EX-10.13.1



 





Exhibit 10.13.1




EXECUTION COPY




 





INVESTMENT NUMBER 11740




Loan Agreement




between




AGUAS DE PANAMA S.A.




and




INTERNATIONAL FINANCE CORPORATION




Dated April 11, 2003




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 
	Article/Section                                                                                                    Item	 	Page No.	 
	ARTICLE I
	 	 	 	 
	     Definitions and Interpretation
	 	 	1	 
	 
	 	 	 	 
	Section 1.01. General Definitions. Wherever used in this Agreement, the following
terms have the meanings opposite them:
	1	 
	Section 1.02. Financial Definitions
	 	 	13	 
	Section 1.03. Financial Calculations
	 	 	17	 
	Section 1.04. Interpretation
	 	 	17	 
	Section 1.05. Business Day Adjustment
	 	 	18	 
	 
	 	 	 	 
	ARTICLE II 

The Project, Project Cost and Financial Plan
	 	 	18	 
	 
	 	 	 	 
	Section 2.01. The Project
	 	 	18	 
	Section 2.02. Project Cost and Financial Plan.* (a) The total cost of the Project
is the equivalent of twenty five million Dollars ($25,000,000) as follows:
	 	 	18	 
	 
	 	 	 	 
	ARTICLE III 

The Loan
	 	 	19	 
	 
	 	 	 	 
	Section 3.01. The Loan
	 	 	19	 
	Section 3.02. Disbursement Procedure
	 	 	19	 
	Section 3.03. Interest
	 	 	19	 
	Section 3.04. Change in Interest Period
	 	 	20	 
	Section 3.05. Default Rate Interest
	 	 	21	 
	Section 3.06. Repayment
	 	 	21	 
	Section 3.07. Prepayment
	 	 	22	 
	Section 3.08. Fees
	 	 	23	 
	Section 3.09. Currency and Place of Payments
	 	 	24	 
	Section 3.10. Allocation of Partial Payments
	 	 	24	 
	Section 3.11. Increased Costs
	 	 	24	 
	Section 3.12. Unwinding Costs
	 	 	25	 
	Section 3.13. Suspension or Cancellation by IFC
	 	 	25	 
	Section 3.14. Cancellation by the Borrower
	 	 	25	 
	Section 3.15. Taxes
	 	 	26	 
	Section 3.16. Expenses
	 	 	26	 
	Section 3.17. Illegality of Participation
	 	 	27	 
	 
	 	 	 	 
	ARTICLE IV 

Representations and Warranties
	 	 	28	 
	 
	 	 	 	 
	Section 4.01. Representations and Warranties
	 	 	28	 
	Section 4.02. IFC Reliance
	 	 	30	 
	 
	 	 	 	 
	ARTICLE V 

Conditions of Disbursement
	 	 	31	 
	 
	 	 	 	 
	Section 5.01. Conditions of the Disbursement
	 	 	31	 






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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page	 
	Section 5.02. Borrower’s Certification
	 	 	35	 
	Section 5.03. B Loan Conditions
	 	 	35	 
	Section 5.04. Conditions for IFC Benefit
	 	 	35	 
	 
	 	 	 	 
	ARTICLE VI 

Particular Covenants
	 	 	35	 
	 
	 	 	 	 
	Section 6.01. Affirmative Covenants
	 	 	35	 
	Section 6.02. Negative Covenants
	 	 	37	 
	Section 6.03. Reporting Requirements
	 	 	41	 
	Section 6.04. Insurance
	 	 	43	 
	 
	 	 	 	 
	ARTICLE VII 

Events of Default
	 	 	45	 
	 
	 	 	 	 
	Section 7.01. Acceleration after Default
	 	 	45	 
	Section 7.02. Events of Default
	 	 	46	 
	Section 7.03. Bankruptcy
	 	 	48	 
	 
	 	 	 	 
	ARTICLE VIII 

Miscellaneous
	 	 	49	 
	 
	 	 	 	 
	Section 8.01. Saving of Rights
	 	 	49	 
	Section 8.02. Notices
	 	 	49	 
	Section 8.03. English Language
	 	 	50	 
	Section 8.04. Term of Agreement
	 	 	50	 
	Section 8.05. Applicable Law and Jurisdiction
	 	 	50	 
	Section 8.06. Disclosure of Information
	 	 	52	 
	Section 8.07. Successors and Assignees
	 	 	52	 
	Section 8.08. Amendments, Waivers and Consents
	 	 	53	 
	Section 8.09. Counterparts
	 	 	53	 
	Section 8.10. Special Authorization
	 	 	53	 
	Annex A
	 	 	71	 







-ii- 









 



	 	 	 	 	 
	BORROWER/PROJECT
AUTHORIZATIONS
	 	 	71	 
	 
	ANNEX B
	 	 	73	 
	INSURANCE
REQUIREMENTS
	 	 	73	 
	 
	SCHEDULE I
	 	 	74	 
	FROM OF
CERTFICATE OF INCUMBENCY AND AUTHORITY
	 	 	74	 
	 
	SCHEDULE 2
	 	 	76	 
	FROM OF REQUEST
FOR DISBURSEMENT
	 	 	76	 
	 
	SCHEDULE 3
	 	 	80	 
	FROM OF LOAN
DISBURSEMENT RECEIPT
	 	 	80	 
	 
	SCHEDULE 4
	 	 	81	 
	FROM OF SERCICE
OF PROCESS LETTER
	 	 	81	 
	 
	SCHEDULE 5
	 	 	83	 
	[INTENTIONALLY
OMMITED]
	 	 	83	 
	 
	SCHEDULE 6
	 	 	84	 
	FROM OF LETTER
TO BORROWER’S DISTRIBUTTION OF DIVIDENDS
	 	 	84	 
	 
	SCHEDULE 7
	 	 	86	 
	FROM OF
BORROWER’S CERTIFICATION ON DISTRIBUTION DIVIDENDS
	 	 	86	 
	 
	SCHEDULE 8
	 	 	88	 
	INFORMATION TO
BE INCLUDED IN QUARTERLY PROGRESS REPORT RE: OPERATION OF THE PLANT
	 	 	88	 
	 
	SCHEDULE 9
	 	 	90	 
	INFORMATION TO
BE INCLUDED IN ANNUAL REVIEW OF OPERATIONS
	 	 	90	 
	 





- iii
-






 








LOAN AGREEMENT




     AGREEMENT, dated April 11, 2003, between:




	 	(1)	 	AGUAS DE PANAMA S.A., a socieclad anónima organized and existing under the laws
of the Republic of Panama (the “Borrower”); and
	 
	 	(2)	 	INTERNATIONAL FINANCE CORPORATION, an international organization established by
Articles of Agreement among its member countries including the Republic of Panamá
(“IFC”).





ARTICLE I




Definitions and Interpretation




     Section 1.01. General Definitions. Wherever used in this Agreement, the following
terms have the meanings opposite them:



	 	 	 
	“A Loan”

	 	the loan specified in Section 3.01(a) (The Loan) or, as
the context requires, its principal amount from time to
time outstanding;
	 
	 	 
	“A Loan Disbursement”

	 	the disbursement of the A Loan;
	 
	 	 
	“A Loan Interest Rate”

	 	for any Interest Period, the rate at which interest is
payable on the A Loan during that Interest Period,
determined in accordance with Section 3.03 (Interest) and,
if applicable, Section 3.04 (Change in Interest Period);
	 
	 	 
	“Accounting Principles”

	 	International Financial Reporting Standards (“IFRS”)
promulgated by the International Accounting Standards
Board (“IASB”) (which includes standards and
interpretations approved by the IASB and International
Accounting Standards (“IAS”) issued under previous
constitutions), together with its pronouncements thereon
from time to time, and applied on a consistent basis;
	 
	 	 
	“Affiliate”

	 	any Person directly or indirectly controlling, controlled
by or under common control with, the Borrower (for
purposes of this definition, “control” means the power to
direct the management or policies of a Person, directly or
indirectly, whether through the ownership of shares or
other securities, by contract or otherwise, provided that
the direct or indirect ownership of twenty-five per cent
(25.0%) or more of the voting share capital of a Person is
deemed to constitute control of that Person, and
“controlling” and “controlled” have corresponding
meanings);






 









 






	 	 	 
	“ANAM”

	 	the Autoridad Nacional del Ambiente, an autonomous entity
of the Government of the Republic of Panamá;
	 
	 	 
	“ASSA”

	 	ASSA COMPAÑÍA DE SEGUROS, S.A., an insurance company duly
licensed pursuant to the laws of Panamá;
	 
	 	 
	“ASSA Subordination 

Agreement”

	 	the agreement to be entered into by the Borrower, ASSA and
IFC pursuant to which, inter alia, ASSA (i) consents to
the terms and conditions and the execution of the
transactions contemplated by the Transaction Documents,
and more specifically, the Loan, the Mortgage, the Share
Pledge Agreement and the Security Account Agreement, (ii)
consents to the Borrower’s subrogation in favor of IFC of
every insurance policy on the Borrower’s assets, (iii)
acknowledges and agrees that any and all payments owed to
it at any time by the Borrower (if any) shall be
subordinated to any and all payments owed by the Borrower
to IFC under this Agreement and the other Transaction
Documents and (iv) irrevocably waives the rights it has
pursuant to the performance or payment bonds to take over
the Concession Contract if and when payments under any
performance or payment bond are made by it.
	 
	 	 
	“Assignment and Security
Agreement”


	 	the agreement to be entered into by the Borrower and IFC
pursuant to which, inter alia, the Borrower collaterally
assigns in favor of IFC all of its rights under the
Turnkey Construction Contract, the Equipment Supply
Contract and the Operation and Maintenance Contract

	 
	 	 
	
“Auditors”

	 	
KPMG or such other firm that the Borrower appoints from
time to time as its auditors pursuant to Section 6.01 (d)
(Affirmative Covenants);
	 
	 	 
	“Authority”

	 	any national, supranational, regional or local government
or governmental, administrative, fiscal, judicial, or
government-owned body, department, commission, authority,
tribunal, agency or entity, or central bank (or any
Person, whether or not government owned and howsoever
constituted or called, that exercises the functions of a
central bank);
	 
	 	 
	“Authorization”

	 	any consent, registration, filing, agreement,
notarization, certificate, license, approval, permit,
authority or exemption from, by or with any Authority,
whether given by express action or deemed given by failure
to act within any specified time period and all corporate,
creditors’ and shareholders’ approvals or consents;






2









 






	 	 	 
	“Authorized Representative”

	 	any natural person who is duly authorized by the Borrower
to act on its behalf for the purposes specified in, and
whose name and a specimen of whose signature appear on,
the Certificate of Incumbency and Authority most recently
delivered by the Borrower to IFC;
	 
	 	 
	“B Loan”

	 	the loan specified in Section 3.01(b) (The Loan) or, as
the context requires, its principal amount from time to
time outstanding;
	 
	 	 
	“B Loan Disbursement”

	 	Any disbursement of the B Loan;
	 
	 	 
	“B Loan Interest Rate”

	 	for any Interest Period, the rate at which interest is
payable on the B Loan during that Interest Period,
determined in accordance with Section 3.03 (Interest) and,
if applicable, Section 3.04 (Change in Interest Period);
	 
	 	 
	“BIL”

	 	Biwater International Limited, a company organized and
existing under the laws of England;
	 
	 	 
	“BIL Consent”

	 	the agreement to be entered into by the Borrower, BIL and
IFC pursuant to which, inter alia, BIL consents to the
collateral assignment to IFC by the Borrower of its rights
under the Turnkey Construction Contract and the Operation
and Maintenance Contract;
	 
	 	 
	“BIL’s Charter”

	 	with respect to BIL, the memorandum and articles of
association, statutes or other constitutive document
howsoever called;
	 
	 	 
	“Borrower’s Charter”

	 	with respect to the Borrower, the memorandum and articles
of association, statutes, Estatutos or other constitutive
document howsoever called;
	 
	 	 
	“BPL”

	 	Biwater Projects Limited, a company organized and existing
under the laws of England;
	 
	 	 
	“BPL Consent”

	 	the agreement to be entered into by the Borrower, BPL and
IFC pursuant to which, inter alia, BPL consents to the
collateral assignment to IFC by the Borrower of its rights
under the Equipment Supply Contract;
	 
	 	 
	“BSL”

	 	Biwater Supply Limited, a company organized and existing
under the laws of England;






3









 











	 	 	 
	“BSL’s Charter”

	 	with respect to BSL, the memorandum and articles of
association, statutes or other constitutive document
howsoever called;
	 
	 	 
	“Business Day”

	 	a day when hanks are open for business in New York, New
York or, solely for the purpose of determining the
applicable Interest Rate other than pursuant to Section
3.03(d)(ii) (Interest), London, England;
	 
	 	 
	“Certificate of Incumbency
and Authority”

	 	a certificate provided to IFC by the Borrower in the form
of Schedule 1;
	 
	 	 
	“Concession Contract”

	 	the Concession Contract dated April 2, 1998 amended by
Addendum No. 1 dated August 12, 1999 and by the Second
Addendum to the Concession Contract dated September 16,
2002 between IDAAN and the Borrower, as well as any other
documents referred to therein, including annexes,
schedules and any amendatory agreements executed
thereafter;
	 
	 	 
	“Country”

	 	Republic of Panamá;
	 
	 	 
	“Derivative Transaction”

	 	any swap agreement, cap agreement, collar agreement,
futures contract, forward contract or similar arrangement
with respect to, currencies or commodity prices, other
than Permitted Hedging Transactions;
	 
	 	 
	“Disbursement”

	 	the A Loan Disbursement or the B Loan Disbursement or
both, as the context requires;
	 
	 	 
	“Dollars” and “$”

	 	the lawful currency of the United States of America;
	 
	 	 
	“Environmental, Health and
Safety Guidelines”

	 	World Bank General Environmental Guidelines dated July 1,
1998 and IFC General Health and Safety Guidelines, a copy
of each of which has been delivered to, and receipt of
which has been acknowledged by, the Borrower by letter
dated November 5, 2002 and incorporated herein by
reference;
	 
	 	 
	“Environmental and Social
Policies”

	 	Policy on Involuntary Resettlement (OP 4.30), dated June
1990, Policy on Environmental Assessment (OP 4.01), dated
October 1998 and IFC Policy Statement on Forced Labor and
Harmful Child Labor, dated March 1998 a copy of each of
which has been delivered to, and receipt of which has been
acknowledged by, the Borrower by letter dated November 5,
2002 and incorporated herein by reference;
	 
	 	 
	“Equipment Supply Contract”

	 	the Agreement for the Supply of Offshore Mechanical and
Electrical Equipment for the Drinking Water System to
Supply Water to the Area of La Chorrera, Arraijan and
Capira dated






4









 






	 	 	 
	

	 	November 26, 1999 between the Borrower and
BPL;


	 
	 	 
	“Event of Default”

	 	any one of the events specified in Section 7.02 (Events of
Default);
	 
	 	 
	“Financial Plan”

	 	the proposed sources of financing for the Project set out
in Section 2.02 (b) (Project Cost and Financial Plan);
	 
	 	 
	“Financial Year”

	 	the accounting year of the Borrower commencing each year
on January 1st and ending on the following December 31st,
or such other period as the Borrower, with IFC’s consent,
from time to time designates as its accounting year;
	 
	 	 
	“Guarantee and Share
Retention Agreement”

	 	the agreement entitled “Guarantee and Share Retention
Agreement” dated as of the date of this Agreement between
the Guarantor and IFC;
	 
	 	 
	“Guarantee Trust”

	 	the guarantee trust created pursuant to the agreement
entitled the “Contrato de Fideicomiso – Segundo
Fideicomiso de Garantiá como Instrumento Eficaz para el
Cumplimiento de Obligación” dated September 16, 2002
between IDAAN, Caja de Ahorros, and the Borrower;
	 
	 	 
	“Guarantor”

	 	Biwater Plc, a company organized and existing under the
laws of England;
	 
	 	 
	“Guarantor’s Charter”

	 	with respect to the Guarantor, the memorandum and articles
of association, statutes or other constitutive document
howsoever called;
	 
	 	 
	“IDAAN”

	 	Instituto de Acueductos y Alcantarillados Nacionales, an
autonomous institution of the Republic of Panama created
by Law No. 98 of December 29, 1961, which was derogated
and replaced by Law No. 77 of December 28, 2001;
	 
	 	 
	“IDAAN Consent”

	 	the agreement to be entered into between the Borrower,
IDAAN, the Republic of Panamá and IFC pursuant to which,
inter alia, IDAAN and the Republic of Panamá consent to
the creation of a security interest in favor of IFC by the
Borrower over its rights under the Concession Contract;
	 
	 	 
	“IFC Security”

	 	the security created by or pursuant to the Security
Documents to secure all amounts owing by the Borrower to
IFC under this Agreement;
	 
	 	 
	“Indemnity Agreement”

	 	the agreement to be entered into by the Guarantor and BSL
in favor of IFC pursuant to which, inter alia, the
Guarantor and BSL agree to fully indemnify IFC, its
directors, officers,






5









 









	 	 	 
	

	 	agents, employees, successors and
assigns, from and against any all losses, expenses,
obligations, damages, injuries, liabilities, claims,
demands, penalties, interests, causes of action,
judgments, suits, costs or disbursements of any kind or
nature whatsoever (including, without limitation, fees and
disbursements of counsel for any such indemnified party in
connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or
not such indemnified party shall be designated a party
thereto) that may at any time be imposed on, asserted
against or incurred by any indemnified party directly or
indirectly as a result of, or arising out of, or in any
way related to or by reason of, the Borrower being in
breach of any of Section 4.01(1) (Representation and
Warranties) and Section 6.01(m) (Affirmative Covenants);
	 
	 	 
	“Increased Costs”

	 	the amount certified in an Increased Costs Certificate to
be the net incremental costs of, or reduction in return
to, IFC or any Participant in connection with the making
or maintaining of the Loan or its Participation that
result from:
	 
	 	 
	 

	 	(i)  any change in any applicable law or regulation or
directive (whether or not having force of law) or in its
interpretation or application by any Authority charged
with its administration; or

	 
	 	 
	 

	 	(ii)  compliance with any request from, or requirement of,
any central bank or other monetary or other Authority; 



which, in either case, after the date of this Agreement:

	 
	 	 
	 

	 	(A)  imposes, modifies or makes applicable any reserve,
special deposit or similar requirements against assets
held by, or deposits with or for the account of, or loans
made by, IFC or that Participant;

	 
	 	 
	 

	 	(B)  imposes a cost on IFC as a result of IFC having made
the Loan or on that Participant as a result of that
Participant having acquired its Participation or reduces
the rate of return on the overall capital of IFC or that
Participant than it would have achieved, had IFC not made
the Loan or that Participant not acquired its
Participation, as the case may be;

	 
	 	 
	 

	 	
(C)  changes the basis of taxation on payments received by
IFC in respect of the Loan or by that Participant with
respect to its Participation (otherwise than by






6









 






	 	 	 
	 

	 	      a change
in taxation of the overall net income of IFC or that
Participant imposed by the jurisdiction of its
incorporation or in which it books its Participation or in
any political subdivision of any such jurisdiction); or

	 
	 	 
	 

	 	(D)  imposes on IFC or that Participant any other condition
regarding the making or maintaining of the Loan or its
Participation,


but excluding any incremental costs of making or
maintaining a Participation that are a direct result of
that Participant having its principal office in the
Country or having or maintaining a permanent office or
establishment in the Country, if and to the extent that
permanent office or establishment acquires that
Participation;

	 
	 	 
	“Increased Costs Certificate”

	 	a certificate provided from time to time by IFC (based on
a certificate to IFC from any Participant, if Increased
Costs affect its Participation), certifying:
	 
	 	 
	 

	 	(i)  the circumstances giving rise to the Increased Costs;

	 
	 	 
	 

	 	(ii)  that the costs of IFC or, as the case may be, that
Participant, have increased or the rate of return of
either of them has been reduced;

	 
	 	 
	 

	 	(iii)  that, IFC or, as the case may be, that Participant,
has, in its opinion, exercised reasonable efforts to
minimize or eliminate the relevant increase or reduction,
as the case may be; and

	 
	 	 
	 

	 	(iv)  the amount of Increased Costs;

	 
	 	 
	“Interest Determination Date”

	 	except as otherwise provided in Section 3.03 (d) (ii)
(Interest) the second Business Day before the beginning of
each Interest Period;
	 
	 	 
	“Interest Payment Date”

	 	April 15 or October 15 in any year or, in the case of any
Interest Period of less than six (6) months, any day which
is the 15th day of the month in which the relevant
Interest Period ends;
	 
	 	 
	“Interest Period”

	 	each period of six (6) months or, in the circumstances
referred to in Section 3.04 (Change in Interest Period),
each period of three (3) months or one (1) month
determined pursuant to that Section, in each case
beginning on an Interest Payment Date






7









 






	 	 	 
	 

	 	and ending on the
day immediately before the next following Interest Payment
Date, except in the case of the first period applicable to
the Disbursement when it means the period beginning on the
date on which the Disbursement is made and ending on the
day immediately before the next following Interest Payment
Date;
	 
	 	 
	“Interest Rate”

	 	(i) with respect to the A Loan, the A Loan Interest Rate,
or (ii) with respect to the B Loan, the B Loan Interest
Rate, as the context requires;
	 
	 	 
	“Irrevocable Letter of
Instruction for Payment”

	 	the Irrevocable Letter of Instruction for Payment by IDAAN
to Banco Nacional de Panamá dated September 16, 2002;
	 
	 	 
	“LIBOR”

	 	the British Bankers’ Association (“BBA”) interbank offered
rates for deposits in the Loan Currency which appear on
the relevant page of the Telerate Service (currently page
3750) or, if not available, on the relevant pages of any
other service (such as Reuters Service or Bloomberg
Financial Markets Service) that displays such BBA rates;
provided that if BBA for any reason ceases (whether
permanently or temporarily) to publish interbank offered
rates for deposits in the Loan Currency, “LIBOR” shall
mean the rate determined pursuant to Section 3.03 (d)
(Interest);
	 
	 	 
	“Lien”

	 	any mortgage, pledge, charge, assignment, hypothecation,
security interest, title retention, preferential right,
trust arrangement, right of set-off, counterclaim or
banker’s lien, privilege or priority of any kind having
the effect of security, any designation of loss payees or
beneficiaries or any similar arrangement under or with
respect to any insurance policy or any preference of one
creditor over another arising by operation of law;
	 
	 	 
	“Loan”

	 	collectively, the A Loan and the B Loan or, as the context
requires, the principal amount of the A Loan and the B
Loan outstanding from time to time;
	 
	 	 
	“Loan Currency”

	 	Dollars;
	 
	 	 
	“Material Adverse Effect”

	 	a material adverse effect on:
	 
	 	 
	 

	 	(i)  the Borrower, the Guarantor, BSL or BIL, their assets
or properties;

	 
	 	 
	 

	 	(ii)  the Borrower’s, the Guarantor’s or BSL’s business
prospects or financial condition;






8









 






	 	 	 
	 

	 	(iii)  the implementation of the Project, the Financial
Plan or the carrying on of the Borrower’s, the Guarantor’s
or BSL’s business or operations; or

	 
	 	 
	 

	 	
(iv)  the ability of the Borrower, the Guarantor, BSL or
BIL to comply with their respective obligations under this
Agreement or any other Transaction Document or Project
Document;

	 
	 	 
	“Mortgage”

	 	the agreement to be entered into by the Borrower and IFC
pursuant to which, inter alia, the Borrower grants in
favor of IFC a first ranking mortgage on the Concession
Contract and the Plant.
	 
	 	 
	“Official”

	 	any officer of a political party or candidate for
political office in the Country or any officer or employee
(i) of the Government (including any legislative,
judicial, executive or administrative department, agency
or instrumentality thereof) or (ii) of a public
international organization;
	 
	 	 
	“Operating License”

	 	the Operating License dated September 16, 2002 between
IDAAN and the Borrower;
	 
	 	 
	“Operation and Maintenance
Contract”

	 	the Operation and Maintenance Contract dated July 6, 2000
between the Borrower and BIL;
	 
	 	 
	“Participant”

	 	any Person who acquires a Participation;
	 
	 	 
	“Participation”

	 	the interest of any Participant in the B Loan, or as the
context requires, in the B Loan Disbursement;
	 
	 	 
	“Participation Agreement”

	 	any of the agreements entitled “Participation Agreement”
between IFC and the Participant(s) pursuant to which the
Participant(s) acquires a Participation;
	 
	 	 
	“Payment Trust”

	 	the payment trust created pursuant to the agreement
entitled “Contrato de Fideicomiso — Primer Fideicomiso de
Garantia como Instrumento o Mecanismo Eficaz de Pago”
dated September 16, 2002 between IDAAN, Caja de Ahorros
and the Borrower;
	 
	 	 
	“Permitted Hedging 

Counterparty”

	 	any financial institution whose long-term unsecured
indebtedness is rated AA+ or better by Standard & Poor’s
or Aa1 or better by Moody’s;
	 
	 	 
	“Permitted Hedging 

Transaction”

	 	any interest rate swap transaction, interest “cap” or
“collar” transaction or other interest rate hedging
transaction entered into by the Borrower with a Permitted
Hedging Counterparty






9









 






	 	 	 
	



“Person”

	 	exclusively for the purpose of
hedging interest rates;  



any natural person, corporation, company, partnership,
firm, voluntary association, joint venture, trust,
unincorporated organization, Authority or any other entity
whether acting in an individual, fiduciary or other
capacity;
	 
	 	 
	“Plant”

	 	the bulk water treatment plant described in Section 2.01
(The Project);
	 
	 	 
	“Potential Event of Default”

	 	any event or circumstance which would, with notice, lapse
of time, the making of a determination or any combination
thereof, become an Event of Default;
	 
	 	 
	“Prohibited Payments”

	 	any offer, gift, payment, promise to pay or authorization
of the payment of any money or anything of value, directly
or indirectly, to or for the use or benefit of any
Official (including to or for the use or benefit of any
other Person if the Borrower or any Affiliate knows, or
has reasonable grounds for believing, that the other
Person would use such offer, gift, payment, promise or
authorization of payment for the benefit of any such
Official), for the purpose of influencing any act or
decision or omission of any Official in order to obtain,
retain or direct business to, or to secure any improper
benefit or advantage for, the Borrower, its Affiliates or
any other Person; provided that any such offer, gift,
payment, promise or authorization of payment shall not be
considered a Prohibited Payment if, in IFC’s reasonable
opinion, it (i) is lawful under applicable written laws
and regulations or (ii) is made for the purpose of
expediting or securing the performance of a routine
governmental action (as such term is construed under
applicable law);
	 
	 	 
	“Project”

	 	the project described in Section 2.01 (The Project);
	 
	 	 
	“Project Documents”

	 	(i)  the Borrower’s Charter;

	 
	 	 
	 

	 	(ii)  BSL’s Charter,

	 
	 	 
	 

	 	(iii)  BIL’s Charter

	 
	 	 
	 

	 	(iv)  the Guarantor’s Charter;

	 
	 	 
	 

	 	(v)  the Concession Contract;

	 
	 	 
	 

	 	(vi)  the agreement creating the Guarantee Trust;






10









 






	 	 	 
	 

	 	(vii)  the agreement creating the Payment Trust;

	 
	 	 
	 

	 	(viii)  the Irrevocable Letter of Instruction for Payment;

	 
	 	 
	 

	 	(ix)  the Operating License;

	 
	 	 
	 

	 	(x)  the Raw Water Abstraction Contract;

	 
	 	 
	 

	 	(xi)  the Turnkey Construction Contract

	 
	 	 
	 

	 	(xii)  the Equipment Supply Contract; and

	 
	 	 
	 

	 	(xiii)  the Operation and Maintenance Contract;

	 
	 	 
	“Raw Water Abstraction 

Contract”

	 	Contract No. 17-99 of April 26, 1999 between ANAM and the
Borrower;
	 
	 	 
	“Relevant Spread”

	 	(i) with respect to the A Loan, four per cent (4%) per
annum, and (ii) with respect to the B Loan, three and
three quarters of one per cent (3.75%) per annum;
	 
	 	 
	“Security Account”

	 	the Borrower’s account located at HSBC Bank USA in Panama,
or such other bank as may be agreed from time to time by
IFC, into which Caja de Ahorros shall deposit all funds to
be transferred to the Borrower from the Payment Trust;
	 
	 	 
	“Security Account Agreement”

	 	the agreement to be entered into by the Borrower and IFC
which provides, inter alia, for the creation of the
Security Account and a pledge of the Borrower’s interest
therein to IFC (this agreement is referred to in Spanish
as the Contraro de Prenda Mercantil Sobre Cuenta Bancaria
y Cesion de Derechos de Pago);
	 
	 	 
	“Security Documents”

	 	the documents providing for the IFC Security consisting of:
	 
	 	 
	 

	 	(i)  (x) the assignment of each of the Turnkey Construction
Contract, the Equipment Supply Contract and the Operation
and Maintenance Contract pursuant to the terms of the
Assignment and Security Agreement and (y) the
hypothecation of the Concession Contract pursuant to the
terms of the Mortgage;

	 
	 	 
	 

	 	(ii)  the first ranking pledge in favor of IFC of the
Borrower’s share capital held by BSL pursuant to the terms
of the Share Pledge Agreement;

	 
	 	 
	 

	 	(iii)  conditional assignment of the right to receive
payments under the Payment Trust and the Guarantee Trust
and a 






11









 






	 	 	 
	 

	 	first ranking lien on the deposits made into the
Security Account pursuant to the terms of the Security
Account Agreement;


	 
	 	 
	 

	 	(iv)  a first ranking mortgage on the Plant pursuant to the
terms of the Mortgage;

	 
	 	 
	 

	 	(v)  an assignment in favor of IFC of proceeds on every
performance or payment bond and on every insurance policy
on the Borrower’s assets by naming IFC as an additional
named insured and as loss payee in accordance with the
terms hereof;

	 
	 	 
	 

	 	(vi)  the consents to the assignments described in
paragraph (i) above pursuant to the IDAAN Consent, the BIL
Consent and the BPL Consent; and

	 
	 	 
	 

	 	(vii)  the ASSA Subordination Agreement;

	 
	 	 
	“Share Pledge Agreement”

	 	the agreement to be entered into by BSL, the Borrower and
IFC pursuant to which, inter alto, BSL grants a first
ranking pledge in favor of IFC of the Borrower’s share
capital held by BSL;
	 
	 	 
	“Subsidiary”

	 	with respect to any Person, any entity:
	 
	 	 
	 

	 	(i)  over 50% of whose capital is owned, directly or
indirectly, by that Person;

	 
	 	 
	 

	 	(ii)  for which that Person may nominate or appoint a
majority of the members of the board of directors or such
other body performing similar functions; or

	 
	 	 
	 

	 	(iii)  which is otherwise effectively controlled by that
Person;

	 
	 	 
	“Taxes”

	 	Any present or future taxes, withholding obligations,
duties and other charges of whatever nature levied by any
Authority;
	 
	 	 
	“Transaction Documents”

	 	(i)  this Agreement;

	 
	 	 
	 

	 	(ii)  the Guarantee and Share Retention Agreement;

	 
	 	 
	 

	 	(iii)  the Indemnity Agreement;

	 
	 	 
	 

	 	(iv)  the Participation Agreement(s); and

	 
	 	 
	 

	 	(v)  the Security Documents;

	 
	 	 
	“Turnkey Construction


	 	The Firm Price Turnkey Design and Construction Agreement
 





12









 






	 	 	 
	
Contract”

	 	dated November 26, 1999 between the Borrower and BIL; and
	 
	 	 
	“World Bank”

	 	the International Bank for Reconstruction and Development,
an international organization established by Articles of
Agreement among its member countries.






     Section 1.02. Financial Definitions. (a) Wherever used in this Agreement, unless the
context otherwise requires, the following terms have the meanings opposite them:



	 	 	 
	“Current Assets”

	 	the aggregate of the Borrower’s cash,
marketable securities, trade, services to
be invoiced, credit to users and other
receivables realizable within one year
and other prepaid expenses and
inventories which are to be charged to
income within one year;
	 
	 	 
	“Current Liabilities”

	 	the aggregate of all liabilities of the
Borrower falling due on demand or within
one year (including the portion of
Long-term Debt falling due within one
year);
	 
	 	 
	“Current Ratio”

	 	the result obtained by dividing Current
Assets by Current Liabilities;
	 
	 	 
	“Debt”

	 	the aggregate of all obligations (whether
actual or contingent) of the Borrower to
pay or repay money including, without
limitation:
	 
	 	 
	 

	 	(i) all Indebtedness for Borrowed Money;

	 
	 	 
	 

	 	(ii) the aggregate amount then
outstanding of all liabilities of any
party to the extent the Borrower
guarantees them or otherwise directly or
indirectly obligates itself to pay them;

	 
	 	 
	 

	 	(iii) all liabilities of the Borrower
(actual or contingent) under any
conditional sale or a transfer with
recourse or obligation to repurchase,
including, without limitation, by way of
discount or factoring of book debts or
receivables; and

	 
	 	 
	 

	 	(iv) all liabilities of the Borrower
(actual or contingent) under the
Borrower’s Charter, any resolution of its
shareholders, or any agreement or other
document binding on the Borrower to
redeem any of its shares;

	 
	 	 
	“Indebtedness for Borrowed 

Money”

	 	all obligations of the Borrower to repay
money including, without limitation, with
respect to:






13









 






	 	 	 
	 

	 	(i)  borrowed money;

	 
	 	 
	 

	 	(ii)  the outstanding principal amount of
any bonds, debentures, notes, loan stock,
commercial paper, acceptance credits,
bills or promissory notes drawn,
accepted, endorsed or issued by the
Borrower;

	 
	 	 
	 

	 	(iii) any credit to the Borrower from a
supplier of goods or services under any
installment purchase or other similar
arrangement with respect to goods or
services (except trade accounts that are
payable in the ordinary course of
business and included in Current
Liabilities);

	 
	 	 
	 

	 	(iv)  non-contingent obligations of the
Borrower to reimburse any other Person
with respect to amounts paid by that
Person under a letter of credit or
similar instrument (excluding any letter
of credit or similar instrument issued
for the benefit of the Borrower with
respect to trade accounts that are
payable in the ordinary course of
business and included in Current
Liabilities);

	 
	 	 
	 

	 	(v)  amounts raised under any other
transaction having the financial effect
of a borrowing and which would be
classified as a borrowing (and not as an
off-balance sheet financing) under the
Accounting Principles including, without
limitation, under leases or similar
arrangements entered into primarily as a
means of financing the acquisition of the
asset leased;

	 
	 	 
	 

	 	(vi)  the amount of the Borrower’s
obligations pursuant to Derivative
Transactions and Permitted Hedging
Transactions which consist of swap,
collar and cap agreements entered into in
connection with other Debt of the
Borrower, provided that for the avoidance
of double counting and for so long as any
such swap, collar or cap agreement is in
effect, that Debt will be included in
Indebtedness for Borrowed Money pursuant
to the terms of the relevant Derivative
Transaction or Permitted Hedging
Transaction and not the terms of the
agreement providing for that Debt when it
was incurred; and

	 
	 	 
	 

	 	(vii)  any premium payable on a redemption
or replacement of any of the foregoing
obligations;

	 
	 	 
	“Long-term Debt”

	 	that part of the Debt the final maturity
of which, by its terms or the terms of
any agreement relating to it, falls due
more than one year after the date of its
incurrence;






14









 






	 	 	 
	“Long-term Debt Service 

Coverage Ratio”

	 	the ratio obtained by dividing:
	 
	 	 
	 

	 	(i)  the aggregate, for the Financial Year
most recently ended prior to the relevant
date of calculation for which audited
financial statements are available, of
(A) net income appearing in the audited
financial statements for that Financial
Year, after deduction of taxes payable on
that net income (whether or not actually
paid), (B) Non-Cash Items and (C) the
amount of all payments that were due
during that Financial Year (whether or
not actually paid) on account of interest
and other charges on Long-term Debt ;

	 
	 	 
	 

	 	by
	 
	 	 
	 

	 	(ii)  the aggregate amount, for the
Financial Year most recently ended prior
to the relevant date of calculation for
which audited financial statements are
available, of (A) all scheduled payments
falling due on account of principal,
interest and other charges on Long-term
Debt (whether or not actually paid) and
(B) without double counting with respect
to any payment already counted in the
preceding sub-paragraph (A), any payment
required to be made to any debt service
account under the terms of any agreement
providing for the Long-term Debt;

	 
	 	 
	 

	 	where, for the purposes of clause (ii)
above, for the computation of interest
payable during any period for which the
applicable rate is not yet determined,
that interest shall be computed at the
rate in effect at the time of the
relevant date of calculation;
	 
	 	 
	“Non-Cash Items”

	 	for any period, the net aggregate amount
(which may be a positive or negative
number) of all non-cash expenses and
non-cash credits which have been
subtracted or, as the case may be, added
in calculating net income during that
period, including, without limitation,
depreciation, amortization, deferred
taxes, provisions for severance pay of
staff and workers, and credits resulting
from revaluation of the assets’ book
value;
	 
	 	 
	“Projected Long-term Debt 

Service Coverage Ratio”

	 	the ratio obtained by dividing:
	 
	 	 
	 

	 	(i)  the aggregate, for the next four
consecutive fiscal quarters from the date
of calculation, of (A) projected net
income after deduction of taxes payable
on that net 






15









 






	 	 	 
	 

	 	income (whether or not
actually paid), provided, that the
projected net income for the relevant
period shall be based solely on the
contractually-agreed minimum take-or-pay
levels set forth in the Concession
Contract, (B) Non-Cash Items for such
period and (C) the amount of all payments
that are due during that period (whether
or not actually paid) on account of
interest and other charges on Long-term
Debt ;

	 
	 	 
	 

	 	by
	 
	 	 
	 

	 	(ii)  the aggregate amount, for the same
period of calculation, of (A) all
scheduled payments falling due on account
of principal, interest and other charges
on Long-term Debt (whether or not
actually paid) and (B) without double
counting with respect to any payment
already counted in the preceding
sub-paragraph (A), any payment required
to be made to any debt service account
under the terms of any agreement
providing for the Long-term Debt;

	 
	 	 
	 

	 	where, for the purposes of clause (ii)
above, for the computation of interest
payable during any period for which the
applicable rate is not yet determined,
that interest shall be computed at the
rate in effect at the time of the
relevant date of calculation;
	 
	 	 
	“Shareholders’ Equity”

	 	the aggregate of:
	 
	 	 
	 

	 	(i)  the amount paid up or credited as
paid up on the share capital of the
Borrower; and

	 
	 	 
	 

	 	(ii)  the amount standing to the credit of
the reserves of the Borrower (including,
without limitation, any share premium
account, capital redemption reserve funds
and any credit balance on the accumulated
profit and loss account);

	 
	 	 
	 

	 	after deducting from that aggregate (A)
any debit balance on the profit and loss
account or impairment of the issued share
capital of the Borrower (except to the
extent that deduction with respect to
that debit balance or impairment has
already been made), (B) amounts set aside
for dividends or taxation (including
deferred taxation), and (C) amounts
attributable to capitalized items such as
goodwill, trademarks, deferred charges,
licenses, patents and other intangible
assets;
	 
	 	 
	“Short-term Debt”

	 	all Debt other than Long-term Debt;






16









 






	 	 	 
	“Total Debt to Equity Ratio”

	 	the result obtained by dividing (as of
the relevant calculation date) all Debt
by Shareholders’ Equity.






     Section 1.03. Financial Calculations. (a) All financial calculations to be made
under, or for the purposes of, this Agreement and any other Transaction Document shall be
determined in accordance with the Accounting Principles and, except as otherwise required to
conform to any provision of this Agreement, shall be calculated from the then most recently issued
quarterly financial statements which the Borrower is obligated to furnish to IFC under Section 6.03
(a) (Reporting Requirements).



     (b) Where quarterly financial statements are used for the purpose of making certain financial
calculations and those statements are with respect to the last quarter of a Financial Year then, at
IFC’s option, those calculations may instead be made from the audited financial statements for the
relevant Financial Year.



     (c) If any material adverse change in the financial condition of the Borrower has occurred
after the end of the period covered by the financial statements used to make the relevant financial
calculations, that material adverse change shall also be taken into account in calculating the
relevant figures.



     (d) If a financial calculation is to be made under or for the purposes of this Agreement or
any other Transaction Document on a Consolidated Basis, that calculation shall be made by reference
to the sum of all amounts of similar nature reported in the relevant financial statements of each
of the entities whose accounts are to be consolidated with the accounts of the Borrower plus or
minus the consolidation adjustments customarily applied to avoid double counting of transactions
among any of those entities, including the Borrower.



     Section 1.04. Interpretation. In this Agreement, unless the context otherwise
requires:



     (a) headings and underlinings are for convenience only and do not affect the interpretation of
this Agreement;



     (b) words importing the singular include the plural and vice versa;



     (c) an expression importing a natural person includes any company, partnership, trust, joint
venture, association, corporation or other body corporate and any governmental authority or agency;



     (d) a reference to an Annex, Article, party, Schedule or Section is a reference to that
Article or Section of, or that Annex, party or Schedule to, this Agreement;



     (e) a reference to a document includes an amendment or supplement to, or replacement or
novation of, that document but disregarding any amendment, supplement, replacement or novation made
in breach of this Agreement; and



     (f) a reference to a party to any document includes that party’s successors and permitted
assigns.



17









 





     Section 1.05. Business Day Adjustment. When the day on or by which a payment is due
to be made is not a Business Day, that payment shall be made on or by the next succeeding Business
Day. Interest, fees and charges (if any) shall continue to accrue for the period from the due date
that is not a Business Day to that next succeeding Business Day.



ARTICLE II




The Project, Project Cost and Financial Plan




     Section 2.01. The Project. The project to be financed consists of the refinancing of
the shareholder bridge financing used by the Borrower to design, construct and operate the Laguna
Alta bulk water treatment plant, as an integrated whole and including all components thereof and
all related facilities, including, without limitation, the plant intake, the raw water pumping
station, the water treatment facility, and the pipelines connecting the intake, the pumping
station, the water treatment facility and the point of delivery of the water to IDAAN, and any
other property that may be incorporated or installed in or attached to or otherwise become a part
of such plant or related facilities (the “Plant”) to provide potable water to the areas of
Arraijan, Chorrera and Capira in the Country under the Concession Contract.



     Section 2.02. Project Cost and Financial Plan.* (a) The total cost of the Project
is the equivalent of twenty five million Dollars ($25,000,000) as follows:



	 	 	 	 	 	 	 	 	 
	Project	 	$ millions	 	Percent
	Equipment
	 	 	12.9	 	 	 	51.6	 
	Engineering & Design
	 	 	1.5	 	 	 	6.1	 
	Land Purchase
	 	 	0.1	 	 	 	0.5	 
	Civil Works & Installation
	 	 	8.6	 	 	 	34.2	 
	M&E Installation
	 	 	0.9	 	 	 	3.7	 
	Project Development & Insurance
	 	 	1.0	 	 	 	3.9	 
	Total Project Cost
	 	 	25.0	 	 	 	100	%








 




			
	*	 	For purposes of this Section, an exchange rate of 1 Panama Balboa $1 has been
assumed.





     (b) The proposed sources of refinancing for the Project are as follows:



	 	 	 	 	 	 	 	 	 
	Financial Plan	 	$ millions	 	Percent
	Loan
	 	 	 	 	 	 	 	 
	IFC A Loan
	 	 	6.0	 	 	 	24.0	 
	IFC B Loan
	 	 	9.0	 	 	 	36.0	 
	Total Debt
	 	 	15.0	 	 	 	60.0	 
	Equity
	 	 	 	 	 	 	 	 
	BSL’s Equity
	 	 	10.0	 	 	 	40.0	 
	Total Financial Plan
	 	 	25.0	 	 	 	100	%






18









 





ARTICLE III




The Loan




     Section 3.01. The Loan. Subject to the provisions of this Agreement, IFC agrees to
lend, and the Borrower agrees to borrow, the Loan consisting of:



     (a) the A Loan, being six million Dollars ($6,000,000); and



     (b) the B Loan, being nine million Dollars ($9,000,000).



     Section 3.02. Disbursement Procedure. (a) The Borrower may request the Disbursement
by delivering to IFC, at least ten (10) Business Days prior to the proposed date of Disbursement, a
Disbursement request substantially in the form of Schedule 2 and a receipt substantially in the
form of Schedule 3.



     (b) The Disbursement shall be made by IFC at a bank in New York, New York for further credit
to the Borrower’s account at a bank in the Country, or any other place acceptable to IFC, all as
specified by the Borrower in the Disbursement request.



     (c) There shall be one Disbursement in an amount of not less than fifteen million Dollars
($15,000,000).



     Section 3.03. Interest. Subject to the provisions of Section 3.05 (Default Rate
Interest), the Borrower shall pay interest on the Loan in accordance with this Section 3.03:



     (a) During each Interest Period, the Loan (or, with respect to the first Interest Period for
the Disbursement, the amount of the Disbursement) shall bear interest at the applicable Interest
Rate for that Interest Period.



     (b) Interest on each of the A Loan and the B Loan shall accrue from day to day, be prorated on
the basis of a 360-day year for the actual number of days in the relevant Interest Period and be
payable in arrears on the Interest Payment Date immediately following the end of that Interest
Period; provided that if the Disbursement is made less than fifteen (15) days before an Interest
Payment Date, interest on the Disbursement shall be payable commencing on the second Interest
Payment Date following the date of the Disbursement.



     (c) Subject to Section 3.04 (Change in Interest Period), the A Loan Interest Rate and the 13
Loan Interest Rate for any Interest Period shall be the rate which is the sum of:




	 	(i)	 	the Relevant Spread; and
	 
	 	(ii)	 	LIBOR on the Interest Determination Date for that Interest
Period for six (6) months (or, in the case of the first Interest Period for the
Disbursement, for one (I) month, two (2) months, three (3) months or six (6)
months, whichever period is closest to the duration of the relevant Interest
Period (or, if two periods are equally close, the longer one)) rounded upward
to the nearest three decimal places.










19









 











     (d) If, for any Interest Period, IFC cannot determine LIBOR by reference to the Telerate
Service or any other service that displays BBA rates, IFC shall notify the Borrower and shall
instead determine LIBOR:




	 	(i)	 	on the second Business Day before the beginning of the relevant
Interest Period by calculating the arithmetic mean (rounded upward to the
nearest three decimal places) of the offered rates advised to IFC on or around
11:00 a.m., London time, for deposits in the Loan Currency and otherwise in
accordance with Section 3.03 (c) (ii), by any four (4) major banks active in
the Loan Currency in the London interbank market, selected by IFC; provided
that if less than four quotations are received, IFC may rely on the quotations
so received if not less than two (2); or
	 
	 	(ii)	 	if less than two (2) quotations are received from the banks in
London in accordance with subsection (i) above, on the first day of the
relevant Interest Period, by calculating the arithmetic mean (rounded upward to
the nearest three decimal places) of the offered rates advised to IFC on or
around 11:00 a.m., New York time, for loans in the Loan Currency and otherwise
in accordance with Section 3.03 (c) (ii), by a major bank or banks in New York,
New York selected by IFC.





     (e) On each Interest Determination Date for any Interest Period, IFC shall determine the A
Loan Interest Rate and the B Loan Interest Rate applicable to that interest Period and promptly
notify the Borrower of those rates.



     (f) The determination by IFC, from time to time, of the applicable Interest Rate shall be
final and conclusive and bind the Borrower (unless the Borrower shows to IFC’s satisfaction that
the determination involves manifest error).



     Section 3.04. Change in Interest Period. Without prejudice to the provisions of
Section 3.05 (Default Rate Interest), if at any time the Borrower fails to pay any amount of
principal of, or interest on, the Loan when due (whether at stated maturity or upon acceleration),
and any part of that amount remains unpaid on the third Business Day immediately preceding any
Interest Payment Date falling after that amount became due, then:



     (a) IFC may elect that the duration of the Interest Period commencing on that Interest Payment
Date and, subject to Section 3.04 (c), any subsequent Interest Period shall be either three (3)
months or one (1) month and shall notify the Borrower of that election in the notice referred to in
Section 3.03 (e) (Interest);



     (b) the Interest Rates applicable to any Interest Period which is three (3) months or one (1)
month shall be determined in accordance with Section 3.03 (Interest) in all respects, except that
any reference in Section 3.03 (c) (ii) to six (6) months shall be deemed to be a reference to three
(3) months or, as the case may be, one (1) month; and



     (c) unless an Event of Default or Potential Event of Default has occurred and is continuing,
IFC shall reinstate Interest Periods of six (6) months as of the first Interest Payment Date which
is April l5th or October 15th falling at least three (3) Business Days after
the payment



20









 







default is remedied in full and shall inform the Borrower of that reinstatement in the notice
referred to in Section 3.03 (e) (Interest).



     Section 3.05. Default Rate Interest. (a) Without limiting the remedies available to
IFC under this Agreement or otherwise (and to the maximum extent permitted by applicable law), if
the Borrower fails to make any payment of principal or interest (including interest payable
pursuant to this Section) or any other payment provided for in Section 3.08 (Fees) when due as
specified in this Agreement (whether at stated maturity or upon acceleration), the Borrower shall
pay interest on the amount of that payment due and unpaid at the rate which shall be the sum of two
per cent (2.0%) per annum and the A Loan Interest Rate (with respect to amounts relating to the A
Loan) or two per cent (2.0%) per annum and the B Loan Interest Rate (with respect to amounts
relating to the B Loan) in effect from time to time;



     (b) Interest at the rate referred to in Section 3.05 (a) shall accrue from the date on which
payment of the relevant overdue amount became due until the date of actual payment of that amount
(as well after as before judgment), and shall be payable on demand or, if not demanded, on each
Interest Payment Date falling after any such overdue amount became due.



     Section 3.06. Repayment. (a) The Borrower shall repay the A Loan on the following
dates and in the following amounts:



	 	 	 	 	 
	Date Payment Due	 	Principal Amount Due
	October 15, 2003
	 	$	360,000	 
	April 15, 2004
	 	$	180,000	 
	October 15, 2004
	 	$	180,000	 
	April 15, 2005
	 	$	240,000	 
	October 15, 2005
	 	$	240,000	 
	April 15, 2006
	 	$	300,000	 
	October 15, 2006
	 	$	300,000	 
	April 15, 2007
	 	$	300,000	 
	October 15, 2007
	 	$	300,000	 
	April 15, 2008
	 	$	360,000	 
	October 15, 2008
	 	$	360,000	 
	April 15, 2009
	 	$	360,000	 
	October 15, 2009
	 	$	360,000	 
	April 15, 2010
	 	$	360,000	 
	October 15, 2010
	 	$	360,000	 
	April 15, 2011
	 	$	360,000	 
	October 15, 2011
	 	$	360,000	 
	April 15, 2012
	 	$	360,000	 
	October 15, 2012
	 	$	360,000	 





     (b) The Borrower shall repay the B Loan on the following dates and in the following amounts:



21









 








	 	 	 	 	 
	Date Payment Due	 	Principal Amount Due
	October 15, 2003
	 	$	675,000	 
	April 15, 2004
	 	$	337,500	 
	October 15, 2004
	 	$	337,500	 
	April 15, 2005
	 	$	450,000	 
	October 15, 2005
	 	$	450,000	 
	April 15, 2006
	 	$	675,000	 
	October 15, 2006
	 	$	675,000	 
	April 15, 2007
	 	 	5675,000	 
	October 15, 2007
	 	$	675,000	 
	April 15, 2008
	 	$	675,000	 
	October 15, 2008
	 	$	675,000	 
	April 15, 2009
	 	$	675,000	 
	October 15, 2009
	 	$	675,000	 
	April 15, 2010
	 	$	675,000	 
	October 15, 2010
	 	$	675,000	 






     (c) The dates for repayment of principal of the Loan are intended to coincide with the
Interest Payment Dates.



     (d) Upon the Disbursement, the amount disbursed shall be allocated for repayment on each of
the respective dates for repayment of principal set out in the tables in Section 3.06 (a) and
Section 3.06 (b) in amounts which are pro rata to the amounts of the respective
installments shown opposite those dates in those tables (with IFC adjusting those allocations as
necessary so as to achieve whole numbers in each case).



     Section 3.07. Prepayment. Subject to Section 3.12 (Unwinding Costs), Section 3.15
(Taxes), Section 3.17 (Illegality of Participation) and Section 6.04 (c) (Insurance):



     (a) the Borrower may prepay on any Interest Payment Date all or any part of the Loan, on not
less than ninety (90) days’ prior notice to IFC, but only if:




	 	(i)	 	the Borrower simultaneously pays all accrued interest and
Increased Costs (if any) on the amount of the Loan to be prepaid, together with
all other amounts then due and payable under this Agreement, including the
amount payable under Section 3.12 (Unwinding Costs), if the prepayment is not
made on an Interest Payment Date;
	 
	 	(ii)	 	for a partial prepayment, that prepayment is of an amount not
less than one million Dollars ($1,000,000); and
	 
	 	(iii)	 	if requested by IFC, the Borrower delivers to IFC, prior to
the date of prepayment, evidence satisfactory to IFC that all necessary
Authorizations with respect to the prepayment have been obtained.






     (b) Amounts of principal prepaid under this Section shall:



22









 













	 	(i)	 	first be allocated by IFC pro rata between the
A Loan and the B Loan in proportion to their respective principal amounts
outstanding; and
	 
	 	(ii)	 	then be applied by IFC to all the respective outstanding
installments of principal of the A Loan and the B Loan in inverse order of
maturity.





     (c) Upon delivery of a notice in accordance with Section 3.07 (a), the Borrower shall make the
prepayment in accordance with the terms of that notice.



     (d) Any principal amount of the Loan prepaid under this Agreement may not be re-borrowed.



     Section 3.08. Fees. (a) The Borrower shall pay to IFC a commitment fee at the rate
of one-half of one per cent (.5%) per annum on that part of the Loan which from time to time has
not been disbursed or canceled. The commitment fee shall:




	 	(i)	 	begin to accrue,






	 	(A)	 	with respect to the A Loan, on the date of this
Agreement; and
	 
	 	(B)	 	with respect to the B Loan, for each
Participation, on the date of the Participation Agreement evidencing
that Participation;






	 	(ii)	 	be pro rated on the basis of a 360-day year for
the actual number of days elapsed; and
	 
	 	(iii)	 	be payable semi-annually, in arrears, on the Interest Payment
Dates in each year, the first such payment to be due on October 15, 2003.






	 	(b)	 	The Borrower shall also pay to IFC:






	 	(i)	 	a front-end fee on the A Loan of sixty thousand Dollars
(S60,000), to be paid upon the earlier of (x) the date which is thirty (30)
days after the date of this Agreement and (y) the date immediate, preceding the
date of the A Loan Disbursement;
	 
	 	(ii)	 	a front-end fee on the B Loan of one per cent (1.00%) of the
amount of each Participation, upon the earlier of (x) the date which is thirty
(30) days after the date of the relevant Participation Agreement and (y) the
date immediately preceding the B Loan Disbursement from the relevant
Participation;
	 
	 	(iii)	 	a syndication fee of an amount agreed in the letter agreement
dated on or about the date of this Agreement between the Borrower and IFC, to
be paid on or before the date specified in that letter agreement;
	 
	 	(iv)	 	an annual B Loan administration fee of five thousand Dollars
($5,000) per Participant for each calendar year during which any portion of
that





23









 












Participant’s Participation is committed or outstanding, whether that year
is complete or not, to be paid in full in advance:




	 	(A)	 	with respect to the first calendar year, within
thirty (30) days after the date of the relevant Participation
Agreement; and
	 
	 	(B)	 	with respect to each subsequent calendar year,
on the first Interest Payment Date in that year.





     Section 3.09. Currency and Place of Payments. (a) The Borrower shall make all
payments of principal, interest, fees, and any other amount due to IFC under this Agreement in the
Loan Currency, in same day funds, to the account of IFC at Northern Trust International Banking
Corporation, New York, New York, U.S.A., ABA#026001122, for credit to IFC’s account number
10215220300, or at such other bank or account in New York as IFC from time to time designates.
Payments must be received in IFC’s designated account no later than 1:00 p.m. New York time; and
the Borrower hereby irrevocably agrees that IFC may deem any payment, or part thereof, relating to
the B Loan that is received after that time as made on the next Business Day and accordingly
interest will accrue on any Participant’s pro rata share of that payment with
respect to which IFC is unable to make same day remittance to that Participant.



     (b) The tender or payment of any amount payable under this Agreement (whether or not by
recovery under a judgment) in any currency other than the Loan Currency shall not novate, discharge
or satisfy the obligation of the Borrower to pay in the Loan Currency all amounts payable under
this Agreement except to the extent that (and as of the date when) IFC actually receives funds in
the Loan Currency in the account specified in, or pursuant to, Section 3.09 (a).



     (c) The Borrower shall indemnify IFC against any losses resulting from a payment being
received or an order or judgment being given under this Agreement in any currency other than the
Loan Currency or any place other than the account specified in, or pursuant to, Section 3.09 (a).
The Borrower shall, as a separate obligation, pay such additional amount as is necessary to enable
IFC to receive, after conversion to the Loan Currency at a market rate and transfer to that
account, the full amount due to IFC under this Agreement in the Loan Currency and in the account
specified in, or pursuant to, Section 3.09 (a).



     (d) Notwithstanding the provisions of Section 3.09 (a) and Section 3.09 (b), IFC may require
the Borrower to pay (or reimburse IFC) for any Taxes, fees, costs, expenses and other amounts
payable under Section 3.15 (a) (Taxes) and Section 3.16 (Expenses) in the currency in which they
are payable, if other than the Loan Currency.



     Section 3.10. Allocation of Partial Payments. If at any time IFC receives less than
the full amount then due and payable to it under this Agreement, IFC may allocate and apply the
amount received in any way or manner and for such purpose or purposes under this Agreement as IFC
in its sole discretion determines, notwithstanding any instruction that the Borrower may give to
the contrary.



     Section 3.11. Increased Costs. On each Interest Payment Date, the Borrower shall
pay, in addition to interest, the amount which IFC from time to time notifies to the Borrower in an



24









 







Increased Costs Certificate as being the aggregate Increased Costs of IFC and each Participant
accrued and unpaid prior to that Interest Payment Date.



     Section 3.12. Unwinding Costs. (a) If IFC or any Participant incurs any cost,
expense or loss as a result of the Borrower.




	 	(i)	 	failing to borrow in accordance with a request for Disbursement
made pursuant to Section 3.02 (Disbursement Procedure), or to prepay in
accordance with a notice of prepayment; or
	 
	 	(ii)	 	prepaying all or any portion of the Loan on a date other than
an Interest Payment Date;




then the Borrower shall immediately pay to IFC the amount which IFC from time to time notifies to
the Borrower as being the amount of those costs, expenses and losses incurred.




     (b) For the purposes of this Section, “costs, expenses or losses” include any premium, penalty
or expense incurred to liquidate or obtain third party deposits or borrowings in order to make,
maintain or fund all or any part of the Loan.



     Section 3.13. Suspension or Cancellation by IFC. (a) IFC may, by notice to the
Borrower, suspend the right of the Borrower to the Disbursement or cancel the undisbursed portion
of the Loan in whole:




	 	(i)	 	if the Disbursement has not been made by May 30, 2003, or such
other date as the parties agree;
	 
	 	(ii)	 	if any Event of Default has occurred and is continuing or if
the Event of Default specified in Section 7.02 (f) (Events of Default) is, in
the reasonable opinion of IFC, imminent; or
	 
	 	(iii)	 	if any event or condition has occurred which has or can
reasonably be expected to have a Material Adverse Effect.





     (b) Upon the giving of any such notice, the right of the Borrower to the Disbursement shall be
suspended or canceled, as the case may be. The exercise by IFC of its right of suspension shall
not preclude IFC from exercising its right of cancellation, either for the same or any other reason
specified in Section 3.13 (a). Upon any cancellation the Borrower shall pay to IFC all fees and
other amounts accrued (whether or not then due and payable) under this Agreement up to the date of
that cancellation. A suspension shall not limit any other provision of this Agreement.



     (c) Any portion of the Loan that is canceled under this Section 3.13 may not be rehorrowed.



     Section 3.14. Cancellation by the Borrower. (a) The Borrower may, by notice to IFC,
irrevocably request IFC to cancel the undisbursed portion of the Loan on the date specified in that
notice (which shall be a date not earlier than thirty (30) days after the date of that notice).



25









 





     (b) IFC shall, by notice to the Borrower, cancel the undisbursed portion of the Loan effective
as of that specified date if IFC has received all fees and other amounts accrued (whether or not
then due and payable) under this Agreement up to such specified date.



     (c) Any portion of the Loan that is canceled under this Section 3.14 may not be reborrowed.



     Section 3.15. Taxes. (a) The Borrower shall pay or cause to be paid all Taxes other
than taxes, if any, payable on the overall income of IFC on or in connection with the payment of
any and all amounts due under this Agreement that are now or in the future levied or imposed by any
Authority of the Country or by any organization of which the Country is a member or any
jurisdiction through or out of which a payment is made.



     (b) All payments of principal, interest, fees and other amounts due under this Agreement shall
be made without deduction for or on account of any Taxes.



     (c) If the Borrower is prevented by operation of law or otherwise from making or causing to be
made those payments without deduction, the principal or (as the case may be) interest, fees or
other amounts due under this Agreement shall be increased to such amount as may be necessary so
that IFC receives the full amount it would have received (taking into account any Taxes payable on
amounts payable by the Borrower under this subsection) had those payments been made without that
deduction.



     (d) If Section 3.15 (c) applies and IFC so requests, the Borrower shall deliver to IFC
official tax receipts evidencing payment (or certified copies of them) within thirty (30) days of
the date of that request.



     (e) Section 3.15 (a) and Section 3.15 (b) do not apply to Taxes which directly result from a
Participant (or, as the case may be, a participant with a comparable participation in the A Loan)
having its principal office in the Country or having or maintaining a permanent office or
establishment in the Country, if and to the extent that such permanent office or establishment
acquires the relevant Participation (or a comparable participation in the A Loan).



     Section 3.16. Expenses. (a) The Borrower shall pay or, as the case may be,
reimburse IFC or its assignees any amount paid by them on account of, all taxes (including stamp
taxes), duties, fees or other charges payable on or in connection with the execution, issue,
delivery, registration or notarization of the Transaction Documents and any other documents related
to this Agreement or any other Transaction Document.



     (b) The Borrower shall pay to IFC or as IFC may direct:




	 	(i)	 	the fees and expenses of IFC’s technical consultants incurred
in connection with the investment by IFC provided for under this Agreement;
	 
	 	(ii)	 	the fees and expenses of IFC’s counsel in the Country, the
United Kingdom and New York incurred in connection with:




26









 












	 	(A)	 	the preparation of the investment by IFC
provided for under this Agreement and any other Transaction Document;
	 
	 	(B)	 	the preparation and/or review, execution and,
where appropriate, translation and registration of the Transaction
Documents and any other documents related to them;
	 
	 	(C)	 	the giving of any legal opinions required by
IFC under this Agreement and any other Transaction Document;
	 
	 	(D)	 	the administration by IFC of the investment
provided for in this Agreement or otherwise in connection with any
amendment, supplement or modification to, or waiver under, any of the
Transaction Documents;
	 
	 	(E)	 	the registration (where appropriate) and the
delivery of the evidences of indebtedness relating to the Loan and its
disbursement; and
	 
	 	(F)	 	the occurrence of any Event of Default or
Potential Event of Default; and






	 	(iii)	 	in 2003 and in each calendar year thereafter upon receipt of a
statement from IFC, the amount of five thousand Dollars ($5.000) on account of
IFC’s expenses in carrying out its annual supervision review of the Borrower
and the Project;
	 
	 	(iv)	 	the costs and expenses incurred by IFC relating to its
syndication efforts and presentation of the Project to potential participants
including, without limitation, the fee for using Intralinks in connection with
the syndication of the Project in the amount of seven thousand Dollars
($7,000); and
	 
	 	(v)	 	the costs and expenses incurred by IFC in relation to efforts
to enforce or protect its rights under any Transaction Document, or the
exercise of its rights or powers consequent upon or arising out of the
occurrence of any Event of Default or Potential Event of Default, including
legal and other professional consultants’ fees.





     Section 3.17. Illegality of Participation. If, after the date of this Agreement, any
change made in any applicable law or regulation or official directive (or its interpretation or
application by any Authority charged with its administration) (herein the “Relevant Change”) makes
it unlawful for any Participant to continue to maintain or to fund its Participation:



     (a) the Borrower shall, upon request by IFC (but subject to any applicable Authorization
having been obtained), on the earlier of (x) the next Interest Payment Date and (y) the date that
IFC advises the Borrower is the latest day permitted by the Relevant Change, prepay in full that
part of the B Loan that IFC advises corresponds to that Participation;



27









 





     (b) concurrently with the prepayment of the part of the B Loan corresponding to the
Participation affected by the Relevant Change, the Borrower shall pay all accrued interest,
Increased Costs (if any) on that part of the B Loan (and, if that prepayment is not made on an
Interest Payment Date, any amount payable in respect of the prepayment under Section 3.12
(Unwinding Costs));



     (c) the Borrower agrees to take all reasonable steps to obtain, as quickly as possible after
receipt of IFC’s request for prepayment, the Authorization referred to in Section 3.17 (a) if any
such Authorization is then required; and



     (d) the Borrower shall have no further right to disbursement of the undishursed portion of the
B Loan corresponding to that Participation after it has received IFC’s request for prepayment under
this Section.



ARTICLE IV




Representations and Warranties




     Section 4.01. Representations and Warranties. The Borrower represents and warrants
that:



     (a) the Borrower is a company duly incorporated and validly existing under the laws of the
Country and has the corporate power — and has obtained all required Authorizations — to own its
assets, conduct its business as presently conducted and to enter into, and comply with its
obligations under, the Transaction Documents to which it is a party or will, in the case of any
Transaction Document not executed as at the date of this Agreement, when that Transaction Document
is executed, have the corporate power to enter into, and comply with its obligations under, that
Transaction Document;



     (b) each Transaction Document to which the Borrower is a party has been, or will be, duly
authorized and executed by the Borrower and constitutes, or will, when executed constitute, a valid
and legally binding obligation of the Borrower, enforceable in accordance with its terms;



     (c) neither the making of any Transaction Document to which the Borrower is a party nor (when
all the Authorizations referred to in Section 5.01(e) (Conditions of the Disbursement) have been
obtained) the compliance with its terms will conflict with or result in a breach of any of the
terms, conditions or provisions of, or constitute a default or require any consent under, any
indenture, mortgage, agreement or other instrument or arrangement to which the Borrower is a party
or by which it is bound, or violate any of the terms or provisions of the Borrower’s Charter or any
Authorization, judgment, decree or order or any statute, rule or regulation applicable to the
Borrower;



     (d) to the best of the Borrower’s knowledge, after due inquiry:




	 	(i)	 	the Authorizations specified in Annex A are all the
Authorizations (other than Authorizations that are of a routine nature and are
obtained in the ordinary course of business) needed by the Borrower to conduct
its business, carry out the Project and execute, and comply with its




28









 






	 	 	 	obligations under, this Agreement and each of the other Transaction
Documents to which it is a party;






	 	(ii)	 	all Authorizations specified in Section (1) of Annex A have
been obtained and are in full force and effect; and
	 
	 	(iii)	 	the Borrower has applied (or is making arrangements to apply)
for all Authorizations specified in Section (2) of Annex A, and has no reason
to believe that it will not obtain those Authorizations in a timely manner;





     (e) the Borrower’s Charter has not been amended since January 14, 2003;



     (f) neither the Borrower nor any of its property enjoys any right of immunity from set-off,
suit or execution with respect to its assets or its obligations under any Transaction Document;



     (g) the financial statements of the Borrower for the period ending on December 31, 2002:




	 	(i)	 	have been prepared in accordance with the Accounting
Principles, and present fairly the financial condition of the Borrower as of
the date as of which they were prepared and the results of the Borrower’s
operations during the period then ended;
	 
	 	(ii)	 	disclose all liabilities (contingent or otherwise) of the
Borrower, and the reserves, if any, for such liabilities and all unrealized or
anticipated liabilities and losses arising from commitments entered into by the
Borrower (whether or not such commitments have been disclosed in such financial
statements);





     (h) since December 31, 2002, the Borrower:




	 	(i)	 	has not suffered any change that has a Material Adverse Effect
or incurred any substantial loss or liability;
	 
	 	(ii)	 	has not undertaken or agreed to undertake any substantial
obligation;





     (i) the Information Memorandum dated February 2003 relating to the Borrower and the Project
was and continues to be true and accurate (other than for projections and other forward-looking
statements contained in that Information Memorandum which the Borrower believes to be reasonable)
and does not contain any information which is misleading in any material respect nor does it omit
any information the omission of which makes the information contained in it misleading m any
material respect;



     (j) the Borrower is not a party to, or committed to enter into, any contract which would or
might affect the judgment of a prospective investor;



29









 





     (k) the Borrower has no outstanding Lien on any of its assets other than Liens arising by
operation of law, and no contracts or arrangements, conditional or unconditional, exist for the
creation by the Borrower of any Lien, except for the IFC Security;



     (l) the Borrower has ownership of the Plant and the real estate over which any part of the
Plant is located (except for land over which it has obtained duly created easements in its favor),
has properly obtained and duly created all necessary easements and has the right to use any
necessary rights of way for the Plant, except that the Borrower acknowledges that the easement
contracts it currently has in place are not satisfactory to IFC and agrees to take the actions set
forth in Section 6.01(m) (Affirmative Covenants);



     (m) all tax returns and reports of the Borrower required by law to be filed have been duly
filed and all Taxes, obligations, fees and other governmental charges upon the Borrower, or its
properties, or its income or assets, which are due and payable or to be withheld, have been paid or
withheld, other than those presently payable without penalty or interest;



     (n) the Borrower is not engaged in nor, to the best of its knowledge, after due inquiry,
threatened by, any litigation, arbitration or administrative proceedings, the outcome of which
could reasonably be expected to have a Material Adverse Effect;



     (o) to the best of its knowledge and belief, after due inquiry, the Borrower is not in
violation of arty statute or regulation of any Authority;



     (p) no judgment or order has been issued which has or may reasonably be expected to have a
Material Adverse Effect;




	 	(q)	 	(i)        to the best of its knowledge and belief, after due inquiry, the Borrower is
not in violation of any of the Environmental, Health and Safety Guidelines or of the
Environmental and Social Policies, and







	 	(ii)	 	the Borrower has not received nor is aware of any complaint,
order, directive, claim, citation or notice from any Authority with respect to
any matter of the Borrower’s compliance with the relevant environmental, health
and safety laws and regulations in effect in the Country such as, without
limitation, air emissions, discharges to surface water or ground water, noise
emissions, solid or liquid waste disposal, or the use, generation, storage,
transportation or disposal of toxic or hazardous substances or wastes;





     (r) neither the Borrower, nor any Affiliates, nor any Person acting on its or their behalf,
has made, with respect to the Project, the Plant or any transaction contemplated by this Agreement,
any Prohibited Payment; and



     (s) none of the representations and warranties in this Section 4.01 omits any matter the
omission of which makes any of such representations and warranties misleading.



     Section 4.02. IFC Reliance. The Borrower acknowledges that it makes the
representations and warranties in Section 4.01 with the intention of inducing IFC to enter into



30









 







this Agreement (and the Participants to enter into the Participation Agreements) and that IFC
enters into this Agreement (and the Participants will enter into the Participation Agreements) on
the basis of, and in full reliance on, each of such representations and warranties.



ARTICLE V




Conditions of Disbursement




     Section 5.01. Conditions of the Disbursement. The obligation of IFC to make the
Disbursement is subject to the fulfillment prior to or concurrently with the making of the
Disbursement of the following conditions:



     (a) the following agreements, each in form and substance satisfactory to IFC, have been
entered into by all parties to them and have become (or, as the case may be, remain) unconditional
and fully effective in accordance with their respective terms (except for this Agreement having
become unconditional and fully effective, if that is a condition of any of those agreements), and
IFC has received a copy of each of those agreements to which it is not a party:




	 	(i)	 	each Transaction Document; and
	 
	 	(ii)	 	each Project Document;





     (b) IFC has entered into Participation Agreements with Participants for the acquisition by
them of Participations in an aggregate amount equal to the full amount of the B Loan and those
Participation Agreements are in full force and effect;



     (c) the Borrower has certified to IFC that no amendment has been made to the Borrower’s
Charter since January 14, 2003, or if any such amendment was made, IFC has received a copy of the
amended Borrower’s Charter and determined, in its reasonable judgment, that it is not inconsistent
with the provisions of any Transaction Document and does not have or may not reasonably be expected
to have a Material Adverse Effect;



     (d) the IFC Security has been duly created and perfected as first ranking security interests
in all assets and rights subject to the Security Documents;



     (e) each of the Borrower, BSL and the Guarantor has obtained, and provided to IFC copies of,
all Authorizations listed in Section (1) and Section (2) of Annex A, and such other Authorizations
not listed in those Sections that may become necessary for:




	 	(i)	 	the Loan;
	 
	 	(ii)	 	the business of the Borrower as it is presently carried on and
is contemplated to be carried on;
	 
	 	(iii)	 	the Project and the implementation of the Financial Plan;
	 
	 	(iv)	 	the due execution, delivery, validity and enforceability of,
and performance by the Borrower, BSL, BIL and the Guarantor of their




31









 






	 	 	 	respective obligations under, this Agreement and the other Transaction
Documents and the Project Documents and any other documents necessary or
desirable to the implementation of any of those agreements or documents; and






	 	(v)	 	the remittance to IFC or its assigns in Dollars of all monies
payable with respect to the Transaction Documents;





     and all those Authorizations are in full force and effect;



     (f) IFC has received a legal opinion (i) from IFC’s counsel in the Country and concurred in by
counsel for the Borrower, (ii) from IFC’s counsel in England and concurred in by English counsel
for the Borrower and (iii) from IFC’s counsel in New York in each case in form and substance
satisfactory to IFC and covering such matters relating to the transactions contemplated by this
Agreement and the other Transaction Documents as IFC may reasonably request;



     (g) IFC has received evidence from the Borrower’s that the Auditor’s have been appointed;



     (h) IFC has received a certification from the Auditors confirming that. as at a date not
earlier than sixty (60) days prior to the date of Disbursement, the Borrower is in compliance with
the provisions of Section 6.01 (c) (Affirmative Covenants) and containing a brief description of
the systems and records in place;



     (i) IFC has received copies of all insurance policies required to be obtained pursuant to
Section 6.04 (Insurance) and Annex B, and a certification of the Borrower’s insurers or insurance
agents confirming that such policies are in full force and effect and all premiums then due and
payable under those policies have been paid;



     (j) IFC has received the fees specified in Section 3.08 (Fees) required to be paid before the
date of the Disbursement;



     (k) if IFC so requires, IFC has received the reimbursement of all invoiced fees and expenses
of IFC’s counsel as provided in Section 3.16 (b) (ii) or confirmation that those fees and expenses
have been paid directly to that counsel;



     (l) IFC has received a copy of the authorization to the Auditors referred to in Section
6.01(e) (Affirmative Covenants);



     (m) IFC has received a Certificate of Incumbency and Authority;



     (n) the Borrower has delivered to IFC (x) evidence, substantially in the form of Schedule 4,
of appointment by Borrower of an agent for service of process pursuant to Section 8.05(d)
(Applicable Law and Jurisdiction) hereof and Section 7.03(d) (Applicable Law and Jurisdiction) of
the Assignment and Security Agreement and (y) evidence substantially in the form of Schedule 2 to
the Guarantee and Share Retention Agreement, of the appointment by



32









 







Guarantor and BSL of an agent for service of process pursuant to Section 6.03(b) (Jurisdiction
and Enforcement) of the Guarantee and Share Retention Agreement;



     (o) IFC has received evidence that the Borrower has designed, constructed and continues to
operate (or to cause BIL to operate), maintain and monitor all of its sites and the Plant in
accordance with the Environmental and Social Policies and the Environmental, Health and Safety
Guidelines;



     (p) IFC has received a statement certified by an Authorized Representative and, in relation to
the relevant portions of (i) below, by authorized representatives of the Guarantor, BIL and BSI,
that:




	 	(i)	 	there has been no final judgment, order or arbitral award
rendered against the Borrower, the Guarantor, BIL or BSL or any of their
respective properties that may have a Material Adverse Effect and that no
litigation is currently pending that may have a Material Adverse Effect;
	 
	 	(ii)	 	the Borrower is in full compliance with the terms and
conditions of the Concession Contract, applicable regulations of IDAAN and any
other applicable regulations issued by a competent Authority and is expected to
continue to be in full compliance therewith; and
	 
	 	(iii)	 	after giving effect to the Disbursement, the Borrower’s
Short-term Debt does not exceed one million Dollars ($1,000,000), and certified
by the Auditor’s should IFC so require;





     (q) no Event of Default and no Potential Event of Default has occurred and is continuing;



     (r) the proceeds of the Disbursement are, at the date of the request, needed by the Borrower
for the purpose of the Project, or will be needed for that purpose within fifteen (15) days of that
date;



     (s) since the date of this Agreement nothing has occurred which has or can reasonably be
expected to have a Material Adverse Effect;



     (t) since the date of this Agreement the Borrower has not incurred any material loss or
liability (except such liabilities as may be incurred in accordance with Section 602 (Negative
Covenants ));



     (u) the representations and warranties made in Article IV are true and correct in all material
respects on and as of the date of the Disbursement with the same effect as if those representations
and warranties had been made on and as of the date of the Disbursement (but in the case of Section
4.01 (c) (Representations and Warranties), without the words in parentheses);



33









 





     (v) the proceeds of the Disbursement are not in reimbursement of, or to be used for,
expenditures in the territories of any country which is not a member of the World Bank or for goods
produced in or services supplied from any such country;



     (w) IFC has received (if it so requires) a legal opinion or opinions in form and substance
satisfactory to IFC, of IFC’s counsel in the Country, and concurred in by counsel for the Borrower,
with respect to any matters relating to the Disbursement;



     (x) after giving effect to the Disbursement, none of the Borrower, BSL, BIL or the Guarantor
would be in violation of:




	 	(i)	 	the Borrower’s Charter (in the case of the Borrower), BSL’s
Charter (in the case of BSL), BIL’s Charter (in the case of BIL) or the
Guarantor’s Charter (in the case of the Guarantor);
	 
	 	(ii)	 	any provision contained in any document to which the Borrower,
BSL, BIL or the Guarantor is a party (including this Agreement) or by which the
Borrower, BSL, BIL or the Guarantor is bound; or
	 
	 	(iii)	 	any law, rule, regulation, Authorization or agreement or other
document binding on the Borrower, BSL, BIL or the Guarantor directly or
indirectly limiting or otherwise restricting the Borrower’s borrowing power or
authority or its ability to borrow or BSL’s ability to pledge shares or BIL’s
ability to perform its obligations under any Transaction Document or Project
Document to which it is a party or the Guarantor’s ability to guarantee the
obligations of the Borrower;






and IFC shall have received certifications from an Authorized Representative and from
authorized representatives of BSL. BIL and the Guarantor evidencing the portions of this
subsection (x) relevant to each such Person;



     (y) (without limiting the generality of Section 5.01 (x)), after taking into account the
amount of the Disbursement and any other Long-term Debt incurred by the Borrower and of any amounts
of Shareholders’ Equity paid into the Borrower after the date of the latest financial statements of
the Borrower due pursuant to Section 6.03 (a) (Reporting Requirements), the Projected Long-term
Debt Service Coverage Ratio would not he less than 1.2; and



     (z) IFC has received a report from an independent surveyor acceptable to IFC, which report
shall be in form and substance satisfactory to IFC, setting forth the independent surveyor’s
findings and recommendations for the cure of any deficiencies discovered in connection with the
independent surveyor’s verification of the property lines of the parcels of land over which the
Plant is located and easements over which any part of the Plant is located, verification that the
assets of the Borrower lie within those property lines and verification that all necessary
easements and rights of way have been properly obtained and duly created by the Borrower, all such
verifications and such report to be performed and prepared objectively for the benefit of IFC as
set forth herein;



34









 





     Section 5.02. Borrower’s Certification. The Borrower shall deliver to IFC with
respect to the request for Disbursement:



     (a) certifications, in the form included in Schedule 2, relating to the conditions specified
in Section 5.01(o), (p)(i), (q) through and including (v), (x) and (y) (Conditions of the
Disbursement) expressed to be effective as of the date of the Disbursement, and in the case of
Section 5.01 (t), also certified by the Auditors if IFC so requires; and



     (b) such evidence as IFC may reasonably request of the proposed utilization of the proceeds of
the Disbursement.



     Section 5.03. B Loan Conditions. Notwithstanding any other provision of this
Agreement, IFC is not obliged to make.



     (a) the B Loan Disbursement, except to the extent that the Participants provide funds for the
B Loan Disbursement under their Participations; and



     (b) any Disbursement except simultaneous disbursements of the entire amounts of the A Loan and
the B Loan.



     Section 5.04. Conditions for IFC Benefit. The conditions in Section 5.01 through
Section 5.03 are for the benefit of IFC and may be waived only by IFC in its sole discretion.



ARTICLE VI




Particular Covenants




     Section 6.01. Affirmative Covenants. Unless IFC otherwise agrees, the Borrower
shall:



     (a) carry out the Project, operate the Plant and conduct its business with due diligence and
efficiency and in accordance with sound engineering, financial, utility and business practices;



     (b) cause the financing specified in the Financial Plan to be applied exclusively to the
Project;



     (c) maintain an accounting and control system, management information system and books of
account and other records, which together adequately reflect truly and fairly the financial
condition of the Borrower and the results of its operations in conformity with the Accounting
Principles;



     (d) maintain at all times a firm of internationally recognized independent public accountants
acceptable to IFC as auditors of the Borrower;



     (e) irrevocably authorize, in the form of Schedule 6, the Auditors (whose fees and expenses
shall be for the account of the Borrower) to communicate directly with IFC at any time regarding
the Borrower’s accounts and operations, and provide to IFC a copy of that



35









 







authorization, and, no later than thirty (30) days after any change in Auditors, issue a
similar authorization to the new Auditors and provide a copy thereof to IFC;



     (f) upon IFC’s request, such request to be made with reasonable prior notice to the Borrower,
except if an Event of Default or Potential Event of Default is continuing or if special
circumstances so require in which cases no such prior notice shall be required, permit
representatives of IFC, during normal office hours, to:




	 	(i)	 	visit the Plant site and any of the premises where the business
of the Borrower is conducted;
	 
	 	(ii)	 	inspect all facilities, equipment and all other components
comprised in the Plant;
	 
	 	(iii)	 	have access to the Borrower’s books of account and records;
and
	 
	 	(iv)	 	have access to those employees and agents of the Borrower who
have or may have knowledge of matters with respect to which IFC seeks
information;





     (g) design, construct, operate, maintain and monitor all of its sites and the Plant;




	 	(i)	 	in accordance with the Environmental and Social Policies and
the Environmental, Health and Safety Guidelines; and
	 
	 	(ii)	 	in compliance with applicable environmental, indigenous
peoples, involuntary resettlement, cultural property protection, occupational
health and safety requirements, and any child labor and forced labor laws,
rules and regulations (including any international treaty obligations, if any)
of the Government of the Country and the local authorities;





     (h) from time to time, execute, acknowledge and deliver or cause to be executed, acknowledged
and delivered such further instruments as may reasonably be requested by IFC for perfecting or
maintaining in full force and effect the IFC Security or for re-registering the IFC Security or
otherwise to enable the Borrower to comply with its obligations under the Transaction Documents;



     (i) at all times act and remain in the full compliance with the Concession Contract,
applicable regulations issued by IDAAN and any other applicable regulations issued by a competent
Authority;



     (j) obtain, renew, maintain in force and comply with, and ensure that each of BSL, BIL and the
Guarantor obtains renews, maintains in force and complies with, all Authorizations which are
necessary for the A Loan, the B Loan, the Borrower’s, BSL’s, BIL’s and the Guarantor’s business and
the compliance by the Borrower, BSL, BIL and the Guarantor with all its respective obligations
under this Agreement and any other Transaction Document or Project Document to which it is a party;



36









 





     (k) maintain a Total Debt to Equity Ratio of not more than 1.2 and a Long-term Debt Service
Coverage Ratio of not less than 1.2;



     (l) within fifteen (15) days of the Disbursement, deliver to IFC a certificate from the chief
financial officer of the Borrower, and certified by the Auditors, evidencing that the proceeds of
the Disbursement were applied to the Project as contemplated by this Agreement;



     (m) within twelve (12) months of the date of this Agreement, deliver to IFC satisfactory
evidence that the Borrower has obtained and duly created all necessary easements and rights of way
for the Plant, including, without limitation, (x) satisfactory evidence that the Borrower has
re-entered into the existent easement contracts in the form of public deeds and otherwise in form
and substance satisfactory to IFC and has taken all such further actions (including the
registration of such public deeds) and executed all such further documents as IFC may at any time
determine necessary to duly create all necessary easements and rights of way for the Plant, which
evidence shall include the delivery to IFC of copies of the public deeds covering the easements as
well any proof of registration thereof and of any other filing or act required by IFC, and (y)
satisfactory evidence that the Borrower has cured all of the deficiencies (if any) set forth in the
independent surveyor’s report to be delivered to IFC pursuant to Section 5.01(z) (Conditions of the
Disbursement);



     Section 6.02. Negative Covenants. Unless IFC otherwise agrees, the Borrower shall
not:



     (a) declare or pay any dividend or make any distribution on its share capital (other than
dividends or distributions payable in shares of the Borrower), or purchase, redeem or otherwise
acquire any shares of the Borrower or any option over them unless the proposed payment or
distribution is out of retained earnings and the Borrower, no earlier than sixty (60) days nor
later than thirty (30) days prior to doing so, certifies to IFC in writing, in the form attached as
Schedule 7, that:




	 	(i)	 	no Event of Default or Potential Event of Default has occurred
and is continuing; and
	 
	 	(ii)	 	after giving effect to any such action:






	 	(A)	 	the Borrower’s aggregate Short-term Debt is
less than one million dollars ($1,000,000);
	 
	 	(B)	 	the Total Debt to Equity Ratio will be less
than 1.2; and
	 
	 	(C)	 	the Projected Long-term Debt Service Coverage
Ratio for the four financial quarters following such distribution would
not be less than 1.2.






provided always that:




	 	(x)	 	the retained earnings out of which any of the
payments or distributions referred to in this sub-section may be made
should in




37









 






	 	 	 	no event include any amount resulting from the revaluation of any of
the Borrower’s assets; and






	 	(y)	 	the Borrower shall not make any payments or
distributions of the type referred to in this sub-section if, after
giving effect to it, the Borrower could not certify the matters
referred to in Section 6.02 (a) (i) and (ii);





     (b) incur expenditures or commitments for expenditures for fixed or other non-current assets,
other than those required for carrying out the Project or necessary for repairs, replacements and
maintenance of satisfactory operating conditions that are essential to the Borrower’s business or
operations, unless those expenditures or commitments are incurred in the Borrower’s business
judgment to maintain compliance with the Concession Contract and/or regulations issued or monitored
by IDAAN, provided, that prior to incurring such expenditures to maintain such compliance, the
Borrower shall consult with IFC about such expenditures;



     (c) incur, assume or permit to exist any Debt except:




	 	(i)	 	the Loan;
	 
	 	(ii)	 	Short-term Debt incurred in the ordinary course of business
which, when aggregated with contingent liabilities arising from the discounting
of trade receivables, would not exceed at any one time outstanding the
equivalent of one million Dollars ($1,000,000); and
	 
	 	(iii)	 	Long-term Debt or Short-term Debt obtained to replace any
existing Long-term Debt or, as the case may be, any Short-term Debt component
of then outstanding Debt, but then only to the extent that such new Debt is on
terms and conditions (as to interest rate, other costs and tenor) at least as
favorable to the Borrower as those of the Debt being replaced;





     (d) enter into any agreement or arrangement to lease any property or equipment of any kind,
except leases with respect to which the aggregate lease payments do not exceed the equivalent of
fifty thousand Dollars ($50,000) in any Financial Year;



     (e) enter into any Derivative Transaction or assume the obligations of any party to any
Derivative Transaction;



     (f) enter into any agreement or arrangement to guarantee or, in any way or under any
condition, assume or become obligated for all or any part of any financial or other obligation of
another Person;



     (g) create or permit to exist any Lien on any property, revenues or other assets, present or
future, of the Borrower, except for:




	 	(i)	 	the IFC Security;
	 
	 	(ii)	 	the naming of IFC as loss payee under the Borrower’s insurance
policies;




38









 












	 	(iii)	 	any Lien arising from any tax, assessment or other
governmental charge or other Lien arising by operation of law, in each case if
the obligation underlying any such Lien is not yet due or, if due, is being
contested in good faith by appropriate proceedings so long as:






	 	(A)	 	those proceedings do not involve any
substantial danger of the sale, forfeiture or loss of any part of the
Plant, title thereto or any interest therein, nor interfere in any
material respect with the use or disposition thereof or the
implementation of the Project or the operation of the Plant or the
carrying on of the business of the Borrower;
	 
	 	(B)	 	the Borrower has set aside adequate reserves
sufficient to promptly pay in full any amounts that the Borrower may be
ordered to pay on final determination of any such proceedings; and
	 
	 	(C)	 	upon any Lien arising from such assessment or
judgement is discharged within thirty (30) days;





     (h) enter into any transaction except in the ordinary course of business on the basis of
arm’s-length arrangements (including, without limitation, transactions whereby the Borrower might
pay more than the ordinary commercial price for any purchase or might receive less than the full
ex-works commercial price (subject to normal trade discounts) for its products);



     (i) establish any sole and exclusive purchasing or sales agency;




     (j) enter into 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;



     (k) enter into any management contract or similar arrangement whereby its business or
operations are managed by any other Person;



     (l) form or have any Subsidiary;



     (m) make or permit to exist loans or advances to, or deposits (except commercial bank deposits
in the ordinary course of business) with, other Persons or investments in any Person or enterprise
other than short-term investment grade marketable securities acquired solely to give temporary
employment to its idle funds;



     (n) change the Borrower’s Charter in any manner which would be inconsistent with the
provisions of any Transaction Document;



     (o) change its Financial Year;



     (p) change the nature or scope of the Project or change the nature of its present or
contemplated business or operations or engage in any business other than (i) the abstraction and



39









 







treatment of water from Lake Gatun, (ii) the supply of potable water to IDAAN, and (iii) such
other activities as contemplated under the Consession Contract;



     (q) sell, transfer, lease or otherwise dispose of all or a substantial part of its assets,
other than inventory, whether in a single transaction or in a series of transactions related or
otherwise. with an aggregate value in any Financial Year of not more than one hundred thousand
Dollars ($100,000);



     (r) undertake or permit any merger, spin-off, consolidation or reorganization without the
prior written consent of IFC which consent shall not be unreasonably withheld;



     (s) terminate, amend or grant any waiver with respect to any provision of the Concession
Contract or any of the agreements listed in Section 5.01 (a) (Conditions of the Disbursement);



     (t) prepay (whether voluntarily or involuntarily) or repurchase any Long-term Debt (other than
the Loan) pursuant to any provision of any agreement or note with respect to that Long-term Debt
unless:




	 	(i)	 	that Long-term Debt is refinanced using new Long-term Debt on
terms and conditions (as to interest rate, other costs and tenor) at least as
favorable to the Borrower as those of the Long-term Debt being refinanced and
such refinancing shall have no adverse impact on the seniority of the Loan or
the IFC Security; or
	 
	 	(ii)	 	the Borrower gives IFC at least thirty (30) days advance notice
of its intention to make the proposed prepayment and, if IFC so requires, the
Borrower contemporaneously prepays a proportion of the Loan equivalent to the
proportion of the part of the Long-term Debt being prepaid, such prepayment to
be made in accordance with the provisions of Section 3.07 (Prepayment) except
that there shall be no minimum amount or advance notice period for that
prepayment;





     (u) use the proceeds of any Disbursement in the territories of any country which is not a
member of the World Bank or for reimbursements of expenditures in those territories or for goods
produced in or services supplied from any such country;



     (v) make (and shall not authorize or permit any Affiliate or any other Person acting on its
behalf to make) with respect to the Project or any transaction contemplated by this Agreement, any
Prohibited Payment. The Borrower further covenants that should IFC notify Borrower of its concerns
that there has been a violation of the provisions of this Section or of Section 4.01(r) of this
Agreement, it shall cooperate in good faith with IFC and its representatives in determining whether
such a violation has occurred, and shall respond promptly and in reasonable detail to any notice
from IFC, and shall furnish documentary support for such response upon IFC’s request; or



40









 





     (w) transfer, assign or otherwise dispose of all or any rights and privileges awarded pursuant
to the Concession Contract or any Authorizations associated therewith except in accordance with the
Security Documents.



     Section 6.03. Reporting Requirements. Unless IFC otherwise agrees, the Borrower
shall:



     (a) as soon as available but in any event within sixty (60) days after the end of each quarter
of each Financial Year, deliver to IFC:




	 	(i)	 	three (3) copies of the Borrower’s complete financial
statements for such quarter prepared in accordance with the Accounting
Principles;
	 
	 	(ii)	 	a report, which shall include the information set forth in
Schedule 8, on the operations of the Plant, including any factors that have or
could reasonably be expected to have a Material Adverse Effect; and
	 
	 	(iii)	 	a statement by the Borrower of all transactions during that
quarter between the Borrower and each of its Affiliates, if any, and a
certification by an Authorized Representative that those transactions were on
the basis of arm’s-length arrangements;





     (b) as soon as available but in any event within one hundred and twenty (120) days after the
end of each Financial Year, deliver to IFC:




	 	(i)	 	three (3) copies of its complete and audited financial
statements for that Financial Year (which are in agreement with its books of
account and prepared, in accordance with the Accounting Principles, together
with the Auditors’ audit report on them, all in form satisfactory to IFC;
	 
	 	(ii)	 	a management letter and such other communication from the
Auditors commenting, with respect to that Financial Year, on, among other
things, the adequacy of the Borrower’s financial control procedures, accounting
systems and management information system;
	 
	 	(iii)	 	a report by the Auditors certifying that, on the basis of its
financial statements, the Borrower was in compliance with the covenants
contained in Section 6.01(k) (Affirmative Covenants) and Section 6.02 (Negative
Covenants) as of the end of that Financial Year or, as the case may be,
detailing any non-compliance;
	 
	 	(iv)	 	a report by the Borrower (A) on its operations during that
Financial Year, in the form of, and addressing the topics listed in, Schedule
9, (B) financial projections for a 12-month period for its income statement,
balance sheet, cash flow and the Total Debt to Equity Ratio, Projected
Long-term Debt Service Coverage Ratio, and Short-term Debt certified by the
Borrower’s chief financial officer and (C) its annual budget; and




41









 












	 	(v)	 	a statement by the Borrower of all transactions between the
Borrower and each of its Affiliates, if any, during that Financial Year, and a
certification by an Authorized Representative that those transactions were on
the basis of arm’s-length arrangements;





     (c) deliver to IFC, within thirty (30) days following receipt; (i) a copy of any management
letter or other communication sent by the Auditors (or any other accountants retained by the
Borrower) to the Borrower or its management in relation to the Borrower’s financial, accounting and
other systems, management or accounts, if not provided pursuant to Section 6.03 (b) (ii); (ii) any
relevant information on the status of the Concession Contract, including the status of any
Authorizations, including, without limitation, governmental decrees or communications from the
regulatory authorities proposing or agreeing changes to the Concession Contract or to any other of
the concessions operated by IDAAN, or reports of any occurrence that may have a material adverse
effect thereto;



     (d) within sixty (60) days after the end of each Financial Year, deliver to IFC an annual
monitoring report in a form acceptable to IFC, confirming compliance with the applicable national
or local requirements, the Environmental and Social Policies, the Environmental, Health and Safety
Guidelines, or, as the case may be, detailing any non-compliance together with the action being
taken to ensure compliance;



     (e) as soon as possible but no later than three (3) days after its occurrence, notify IFC of.




	 	(i)	 	any incident or accident which has or may reasonably be
expected to have an adverse effect on the environment, health or safety,
including, without limitation, explosions, spills or workplace accidents which
result in death, serious or multiple injury or major pollution, specifying, in
each case, the nature of the incident or accident, the on-site and off-site
impacts arising or likely to arise therefrom and the measures the Borrower is
taking or plans to take to address those impacts; and keep IFC informed of the
on-going implementation of those measures;
	 
	 	(ii)	 	any communications received from any Authority in respect of
any non-compliance with the terms and the Concession Contract, impending
termination of the Concession Contract or notification to terminate the
Consession Contract;
	 
	 	(iii)	 	any proposed change in the nature or scope of the Project or
the business or operations of the Borrower and of any event or condition which
has or may reasonably be expected to have a Material Adverse Effect;
	 
	 	(iv)	 	of any litigation or administrative proceedings before any
Authority or arbitral body which has or may reasonably be expected to have a
Material Adverse Effect, notify IFC by facsimile of that event specifying the
nature of that litigation or those proceedings and the steps the Borrower is
taking or proposes to take with respect thereto;










42









 












	 	(v)	 	any fines imposed by IDAAN or any other Authority in the any
Financial Year exceeding in the aggregate five thousand Dollars ($5,000);
	 
	 	(vi)	 	any matters referred to dispute resolution in respect of the
Concession Contract, or any dispute with IDAAN regarding the setting of tariff,
tariff adjustments or payments under the Payment Trust or Guarantee Trust, or
any event adversely affecting the Payment Trust, or any failure to maintain the
Guarantee Trust fully funded; and
	 
	 	(vii)	 	any event of force majeure affecting the performance of the
parties to the Concession Contract;





     (f) give notice to IFC, concurrently with the Borrower’s notification to its shareholders, of
any meeting (whether ordinary or extraordinary) of its shareholders, such notice to include the
agenda of the meeting; and, as soon as available, deliver to IFC two (2) copies of:




	 	(i)	 	all notices, reports and other communications of the Borrower
to its shareholders, whether any such communication has been made on an
individual basis or by way of publication in a newspaper or other communication
medium; and
	 
	 	(ii)	 	the minutes of all shareholders’ meetings;





     (g) promptly upon the occurrence of an Event of Default or Potential Event of Default, notify
IFC by facsimile specifying the nature of that Event of Default or Potential Event of Default and
any steps the Borrower is taking to remedy it;



     (h) provide to IFC, in a timely manner, the insurance certificates and other information
referred to in Section 6.04 (d) (Insurance); and



     (i) promptly provide to IFC such other information as IFC from time to time requests about the
Borrower, its assets, the Plant, the Project or the Guarantor.



     Section 6.04. Insurance.



     (a) Insurance Requirements and Borrower’s Undertakings. Unless IFC otherwise agrees,
the Borrower shall:




	 	(i)	 	insure and keep insured, with financially sound and reputable
insurers, all its assets and business against all insurable losses to include
the insurances specified in Annex B and any insurance required by law;
	 
	 	(ii)	 	punctually pay any premium, commission and any other amounts
necessary for effecting and maintaining in force each insurance policy;
	 
	 	(iii)	 	promptly notify the relevant insurer of any claim by the
Borrower under any policy written by that insurer and diligently pursue that
claim;




43









 












	 	(iv)	 	comply with all warranties under each policy of insurance;
	 
	 	(vi)	 	not do or omit to do, or permit to be done or not done,
anything which might prejudice the Borrower’s, or, where IFC is a loss payee or
an additional named insured, IFC’s right to claim or recover under any
insurance policy; and
	 
	 	(vii)	 	not vary, rescind, terminate, cancel or cause a material change
to any insurance policy;






provided always that if at any time and for any reason any insurance required to be
maintained under this Agreement shall not be in full force and effect, then IFC
shall thereupon or at any time while the same is continuing be entitled (but have no
such obligation) on its own behalf to procure that insurance at the expense of the
Borrower and to take all such steps to minimize hazard as IFC may consider expedient
or necessary.



     (b) Policy Provisions. Each insurance policy required to be obtained pursuant to this
Section shall be on terms and conditions acceptable to IFC, and shall contain provisions to the
effect that:




	 	(i)	 	no policy can expire nor can it be canceled or suspended by the
Borrower or the insurer for any reason (including failure to renew the policy
or to pay the premium or any other amount) unless IFC and, in the case of
expiration or if cancellation or suspension is initiated by the insurer, the
Borrower receive at least forty-five (45) days’ notice (or such lesser period
as IFC may agree with respect to cancellation, suspension or termination in the
event of war and kindred peril) prior to the effective date of termination,
cancellation or suspension;
	 
	 	(ii)	 	IFC and all contractors working at the Plant site are named as
additional named insured on all liability policies;
	 
	 	(iii)	 	where relevant, all its provisions (except those relating to
limits of liability) shall operate as if they were a separate policy covering
each insured party; and
	 
	 	(iv)	 	on every insurance policy on the Borrower’s assets and for
business interruption or delayed start-up, IFC is named as loss payee for any
claim of, or any series of claims arising with respect to the same event whose
aggregate amount is, the equivalent of one hundred thousand Dollars ($100,000)
or more;





     (c) Application of Proceeds.




	 	(i)	 	At its discretion, IFC may remit the proceeds of any insurance
paid to it to the Borrower to repair or replace the relevant damaged assets or
may apply those proceeds towards any amount payable to IFC under this




44









 






	 	 	 	Agreement, including to repay or prepay all or any part of the Loan in
accordance with Section 3.07 (Prepayment); provided that there shall be no
minimum amount or notice period for any such prepayment.






	 	(ii)	 	The Borrower shall use any insurance proceeds it receives
(whether from IFC or directly from the insurers) for loss of or damage to any
asset solely to replace or repair that asset.





     (d) Reporting Requirements. Unless IFC otherwise agrees, the Borrower shall provide
to IFC the following:




	 	(i)	 	as soon as possible after its occurrence, notice of any event
which entitles the Borrower to claim for an aggregate amount exceeding the
equivalent of one hundred thousand Dollars ($100,000) under any one or more
insurance policies;
	 
	 	(ii)	 	within thirty (30) days after any insurance policy is issued to
the Borrower, a copy of that policy incorporating any loss payee provisions
required under Section 6.04 (b) (iv) (unless that policy has already been
provided to IFC pursuant to Section 5.01(i));
	 
	 	(iii)	 	not less than ten (10) days prior to the expiry date of any
insurance policy (or, for insurance with multiple renewal dates, not less than
ten (10) days prior to the expiry date of the policy on the principal asset), a
certificate of renewal from the insurer, insurance broker or agent confirming
the renewal of that policy and the renewal period, the premium, the amounts
insured for each asset or item and any changes in terms or conditions from the
policy’s issue date or last renewal, and confirmation from the insurer that
provisions naming IFC as loss payee or additional named insured, as applicable
remain in effect;
	 
	 	(iv)	 	such evidence of premium payment as IFC may from time to time
request; and
	 
	 	(v)	 	any other information or documents on each insurance policy as
IFC requests from time to time.





ARTICLE VII




Events of Default




     Section 7.01. Acceleration after Default. If any Event of Default occurs and is
continuing (whether it is voluntary or involuntary, or results from operation of law or otherwise),
IFC may, by notice to the Borrower, require the Borrower to repay the Loan or such part of the Loan
as is specified in that notice. On receipt of any such notice, the Borrower shall immediately repay
the Loan (or that part of the Loan specified in that notice) and pay all interest accrued on it and
any other amounts then payable under this Agreement. The Borrower waives any right it



45









 




might have to further notice, presentment, demand or protest with respect to that demand for
immediate payment.




     Section 7.02. Events of Default. It shall be an Event of Default if:



     (a) the Borrower fails to pay when due any part of the principal of, or interest on, the Loan
and such failure continues for a period of five (5) days;



     (b) the Borrower fails to pay when due any part of the principal of, or interest on, any loan
from IFC to the Borrower other than the Loan and any such failure continues for the relevant period
of grace provided for in the agreement providing for that loan;



     (c) the Borrower fails to comply with any of its obligations under this Agreement or any other
Transaction Document or any other agreement between the Borrower and IFC (other than for the
payment of the principal of, or interest on, the Loan or any other loan from IFC to the Borrower),
and any such failure continues for a period of thirty (30) days after the date of that failure:



     (d) any party to a Transaction Document (other than IFC or the Borrower) fails to observe or
perform any of its obligations under that Transaction Document, and any such failure continues for
a period of thirty (30) days after the date or in the case of any payment obligation to IFC arising
thereunder, such payments failure continues for a period of five (5) days after the date of such
payment failure, of that failure;



     (e) any representation or warranty made in Article IV or any other Transaction Document or in
connection with the execution of, or any request (including a request for Disbursement) under, this
Agreement or any other Transaction Document is found to be incorrect in any material respect;



     (f) any Authority condemns, nationalizes, seizes, or otherwise expropriates all or any
substantial part of the property or other assets of the Borrower or of its share capital, or
assumes custody or control of that property or other assets or of the business or operations of the
Borrower or of its share capital, or takes any action for the dissolution or disestablishment of
the Borrower or any action that would prevent the Borrower or its officers from carrying on all or
a substantial part of its business or operations;



     (g) a decree or order by a court is entered against the Borrower, the Guarantor, BIL (for
purposes of (i) below) or BSL:




	 	(i)	 	adjudging the Borrower, the Guarantor, BIL or BSL bankrupt or
insolvent;
	 
	 	(ii)	 	approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of, or with respect to, the Borrower,
the Guarantor, or BSL under any applicable law;
	 
	 	(iii)	 	appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Borrower, the Guarantor or BSL
or of any substantial part of its property or other assets; or





46









 






	 	(iv)	 	ordering the winding up or liquidation of its affairs;




or any petition is filed seeking any of the above and is not dismissed within thirty (30) days;




     (h) the Borrower, the Guarantor, BIL or BSL:




	 	(i)	 	requests a moratorium or suspension of payment of debts from
any court;
	 
	 	(ii)	 	institutes proceedings or takes any form of corporate action to
be liquidated, adjudicated bankrupt or insolvent;
	 
	 	(iii)	 	consents to the institution of bankruptcy or insolvency
proceedings against it;
	 
	 	(iv)	 	files a petition or answer or consent seeking reorganization or
relief under any applicable law, or consents 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, the Guarantor, BIL or
BSL of any substantial part of its property;
	 
	 	(v)	 	makes a general assignment for the benefit of creditors; or
	 
	 	(vi)	 	admits in writing its inability to pay its debts generally as
they become due or otherwise becomes insolvent;





     (i) an attachment or analogous process is levied or enforced upon or issued against any of the
assets of the Borrower, the Guarantor or BSL and is not discharged within thirty (30) days;



     (j) any other event occurs which under any applicable law would have an effect analogous to
any of those events listed in Section 7.02 (g) through and including Section 7.02 (i);



     (k) the Borrower fails to pay any of its Debt (other than the Loan or any other loan from IFC
to the Borrower) or to perform any of its obligations under any agreement pursuant to which there
is outstanding any Debt, and any such failure continues for more than any applicable period of
grace or any such Debt becomes prematurely due and payable or is placed on demand;



     (l) any Authorization necessary for the Borrower to perform and observe its obligations under
any Transaction Document, or to carry out the Project, is not obtained when required or is
rescinded, terminated, lapses or otherwise ceases to be in full force and effect, including with
respect to the remittance to IFC or its assignees, in the Loan Currency, of any amounts payable
under any Transaction Document, and is not restored or reinstated within thirty (30) days of notice
by IFC to the Borrower requiring that restoration or reinstatement;



     (m) any Security Document or any of its provisions:



47









 






	 	(i)	 	is revoked, terminated or ceases to be in full force and effect
or ceases to provide the security intended, without, in each case, the prior
written consent of IFC;
	 
	 	(ii)	 	becomes unlawful or is declared void; or
	 
	 	(iii)	 	is repudiated or its validity or enforceability is challenged
by any Person and any such repudiation or challenge continues for a period of
thirty (30) days during which period such repudiation or challenge has no
effect;





     (n) any Transaction Document (other than a Security Document) or any of its provisions:




	 	(i)	 	is revoked, terminated or ceases to be in full force and effect
without, in each case, the prior written consent of IFC, and that event, if
capable of being remedied, is not remedied to the satisfaction of IFC within
thirty (30) days of IFC’s notice to the Borrower; or
	 
	 	(ii)	 	becomes unlawful or is declared void;





     (o) any Transaction Document (other than a Security Document) is repudiated or the validity or
enforceability of any of its provisions at any time is challenged by any Person and such
repudiation or challenge is not withdrawn within thirty (30) days of IFC’s notice to the Borrower
requiring that withdrawal; provided that no such notice shall be required or, as the case may be,
the notice period shall terminate if and when such repudiation or challenge becomes effective;



     (p) any Project Document




	 	(i)	 	is breached by any party to it and such breach has or could
reasonably be expected to have a Material Adverse Effect; or
	 
	 	(ii)	 	is revoked, terminated or ceases to be in full force and effect
without the prior written consent of IFC, or performance of any of the material
obligations under any such agreement becomes unlawful or any such agreement is
declared to be void or is repudiated or its validity or enforceability at any
time is challenged by any party to it;





     (q) the Borrower fails to be in compliance with the Concession Contract or any Authorization
issued or enforced by IDAAN or any Authority; or



     (r) any representation or warranty made by the Guarantor under the Guarantee and Share
Retention Agreement or by BSL under the Security Documents is found to be incorrect in any material
respect.



     Section 7.03. Bankruptcy. If the Borrower is liquidated or declared bankrupt, the
Loan, all interest accrued on it and any other amounts payable under this Agreement will become



48









 







immediately due and payable without any presentment, demand, protest or notice of any kind,
all of which the Borrower waives.



ARTICLE VIII




Miscellaneous




     Section 8.01. Saving of Rights. (a) The rights and remedies of IFC in relation to
any misrepresentation or breach of warranty on the part of the Borrower shall not be prejudiced by
any investigation by or on behalf of IFC or any of the Participants into the affairs of the
Borrower, by the execution or the performance of this Agreement or by any other act or thing which
may be done by or on behalf of IFC in connection with this Agreement and which might, apart from
this Section, prejudice such rights or remedies.



     (b) No course of dealing or waiver by IFC in connection with any condition of Disbursement of
the Loan under this Agreement shall impair any right, power or remedy of IFC with respect to any
other condition of Disbursement, or be construed to be a waiver thereof.



     (c) Unless otherwise notified to the Borrower by 1FC and without prejudice to the generality
of Section 8.01 (b), the right of IFC to require compliance with any condition under this Agreement
which may be waived by IFC with respect to the Disbursement is expressly preserved.



     (d) No course of dealing and no failure or delay by IFC in exercising, in whole or in part,
any power, remedy, discretion, authority or other right under this Agreement or any other agreement
shall waive or impair, or be construed to be a waiver of or an acquiescence in, such or any other
power, remedy, discretion, authority or right under this Agreement, or in any manner preclude its
additional or future exercise; nor shall the action of IFC with respect to any default, or any
acquiescence by it therein, affect or impair any right, power or remedy of IFC with respect to any
other default.



     Section 8.02. Notices. Any notice, request or other communication to be given or
made under this Agreement shall be in writing. Subject to Section 6.03 (e)(iv) and Section 6.03 (g)
(Reporting Requirements) and Section 8.05 (f), (Applicable Law and Jurisdiction), any such
communication may be delivered by hand, airmail, facsimile or established courier service to the
party’s address specified below or at such other address as such party notifies to the other party
from time to time, and will be effective upon receipt.



     For the Borrower:


Aguas de Panama S.A.

Planta Potabilizadora Laguna Alta

Via Hacia Rio Congo

Nuevo Emperador

Arraijan, Panama

Republic of Panamá



Facsimile: +507 248 9647

Attention: Derek Rubie





49









 








     For IFC:


International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America



Facsimile: 202-974-4318



Attention: Director, Infrastructure Department



With a copy (in the case of communications relating to payments) sent to the
attention of the Senior Manager, Financial Operations Unit, at:



Facsimile: 202-974-4371.




     Section 8.03. English Language. (a) All documents to be provided or communications
to be given or made under this Agreement shall be in the English language.



     (b) To the extent that the original version of any document to be provided, or communication
to be given or made, to IFC under this Agreement or any other Transaction Document is in a language
other than English, that document or communication shall be accompanied by an English translation
certified by an Authorized Representative to be a true and correct translation of the original.
IFC may, if it so requires, obtain an English translation of any document or communication received
in a language other than English at the cost and expense of the Borrower. IFC may deem any such
English translation to be the governing version between the Borrower and IFC.



     Section 8.04. Term of Agreement. This Agreement shall continue in force until all
monies payable under it have been fully paid in accordance with its provisions.



     Section 8.05. Applicable Law and Jurisdiction.



     (a) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, United States of America.



     (b) For the exclusive benefit of IFC, the Borrower irrevocably agrees that any legal action,
suit or proceeding arising out of or relating to this Agreement may be brought in the courts of the
United States of America located in the Southern District of New York or in the courts of the State
of New York located in the Borough of Manhattan. By the execution of this Agreement, the Borrower
irrevocably submits to the jurisdiction of any such court in any such action, suit or proceeding.
Final judgment against the Borrower in any such action, suit or proceeding shall be conclusive and
may be enforced in any other jurisdiction, including the Country, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the judgment, or in any
other manner provided by law.



50









 





     (c) Nothing in this Agreement shall affect the right of IFC to commence legal proceedings or
otherwise sue the Borrower in the Country or any other appropriate jurisdiction, or concurrently in
more than one jurisdiction, or to serve process, pleadings and other legal papers upon the Borrower
in any manner authorized by the laws of any such jurisdiction.



     (d) The Borrower hereby irrevocably designates, appoints and empowers CT Corporation System,
with offices currently located at 111 Eighth Avenue, 13th Floor, New York, New York 10011, as its
authorized agent solely to receive for and on its behalf service of any summons, complaint or other
legal process in any action, suit or proceeding IFC may bring in the State of New York in respect
of this Agreement.



     (e) As long as this Agreement remains in force, the Borrower shall maintain a duly appointed
and authorized agent to receive for and on its behalf service of any summons, complaint or other
legal process in any action, suit or proceeding IFC may bring in New York, New York, United States
of America, with respect to this Agreement. The Borrower shall keep IFC advised of the identity and
location of such agent.



     (f) The Borrower also irrevocably consents, if for any reason its authorized agent for service
of process of summons, complaint and other legal process in any action, suit or proceeding is not
present in New York, New York, to the service of such papers being made out of the courts of the
United States of America located in the Southern District of New York and the courts of the State
of New York located in the Borough of Manhattan by mailing copies of the papers by registered
United States air mail, postage prepaid, to the Borrower, at its address specified pursuant to
Section 8.02 (Notices). In such a case, IFC shall also send by facsimile, or have sent by
facsimile, a copy of the papers to the Borrower.



     (g) Service in the manner provided in Sections 8.05(d), (e) and (f) in any action, suit or
proceeding will be deemed personal service, will be accepted by the Borrower as such and will he
valid and binding upon the Borrower for all purposes of any such action, suit or proceeding.



     (h) The Borrower irrevocably waives to the fullest extent permitted by applicable law.





	 	(i)	 	any objection which it may have now or in the future to the
laying of the venue of any action, suit or proceeding in any court referred to
in this Section;
	 
	 	(ii)	 	any claim that any such action, suit or proceeding has been
brought in an inconvenient forum;
	 
	 	(iii)	 	its right of removal of any matter commenced by IFC in the
courts of the State of New York to any court of the United States of America;
and
	 
	 	(iv)	 	any and all rights to demand a trial by jury in any such
action, suit or proceeding brought against such party by IFC.





     (i) To the extent that the Borrower may be entitled in any jurisdiction to claim for itself or
its assets immunity in respect of its obligations under this Agreement or any other



51









 







Transaction Document from any suit, execution, attachment (whether provisional or final, in
aid of execution, before judgment or otherwise) or other legal process or to the extent that in any
jurisdiction that immunity (whether or not claimed) may be attributed to it or its assets, the
Borrower irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent
permitted now or in the future by the laws of such jurisdiction.



     (j) The Borrower hereby acknowledges that IFC shall be entitled under applicable law,
including the provisions of the International Organizations Immunities Act, to immunity from a
trial by jury in any action, suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby brought against IFC in any court of the United States of America.
The Borrower hereby waives any and all rights to demand a trial by jury in any action, suit or
proceeding arising out of or relating to this Agreement or the transactions contemplated by this
Agreement, brought against IFC in any forum in which IFC is not entitled to immunity from a trial
by jury.



     (k) To the extent that the Borrower may, in any action, suit or proceeding brought in any of
the courts referred to in Section 8.05 (b) or a court of the Country or elsewhere arising out of or
in connection with this Agreement or any other Transaction Document be entitled to the benefit of
any provision of law requiring IFC in such action, suit or proceeding to post security for the
costs of the Borrower, or to post a bond or to take similar action, the Borrower hereby irrevocably
waives such benefit, in each case to the fullest extent now or in the future permitted under the
laws of the Country or, as the case may be, the jurisdiction in which such court is located.



     Section 8.06. Disclosure of Information. (a) IFC may disclose any documents or
records of, or information about, this Agreement or any other Transaction Document, or the assets,
business or affairs of the Borrower to:




	 	(i)	 	its outside counsel, auditors and rating agencies,
	 
	 	(ii)	 	any Person with a participation in or who intends to purchase a
participation in a portion of the Loan; and
	 
	 	(iii)	 	any other Person as IFC may deem appropriate in connection
with any proposed sale, transfer, assignment or other disposition of IFC’s
rights under this Agreement or any Transaction Document or otherwise for the
purpose of exercising any power, remedy, right, authority, or discretion
relevant to this Agreement or any other Transaction Document.





     (b) The Borrower acknowledges and agrees that, notwithstanding the terms of any other
agreement between the Borrower and IFC, a disclosure of information by IFC in the circumstances
contemplated by Section 8.06 (a) does not violate any duty owed to the Borrower under this
Agreement or under any such other agreement.



     Section 8.07. Successors and Assignees. This Agreement binds and benefits the
respective successors and assignees of the parties. However, the Borrower may not assign or
delegate any of its rights or obligations under this Agreement without the prior consent of IFC.



52









 







     Section 8.08. Amendments, Waivers and Consents. Any amendment or waiver of, or any
consent given under, any provision of this Agreement shall be in writing and, in the case of an
amendment, signed by the parties hereto.



     Section 8.09. Counterparts. This Agreement may be executed in several counterparts,
each of which is an original, but all of which together constitute one and the same agreement.



     Section 8.10. Special Authorization. The parties hereby authorize Morgan & Morgan to
protocolize this Agreement into a public deed and to register the same in the public registry of
Panama.



     IN WITNESS WHEREOF, the parties have caused this Agreement to he signed in their respective
names as of the date first above written.


AGUAS DE PANAMA S.A.



By:
/s/ Grahame Sweetsur                                                
            

Name: Grahame Sweetsur



Title : Director



INTERNATIONAL FINANCE CORPORATION



By:
/s/ Usha Rao-Monari                                                         
       

Name: Usha Rao-Monari



Title : Manager




53









 





District of Columbia) ss:



I, Sylvia P. Adricula, have hereto subscribed my name and affixed my Notarial Seal for the
signature of Grahame Sweetsur this 11th day of April, 2003.




			
	 	 	 
	 
	 	/s/ Sylvia P. Adricula
	 
	 	Sylvia P. Adricula
	 
	 	My commission expires July 31, 2003
	 	 	 




District of Columbia) ss:



I, Sylvia P. Adricula, the undersigned Notary Public acknowledge that Usha Rao-Monari, to me known
and known by me to be Manager, Infrastructure Department of International Finance Corporation,
executed the foregoing document in the name and on behalf of International Finance Corporation and
acknowledged the signing thereof to be her voluntary act and deed.




     Washington, D.C. this 11th day of April, 2003.



			
	 	 	 
	 
	 	/s/ Sylvia P. Adricula
	 
	 	Sylvia P. Adricula
	 
	 	My commissions expires July 31, 2003
	 	 	 






54









 









ANNEX A

Page 1 of 2




BORROWER/PROJECT AUTHORIZATIONS



(See Sections 4.01 (d) and 5.01 (e) of the Loan Agreement)



Section (1). Authorizations Already Obtained





	 	(a)	 	Concession Contract (IDAAN)
	 
	 	(b)	 	Raw Water Abstraction Contract (ANAM)
	 
	 	(c)	 	Industrial License No. 1998-2759, dated 29 May 1998, issued by the Ministry of
Commerce
	 
	 	(d)	 	Construction Permit No. 1756-00, dated December 7, 2000, issued by the
Municipality of Arraijan (Water Treatment Plant)
	 
	 	(e)	 	Renovation of Construction Permit issued through Resolution No. 49, dated
February 26, 2002, issued by the Municipality of Chorrera (Intake)
	 
	 	(f)	 	Operating License
	 
	 	(g)	 	Resolution No. IA-152-98, issued by the National Environmental Authority (ANAM)
approving the Environmental Impact Study for the Laguna Alta water treatment plant.




Section (2). Authorizations to be Obtained Prior to Disbursement





	 	(a)	 	Approval by the Board of Directors of IDAAN
	 
	 	(b)	 	Approval by the National Economic Council (Consejo National Económico —CENA)
	 
	 	(c)	 	Approval by the Cabinet Council (Consejo de Gabinete)




 









 












ANNEX A

Page 2 of 2





	 	(d)	 	IDAAN Consent
	 
	 	(e)	 	General Comptroller’s execution of the IDAAN Consent






			
	Section (3).	 	Authorizations to be Obtained no Later than 12 months after the date of this
Agreement






	 	(a)	 	Obtainment of real estate rights (easement, concession, as applicable) over
State owned property over which any improvements/equipment is located (intake,
pipelines, etc.)






 









 








ANNEX B

Page 1 of 1




INSURANCE REQUIREMENTS




(See Section 6.04 (a) of the Loan Agreement)




MINIMUM INSURANCE REQUIREMENTS





	1.	 	ONGOING / OPERATIONAL PHASE






	 	(a)	 	Fire and named perils or All risks, based on replacement cost of assets.
	 
	 	(b)	 	Machinery Breakdown
	 
	 	(c)	 	Business Interruption and / or Extra Expenses
	 
	 	(d)	 	Third Party Liability, including Products Liability, with a minimum loss limit of USD 3
Million






	2.	 	AT ALL TIMES





     All insurances required by focal legislation.




 









 










SCHEDULE 1

Page 1 of 2




FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY




(See Section 1.01 and Section 5.01(m) of the Loan Agreement)




[Borrower’s Letterhead]




International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America




Attention: Director, Infrastructure Department




Ladies and Gentlemen:




Certificate of Incumbency and Authority





     With reference to the Loan Agreement between us, dated [                    ] 2003 (the “Loan
Agreement”), I, the undersigned [Chairman/Director] of [Name of Borrower], (the “Borrower”), duly
authorized to do so, hereby certify that the following are the names, offices and true specimen
signatures of the persons each of whom is, and will continue to be, authorized:



     (a) to sign on behalf of the Borrower the requests for the disbursement of funds provided for
in Section 3.02 of the Loan Agreement;



     (b) to sign the certifications provided for in Section 5.01 and Section 5.02 of the Loan
Agreement; and




 









 









SCHEDULE 1

Page 2 of 2




     (c) to take any other action required or permitted to be taken, done, signed or executed under
the Loan Agreement or any other agreement to which IFC and the Borrower may he parties.



	 	 	 	 	 
	*Name	 	Office	 	Specimen Signature
	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 	 	 	 
	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 	 	 	 
	 
	 	 
	 	 

	 
	 	 
	 	 





     You may assume that any such person continues to be so authorized until you receive authorized
written notice from the Borrower that they, or any of them, are no longer so authorized.


Yours truly,



AGUAS DE PANAMA S.A.



	 	 	 	 	 
	 	 	 
	 	By  	
 	 
	 	 	[Chairman/Director] 	 
	 





 




			
	*	 	Designations may he changed by the Borrower
at any time by issuing a new Certificate of Incumbency and Authority authorized
by the Board of Directors of the Borrower where applicable.








 









 









SCHEDULE 2

Page 1 of 4




FORM OF REQUEST FOR DISBURSEMENT




(See Section 3.02 and Section 5.02 of the Loan Agreement)




[Borrower’s Letterhead]




[Date]




International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America




Attention: Director, Infrastructure Department




Ladies and Gentlemen:




Investment No. 11740



Request for Loan Disbursement



1. Please refer to the Loan Agreement (the “Loan Agreement”) dated [                    ], 2003, between
Aguas de Panama S.A. (the “Borrower”) and International Finance Corporation (“IFC”). Terms defined
in the Loan Agreement have their defined meanings whenever used in this request.



2. The Borrower irrevocably requests the disbursement on                     , (or as soon as
practicable thereafter) of the amount of fifteen million Dollars ($15,000,000) under the Loan (the
“Disbursement”) in accordance with the provisions of Section 3.02 of the Loan Agreement. You are
requested to pay such amount to the account in [New York] of Aguas de Panama, S.A. [Name of
correspondent Bank], Account No.                      at [Name and Address of Bank] [for further credit to the
Borrower’s Account No.                      at [Name and address of Bank] in [city and country].



3. There is enclosed a signed but undated receipt for the amount of the Disbursement. The Borrower
authorizes IFC to date such receipt with the date of actual disbursement by IFC.



4. For the purpose of Section 5.01 and Section 5.02 of the Loan Agreement, the Borrower certifies
as follows:





     (a) no amendment has been made to the Borrower’s Charter since January 14, 2003;



     (b) no Event of Default and no Potential Event of Default has occurred and is continuing;



     (c) the proceeds of the Disbursement are at the date of this request needed by the Borrower
for the purpose of the Project, or will be needed for such purpose within fifteen (15) days of such
date;



 









 






SCHEDULE 2

Page 2 of 4




     (d) since the date of the Loan Agreement nothing has occurred which has or could reasonably be
expected to have a Material Adverse Effect;



     (e) since the date of the Loan Agreement the Borrower has not incurred any material loss or
liability (except such liabilities as may be incurred by the Borrower in accordance with Section
6.02 of the Loan Agreement);



     (f) the representations and warranties made in Article IV of the Loan Agreement are true on
the date of this request and will be true on the date of Disbursement with the same effect as if
such representations and warranties had been made on and as of each such date (but in the case of
Section 4.01(c) of the Loan Agreement, without the words in parenthesis);



     (g) after giving effect to the Disbursement:




	 	(i)	 	the Projected Long-term Debt Service Coverage Ratio will not be
less than 1.2;
	 
	 	(ii)	 	the aggregate Short-term Debt of the Borrower will not exceed
one million Dollars ($1,000,000); and
	 
	 	(iii)	 	the Borrower will be in full compliance with the terms and
conditions of the Concession Contract and all applicable regulations of IDAAN
and is expected to continue to be in full compliance therewith;





     (h) after giving effect to the Disbursement, the Borrower will not be in violation of:




	 	(i)	 	the Borrower’s Charter;
	 
	 	(ii)	 	any provision contained in any document to which the Borrower
is a party (including the Loan Agreement) or by which the Borrower is bound; or
	 
	 	(iii)	 	any law, rule, regulation, Authorization or agreement or other
document binding on the Borrower directly or indirectly, limiting or otherwise
restricting the Borrower’s borrowing power or authority or its ability to
borrow; and





     (i) the proceeds of the Disbursement are not in reimbursement of, or to be used for,
expenditures in the territories of any country which is not a member of the World Bank or for goods
produced in or services supplied from any such country;



     (j) the Borrower has designed, constructed and continues to operate (or to cause BIL to
operate), maintain and monitor all of its sites and the Plant in accordance with the Environmental
and Social Policies and the Environmental, Health and Safety Guidelines; and



     (k) there has been no final judgment, order or arbitral award rendered against the Borrower or
any of its properties that may have a Material Adverse Effect and no litigation is currently
pending that may have a Material Adverse Effect.



 









 






SCHEDULE 2

Page 3 of 4




     The above certifications are effective as of the date of this request for Disbursement and
shall continue to be effective as of the date of the Disbursement. If any of these certifications
is no longer valid as of or prior to the date of the requested Disbursement, the Borrower
undertakes to immediately notify IFC.



 









 





SCHEDULE 2

Page 4 of 4





	 	 	 	 	 
	 	Yours truly,





AGUAS DE PANAMA S.A.

 	 
	 	By  	
 	 
	 	 	Authorized Representative 	 
	 




			
	Copy to:	 	Manager, Financial Operations Unit

International Finance Corporation






 









 








SCHEDULE 3

Page 1 of 1




FORM OF LOAN DISBURSEMENT RECEIPT




(See Section 3.02 of the Loan Agreement)




[Borrower’s Letterhead]




International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America




Attention: Manager, Financial Operations Unit




Ladies and Gentlemen:




Investment No.11740



Disbursement Receipt (Loan)





     We, Aguas de Panama S.A., hereby acknowledge receipt on the date hereof, of the sum of fifteen
million Dollars ($15,000,000) disbursed to us by International Finance Corporation (“IFC”) under
the Loan of fifteen million Dollars ($15,000,000) provided for in the Loan Agreement dated [     ],
2003 between our company and International Finance Corporation. Of this sum, six million Dollars
($6,000,000) is an A Loan Disbursement and nine million Dollars ($9,000,000) is a B Loan
Disbursement.



	 	 	 	 	 
	 	Yours truly,





AGUAS DE PANAMA S.A.

 	 
	 	By  	
 	 
	 	 	Authorized Representative 	 
	 




 









 








SCHEDULE 4

Page 1 of 2




FORM OF SERVICE OF PROCESS LETTER



[Letterhead of Agent for Service of Process]



(See Section 5.01 (n) of the Loan Agreement)




[Date]




International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433




Attention: Director, Infrastructure Department





			
	Re:	 	Panama: Aguas de Panama S.A.

 IFC Investment No. 11740





Dear Sirs:





     Reference is made to (i) Section 8.05(d) of the Loan Agreement dated [                    ], 2003 (the
“Loan Agreement”) between Aguas de Panama S.A. (the “Borrower”) and International Finance
Corporation (“IFC”) and (ii) Section 7.03(d) of the Assignment and Security Agreement dated
[                    ], 2003 (the “Assignment and Security Agreement”) between the Borrower and
IFC.1’ Unless otherwise defined herein, capitalized terms used herein shall have the
meaning specified in the Loan Agreement.



     Pursuant to Section 8.05(d) of the Loan Agreement and Section 7.03(d) of the Assignment and
Security Agreement, the Borrower has irrevocably designated and appointed the undersigned, CT
Corporation System, with offices currently located at 111 Eighth Avenue, 13th Floor, New
York, New York 10011, as its authorized agent to receive for and on its behalf service of process
in any legal action or proceeding with respect to the Loan Agreement and the Assignment and
Security Agreement in the courts of the United States of America for the Southern District of New
York or in the courts if the State of New York located in the Borough of Manhattan.



     The undersigned hereby informs you that it has irrevocably accepted that appointment as
process agent as set forth in Section 8.05(d) of the Loan Agreement and Section 7.03(d) of the
Assignment and Security Agreement from [                    ], 20032 until April 15, 2013 and
agrees with you that the undersigned (i) shall inform IFC promptly in writing of any change of its
address in New York, (ii) shall perform its obligations as such process agent in accordance with
the provisions of Section 8.05(d) of the Loan Agreement and Section 7.03(d) of the Assignment and
Security Agreement and (iii) shall forward promptly to the Borrower any legal process received by
the undersigned in its capacity as process agent.





 




			
	1	 	To be expanded to include any other NY law
governed documents, as necessary.
	 
	2	 	Insert date of the Loan Agreement.




 









 










SCHEDULE 4

Page 2 of 2




     As process agent, the undersigned and its successor or successors agree to discharge the
above-mentioned obligations and will not refuse fulfillment of such obligations as provided under
Section 8.05(d) of the Loan Agreement and Section 7.03(d) of the Assignment and Security Agreement.



	 	 	 	 	 
	 	Very truly yours,





CT Corporation System

 	 
	 	By  	
 	 
	 	 	Title:  	 	 
	 



cc: Aguas de Panama S.A.





 









 








SCHEDULE 5

Page 1 of 1




[INTENTIONALLY OMITTED]





 









 








SCHEDULE 6

Page 1 of 2




FORM OF LETTER TO BORROWER’S AUDITORS




(See Section 5.01(1) and Section 6.01(e) of



the Loan Agreement)




[Borrower’s Letterhead]




[Date]




[NAME OF AUDITORS]

[ADDRESS]




Ladies and Gentlemen:





     We hereby authorize and request you to give to International Finance Corporation of 2121
Pennsylvania Avenue, N.W., Washington, D.C. 20433, United States of America (“IFC”), all such
information as IFC may reasonably request with regard to the financial statements of the
undersigned company, both audited and unaudited. We have agreed to supply that information and
those statements under the terms of a Loan Agreement between the undersigned company and IFC dated
[                    ], 2003 (the “Loan Agreement”). For your information we enclose a copy of the Loan
Agreement.



     We authorize and request you to send three copies of the audited accounts of the undersigned
company to IFC to enable us to satisfy our obligation to IFC under Section 6.03 (b) (i) of the Loan
Agreement. When submitting the same to IFC, please also send, at the same time, a copy of your full
report on such accounts in a form reasonably acceptable to IFC.



     Please note that under Section 6.03 (b) (ii) and (iii) and Section 6.03 (c) of the Loan
Agreement, we are obliged to provide IFC with:



     (a) a copy of the annual and any other management letter or other communication from you to
the undersigned company or its management commenting on, among other things, the adequacy of the
undersigned company’s financial control procedures and accounting and management information
system; and



     (b) a report by you certifying that, based upon its audited financial statements, the
undersigned company was in compliance with the financial covenants contained in Section 6.01(k) and
Section 6.02 of the Loan Agreement as at the end of the relevant Financial Year or, as the case may
be, detailing any non-compliance.



     Please also submit each such communication and report to IFC with the audited accounts.



 









 




SCHEDULE 6

Page 2 of 2



     For our records, please ensure that you send to us a copy of every letter which you receive
from IFC immediately upon receipt and a copy of each reply made by you immediately upon the issue
of that reply.





	 	 	 	 	 
	 	Yours truly,





AGUAS DE PANAMA S.A.

 	 
	 	By  	
 	 
	 	 	Authorized Representative 	 
	 





Enclosure





			
	cc:	 	Director

Infrastructure Department

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America






 









 








SCHEDULE 7

Page 1 of 2




FORM OF BORROWER’S CERTIFICATION ON DISTRIBUTION OF



DIVIDENDS



(See Section 6.02 (a) of the Loan Agreement)




[Borrower’s Letterhead]




[Date]




International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

Attention: Director, Infrastructure Department





			
	Re:	 	Panama : Aguas de Panama S.A.

IFC Investment #11740





Dear Sirs:



1. Please refer to the Loan Agreement (the “Loan Agreement”) dated [                                        ], 2003 between
Aguas de Panama S.A. (the “Borrower”) and International Finance Corporation (“IFC”). Terms defined
in the Loan Agreement have their defined meanings whenever used in this request.



2. This is to inform you that the Borrower plans a distribution of dividends to its shareholders in
the aggregate amount of (                    ), such distribution to commence on or about                     . Pursuant
to Section 6.02(a) of the Loan Agreement, the Borrower hereby certifies that, as at the date
hereof:





	 	(a)	 	the proposed distribution will be entirely out of retained earnings and such
retained earnings do not include any amount resulting from the revaluation of any of
the Borrower’s assets;
	 
	 	(b)	 	no Event of Default or Potential Event of Default has occurred and is
continuing;
	 
	 	(c)	 	after giving effect to the proposed distribution:






	 	(i)	 	the aggregate Short-term Debt of the Borrower is less than one
million Dollars ($1,000,000)
	 
	 	(ii)	 	the Total Debt to Equity Ratio would he less than 1.2; and
	 
	 	(iii)	 	the Projected Long-term Debt Service Coverage Ratio for the
four financial quarters following such distribution would not be less than 1.2;




 









 











SCHEDULE 7

Page 2 of 2



3. The Borrower undertakes not give effect to the proposed distribution or any part thereof if, at
the time of so doing or after giving effect to it, the Borrower could not certify the matters
referred to in section 2 of this certification.




	 	 	 	 	 
	 	Yours truly,





AGUAS DE PANAMA S.A.

 	 
	 	By  	
 	 
	 	 	Authorized Representative 	 
	 




 









 











SCHEDULE 8

Page 1 of 1




INFORMATION TO BE INCLUDED IN QUARTERLY PROGRESS REPORT



RE: OPERATION OF THE PLANT



(See Section 6.03 (a) (ii) of the Loan Agreement)




For the Borrower:





	1.	 	Operating Statistics,






	 	a.	 	MGD produced during the period under review
	 
	 	b.	 	MGD sold during the period under review
	 
	 	c.	 	Tariffs charged to IDAAN during the period under review
	 
	 	d.	 	Discussion of any proposed or expected changes in tariffs charged to IDAAN
	 
	 	e.	 	Discussion of any major factors affecting operations during the period under
review






	2.	 	Financial Performance.






	 	a.	 	Discussion of major factors affecting the quarter’s financial results,
operating and financial expenses, profit margins, capacity utilization, capital
expenditures, etc.
	 
	 	b.	 	Key financial ratios for the quarter






	3.	 	Shareholdings. Information on significant changes in share ownership of Borrower,
the reasons for such changes, and the identity of major new shareholders





For the Guarantor:





	a.	 	Financial Performance.






	 	a.	 	Discussion of major factors affecting the quarter’s financial results,
operating and financial expenses, profit margins, acquisition program, investments,
etc.
	 
	 	b.	 	Key financial ratios for the quarter






	b.	 	Shareholdings. Information on significant changes in share ownership of the
Guarantor [or its subsidiaries or downstream affiliates], the reasons for such changes, and
the identity of major new shareholders





General:





	 	1.	 	Report (if such information is available) on any material changes in local
conditions, including government policy changes, that directly affect the Borrower or
the Guarantor [or any of the Borrower’s subsidiaries or downstream Affiliates] (e.g.
changes in government economic strategy, IDAAN’s investment program, taxation, foreign
exchange convertibility, price controls, and other areas of regulations)
	 
	 	2.	 	Corporate Strategy. Description of any changes to the corporate or
operational strategy of the Borrower or the Guarantor.






 









 










SCHEDULE 9

Page 1 of 2




INFORMATION TO BE INCLUDED IN ANNUAL REVIEW OF



OPERATIONS




See Section 6.03 (b) (iv) of the Loan Agreement)





	(1)	 	Sponsors and Shareholdings. Information on significant changes in share ownership of
Borrower, the reasons for such changes, and the identity of major new shareholders.
	 
	(2)	 	Country Conditions and Government Policy. Report on any material changes in local
conditions, including government policy changes, that directly affect the Borrower (e.g.
changes in government economic strategy, taxation, foreign exchange availability, price
controls, and other areas of regulations).
	 
	(3)	 	Management and Technology. Information on significant changes in (i) the Borrower’s
senior management or organizational structure, and (ii) technology used by the Borrower,
including technical assistance arrangements.
	 
	(4)	 	Corporate Strategy. Description of any changes to the Borrower’s corporate or
operational strategy, including changes in products, degree of integration, and business
emphasis.
	 
	(5)	 	Markets. Brief analysis of changes in Borrower’s market conditions (both domestic
and export), with emphasis on changes in market share and degree of competition.






 









 







SCHEDULE 9

Page 2 of 2





	 
	(6)	 	Operating Performance. Discussion of major factors affecting the year’s financial
results (sales by value and volume, operating and financial costs, profit margins, capacity
utilization, capital expenditure, etc.).
	 
	(7)	 	Financial Condition. Key financial ratios for previous year, compared with ratios
covenanted in the Loan Agreement.