Any Covered Property which has suffered Damage due in whole
or in part to the failure of the Investor or the Foreign Enterprise to take all
reasonable measures to protect and preserve such Covered Property shall
be excluded from the computations provided in section 25.01.

Under this provision, if the Investors or the Foreign Enterprise had failed to take
any action reasonably available to it to prevent the Damage from occurring, OPIC would
not compensate for such Damage. However, OPIC is satisfied that there were no such
measures available to SORWATHE or to the Investor. SORWATHE has requested the
return of the car, but this has not occurred and will probably not occur, since political
violence is ongoing and there does not seem to be any proper judicial system.

B. Section 24.01. That total compensation paid is 9,878.57

Section 24.01 of the Contracts provides that the amount of compensation is the
lesser of the Net Investment as of the Date of Damage, or the Investor's Share of the
amount of Damage, less any Other Compensation received by the Investor for the same
Damage, and the Investor's share of any Other Compensation received by the Foreign
Enterprise for the same Damage.

The Contracts further limit the amount of Damage to: (1) the Current Insured
Amounts for Coverage C in effect on the first day of the Contract Period during which the
Date of the Damage occurred; and (2) the maximum liability of OPIC under Article 5 of
the Contracts. Article 5 states that OPIC's maximum liability shall not exceed the
Maximum Insured Amount specified in the Special Terms and Conditions in effect with
respect to equity securities.

1. Section 25.01. That the amount of Damage to Covered Property is
$20,276.26

The amount of Damage to an item of Covered Property is defined under Section
25.01 of the Contracts as:

(T)he Actual Cash Value, immediately prior to the Date of Damage, of the
Covered Property which has suffered Damage, but not exceeding the lesser of (i)
the reasonable cost of repairing or replacing such Covered Property with property
of like kind and quality within a reasonable time after such Damage, or (ii) the
amount by which the Damage reduced the fair market value in the Project
Country on the Date of Damage of such Covered Property.

The term Actual Cash Value is defined under Section 1.02 of the Contracts as
follows:


Tea Importers and C & W Trading represented upon the execution of the
Contracts and have certified that they were organized as and remain corporations
organized under the laws of the state of Connecticut and that they are more than 50
percent owned by U.S. Citizens (Tab 12).

7. Section 23.02. That Tea Importers and C & W Trading will assign to OPIC
any claims, causes of action or rights which they may have for compensation from
any other source based on the Damage.

Prior to payment of the claim, Tea Importers and C & W Trading will assign,
transfer and convey to OPIC any claims, causes of action or rights which they have for
compensation from any other source based on the Damage. They will execute all
documents and take any necessary actions to complete such assignments, transfers and
conveyances (Tab 13 & 14).

V. CONCLUSION
Based on the foregoing determinations and subject to the execution of the
Certificate, Assignment, and Receipt and Release prior to the claim payment, we find that

the political violence claim of Tea Importers and C & W Trading is valid and that OPIC
is liable for $9,878.57.

OVERSEAS P omens CORPORATION
By Ut, 7 cA

Ruth R. Harkin
President and Chief Executive Officer

Date 1/24 %


the right to citizenship for Rwandan refugees living stateless outside Rwandan borders
and denied entry into the country by the Rwandan government. The Rwandan
government accused the RPF of attempting to reinstall a Tutsi monarchy in place of what
it claimed was a legitimate political regime. After Hutus killed several hundred thousand
Tutsis, the Tutsi-led RPF managed to seize control of the government. Millions of Hutus
then fled to refugee camps along the Zaire-Rwanda border, some protected by French
peacekeeping forces. Political violence continued at the time of the Loss, if not at the
level of active civil war, then at the level of civil strife in the form of reprisals for earlier
acts of violence and intimidation of Hutus by Tutsis. There is a Hutu government in
exile, and the camps are dominated by soldiers and militia of the former government, who
posed a constant threat of invasion.

2. Political violence was the cause of the Loss.

Section 1.07 of the Contract provides that:

Anact shall be considered the direct cause of a Loss if there is an unbroken chain
of causes and effects from the act to the Loss, without the intervention of any
force operating actively from an independent source, and the Loss would not have
occurred but for the event.

OPIC finds that direct causation is established. As discussed above, the fighting
between the RPF and government forces constitutes at least civil strife. The Rwandan
government did not requisition SORWATHE’s car independently of the civil strife.
According to the Investor, the manager heard that he was going to be accused of
participating in the ethnic killing. Like others threatened with arrest in the prevailing
conditions, he had little prospect of a fair trial or humane pretrial detention and fled the
country. The Rwandan authorities confiscated the vehicle because it had been used to
enable a person accused of a political violence - related act to escape the country. Clearly
the Loss would not have occurred but for the conditions of political violence that existed.

3. The property lost constituted Covered Property under the Contracts,
and none of the Exclusions apply.

"Covered Property" is defined in Section 1.05 as tangible property owned by the
Foreign Enterprise or of which the Foreign Enterprise bears the risk of loss and which is
used in connection with the Project and located in the Project Country on the Date of
Damage. The vehicle in question clearly constituted Covered Property. It was owned by
SORWATHE, located in Rwanda, and used in connection with the Project. Furthermore,
the car is not excluded from the definition of “Covered Property” as it was not “bullion,
documents or the tangible evidence of other property (tangible, intangible or real), e.g.
accounts, bills, currency, debentures, deeds, manuscripts, money or securities.” Neither
may the car be excluded under section 25.04, which provides:


Under Coverage C, the term "Actual Cash Value" for any item of Covered
Property owned by the Foreign Enterprise means on any date the reasonable cost
thereof to the Foreign Enterprise (adjusted if necessary to reflect abnormal
deterioration in the physical condition of such item). For the purpose of this
Section, "reasonable cost" means the basic cost of any item (not to exceed fair
market value in the United States of America at the time of the acquisition) plus
freight, insurance, import duties, cost of installation and such other direct costs
related to such item as have been, in accordance with the principles of accounting
referred to in Article 9, capitalized and charged to such item on the books of
account of the Foreign Enterprise.

For the purposes of these Contracts, the Actual Cash Value of the vehicle may be
treated as its original cost. The car was purchased in 1987 for 1,600,000 Rwanda Francs.4
An exact date of purchase was unavailable, however an average of the quarterly exchange
rates of the Rwandan franc in 1987 was 78.91 Rwanda franc to the U.S. dollar (Tab 9).
This makes the Actual Cash Value of the car approximately $20,276.26.

2. That the Investors’ Share of the amount of Damage is $9,878.57

The Contracts contain a complex formula for the calculation of the Investor's
Share according to the investor's equity and debt interests in the Foreign Enterprise. In
the Winter 1984 issue of Topics, OPIC notified insured investors that at the time of
making a claim, each investor could choose to calculate Investor's Share either as
specified in its contract or alternatively according to a formula based strictly on the extent
of an investor's equity investment (Tab 10). The formula based solely on equity (the
"Equity Formula") is more favorable to the Investor than the formula in the Contracts.

Under the Equity Formula, Investor's Share on the Date of Damage is calculated
as a fraction:

(a) the numerator of which shall be the book value of the equity shares of the
Foreign Enterprise owned by the Investor and (b) the denominator of which shall
be the book value of the total stockholders’ equity in the Foreign Enterprise.

C & W Trading owns equity securities representing 7.7% of the insured
investment in the Foreign Enterprise. Since the total amount of Damage equals
$20,276.26, C & W Trading’s share of the amount of Damage is $1,561.25. Tea
Importers owns equity securities totalling 41.02% of the insured Investment in the
Foreign Enterprise. Thus, its share of the amount of Damage is $8,317.32. Adding
together Tea Importers’ share of the amount of Damage and C & W Trading’s share of

4 See Letter from J.H. Wertheim, May 3, 1996 (Tab 4).


MEMORANDUM OF DETERMINATIONS

Political Violence Claim of Tea Importers, Inc. and C & W Trading Company, Inc.,
Rwanda - Contracts of Ins. Nos. 9890, 9891 and 9969 (together, the "Contracts")

I. CLAIM

By letters dated March 20 and May 3, 1996 (Tab 4), Tea Importers, Inc. ("Tea
Importers") filed a political violence claim with OPIC under the Contracts. The claim is
based upon Damage! to tangible property owned by Societe Rwandaise pour la
Production et la Commercialisation du The ("SORWATHE"). OPIC finds that Tea
Importers and C & W Trading Company, Inc. ("C & W") should be compensated for the
losses detailed below according to their insurance under the Contracts in the amount of
$8,317.32 and $1,561.25, respectively, a total of $9,878.57.

Il. FACTUAL BACKGROUND

The hostilities in Rwanda began with the October 1, 1990 invasion by the
Rwandan Patriotic Front (“RPF”)? from neighboring Uganda, which led to a prior claim
by Tea Importers for compensation by OPIC that was paid in the amount of $6,169.41 on
May 8, 1991. A second claim in the amount of $53,965.56 was paid after the crisis flared
up again in early 1993.

By March 1994, the situation in Rwanda had deteriorated into full-scale civil war,
with troops from the elite Presidential Guard battling Tutsi guerrillas in the streets of the
captial, Kigali. There were also reports of armed units assassinating government
officials, Catholic clerics, and Rwandan employees of foreign aid agencies. Americans
living in Rwanda were evacuated.

The crisis in Rwanda soon exploded into a tragedy of historic proportions. Nearly
one million Rwandans were massacred in what has been termed a genocide, and more
than two million are living in refugee camps.

Following the civil war, reprisals and revenge killings took place in villages and
prisons, and the judicial system failed to stop these bloody outbreaks. Refugees were
arrested on the basis of accusations, without arrest warrants or proper investigations.

1 All terms capitalized, unless for grammatical reasons, and not otherwise defined herein are used as
defined in the Contracts.

2 The RPF is led by ethnic Tutsis, who, along with the Hutus, comprise the two major ethnic groups in
Rwanda. The RPF is opposed to Hutu rule, established when the Tutsi monarchy was overthrown in
1959. For more information on the ongoing crisis, see the Memorandum of Determinations regarding
Tea Importers’ previous claim under the same policies, dated April 30, 1991.

3 See news articles (Tab 8).


the amount of Damage, the total Investors’ Share of the amount of Damage equals
$9,878.57.

3. Section 1.24. That the compensation determined to be due does not exceed the
Net Investment.

Tea Importers submitted a financial statement reflecting the financial condition of
SORWATHE as of December 31, 1995 (Tab 11). The statement is not prepared in
accordance with principles of accounting generally accepted in the United States of
America, as prescribed in Section 9.01 of the Contracts. However, since financial
statements are required only for the purpose of determining Net Investment, a cap on
compensation, and not compensation itself, this requirement can be waived without
prejudice to OPIC, given the apparent margin by which Net Investment exceeds the
amount of compensation otherwise due.

According to the financial statement, SORWATHE then had net assets of RF
1,260,083,057. From this, OPIC subtracted total liabilities of RF 87,018,883. The
difference is RF 1,173,064,174. Using the exchange rate of RF 218.42 per Dollar,the net
book value of the Foreign Enterprise is $5,370,681.13. The Net Investment (the share
owned by the Investors and attributable to their insured Investments) is $2,380,554.41
(90% x 49.25% x $5,370,681.13). This Net Investment far exceeds the amount of the claim
(Tab 9).

4. Section 1.06. That the compensation determined to
be due does not exceed the total Current Insured Amount for Political Violence

be due does not exceed the total Uurrent insure? 4 —_—_———

Coverage under the Contracts.

OPIC records confirm that in May and June 1995, the period including the Date of
Damage, the total Current Insured Amount in effect under the Contracts for Political
Violence Coverage was $1,131,046. Thus, the compensation determined to be due does
not exceed the Current Insured Amount.

5. Section 23.01. That Tea Importers promptly notified OPIC of the Damage.

The Contracts require that the Investor give prompt notice of any action which it has
reason to believe may cause or has caused Damage. Tea Importers notified OPIC by
letter on March 20, 1996. OPIC finds this notification sufficient, as the delay from the
Date of Damage did not prejudice OPIC in its processing of the claim.

6. Sections 2.01 and 2.05. That Tea Importers and C & W Trading were on the

dates of execution of the Contracts and have remained corporations created under
the laws of a state of the U.S. and substantially beneficially owned by U.S.

citizens.


People were thrown into prisons on suspicion of participation in the genocide, and many
died either in overcrowded jails or in revenge attacks.

Sometime between May and June 1995, the Assistant General Manager of
SORWATHE fled the country because the government was threatening to arrest him. He
fled to Uganda in the company car, a 1987 Peugot 505. When the employee arrived in
Kampala, he called SORWATHE to have someone pick up the car and bring it back to
Rwanda. When the car was retuned to Rwanda, it was confiscated by the Ministry of
Defense of Rwanda. Tea Importers filed a claim with OPIC on March 20, 1996.

III. THE CONTRACTS

There are two insured investors under the three Contracts, all of which are
- standard form 234 KGT 12-70 (Rev) contracts. Tea Importers is the insured Investor
under Contract No. 9969 (Tab 5) and Contract No. 9890 (Tab 6). C & W is the insured
Investor under Contract No. 9891 (Tab 7). Although Tea Importers and C & W are
separate businesses, both are owned by members of the Wertheim family. For the
purposes of this memorandum, OPIC will treat the claim as having been filed on behalf
of both Investors since both companies are beneficially owned by the same persons.

A. Contract of Insurance No. 9969

Investor Tea Importers entered into Contract No. 9969 in April, 1981 for the
purpose of insuring the original Investment that was made in order to construct the tea
processing facility and establish the tea plantation. It consolidates and supersedes two
previous contracts (8920R and 8921 W, which were executed in 1976). The insured
Investment, 90% of the Investor's investment, consists of up to $239,400, of which
$63,000 is in the form of subordinated debt and $176,400 is in the form of equity,
representing up to 15,481 shares (a 21.22% interest in SORWATHE).

The Contract was amended in 1983 to include coverage against civil strife. In
1984 it was amended again to increase the Maximum and Current Insured Amounts.

B. Contract of Insurance No. 9890

The original Investor under Contract No. 9890 was O.H. Clapp & Co., which was
merged into Tea Importers in 1986. This Contract was entered into in September 1980 to
insure an investment in the expansion of the Rwanda tea processing facility. The insured
Investment under this Contract is up to $170,460, representing 90% of the total
investment under the Contract, all of which is in the form of equity. As a result of the
Investment, the Investor acquired 15,683 shares of stock in SORWATHE, representing a
19.8% equity interest.


The Contract was amended in 1983 to include coverage against civil strife. In
1984 it was amended again to increase the Maximum and Current Insured Amounts.

C. Contract of Insurance No. 9891

Contract No. 9891 (issued in September 1980) insures an investment made by C
& W for the purpose of expanding the existing tea processing facility in Rwanda. The
insured Investment consists of up to $66,000, amounting to 90% of C & W's total equity
investment under the Contract. As a result of the Investment, C & W acquired 6,112
shares of stock, representing a 7.7% equity interest in SORWATHE.

The Contract was amended in 1983 to include coverage against civil strife. In
1984 it was amended again to increase the Maximum and Current Insured Amounts.

IV. DETERMINATIONS UNDER THE CONTRACTS
OPIC hereby makes the following determinations:
A. Section 1.07. That Damage has occurred.
The Contracts, as amended, define "Damage" as:

(a) injury to, (b) disappearance of, or (c) seizure and retention of Covered
Property (any of which events, for the purposes of this Section, shall be referred to
as a "Loss") directly caused by an act of (1) war (whether or not formally
declared), (2) revolution or insurrection, or (3) civil strife, terrorism or sabotage.
An act of revolution or insurrection is an act committed by an organized group
having as its principal objective either the violent overthrow of the established
political authorities or the ouster of such authorities from a specific geographic
area. An act of civil strife, terrorism or sabotage is a violent act undertaken by an
individual or group with the primary intent of achieving a political objective.

The issues raised by this provision of the Contracts are: (1) whether the acts
causing the injury were acts of war, revolution, insurrection, civil strife, terrorism or
sabotage; (2) whether such injury was directly caused by such action; and (3) whether the
injury was to Covered Property.

1. The events leading to the Loss constitute at least civil strife as defined
in the Contracts.

Based on published accounts of the conditions in Rwanda during May
through June 1995 when SORWATHE’s car was taken by the government, OPIC
determines that the conditions of unrest that existed constituted at least civil strife within
the meaning of the Contracts. The RPF initially stated that their primary objective was