EXHIBIT NO. 10.152


                                              EXECUTION COPY






                   SHAREHOLDERS AGREEMENT



                        by and among


                     PANDA BHOTE KOSHI,
             a Cayman Islands exempted company,



                       PANDA OF NEPAL,
              a Cayman Islands exempted company



                             and



                 PANDA GLOBAL ENERGY COMPANY



                             and



                    MCNIC NEPAL LIMITED,
          as the Shareholders of Panda Bhote Koshi,



                         dated as of



                      December 18, 1997
                      TABLE OF CONTENTS
                                                        Page

ARTICLE I DEFINITIONS                                      2

     SECTION 1.01  DEFINITIONS                            2
     SECTION 1.02  ADDITIONAL DEFINED TERMS              15

ARTICLE II ORGANIZATION, CAPITALIZATION AND
           CERTAIN FINANCIAL OBLIGATIONS                 16

     SECTION 2.01  ORGANIZATIONAL DOCUMENTS
                   AND FILINGS                           16
     SECTION 2.02  PARTIES AND SHAREHOLDERS              16
     SECTION 2.03  INCONSISTENCIES BETWEEN THIS
                   AGREEMENT AND THE COMPANY
                   ORGANIZATIONAL DOCUMENTS
                   OR THE PON ORGANIZATIONAL
                   DOCUMENTS                             17
     SECTION 2.04  PERFORMANCE BY THE COMPANY
                   AND PANDA OF NEPAL                    18
     SECTION 2.05  PRINCIPAL PLACE OF BUSINESS           18
     SECTION 2.06  OTHER ACTIVITIES OF THE SHAREHOLDERS  19
     SECTION 2.07  CAPITAL CONTRIBUTIONS BY
                   THE CLASS A SHAREHOLDER               19
     SECTION 2.08  CAPITAL CONTRIBUTION BY
                   CLASS B SHAREHOLDER                   20
     SECTION 2.09  MANNER OF MAKING CAPITAL
                   CONTRIBUTION FOR CLASS B
                   SHAREHOLDERS                          20
     SECTION 2.10  ADDITIONAL FINANCIAL OBLIGATIONS
                   OF CLASS B SHAREHOLDER                21
     SECTION 2.11  ADDITIONAL FINANCIAL OBLIGATIONS
                   OF CLASS A SHAREHOLDER                25
     SECTION 2.12  GUARANTEES                            28
     SECTION 2.13  RIGHTS OF LENDERS                     29

ARTICLE III DISTRIBUTIONS, MANAGEMENT
            AND ADMINISTRATION                           29

     SECTION 3.01  BOARD OF DIRECTORS; ELECTION; TERM    29
     SECTION 3.02  OFFICERS OF THE COMPANY               33
     SECTION 3.03  BOARD OF DIRECTORS OF PANDA
                   OF NEPAL; ELECTION; TERM              35
     SECTION 3.04  OFFICERS OF PANDA OF NEPAL            41
     SECTION 3.05  DIRECTORS OF BKPC                     43
     SECTION 3.06  MEETINGS OF BOARDS OF DIRECTORS       45
     SECTION 3.07  CONTRACTS FOR SERVICES WITH
                   AFFILIATES                            45
     SECTION 3.08  DISTRIBUTABLE CASH FLOW               46
     SECTION 3.09  DISTRIBUTABLE PERCENTAGES;
                   DISTRIBUTIONS                         46
     SECTION 3.10  ACCOUNTING, RECORDKEEPING
                   AND REPORTING                         47
     SECTION 3.11  MEETINGS OF SHAREHOLDERS
                   AND VOTING REQUIREMENTS               52

ARTICLE IV PROFITS, LOSSES AND TAX MATTERS               54

     SECTION 4.01  SHARING OF PROFITS AND LOSSES         54
     SECTION 4.02  COMPLIANCE WITH U.S. INTERNAL
                   REVENUE CODE                          54
     SECTION 4.03  TAX MATTERS PARTNER                   55
     SECTION 4.04  DISSOLUTION AND LIQUIDATION           57

ARTICLE V TRANSFER AND ASSIGNMENT                        58

     SECTION 5.01  RESTRICTIONS ON TRANSFER              58
     SECTION 5.02  RIGHT OF FIRST NEGOTIATION
                   REGARDING DISPOSAL OF SHARES          62
     SECTION 5.03  LIABILITY OF TRANSFEROR               65
     SECTION 5.04  EXPENSES IN CONNECTION
                   WITH TRANSFERS                        65
     SECTION 5.05  COLLATERAL ASSIGNMENT                 65

ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS     66

     SECTION 6.01  PANDA GLOBAL REPRESENTATIONS AND
                   WARRANTIES                            66
     SECTION 6.02  MCNIC NEPAL REPRESENTATIONS
                   AND WARRANTIES                        77
     SECTION 6.03  FURTHER ASSURANCES                    78
     SECTION 6.04  NO PARTNERSHIP                        79
     SECTION 6.05  PURPOSES OF THE COMPANY
                   AND PANDA OF NEPAL                    79
ARTICLE VII INDEMNITY                                    80

     SECTION 7.01  INDEMNITY                             80

ARTICLE VIII CONFIDENTIALITY                             83

     SECTION 8.01  CONFIDENTIALITY                       83

ARTICLE IX DEFAULTS AND REMEDIES                         85

     SECTION 9.01  DEFAULTS                              85
     SECTION 9.02  ACTIONS UPON DEFAULT                  85

ARTICLE X GOVERNING LAWS AND COMPLIANCE                  85

     SECTION 10.01  GOVERNING LAW                        85
     SECTION 10.02  COMPLIANCE WITH LAWS                 86

ARTICLE XI MISCELLANEOUS                                 87

     SECTION 11.01  EFFECT OF CEASING TO OWN SHARES      87
     SECTION 11.02  HEADINGS                             87
     SECTION 11.03  ARBITRATION                          87
     SECTION 11.04  IMPASSE; BUY-SELL AGREEMENT          90
     SECTION 11.05  ENTIRE AGREEMENT                     95
     SECTION 11.06  AMENDMENT                            95
     SECTION 11.07  WAIVERS                              95
     SECTION 11.08  SEVERABILITY                         95
     SECTION 11.09  EFFECTIVENESS                        96
     SECTION 11.10  NO THIRD PARTY BENEFICIARIES         96
     SECTION 11.11  NOTICES                              96
     SECTION 11.12  ASSIGNMENT                           98
     SECTION 11.13  SURVIVAL OF REPRESENTATIONS
                    AND WARRANTIES                       99
     SECTION 11.14  EXPENSES                             99
     SECTION 11.15  COMPUTATION OF TIME PERIODS          99
     SECTION 11.16  EXECUTION IN COUNTERPARTS            99
     SECTION 11.17  COVENANT OF GOOD FAITH AND
                    FAIR DEALING                        100

Exhibit A      Form of MCNIC Guarantee

Exhibit B      Form of Panda Guarantee

Exhibit C      Example of Class B Flip Date Determination


                   SHAREHOLDERS AGREEMENT

          This SHAREHOLDERS AGREEMENT (the "Agreement")
dated as of December 18, 1997, made by and among PANDA BHOTE
KOSHI, a Cayman Islands exempted company (the "Company"),
PANDA OF NEPAL, a Cayman Islands exempted company ("Panda of
Nepal"), PANDA GLOBAL ENERGY COMPANY, a Cayman Islands
exempted company ("Panda Global"), and MCNIC NEPAL LIMITED,
a Cayman Islands exempted company ("MCNIC Nepal"), said
Panda Global and MCNIC Nepal as the shareholders of the
Company (Panda Global and MCNIC Nepal and their successors
and permitted assigns being herein referred to collectively
as the "Shareholders," and the Shareholders, the Company and
Panda of Nepal being herein collectively referred to as the
"Parties").

                     W I T N E S S E T H

          WHEREAS, the Company is the owner of 100% of the
issued and outstanding shares of Panda of Nepal;

          WHEREAS, Panda of Nepal is the owner of 75% of the
issued and outstanding shares of Bhote Koshi Power Company
Private Limited, a private limited liability company
organized under the laws of Nepal ("BKPC"), which, in turn,
owns a 36MW hydroelectric power project being developed and
constructed in the Sindhupalchok District in Nepal; and

          WHEREAS, the Parties desire to set forth herein
their mutual agreements as to the rights and obligations of
the Shareholders with respect to the organization,
capitalization, management and operation of the Company,
Panda of Nepal and BKPC and related matters.

          NOW THEREFORE, for and in consideration of the
foregoing premises and the mutual covenants and agreements
hereinafter set forth, the Parties, intending to be legally
bound, do hereby agree as follows:

                          ARTICLE I
                         DEFINITIONS

          Section 1.01  Certain Definitions.  The terms set
out below shall have the following meanings throughout this
Agreement:

          (a)  "Act" shall mean the Companies Law of the
Cayman Islands and any statutory modification thereof.

          (b)  "Affiliate" shall mean, with respect to any
Person, any entity which directly or indirectly through one
or more intermediaries controls, is controlled by, or is
under common control with such Person.  For purposes of this
definition, the term "control" shall mean ownership of more
than 50% of the outstanding voting securities of an entity.

          (c)  "Affiliate Contract" shall mean any contract
or other agreement between the Company, Panda of Nepal or
BKPC, on the one hand, and any Shareholder or Affiliate of a
Shareholder, on the other hand, or which benefits directly
or indirectly any Shareholder or Affiliate of a Shareholder
(other than the Company, Panda of Nepal or BKPC and
excluding benefits available to all Shareholders generally).

          (d)  "Agreement" shall mean this Shareholders
Agreement dated as of December 18, 1997, made by and among
the Company, Panda of Nepal, Panda Global and MCNIC Nepal.

          (e)  "Annual Budget" shall mean each annual budget
for the Company, Panda of Nepal or BKPC, as the case may be,
adopted pursuant to the procedures described in Sections
3.01(d) or 3.03(d).

          (f)  "BKPC" shall mean Bhote Koshi Power Company
Private Limited, a private limited liability company
organized under the laws of Nepal.

          (g)  "BKPC Board of Directors" shall mean the
governing body of BKPC under the laws of Nepal.

          (h)  "BKPC Director" shall mean a member of the
BKPC Board of Directors.

          (i)  "BKPC Shareholders Agreement" shall mean the
Shareholders Agreement dated as of the Closing Date among
BKPC, HIPC, Panda of Nepal, RDC of Nepal and IFC.

          (j)  "Board of Directors" shall mean the governing
body of the Company under the Act.

          (k)  "Business Day" shall mean, except to the
extent expressly provided otherwise, a day when banks are
open for business in New York, New York, Grand Cayman,
Cayman Islands, and, for the purpose of determining the due
date of a payment, a day on which banks are open for
business in the cities required to effect such payment.

          (l)  "Capital Account" shall mean an account
maintained for each Shareholder in accordance with Section
4.02.

          (m)  "Capital Contribution" means the amount of
cash contributed by a Shareholder to the capital of the
Company.

          (n)  "Class A Shareholder" shall mean Panda Global
and any successor and permitted assignee or transferee
thereof.

          (o)  "Class A Shares" shall mean the ordinary
limited liability shares of the Company designated in the
Company Organizational Documents as the "Class A Shares."

          (p)  "Class B Flip Date" shall mean the first day
of the month after the Class B Shareholder has received
distributions of Distributable Cash Flow in amounts that
will provide the Class B Shareholder an internal rate of
return equal to 20% on its Equity Contributions.  The rate
of return on the Class B Shareholder's Equity Contributions
and the resulting Class B Flip Date shall be determined
based on the example set forth in Exhibit C hereto.

          (q)  "Class B Shareholder" shall mean MCNIC Nepal
and any successor and permitted assignee or transferee
thereof.

          (r)  "Class B Shares" shall mean the ordinary
limited liability shares of the Company designated in the
Company Organizational Documents as the "Class B Shares."

          (s)  "Closing Date" shall mean December 12, 1997.

          (t)  "Company" shall mean Panda Bhote Koshi, an
exempted company with limited liability organized and
existing under the laws of the Cayman Islands.

          (u)  "Company Organizational Documents" shall mean
the Amended and Restated Memorandum of Association and the
Amended and Restated Articles of Association of the Company,
to be adopted promptly following the date hereof, as the
same may be further amended from time to time hereafter in
accordance with the applicable provisions hereof and
thereof.

          (v)  "Deficiency" shall mean any Project Funds
Shortfall.

          (w)  "Deficiency Loan" shall mean any subordinated
loan made to fund a Deficiency in accordance with Article 3
of the Share Retention and Project Funds Agreement.

          (x)  "DEG" shall mean DEG-Deutsche Investitions-
und Entwicklungsgesellschaft mbH, a company organized under
the laws of the Federal Republic of Germany.

          (y)  "DEG Investment Agreement" shall mean the DEG
Investment Agreement between BKPC and DEG dated as of the
Closing Date and shall include the DEG Special Conditions
and the General Conditions.

          (z)  "DEG Loans" shall mean the loans to be funded
pursuant to the DEG Investment Agreement.

          (aa) "DEG Special Conditions" shall mean the
Special Conditions between BKPC and DEG dated as of the
Closing Date.

          (bb) "Director" shall mean a member of the Board
of Directors of the Company.

          (cc) "Distributable Cash Flow" shall mean (i) all
cash distributions received by the Company from Panda of
Nepal and (ii) all cash distributions received by Panda of
Nepal from BKPC.

          (dd) "Distributable Percentage" shall mean:

                         (i) with respect to all Equity
               Contributions except those made pursuant to
               Sections 2.10(a)(iv) and 2.11(a)(iii), prior
               to the Class B Flip Date:  85% of
               Distributable Cash Flow to the Class B
               Shareholder and 15% of Distributable Cash
               Flow to the Class A Shareholder, and after
               the Class B Flip Date shall mean 10% of
               Distributable Cash Flow to the Class B
               Shareholder and 90% of Distributable Cash
               Flow to the Class A Shareholder; and

                         (ii) with respect to all Equity
               Contributions made pursuant to Sections
               2.10(a)(iv) and 2.11(a)(iii), 50% of
               Distributable Cash Flow to the Class A
               Shareholder and 50% of Distributable Cash
               Flow to the Class B Shareholder.

          (ee) "EPC Contract" shall mean the Amended and
Restated Contract for the Engineering, Procurement and
Construction of the Upper Bhote Koshi Hydroelectric Project,
dated as of December 19, 1996, between BKPC and the EPC
Contractor, together with all change orders executed
thereunder on or prior to the Closing Date.

          (ff) "EPC Contractor" shall mean China Gezhouba
Construction Group Corporation for Water Resources and
Hydropower, a corporation organized and existing under the
laws of the People's Republic of China.

          (gg) "Equity Contributions" shall mean the
aggregate amount of Capital Contributions contributed to the
Company by the Class A Shareholder and the Class B
Shareholder pursuant to Sections 2.07, 2.08, 2.10 and 2.11
or otherwise.

          (hh) "Equity Letter of Credit" shall mean the
Equity Letter of Credit issued by First Chicago NBD
Corporation in favor of the Trustee and any successor
thereto.

          (ii) "Equity Subscription Agreement" shall mean
the Equity Subscription Agreement among BKPC, Panda of Nepal
and the Trustee dated as of the Closing Date.

          (jj) "Financial Closing Date" shall mean the date
on which the Lenders make an initial Disbursement pursuant
to the Investment Agreement.

          (kk) "Financing Documents" shall mean the
Investment Agreement, the Share Retention and Project Funds
Agreement, the Equity Subscription Agreement, the Panda of
Nepal Share Pledge Agreement, the Panda Bhote Koshi Share
Pledge Agreement, the BKPC Shareholders Agreement, and the
Harza Side Letter.

          (ll) "Financing Plan" shall mean the Financing
Plan attached as Schedule 2.2(a) to the IFC Special
Conditions and the DEG Special Conditions.

          (mm) "Fiscal Year" shall mean the accounting year
of the Company and Panda of Nepal commencing each year on
January 1 and ending on the following December 31, or such
other accounting year as the Company or Panda of Nepal may
from time to time adopt.  For BKPC "Fiscal Year" shall mean
the accounting year as may be adopted by BKPC from time to
time.

          (nn) "General Conditions" shall mean the
Investment Agreement General Conditions among BKPC, IFC and
DEG dated as of the Closing Date.

          (oo) "Government Approval" shall mean any
authorization, consent, approval, license, ruling, permit,
certification, filing for registration (that is not merely a
routine informational filing) or exemption by or with any
Governmental Authority.

          (pp) "Governmental Authority" shall mean the
Government of the Cayman Islands or any department or
political subdivision thereof, the Government of Nepal or
any department or political subdivision thereof, and any
entity, body or authority of any of the foregoing exercising
executive, legislative, judicial, regulatory or
administrative functions relating to government.

          (qq) "Harza Engineering Company International"
shall mean Harza Engineering Company International, a
limited liability company, a limited liability company
organized and existing under the laws of the State of
Wyoming.

          (rr) "Harza Engineering Company International
L.P." shall mean Harza Engineering Company International
L.P., a limited partnership organized and existing under the
laws of the State of Delaware.

          (ss) "Harza Side Letter" shall mean the letter
agreement dated December 18, 1997 between Harza Engineering
Company International and Panda of Nepal concerning the
possible purchase of shares in BKPC from HIPC.

          (tt) "HIPC" shall mean Himal International Power
Corporation Pvt. Ltd., a private limited company organized
and existing under the laws of Nepal.

          (uu) "IFC" shall mean International Finance
Corporation, an international organization established by
articles of agreement among its shareholder countries.

          (vv) "IFC Investment Agreement" shall mean the
Investment Agreement between BKPC and IFC dated as of the
Closing Date and shall include the IFC Special Conditions
and the General Conditions.

          (ww) "IFC Loans" shall mean the loans to be funded
pursuant to the IFC Investment Agreement.

          (xx) "IFC Special Conditions" shall mean the
Special Conditions between BKPC and the IFC dated as of the
Closing Date.

          (yy) "Impasse" shall have the meaning set forth in
Section 11.04.

          (zz) "Insurance Proceeds" shall mean any insurance
proceeds received under any insurance policy maintained by
BKPC or by the EPC Contractor or Harza Engineering Company
International L.P. in respect of the Project (other than
proceeds payable under third party liability policies).

          (aaa)     "Investment Agreement" shall mean and
include the IFC Investment Agreement and the DEG Investment
Agreement.

          (bbb)     "IRC" shall mean the U.S. Internal
Revenue Code of 1986, as amended from time to time, and any
successor statute thereto.

          (ccc)     "Lenders" shall mean IFC and DEG.

          (ddd)     "Liquidated Damages Proceeds" shall mean
any liquidated damages paid by or on behalf of the EPC
Contractor under the EPC Contract.

          (eee)     "Loans" shall mean and include the IFC
Loans and the DEG Loans.

          (fff)     "Loan Documents" shall mean the
Investment Agreement and the security documents under the
Investment Agreement.

          (ggg)     "MCNIC Consent" shall mean the
Assignment, Consent and Agreement dated as of December 18,
1997 among Panda Global, Panda, the Company, Panda of Nepal,
MCNIC, MCNIC Nepal, BKPC, DEG, IFC and the Trustee.

          (hhh)     "MCNIC" shall mean MCN Investment
Corporation, a Michigan corporation.

          (iii)     "MCNIC Nepal" shall mean MCNIC Nepal
Limited, an exempted company with limited liability
organized and existing under the laws of the Cayman Islands.

          (jjj)     "NEA" shall mean Nepal Electricity
Authority.

          (kkk)     "Panda" shall mean Panda Energy
International, Inc., a Texas corporation.

          (lll)     "Panda Bhote Koshi Share Pledge
Agreement" shall mean the Share Pledge Agreement dated as of
the Closing Date among Panda Bhote Koshi, the Trustee, as
Pledgee, and BKPC.

          (mmm)     "Panda Global" shall mean Panda Global
Energy Company, an exempted company with limited liability
organized and existing under the laws of the Cayman Islands.

          (nnn)     "Panda of Nepal" shall mean Panda of
Nepal, an exempted company with limited liability organized
and existing under the laws of the Cayman Islands.

          (ooo)     "Panda of Nepal Share Pledge Agreement"
shall mean the Share Pledge Agreement dated as of the
Closing Date among Panda of Nepal, as Pledgor, the Trustee,
as Pledgee, and BKPC.

          (ppp)     "Parties" shall mean collectively the
Shareholders, the Company and Panda of Nepal.

          (qqq)     "Permitted Transferee" shall mean any
Affiliate of a transferring Shareholder.

          (rrr)     "Person" shall mean any individual,
partnership, joint venture, company, corporation, limited
liability company, limited duration company, limited life
company, association, trust or other enterprise or a
government including any agency thereof.

          (sss)     "PON Board of Directors" shall mean the
governing body of Panda of Nepal under the Act.

          (ttt)     "PON Director" shall mean a member of
the PON Board of Directors.

          (uuu)     "PON Organizational Documents" shall
mean the Amended and Restated Memorandum of Association and
the Amended and Restated Articles of Association of Panda of
Nepal, to be adopted promptly following the date hereof, as
the same may be further amended from time to time hereafter
in accordance with the applicable provisions hereof and
thereof.

          (vvv)     "Project" shall mean the real, personal
and mixed property comprising a 36 MW hydroelectric power
generating facility located in the Sindhupalchok District in
Nepal being developed and constructed by BKPC.

          (www)     "Project Completion" shall mean that the
requirements provided for under "Project Completion" in the
Investment Agreement have been met in full.

          (xxx)     "Project Completion Date" shall mean the
date on which the requirements for Project Completion have
been met in full.

          (yyy)     "Project Contracts" shall mean the
"Principal Documents" as defined in Schedule A to the
Investment Agreement as in effect as of the Closing Date.

          (zzz)     "Project Funds Shortfall" shall mean, at
any point in time on or before the Project Completion Date,
in the reasonable judgment of either Lender, the amount by
which Project Costs (as such term is defined in the
Investment Agreement) or principal, interest, fees, and
other amounts payable under the Loan Documents exceed funds
then available to BKPC from the sources described in the
Financing Plan or the EPC Contract or from other sources (on
terms and subject to conditions acceptable to the Lenders).
For the avoidance of doubt, funds, including, without
limitation, Insurance Proceeds and Liquidated Damages
Proceeds, shall not be deemed available to BKPC until such
funds have been received by BKPC.

        (aaaa)"Projections" shall mean the Base Case
Financial Projection with respect to the Project delivered
to the Lenders on December 11, 1997 pursuant to the
Investment Agreement.

        (bbbb)"Resource Development Consultants" shall mean
Resource Development Consultants, a limited liability
company, a limited liability company organized and existing
under the laws of the State of Wyoming.

        (cccc)"RDC of Nepal" shall mean RDC of Nepal, an
exempted company with limited liability organized and
existing under the laws of the Cayman Islands.

        (dddd)"Shares" means the Class A Shares and the
Class B Shares.

        (eeee)"Shareholder" shall mean Panda Global and
MCNIC Nepal and each Person that becomes a Shareholder
hereafter pursuant to the provisions of this Agreement.  A
Shareholder that Transfers all of its interest in the
Company in accordance with the procedures of the Company
Organizational Documents and Article V hereof shall no
longer be considered a Shareholder.

        (ffff)"Share Pledge Agreement" shall mean each of
the Share Pledge Agreements, dated as of the Closing Date,
among each of Harza Engineering Company International, L.P.,
HIPC, Soaltee Enterprises Private Ltd., Soaltee Hotel Ltd.,
Surya Enterprises Private Ltd., Resource Development
Consultants, Panda of Nepal, RDC of Nepal and the Company,
each as Pledgor, the Trustee, as Pledgee, and BKPC.

        (gggg)"Share Retention and Project Funds Agreement"
shall mean the Share Retention and Project Funds Agreement
among BKPC, Panda, Harza Engineering Company International,
Harza Engineering Company International, L.P., HIPC, Soaltee
Enterprises Private Ltd., Soaltee Hotel Ltd., Surya
Enterprises Private Ltd., Resource Development Consultants,
Panda of Nepal, RDC of Nepal, the Company, IFC and DEG dated
as of the Closing Date.

        (hhhh)"Soaltee Enterprises Private Ltd." shall mean
Soaltee Enterprises Private Ltd., a private company
organized and existing under the laws of Nepal.

        (iiii)"Soaltee Hotel Ltd." shall mean Soaltee Hotel
Ltd., a public company organized and existing under the laws
of Nepal.

        (jjjj)"Surya Enterprises Private Ltd." shall mean
Surya Enterprises Private Ltd., a private company organized
and existing under the laws of Nepal.

        (kkkk)"Transfer" shall mean the sale, assignment,
transfer, pledge, hypothecation or other disposition of a
legal or beneficial interest in any Shares, whether
voluntarily or involuntarily, including pursuant to the
exercise of remedies under a mortgage, pledge or similar
security device.

        (llll)"Trustee" shall mean Wilmington Trust
Company, a Delaware banking corporation.

        (mmmm)"U.S. Dollars" and "$" shall mean the lawful
currency of the United States of America.

          Section 1.02   References to Sections. References
to particular Sections shall mean the Sections of this
Agreement, unless the reference specifically refers to a
section of another agreement or document.


                         ARTICLE II
     ORGANIZATION, CAPITALIZATION AND CERTAIN FINANCIAL
                         OBLIGATIONS

          Section 2.01   Organizational Documents and
Filings.  The Company, Panda Global and Panda of Nepal
represent and covenant to MCNIC Nepal that (a) promptly
following the date hereof the Company Organizational
Documents and the PON Organizational Documents shall be duly
adopted by the Company and Panda of Nepal, respectively, and
(b) the Company Organizational Documents and the PON
Organizational Documents will be filed promptly thereafter
with the Registrar of Companies of the Cayman Islands in
accordance with the Act.  In addition, the Company, Panda of
Nepal and the Shareholders, as the case may be, shall cause
to be executed, filed and published all such certificates,
notices, statements or other instruments, and amendments
thereto under the laws of the Cayman Islands and all other
applicable jurisdictions, as the Board of Directors may deem
necessary or advisable from time to time for the operation
of the Company and as the PON Board of Directors may deem
necessary or advisable from time to time for the operation
of Panda of Nepal, respectively.

          Section 2.02   Parties and Shareholders.  No
Person shall be entered in the Register of Members of the
Company, or become the holder of any Share, through
issuance, Transfer of Shares or otherwise, unless such
Person shall have first signed a counterpart of this
Agreement or a commitment to be bound by the terms and
conditions of this Agreement in accordance with Section
5.01(b).  The Company and the Board of Directors shall deal
only with Persons so named or admitted as Shareholders;
provided, however, that any distribution by the Company to
the Person properly shown on the Company's records as a
Shareholder or his legal representative or the assignee of
the right to receive Shareholder distributions as herein
provided, shall relieve the Company and the Board of
Directors of all liability to any other Person who may be
interested in such distribution by reason of any other event
or circumstances.

          Section 2.03   Inconsistencies Between this
Agreement and the Company Organizational Documents or the
PON Organizational Documents.  If a provision of this
Agreement contradicts a provision of the Company
Organizational Documents or the PON Organizational
Documents, as the case may be, the terms of this Agreement
shall prevail and (a) a general meeting of shareholders of
the Company or Panda of Nepal, as the case may be, shall be
held within thirty (30) calendar days of discovery of such
inconsistency or as soon thereafter as is practicable for
the purpose of adopting any amendment to the Company
Organizational Documents or the PON Organizational
Documents, as the case may be, that may be required to
reconcile such inconsistency to the extent such amendments
are permitted by the Act, and (b) adopt such amendments.
Notwithstanding the foregoing, unless otherwise required by
the Act this Agreement shall still prevail over any such
inconsistency, whether or not such inconsistency is
corrected in the Company Organizational Documents or the PON
Organizational Documents, as the case may be, in the manner
prescribed in this Section 2.03.

          Section 2.04   Performance by the Company and
Panda of Nepal.  The Shareholders shall cause the Company,
the Company shall cause Panda of Nepal, and Panda of Nepal
shall cause the BKPC directors appointed by the Shareholders
to perform each of their respective obligations under this
Agreement, and the Shareholders shall cause their designated
members of the boards of directors of the Company, Panda of
Nepal and BKPC, as the case may be, to act in accordance
herewith and in a manner which causes the Company, Panda of
Nepal and such BKPC directors, as the case may be, to
perform each of their obligations under this Agreement.  In
addition, Panda of Nepal shall use its best efforts as a
shareholder of BKPC to cause BKPC to act in accordance with
the provisions of this Agreement.

          Section 2.05   Principal Place of Business.  The
principal office and place of business of the Company and
Panda of Nepal shall be located at Ugland House (c/o Maples
and Calder), South Church Street, Grand Cayman, Cayman
Islands, British West Indies.  The principal office and
place of business may be changed from time to time, and
other offices and places of business may be established from
time to time, by the Board of Directors or the PON Board of
Directors, as the case may be, with notice to the
Shareholders, the Company and Panda of Nepal.  The Company
and Panda of Nepal shall maintain a registered office in the
Cayman Islands to the extent required by the Act.

          Section 2.06   Other Activities of the
Shareholders.  Except as otherwise expressly provided in
this Agreement, each of the Shareholders and their
Affiliates, at any time and from time to time, may engage in
and possess interests in other business ventures of any and
every type and description, independently or with others,
whether such ventures are competitive with the Company,
Panda of Nepal or BKPC, or otherwise.  Without limiting any
other remedies available under this Agreement or at law for
the breach of other provisions of this Agreement, neither
the Company nor Panda of Nepal nor any Shareholder shall
solely by virtue of this Agreement have any right, title or
interest in or to such ventures or to the income or profits
derived therefrom, nor shall engaging in such activities
constitute a breach of a Shareholder's obligations hereunder
or under the Company Organizational Documents or the PON
Organizational Documents.

          Section 2.07   Capital Contributions by the Class
A Shareholder.  The Class A Shareholder agrees to contribute
to the capital of the Company on the Financial Closing Date
the sum of $2,000,000, and will receive for such
contribution a total of 100 Class A Shares.  The Class A
Shareholder may be required to contribute additional capital
to the Company as provided in Section 2.11 but shall receive
no further Shares for such additional contributions.

          Section 2.08   Capital Contributions by the Class
B Shareholder.  The Class B Shareholder agrees to contribute
to the capital of the Company, in the manner provided in
Section 2.09, an amount equal to the "total equity
commitment to the Project" of Panda of Nepal as set forth in
Section 2.1(a)(1) of the Equity Subscription Agreement less
$2,000,000, but not to exceed in any event $20,121,250, and
shall receive for such contribution and the delivery of the
letter of credit required by Section 2.10(a)(iii) below a
total of 100 Class B Shares.  The Class B Shareholder may be
required to contribute additional capital to the Company as
provided in Section 2.10 but shall receive no further Shares
for such additional contributions.

          Section 2.09   Manner of Making Capital
Contributions for Class B Shareholder.  The Capital
Contributions described in Section 2.08 shall be paid to the
Company in installments as necessary to fund Panda of
Nepal's portion of the equity of BKPC (other than equity
funded with the Capital Contributions made by the Class A
Shareholder on the Financial Closing Date pursuant to
Section 2.07) as required by the Equity Subscription
Agreement.  Each installment shall be paid to the Company no
later than five (5) Business Days prior to the date on which
an installment of Loans is to be disbursed to BKPC.
Immediately following the receipt by the Company of such
capital contributions, the Company shall contribute such
amounts to Panda of Nepal, and Panda of Nepal shall
contribute such amounts to the capital of BKPC.

          Section 2.10   Additional Financial Obligations of
Class B Shareholder.

          (a)  In addition to its obligations to contribute
capital to the Company pursuant to Section 2.08, the Class B
Shareholder shall have the following financial obligations:

               (i)  In the event of a Deficiency (as
     determined in accordance with Article 3 of the Share
     Retention and Project Funds Agreement), the Class B
     Shareholder shall contribute to the Company an amount
     equal to 85% of the aggregate amount of Panda of
     Nepal's share of the Deficiency; provided, however,
     that the Class B Shareholder shall in no event be
     obligated to contribute more than $7,100,000 (plus 85%
     of any additional Deficiency associated with any shares
     of BKPC purchased by Panda of Nepal from HIPC, as
     described below in sub-paragraph (v), but not to exceed
     $361,000) in additional Capital Contributions pursuant
     to this Section 2.10(a)(i).  The proceeds of such
     Capital Contribution shall, in turn, be loaned or
     contributed to Panda of Nepal, and Panda of Nepal
     shall, in turn, loan such amounts to BKPC as a
     Deficiency Loan or make an equity contribution to BKPC
     in accordance with the Share Retention and Project
     Funds Agreement.  If such amounts are loaned by the
     Company to Panda of Nepal, the terms and conditions of
     any such loan shall be the same as the terms and
     conditions for Deficiency Loans as set forth in Exhibit
     A to the Share Retention and Project Funds Agreement.

               (ii)  In the event payment is required to be
     made by the Class A Shareholder (or an Affiliate of the
     Class A Shareholder, including, without limitation,
     Panda) pursuant to Section 7.1 of the Share Retention
     and Project Funds Agreement relating to the guarantee
     by Panda of an amount of EPC Contractor Guaranteed
     Obligations (as defined therein) up to 15% of the EPC
     Contract Price (as defined therein), plus $150,000, the
     Class B Shareholder shall contribute to the Company an
     amount equal to 85% of any such amount; provided,
     however the Class B Shareholder shall in no event be
     obligated to contribute more than $6,035,850 pursuant
     to this Section 2.10(a)(ii).

               (iii)  The Class B Shareholder shall provide
     a letter of credit in favor of the Lenders in an amount
     equal to the Class B Shareholder's unfunded equity
     commitment to the Company, but not to exceed
     $20,121,250 less the amount of equity contributions
     previously made by the Class B Shareholder pursuant to
     this Agreement.  Said letter of credit shall comply
     with the requirements of the Equity Subscription
     Agreement.  Amounts drawn under such letter of credit
     will be treated as Capital Contributions made by the
     Class B Shareholder under Section 2.08 above.

               (iv)  The Class B Shareholder shall
     contribute to the capital of the Company an amount
     equal to 50% of the obligations of Panda of Nepal under
     Section 3.5(b) of the BKPC Shareholders Agreement.
     Such amount shall, in turn, be loaned or contributed by
     the Company to the capital of Panda of Nepal, and Panda
     of Nepal shall use such amount to meet its obligations
     under Section 3.5(b) of the BKPC Shareholders
     Agreement.

               (v)  In the event that Panda of Nepal is
     required to purchase an interest of up to 4.0% in BKPC
     presently held by HIPC as required under the Share
     Retention and Project Funds Agreement, the Class B
     Shareholder shall contribute to the Company an amount
     equal to 85% of the total amount required for Panda of
     Nepal to purchase such shares; provided, however, that
     the Class B Shareholder shall in no event be obligated
     to contribute more than $1,005,000 pursuant to this
     Section 2.10(a)(v).  Such amount shall, in turn, be
     loaned or contributed to the capital of Panda of Nepal.
     The capital contribution described in this subparagraph
     (v) shall be proportionately reduced to the extent that
     RDC of Nepal or any Affiliate thereof purchases BKPC
     shares presently held by HIPC pursuant to the terms of
     the Harza Side Letter.

               (vi)  In the event of any financial
     requirements in connection with the development and
     construction of the Project in addition to those
     provided for in the Financing Documents or described
     above, upon the request of the Class B Shareholder the
     Shareholders shall promptly meet to discuss the ways in
     which such additional financial requirements may be
     met.

          (b)  For the purposes of Section 2.10(a)(i), (ii),
(v) and (vi), the portion of cash distributions from Panda
of Nepal, if any, to the Company that relate to the Capital
Contributions made by the Class B Shareholder pursuant to
such Sections shall be distributed pursuant to clause (i) of
the definition of "Distributable Percentage" in Section
1.01(dd).  The portion of cash distributions from Panda of
Nepal, if any, to the Company that relate to Capital
Contributions made by the Class B Shareholder pursuant to
Section 2.10(a)(iv) shall be distributed pursuant to clause
(ii) of the definition of "Distributable Percentage" in
Section 1.01(dd).  All Capital Contributions contributed by
the Class B Shareholder to the Company pursuant to Section
2.10(a)(i), (ii), (v) and (vi) shall be included as "Equity
Contributions" for purposes of determining the Class B Flip
Date.

          (c)  The Class B Shareholder shall be given
written notice by the Company of any obligation to make a
Capital Contribution or post a letter of credit pursuant to
this Section 2.10, which notice shall be provided a
sufficient amount of time prior to the date on which such
contribution or letter of credit is required to be made or
posted, as the case may be, in order to comply with the
requirements under the Financing Documents.  The failure to
give such notice at any particular time shall not nullify or
change the obligation of the Class B Shareholder to make a
capital contribution or post a letter of credit as required
hereunder at any other time, provided that notice as
provided herein is given.

          Section 2.11   Additional Financial Obligations of
Class A Shareholder.

          (a)  In addition to its obligations to contribute
capital to the Company pursuant to Section 2.07, the Class A
Shareholder shall have the following financial obligations:

               (i)  In the event of a Deficiency (as
     determined in accordance with Article 3 of the Share
     Retention and Project Funds Agreement), the Class A
     Shareholder shall contribute to the Company an amount
     equal to 15% of the aggregate amount of the Deficiency
     plus any remaining portion of the Deficiency for which
     the Class B Shareholder is not obligated to contribute
     capital pursuant to Section 2.10(a)(i).  The proceeds
     of such Capital Contribution shall, in turn, be loaned
     or contributed to Panda of Nepal, and Panda of Nepal
     shall, in turn, loan such amounts to BKPC as a
     Deficiency Loan or make an equity contribution to BKPC
     in accordance with the Share Retention and Project
     Funds Agreement.  If such amounts are loaned by the
     Company to Panda of Nepal, the terms and conditions of
     any such loan shall be the same as the terms and
     conditions for Deficiency Loans set forth in Exhibit A
     to the Share Retention and Project Funds Agreement.

               (ii)  In the event payment is required to be
     made by the Class A Shareholder (or an Affiliate of the
     Class A Shareholder, including, without limitation,
     Panda) pursuant to Section 7.1 of the Share Retention
     and Project Funds Agreement relating to the guarantee
     by Panda of an amount of EPC Contractor Guaranteed
     Obligations (as defined therein) up to 15% of the EPC
     Contract Price (as defined therein), plus $150,000, the
     Class A Shareholder agrees to contribute to the Company
     an amount equal to 15% of any such payment plus any
     remaining portion of such payment for which the Class B
     Shareholder is not obligated to contribute capital
     pursuant to Section 2.10(a)(ii).

               (iii)  The Class A Shareholder shall
     contribute to the capital of the Company an amount
     equal to 50% of the obligations of Panda of Nepal under
     Section 3.5(b) of the BKPC Shareholders Agreement. Such
     amount shall, in turn, be loaned or contributed by the
     Company to the capital of Panda of Nepal, and Panda of
     Nepal shall use such amount to meet its obligations
     under Section 3.5(b) of the BKPC Shareholders
     Agreement.

               (iv)  In the event that Panda of Nepal is
     required to purchase an interest of up to 4.0% in BKPC
     presently held by HIPC as required under the Share
     Retention and Project Funds Agreement, the Class A
     Shareholder shall contribute to the Company an amount
     equal to 15% of the total amount required for Panda of
     Nepal to purchase such shares, plus any remaining
     portion of such amount for which the Class B
     Shareholder is not obligated to contribute capital
     pursuant to Section 2.10(a)(v), and the Company shall
     contribute or loan such amount to Panda of Nepal.  The
     capital described in this subparagraph (iv) shall be
     proportionately reduced to the extent that RDC of Nepal
     or any Affiliate thereof purchases BKPC shares
     presently held by HIPC pursuant to the terms of the
     Harza Side Letter.

               (v)  In the event of any financial
     requirements in connection with the development and
     construction of the Project in addition to those
     provided for in the Financing Documents or described
     above, upon the request of the Class A Shareholder the
     Shareholders shall promptly meet to discuss the ways in
     which such additional financial requirements may be
     met.

          (b)  For the purposes of Section 2.11(a)(i), (ii),
(iv) and (v), the portion of cash distributions from Panda
of Nepal, if any, to the Company that relate to the Capital
Contributions made by the Class A Shareholder pursuant to
such Sections shall be distributed pursuant to clause (i) of
the definition of "Distributable Percentage" in Section
1.01(dd).  The portion of cash distributions from Panda of
Nepal, if any, to the Company that relate to Capital
Contributions made by the Class A Shareholder pursuant to
Section 2.11(a)(iii) shall be distributed pursuant to clause
(ii) of the definition of "Distributable Percentage" in
Section 1.01(dd).

          (c)  Notwithstanding any other provision of this
Agreement, the Class A Shareholder may at any time elect,
through written notice to the Class B Shareholder at the
time of a notice given pursuant to Section 2.10(d), to
increase its percentage of any Capital Contribution made
pursuant to this Section 2.11.  Notwithstanding that the
Class A Shareholder makes such an election with respect to
one or more particular Capital Contributions, the
Distributable Percentage applicable to distributions
relating to such particular Capital Contribution shall
remain as provided in Section 2.11(b) and shall not be
adjusted to reflect the greater percentage rate elected by
the Class A Shareholder with respect to such particular
Capital Contribution and the corresponding lesser percentage
rate with respect to the particular Capital Contribution by
the Class B Shareholder.  In the event that, pursuant to
this Section 2.11(c), the Class A Shareholder elects to fund
a greater percentage of a particular Capital Contribution
than would otherwise be required by this Agreement, the
particular Capital Contribution required of the Class B
Shareholder at such time shall be correspondingly reduced.

          (d)  The Class A Shareholder shall be given
written notice by the Company of any obligation to make a
Capital Contribution or post a letter of credit pursuant to
this Section 2.11 a sufficient amount of time prior to the
date on which such contribution or letter of credit is
required to be made or posted, as the case may be, in order
to comply with the requirements under the Financing
Documents.  The failure to give such notice at any
particular time shall not nullify or change the obligation
of the Class A Shareholder to make a capital contribution or
post a letter of credit as required hereunder at any other
time, provided that notice as provided herein is given.

          Section 2.12   Guarantees.

          (a)  Contemporaneous with the execution of this
Agreement, the Class B Shareholder shall provide the Class A
Shareholder and Panda with the guarantee of MCNIC, in the
form of Exhibit A hereto, guaranteeing to the Class A
Shareholder and Panda the full and complete performance by
the Class B Shareholder (including any Permitted Transferee
thereof) of all the obligations of, and the accuracy of the
representations and warranties of, the Class B Shareholder
hereunder.

          (b)  Contemporaneous with the execution of this
Agreement the Class A Shareholder shall provide the Class B
Shareholder and MCNIC with the guarantee of Panda, in the
form of Exhibit B hereto, guaranteeing to the Class B
Shareholder and MCNIC the full and complete performance by
the Class A Shareholder of all the obligations of, and the
accuracy of the representations and warranties of, the Class
A Shareholder (including any Permitted Transferee thereof)
hereunder.

          Section 2.13   Rights of Lenders.  All rights and
obligations of the Parties under this Agreement shall be
subject to the rights of the Lenders under the MCNIC
Consent.


                         ARTICLE III
        DISTRIBUTIONS, MANAGEMENT AND ADMINISTRATION

          Section 3.01   Board of Directors; Election; Term.

          (a)  The Company shall have a Board of Directors
consisting of four (4) members.  The Class A Shareholder
shall be entitled to appoint two (2) of the four (4)
Directors prior to the occurrence of the Class B Flip Date
and shall be entitled to appoint three (3) of the four (4)
Directors thereafter.  The Class B Shareholder shall be
entitled to appoint two (2) of the four (4) Directors prior
to the occurrence of the Class B Flip Date and shall be
entitled to appoint one (1) of the four Directors
thereafter.  The Shareholders agree to vote in favor of
electing such Directors at the annual general meeting of
shareholders of the Company called for such purpose or at
any other meeting of shareholders at which directors are to
be elected, or in favor of removal or replacement of any
such Director if requested by the appointing Shareholder.
Such actions may be taken by unanimous consent of the
Shareholders without a meeting.

          (b)  Each Director shall serve a two-year (2)
term; provided that the term of one (1) of the Directors
appointed by the Class B Shareholder shall terminate on the
Class B Flip Date.  The Class B Shareholder shall designate
which of its two (2) Directors shall be subject to the
preceding sentence.  The Class A Shareholder shall be
entitled to appoint a third Director to replace the outgoing
Director designated by the Class B Shareholder within thirty
(30) days after the Class B Flip Date.  This newly-appointed
Director shall serve the remainder of the outgoing
Director's term.  There shall be no limit to the number of
terms a Director may serve.  A director may be removed only
with the consent of the Shareholder which appointed such
director.

          (c)  The overall management and direction of the
Company shall be exercised by the Board of Directors and,
except as expressly provided herein, in the Company
Organizational Documents or under the Act, the Shareholders
shall not be required to vote on, approve or consent to any
action of the Company.  Except as authorized by the Board of
Directors or as set forth in this Agreement, no Shareholder
shall have any right or authority to take any action on
behalf of the Company, or to bind or commit the Company with
respect to third parties.  All decisions of the Board of
Directors shall be by majority vote, with each Director
having one (1) vote, except to the extent a decision is
required to be by the unanimous vote of the Directors as
hereinafter provided.

          (d)  Without limiting anything set forth in
Section 3.01(c), the following matters shall require the
majority vote of the Board of Directors:

               (i)  the appointment of the officers of the
     Company;

              (ii)  the appointment of the directors of
     Panda of Nepal, subject to the provisions of Section
     3.03; and

             (iii)  the approval of the Annual Budget for
     the Company.

          (e)  The following matters shall require unanimous
vote of the Board of Directors:

               (i)  any issuance by the Company of
     additional shares;

              (ii)  any increase in the authorized capital
     of the Company;

             (iii)  the incurrence by the Company of any
     indebtedness other than as provided for in this
     Agreement;

              (iv)  any transaction involving the merger,
     consolidation or reorganization of the Company or the
     sale of all or substantially all of the assets of the
     Company;

               (v)  any transaction involving the entry by
     the Company into any partnership, profit-sharing or
     royalty agreement or other similar arrangement whereby
     the Company's income or profits are, or may be, shared
     with any other Person;

               (vi) the filing by the Company of any
     voluntary petition of bankruptcy or insolvency;

             (vii)  any loan, advance, capital contribution
     to or investment in the stock or other securities or
     evidences of indebtedness of or interests in any Person
     other than as provided for in this Agreement or
     required in the Financing Documents as in effect on the
     date hereof;

            (viii)  any transaction involving a sale,
     transfer, pledge (other than in connection with the
     Financing Documents), or other disposition of the
     Company's shares in Panda of Nepal;

              (ix)  the initiation, settlement or compromise
     by the Company of any arbitration, litigation or other
     legal or administrative proceeding, or the settlement
     or compromise of any threatened claim, involving an
     amount in excess of $50,000;

               (x)  any amendment to the Company
     Organizational Documents;

              (xi) any decision to cause the Company to
     enter into or conduct any business other than the
     ownership of shares of Panda of Nepal and activities
     related or incidental thereto including, without
     limitation, any activity required under the Financing
     Documents;

             (xii) any decision with respect to the
     entering into, or amendment of, any Affiliate Contract;

            (xiii) the remuneration, if any, to be paid to
     officers and directors of the Company and to Affiliates
     for services performed (unless approved in the Annual
     Budget); and

            (xiv)  any decision with respect to the
     liquidation or winding up of the Company.

          Section 3.02  Officers of the Company.

          (a)  The Company shall have the following
officers:  a President; a Vice President, Treasurer and
Chief Tax Officer; a Secretary; and one or more Assistant
Secretaries.  Each officer shall serve until the next annual
general meeting of Shareholders unless prior thereto such
officer dies, becomes incapacitated, resigns or is removed
from office.  An officer may be removed only with the
consent of the Shareholder which appointed such officer.

          (b)  The President and the Secretary (which
offices may be held by the same individual) and each
Assistant Secretary, if any, of the Company shall be
nominated by the Class A Shareholder and shall be subject to
the approval of the Board of Directors.  In addition,
following the occurrence of the Class B Flip Date, the Vice
President, Treasurer and Chief Tax Officer of the Company
shall also be nominated by the Class A Shareholder and shall
be subject to the approval of the Board of Directors.  The
Class B Shareholder agrees to instruct the Directors
appointed by it to vote in favor of the nominees for such
officer positions who are nominated by the Class A
Shareholder, or in favor of removal or replacement of any
such officer if requested by the nominating Shareholder.

          (c)  Prior to the occurrence of the Class B Flip
Date, the Vice President, Treasurer and Chief Tax Officer of
the Company shall be nominated by the Class B Shareholder
and shall be subject to the approval of the Board of
Directors.  The Class A Shareholder agrees to instruct the
Directors appointed by it to vote in favor of the nominee
for such officer position who is nominated by the Class B
Shareholder, or in favor of removal or replacement of such
officer if requested by the nominating Shareholder.

          (d)  The President of the Company shall have the
rights and responsibilities to manage the day-to-day
operations and affairs of the Company, subject to the Annual
Budget and the overall direction of the Board of Directors.

          (e)  The Vice-President, Treasurer and Chief Tax
Officer of the Company shall have the rights and
responsibilities to oversee the Annual Budget and the
Company's books and accounting records, manage the Company's
tax returns and tax elections, assist in determining
Distributable Cash Flow pursuant to Section 3.08, and assist
in achieving the Company's compliance with the requirements
in Section 3.10 and Article IV, as well as any other duties
assigned by the President, and may utilize the services of a
qualified accounting firm approved by the Board of Directors
(which shall initially be Deloitte & Touche LLP) to assist
in the performance of such responsibilities.

          (f)  The Secretary of the Company shall have the
rights and responsibilities to maintain the Company's
minutes, records, communications and other administrative
duties as assigned by the President.  The Secretary may be
assisted by one or more Assistant Secretaries, if such are
approved by the Board of Directors, each of whose duties
shall be assigned by the Secretary.

          Section 3.03   Board of Directors of Panda of
Nepal; Election; Term.  (a)  The PON Board of Directors
shall consist of four (4) members.  The Class A Shareholder
shall be entitled to appoint two (2) of the four (4)
directors prior to the occurrence of the Class B Flip Date
and shall be entitled to appoint three (3) of the four (4)
directors thereafter.  The Class B Shareholder shall be
entitled to appoint two (2) of the four directors prior to
the occurrence of the Class B Flip Date and shall be
entitled to appoint one (1) of the four (4) directors
thereafter.  The Shareholders agree to cause the shares of
Panda of Nepal to be voted to elect such directors at the
annual general meeting of Panda of Nepal shareholders called
for such purpose or at any other meeting of shareholders at
which directors are to be elected.  Such action may be taken
by unanimous consent of the Panda of Nepal shareholders
without a meeting.  The Shareholders agree to cause the
shares of Panda of Nepal to be voted in favor of removal or
replacement of any such director if requested by the
nominating Shareholder.

          (b)  Each director of Panda of Nepal shall serve a
two-year (2) term; provided that the term of one (1) of the
directors nominated by the Class B Shareholder shall
terminate on the Class B Flip Date.  The Class B Shareholder
shall designate which of the two (2) directors it nominates
shall be subject to the preceding sentence.  The Class A
Shareholder shall be entitled to nominate a third director
to replace the outgoing director within thirty (30) days
after the Class B Flip Date.  This newly-appointed director
shall serve the remainder of the outgoing director's term.
There shall be no limit to the number of terms a Panda of
Nepal director may serve.  A Panda of Nepal director may be
removed only with the consent of the Shareholder which
appointed such director.

          (c)  The overall management and direction of Panda
of Nepal shall be exercised by the PON Board of Directors
and, except as expressly provided herein, in the PON
Organizational Documents, or under the Act, the shareholders
of Panda of Nepal shall not be required to vote on, approve
or consent to any actions of Panda of Nepal.  All decisions
of the PON Board of Directors shall be by majority vote,
with each director having one (1) vote, except to the extent
a decision is required to be by the unanimous vote of the
PON Board of Directors as hereinafter provided.  A PON
director shall not be bound by an instruction from the
Company, as the shareholder of Panda of Nepal, but shall be
free to vote as directed by the Shareholder which has
appointed such director.

          (d)  Without limiting anything set forth in
Section 3.03(c), the following matters shall require the
majority vote of the PON Board of Directors:

             (i)   the appointment of officers of Panda of
     Nepal;

             (ii)  the appointment of directors of BKPC
     that are entitled to be appointed by Panda of Nepal,
     subject to the provisions of Section 3.05;

             (iii) the approval of the Annual Budget for
     Panda of Nepal; and

             (iv)  any instruction to the directors on the
     BKPC Board of Directors appointed by Panda of Nepal as
     to how to vote on a particular matter brought before
     said board (including approval of the Annual Budget for
     BKPC), except as otherwise provided in Section
     3.03(e)(xv).

          (e)  The following matters shall require unanimous
vote of the PON Board of Directors:

               (i)  any issuance by Panda of Nepal of
     additional shares of stock;

              (ii)  any increase in the authorized capital
     of Panda of Nepal;

             (iii)  the incurrence by Panda of Nepal of any
     indebtedness other than as provided for in this
     Agreement;

              (iv)  any transaction involving the merger,
     consolidation or reorganization of Panda of Nepal or
     the sale of all or substantially all of the assets of
     Panda of Nepal;

               (v)  any transaction involving the entry by
     Panda of Nepal into any partnership, profit-sharing or
     royalty agreement or other similar arrangement whereby
     Panda of Nepal's income or profits are, or may be,
     shared with any other Person;

              (vi) the filing by Panda of Nepal of any
     voluntary petition of bankruptcy or insolvency;

             (vii) any loan, advance, capital contribution
     to or investment in the stock or other securities or
     evidences of indebtedness of or interests in any
     Person, other than as provided for in this Agreement or
     required in the Financing Documents as in effect on the
     date hereof;

             (viii)any transaction involving a sale,
     transfer, pledge (other than in connection with the
     Financing Documents), or other disposition of Panda of
     Nepal's shares in BKPC;

              (ix)  the initiation, settlement or compromise
     by Panda of Nepal of any arbitration, litigation or
     other legal or administrative proceeding, or the
     settlement or compromise of any threatened claim,
     involving an amount in excess of $50,000;

               (x)  any amendment to the PON Organizational
     Documents;

               (xi) any decision to cause Panda of Nepal to
     enter into or conduct any business other than the
     ownership of shares of BKPC and activities related or
     incidental thereto including, without limitation, any
     activity required under the Financing Documents;

             (xii) any decision with respect to the
     entering into, or amendment of, any Affiliate Contract;

            (xiii) the remuneration, if any, to be paid to
     officers and directors of Panda of Nepal and to
     Affiliates for services performed (unless approved in
     the Annual Budget);
             (xiv) any decision with respect to the
     liquidation or winding up of Panda of Nepal; and

              (xv) any instruction to the directors on the
     BKPC Board of Directors appointed by Panda of Nepal as
     to how to vote on a particular matter brought before
     said board if it is a matter described in the following
     clauses (A) through (M):

               (A)  any issuance by BKPC of additional
     shares of stock except in connection with capital
     contributions provided for in this Agreement or the
     Financing Documents as in effect on the date hereof;

               (B)  any increase in the authorized capital
     of BKPC except in connection with capital contributions
     provided for in this Agreement or the Financing
     Documents as in effect on the date hereof;

               (C)  the incurrence by BKPC of any
     indebtedness other than as provided for in this
     Agreement or the Financing Documents as in effect on
     the date hereof;

               (D)  any transaction involving the merger,
     consolidation or reorganization of BKPC or the sale of
     all or substantially all of the assets of BKPC;

               (E)  any transaction involving the entry by
     BKPC into any partnership, profit-sharing or royalty
     agreement or other similar arrangement whereby BKPC's
     income or profits are, or may be, shared with any other
     Person;

               (F)  the filing by BKPC of any voluntary
     petition of bankruptcy or insolvency;

               (G)  any loan, advance, capital contribution
     to or investment in the stock or other securities or
     evidences of indebtedness of or interests in any
     Person, other than as provided for in this Agreement or
     required in the Financing Documents as in effect on the
     date hereof;

               (H)  the initiation, settlement or compromise
     by BKPC of any arbitration, litigation or other legal
     or administrative proceeding, or the settlement or
     compromise of any threatened claim, involving an amount
     in excess of $50,000;

               (I)  any amendment to the BKPC Organizational
     Documents;

               (J)  any decision to cause BKPC to enter into
     or conduct any business other than the ownership of the
     Project and activities related or incidental thereto
     including, without limitation, any activity required
     under the Financing Documents;

               (K)  any decision with respect to the
     entering into, or amendment of, any Affiliate Contract;

               (L)  the remuneration, if any, to be paid to
     officers and directors of BKPC and to Affiliates for
     services performed (unless approved in the Annual
     Budget); and

               (M)  any decision with respect to the
     liquidation or winding up of BKPC.

          Section 3.04  Officers of Panda of Nepal.

          (a)  Panda of Nepal shall have the following
officers:  a President; a Vice President, Treasurer and
Chief Tax Officer; a Secretary; and one or more Assistant
Secretaries.  Each officer shall serve until the next annual
general meeting of Shareholders unless prior thereto such
officer dies, becomes incapacitated, resigns or is removed
from office.  An officer may be removed only with the
consent of the Shareholder which appointed such officer.

          (b)  The President and the Secretary (which
offices may be held by the same individual) and each
Assistant Secretary, if any, of Panda of Nepal shall be
nominated by the Class A Shareholder and shall be subject to
the approval of the PON Board of Directors.  In addition,
following the occurrence of the Class B Flip Date, the Vice
President, Treasurer and Chief Tax Officer of Panda of Nepal
shall also be nominated by the Class A Shareholder and shall
be subject to the approval of the PON Board of Directors.
The Class B Shareholder agrees to cause the directors
nominated by it to vote in favor of the nominees for such
officer positions who are nominated by the Class A
Shareholder, or in favor of removal or replacement of any
such officer if requested by the nominating Shareholder.

          (c)  Prior to the occurrence of the Class B Flip
Date, the Vice President, Treasurer and Chief Tax Officer of
Panda of Nepal shall be nominated by the Class B Shareholder
and shall be subject to the approval of the PON Board of
Directors.  The Class A Shareholder agrees to cause the
directors nominated by it to vote in favor of the nominee
for such officer position who is nominated by the Class B
Shareholder, or in favor of removal or replacement of such
officer if requested by the nominating Shareholder.

          (d)  The President of Panda of Nepal shall have
the rights and responsibilities to manage the day-to-day
operations and affairs of Panda of Nepal, subject to the
Annual Budget and the overall direction of the PON Board of
Directors.

          (e)  The Vice-President, Treasurer and Chief Tax
Officer of Panda of Nepal shall have the rights and
responsibilities to oversee the Annual Budget and Panda of
Nepal's books and accounting records, manage Panda of
Nepal's tax returns and tax elections, and assist in
determining Distributable Cash Flow pursuant to Section 3.08
and in achieving Panda of Nepal's compliance with the
requirements in Article IV as well as any other duties
assigned by the President, and may utilize the services of a
qualified accounting firm approved by the Board of Directors
(which shall initially be Deloitte & Touche LLP) to assist
in the performance of such responsibilities.

          (f)  The Secretary of Panda of Nepal shall have
the rights and responsibilities to maintain Panda of Nepal's
minutes, records, communications and other administrative
duties as assigned by the President.  The Secretary may be
assisted by one or more Assistant Secretaries, if such are
approved by the PON Board of Directors, each of whose duties
shall be assigned by the Secretary.

          Section 3.05   Directors of BKPC.

          (a)  The Class A Shareholder shall be entitled to
appoint two (2) of the four (4) directors which Panda of
Nepal is entitled to appoint on the BKPC Board of Directors
prior to the occurrence of the Class B Flip Date and shall
be entitled to appoint three (3) of such four (4) directors
thereafter.  The Class B Shareholder shall be entitled to
appoint two (2) of the four (4) directors of BKPC which
Panda of Nepal is entitled to appoint prior to the
occurrence of the Class B Flip Date and shall be entitled to
appoint one (1) BKPC director thereafter.

          (b)  Panda of Nepal, as a shareholder of BKPC
shall take all steps necessary to assure that the directors
appointed by the Shareholders pursuant to Section 3.05(a)
are elected to the BKPC Board of Directors and are removed
or replaced if requested by the appointing Shareholder.

          (c)  Subject to their fiduciary duties under
applicable law, each of the directors on the BKPC Board of
Directors appointed pursuant to Section 3.05(a) shall vote
in meetings of the BKPC Board of Directors only as
instructed by the PON Board of Directors; provided, however,
that after the Class B Flip Date the BKPC director appointed
by the Class B Shareholder may also elect to abstain in his
sole discretion.  Failure to comply with this requirement on
the basis of fiduciary duty shall not excuse a breach of
such requirement.  Without limiting the foregoing, each of
the directors on the BKPC Board of Directors appointed
pursuant to Section 3.05(a) shall vote in favor of the
officers of BKPC nominated by the directors on the BKPC
Board of Directors appointed by the Class A Shareholder, and
in favor of removal or replacement of any such officers if
requested by such directors.  Notwithstanding the foregoing,
the directors on the BKPC Board of Directors appointed
pursuant to Section 3.05(a) may vote on any matter brought
before the BKPC Board of Directors for which an instruction
has not been given by the PON Board of Directors if all of
the directors appointed by the Shareholders present at the
meeting agree to vote in the same manner (i.e.,
affirmatively, negatively or abstention) on such matter.

          (d)  It is acknowledged and agreed by the
Shareholders that Panda will have administrative and general
day-to-day and operational control of BKPC and the Project,
subject to the overall direction of the BKPC Board of
Directors, and will appoint the project manager, site
manager and other necessary administrative personnel for the
Project.

          Section 3.06   Meetings of Boards of Directors.
The Parties shall cooperate in good faith to schedule
meetings of the boards of directors of the Company, Panda of
Nepal and BKPC at times when and at places where the members
of such boards of directors can reasonably be expected to
attend.  The Shareholders will use good faith efforts to
cause directors appointed by them to attend each meeting of
the respective boards of directors of the Company, Panda of
Nepal and BKPC in person or, if permitted by applicable law,
through an alternate representative or proxy.


          Section 3.07   Contracts for Services with
Affiliates.  The Company, Panda of Nepal and BKPC may from
time to time hereafter enter into one or more Affiliate
Contracts for the procurement by the Company, Panda of Nepal
or BKPC, as the case may be, of services that are necessary
or appropriate for the proper functioning of the Company,
Panda of Nepal or BKPC, as the case may be; provided, that
any such Affiliate Contracts shall first be approved by the
board of directors of the company wishing to enter into said
contract in accordance with Section 3.01(e)(xii), or
3.03(e)(xii) or 3.03(e)(xv)(K), as the case may be.

          Section 3.08  Distributable Cash Flow.  As soon as
practicable following the end of each month, an amount equal
to the amount of the Distributable Cash Flow for said month,
less any amounts necessary to pay administrative expenses of
Panda of Nepal or the Company, as the case may be (such
amounts to be consistent with the Annual Budget for such
company or as otherwise approved by the board of directors
of such company), shall be distributed to the Company (in
the case of Distributable Cash Flow of Panda of Nepal) or to
the Shareholders (in the case of Distributable Cash Flow of
the Company).  Shareholders may provide the Company with
wiring instructions for distributions and the Company shall
make distributions pursuant to such wiring instructions.
Distributions shall be made in U.S. Dollars.  Subject to
reasonable working capital requirements, the BKPC Annual
Budget and the requirements of the Financing Documents and
applicable law, the Shareholders agree to cause the
directors and officers appointed by them and their directors
at BKPC to seek to promptly distribute cash flow available
for distribution at BKPC to the shareholders of BKPC.

          Section 3.09   Distributable Percentages;
Distributions.  Distributions of Distributable Cash Flow
from the Company shall be made according to the
Distributable Percentage applicable to each Shareholder with
respect to such distribution.

          Section 3.10   Accounting, Recordkeeping and
Reporting.

          (a)  The books and records of the Company and
Panda of Nepal shall be kept in accordance with generally
accepted accounting principles in the Cayman Islands,
consistently applied, and in accordance with generally
accepted accounting principles in the United States,
consistently applied.  The Shareholders shall cause the
books and records of BKPC to be kept in accordance with
generally accepted accounting principles in the United
States, consistently applied.

          (b)  The accounts of the Company and Panda of
Nepal shall be audited by independent public accountants of
international reputation whose retention by the Company
shall be agreed upon by the Board of Directors or the PON
Board of Directors, as applicable.  The Shareholders agree
that Deloitte & Touche LLP shall initially be appointed as
the auditors of the Company and Panda of Nepal.  The
Shareholders shall cause the accounts of BKPC to be audited
by independent public accountants licensed to do business in
the Kingdom of Nepal whose retention by BKPC shall be agreed
upon by the BKPC Board of Directors.  The Shareholders agree
that T. R. Upadhya & Company shall initially be appointed as
the auditors of BKPC.

          (c)  The books of account of the Company and Panda
of Nepal shall be kept and maintained at the principal
office of the Company or Panda of Nepal, as applicable, or
at such other place outside of the United States as the
Board of Directors or the PON Board of Directors, as the
case may be, shall determine.  The Shareholders shall cause
the books of account of BKPC to be kept and maintained at
the principal office of BKPC in the Kingdom of Nepal or such
other place outside of the United States as the BKPC Board
of Directors shall determine.

          (d)  As soon as practicably available but, in any
event, within one hundred twenty (120) days after the close
of each Fiscal Year the Company shall cause to be prepared
and shall deliver to the Shareholders:

               (i)  a profit and loss statement and a
     statement of changes in financial position for such
     Fiscal Year, a balance sheet and a statement of each
     Shareholder's capital account as of the end of such
     Fiscal Year, together with a report thereon of the
     Company's independent public accountants; and

               (ii) a statement showing the computation of
     the Distributable Cash Flow for the Fiscal Year.

          (e)  As soon as practicably available but, in any
event, within sixty (60) days after the close of each
quarterly accounting period in each Fiscal Year, the Company
shall furnish to all Shareholders:

               (i)  complete unaudited statements of
     financial condition of the Company as at the end of
     such quarterly period, and with related statements of
     income and retained earnings and statements of changes
     in cash flow for such quarterly period and for the
     elapsed portion of the Fiscal Year ending on the last
     day of such quarterly period, in each case setting
     forth comparative figures for the related periods in
     the prior Fiscal Year, all of which shall be in
     agreement with the Company's books of account, subject
     to normal year-end audit adjustments, and certified by
     an authorized officer of the Company; and

               (ii) a statement of all financial
     transactions in such quarterly period between the
     Company and any Affiliate, including a certification
     that such transactions were on ordinary commercial
     terms negotiated on an arms-length basis.

          (f)  As soon as available, but, in any event,
within one hundred twenty (120) days after the close of the
Fiscal Year for Panda of Nepal or BKPC, as the case may be,
Panda of Nepal shall deliver to the Shareholders:

               (i)  statements of financial condition of
     each of Panda of Nepal and BKPC, approved by the boards
     of directors of such companies as applicable, as of the
     end of such Fiscal Year with the related statements of
     income and retained earnings, statements of changes in
     cash flow for such Fiscal Year, in each case with
     supporting schedules and setting forth comparative
     figures for such Fiscal Year and certified by each such
     company's independent public accountants (all such
     statements being in agreement with the relevant
     company's books of account and prepared in accordance
     with U.S. GAAP consistently applied);

               (ii) a statement of BKPC's independent public
     accountants setting forth all transactions between BKPC
     or Panda of Nepal, as the case may be, and any
     Affiliate during such Fiscal Year;

              (iii)to the extent provided to the Lenders, a
     report of BKPC's independent public accountants'
     stating that in the course of their regular audit of
     the financial statements of BKPC, they obtained no
     knowledge of any Default or Event of Default (as such
     terms are defined in the Investment Agreement) which
     has occurred and is continuing or, if in the opinion of
     said accountants such a Default or Event of Default has
     occurred and is continuing, a statement as to the
     nature thereof; and

              (iv) a copy of any "management letter" or
     other similar communication received by the company
     from the company's independent public accountants in
     relation to the company's financial, accounting and
     other systems, management and accounts.

          (g)  As soon as practicably available but, in any
     event, within sixty (60) days after the close of each
     quarterly accounting period in each Fiscal Year, the
     Company shall furnish to all Shareholders:

               (i)  complete unaudited statements of
     financial condition of each of Panda of Nepal and BKPC
     as at the end of such quarterly period, and with
     related statements of income and retained earnings and
     statements of changes in cash flow for such quarterly
     period and for the elapsed portion of the Fiscal Year
     ending on the last day of such quarterly period, in
     each case setting forth comparative figures for the
     related periods in the prior Fiscal Year, all of which
     shall be in agreement with the applicable company's
     books of account, subject to normal year-end audit
     adjustments, and certified by an authorized officer of
     the applicable company; and

               (ii) a statement of all financial
     transactions in such quarterly period between BKPC or
     Panda of Nepal, as the case may be, and any Affiliate;
     and

              (iii)any other statements or reports prepared
     by the auditors of BKPC and Panda of Nepal and provided
     to the Lenders.

          (h)  Each Shareholder shall have the right, upon
reasonable notice, to inspect, copy and audit the books,
records and financial statements of the Company and of Panda
of Nepal, and the computation of Distributable Cash Flow.
The Shareholders shall authorize and instruct their
appointed directors to the PON Board of Directors and their
appointees to the BKPC Board of Directors to provide to the
Shareholders access to the books, records and financial
statements of BKPC for the same purpose, and access to
BKPC's auditors for purposes of discussing their interim and
final audit results, and to cause BKPC to prepare and
deliver such additional reports as either Shareholder may
from time to time reasonably request, including but not
limited to:

          (i)  monthly reports including:  a balance sheet
     and statement of capital as of the last day of such
     month; statements of income and cash flows for such
     month; actual-to-plan income comparisons for such
     month; appropriate statistical information for such
     month; and a written explanation of key drivers of
     earnings and variances; and

          (ii) annually, by September 1 of each year, a
     three-year forecast by month for the subsequent three
     calendar years, and, quarterly, updates of such
     forecast.

          Section 3.11   Meetings of Shareholders and Voting
Requirements.

          (a)  An annual general meeting of the Shareholders
of the Company and an annual meeting of the shareholders of
Panda of Nepal, shall be held in every calendar year at such
time and place as may be determined by the board of
directors or the shareholders of each of such companies, but
under no circumstances shall such meetings be held in the
United States.  Provided that if no other time and place is
prescribed by the board of directors or the shareholders of
such companies, the annual general meeting of each of the
Company and Panda of Nepal shall be held at the registered
office of the Company or Panda of Nepal as applicable, on
the second Wednesday in December of each year commencing at
ten o'clock in the morning in the case of the Company and
twelve o'clock noon in the case of Panda of Nepal; provided
further, that not more than fifteen months shall be allowed
to elapse between any two such annual general meetings.
Extraordinary general meetings of the shareholders of the
Company and Panda of Nepal, respectively, may be held at
such times and places as shall be determined by such
shareholders.  Meetings may be called by any shareholder
holding at least ten percent (10%) of all issued and
outstanding Shares of any class of stock.  No meeting of
shareholders of the Company and Panda of Nepal,
respectively, may be held unless not less than ten (10)
business days' prior notice has been given to each
shareholder of such company, unless all shareholders of such
company waive notice or approve a shorter notice period.
Notices of meetings of shareholders of each such company
shall be deemed properly given if transmitted in the same
manner as is authorized for any notice under this Agreement.
If any shareholder is unable to be present in person for any
extraordinary general meeting of each company, that
shareholder may participate in the meeting by telephone
conference call or by nominating a proxy to represent such
shareholder at the meeting, except as otherwise provided in
the Company Organizational Documents or the PON
Organizational Documents, as the case may be.  Any action
required to be taken at an extraordinary general meeting of
shareholders of the Company or Panda of Nepal may be taken
by unanimous consent of such shareholders without a meeting.

          (b)  All decisions required to be taken by the
Shareholders under the Company Organizational Documents and
by the shareholders of Panda of Nepal under the PON
Organizational Documents, as the case may be, or under this
Agreement shall require the affirmative vote of shareholders
holding a majority of the issued and outstanding shares of
each class of stock (voting separately as a class) of such
company, except in the case of a decision requiring a
greater percentage affirmative vote as provided in the
Company Organizational Documents or the PON Organizational
Documents, as the case may be, or under the Act, in which
case such decisions shall require the affirmative vote of
such greater percentage of each class of stock (voting
separately as a class) of such company or with respect to a
decision made pursuant to a unanimous consent without a
meeting as provided in Section 3.11(a).


                         ARTICLE IV
               PROFITS, LOSSES AND TAX MATTERS

          Section 4.01  Sharing of Profits and Losses.  For
U.S. tax purposes and for financial accounting purposes, any
income, gain, deductions (including depreciation), losses
and credits (including any tax payments) of the Company (or
items thereof) shall be allocated to the Shareholders on the
basis of their respective Distributable Percentages;
provided, however, at such time as either Shareholder has
been allocated aggregate depreciation deductions equal to
its Capital Contributions, all subsequent depreciation
deductions shall be allocated to the other Shareholder until
it has also been allocated aggregate depreciation deductions
equal to its Capital Contributions.

          Section 4.02  Compliance with U.S. Internal
Revenue Code.  For purposes of Section 4.01, the provisions
of this Agreement concerning U.S. tax matters shall be
interpreted and applied in accordance with the provisions of
the IRC and the Regulations promulgated thereunder by the
U.S. Treasury Department.  The minimum gain chargeback
provisions of Treasury Regulations section 1.704-2(f), the
partner nonrecourse debt minimum gain provisions of Treasury
Regulations section 1.704-2(i)(4), and the qualified income
offset provision of Treasury Regulations section 1.704-
1(b)(2) shall be considered to be part of this Agreement.  A
separate capital account shall be maintained for each
Shareholder in accordance with Treasury Regulations section
1.704-1(b).  If any Shareholder contributes appreciated or
depreciated property to the Company or for any other reason
the tax basis of property differs from its book basis for
purposes of maintaining the Shareholders' capital accounts,
allocations of tax items to Shareholders shall be adjusted
as required by IRC Section 704(c) and Treasury Regulations
1.704-3(d).  If there are any "partner nonrecourse
deductions" (within the meaning of Treasury Regulations
section 1.704-2(i)(1)), then these shall be allocated to the
Shareholder that bears the economic risk of loss for the
"partner nonrecourse liability" (within the meaning of
Treasury Regulations section 1.704-2(b)(4)) to which the
deductions are attributable.

          Section 4.03  Tax Matters Partner.

          (a)  For purposes of all dealings with the U.S.
Internal Revenue Service, the Company and Panda of Nepal
shall nominate the Class B Shareholder to serve as "Tax
Matters Partner" (as that term is defined in the IRC) prior
to the Class B Flip Date and shall nominate the Class A
Shareholder to serve as "Tax Matters Partner" (as such term
is defined in the IRC) following the Class B Flip Date.

          (b)  The Tax Matters Partner shall provide the
Class A Shareholder and the Class B Shareholder with
information as and when necessary to comply with the
requirements under the IRC.

          (c)  The Tax Matters Partner shall cooperate with
the other Shareholder and, for other than routine
correspondence and communications, shall promptly provide
the other Shareholder with copies of notices or other
materials from, and inform the other Shareholder of
discussions with, the Internal Revenue Service and shall
provide the other Shareholder with notice of all scheduled
administrative proceedings or audits, including meetings
with Internal Revenue Service agents, technical advice
conferences and appellate hearings as soon as possible after
receiving notice of the scheduling of proceedings.  Each of
the Shareholders shall be entitled to participate at its own
expense in any such administrative proceedings or audits.

          (d)  The Tax Matters Partner shall consult with
the Shareholders before agreeing to extend the period of
limitations for a request for an administrative adjustment
of partnership items after a return has been filed and shall
agree to such extension if either the Tax Matters Partner or
any Shareholder believes that such extension is desirable,
and shall obtain the prior consent of each Shareholder prior
to entering into any settlement agreement with the Internal
Revenue Service or the U.S. Department of the Treasury with
respect to the Company's items of income, gain, loss or
deduction which purports to bind any Shareholder other than
the Tax Matters Partner, which consent may not be
unreasonably withheld.

          (e)  The Company shall make a valid and timely
election under Section 754 of the IRC.

          Section 4.04  Dissolution and Liquidation..

          (a)  Upon dissolution of the Company, the Board of
Directors shall proceed to wind up the affairs of the
Company and liquidate the remaining property and assets of
the Company.  The proceeds of such liquidation shall be
applied in the following order of priority:

               (i)  first, to the expenses of such
     liquidation;

               (ii) second, to the debts and liabilities of
     the Company to third parties, if any, in order of
     priority provided by law;

             (iii) third, a reasonable reserve shall be set
     up to provide for any contingent or unforeseen
     liabilities or obligations of the Company to third
     parties (to be held and disbursed, at the discretion of
     the Board of Directors, by an escrow agent selected by
     the Board of Directors) and at the expiration of such
     period as the Board of Directors may deem advisable,
     the balance remaining in such reserve shall be
     distributed as provided herein;

               (iv) fourth, to repayment of all Shareholder
     loans and any other debts of the Company to the
     Shareholders;

               (v)  fifth, to the repayment of the
     Shareholders' respective positive Capital Accounts in
     the ratio of the positive Capital Account balance of
     each to the aggregate of the Capital Account balances
     of all Shareholders; and

               (vi) sixth, the remaining assets of the
     Company, if any, shall be distributed to the
     Shareholders on the basis of their respective
     Distributable Percentages.

          (b)  Immediately prior to any liquidating
distributions, the Company will be treated as if it sold all
its assets for fair market value and any gain for U.S. tax
purposes will be allocated to the Capital Accounts of the
Shareholders pursuant to their Distributable Percentages.


                          ARTICLE V
                   TRANSFER AND ASSIGNMENT

          Section 5.01  Restrictions on Transfer.

          (a)  No Shareholder may Transfer all or any part
of its Shares unless prior thereto, the Shareholder
intending to make such Transfer has received the consent of
the other Shareholder or Shareholders holding at least 51%
of the aggregate Shares of each Class of Shares held by such
other Shareholder or Shareholders, such consent not to be
unreasonably withheld or delayed.  Notwithstanding the
foregoing, the consent of the other Shareholders shall not
be required in the case of a Transfer to a Permitted
Transferee; provided, in the case of such a Transfer the
remaining provisions of this Section 5.01 shall be complied
with.

          (b)  No permitted Transfer of any Shares shall be
valid and effective until the transferee of such Shares has
executed an instrument in writing agreeing to become a party
to this Agreement and to be bound by all the terms and
conditions hereof.  The Shareholders agree to take any
actions (including the voting of their Shares) that may from
time to time be necessary in order to effect all of the
restrictions on the Transfer of Shares set forth herein.
For this purpose, the Company and the Shareholders undertake
to place a legend on all Share certificates stating as
follows:

          "The Shares represented by this Certificate are
          subject to certain restrictions established under
          the Companies Law of the Cayman Islands, as
          amended from time to time (the "Act"), the terms
          of the Amended and Restated Memorandum of
          Association of Panda Bhote Koshi (the "Company")
          dated December 18, 1997, as amended from time to
          time (the "Memorandum of Association"), the terms
          of the Amended and Restated Articles of
          Association of the Company dated December 18,
          1997, as amended from time to time (the "Articles
          of Association"), and the Shareholders Agreement
          dated as of December 18, 1997, as amended,
          modified or supplemented from time to time (the
          "Agreement").  A copy of each of the Memorandum of
          Association, the Articles of Association and the
          Agreement are on file at the offices of the
          Company and the Memorandum of Association and the
          Articles of Association have been filed with the
          Registrar of Companies of the Government of the
          Cayman Islands, and will be furnished to any
          prospective purchaser on request.  The Act, the
          Memorandum of Association, the Articles of
          Association and the Agreement provide, among other
          things, for certain restrictions on the transfer
          of the Shares represented by this Certificate, and
          any purported transfer in violation of these
          restrictions will not be registered by the Company
          and shall be null and void ab initio.  By
          acceptance of this Certificate, each holder hereof
          agrees to be bound by the provisions of the Act,
          the Memorandum of Association, the Articles of
          Association and the Agreement.

          The Shares represented by this Certificate have
          not been registered under the Securities Act of
          1933 of the United States of America, as amended,
          modified or supplemented, or any securities law of
          any state of the United States of America and may
          not be transferred, sold or otherwise disposed of
          in the absence of such registration or an
          exemption therefrom."

          (c)  No Transfer shall be made if such Transfer
would be (i) in violation of applicable law, including
without limitation the Act and applicable securities laws,
(ii) in violation of any of the provisions of the Company
Organizational Documents, or (iii) in violation of the terms
of, or in any manner that would rise to a default under, the
Financing Documents.  In addition, no Transfer shall be made
or permitted if (x) a Transfer would result in the Company's
ceasing to be an "exempt wholesale generator" (an "EWG")
within the meaning of the U.S. Public Utility Holding
Company Act of 1935, as amended, supplemented or replaced
from time to time, if the Company then qualifies as an EWG;
or (y) a Transfer would cause the Company to be terminated
within the meaning of IRC Section 708 assuming that the
Company is treated as a partnership for United States income
tax purposes, unless this provision is waived by the
Shareholders.

          (d)  Notwithstanding any other provisions of this
Agreement (except that Section 5.01(d)(ii) shall not be
applicable to any transaction described in Section 5.02):

               (i)  No Transfer shall be effected if such
Transfer would violate the terms of the MCNIC Consent; and

               (ii)  from the date hereof and at all times
prior to the termination of this Agreement, Panda, directly
or indirectly, shall own at least fifty-one percent (51%) of
the Class A Shares and MCNIC, directly or indirectly, shall
own at least fifty-one percent (51%) of the Class B Shares
unless prior written consent for any Transfer by a
Shareholder is obtained from the other Shareholder.  Such
consent may be withheld for any reason.  Notwithstanding
anything to the contrary provided in this subparagraph (ii),
the provisions of this subparagraph (ii) shall be deemed
satisfied if all of the Class A Shares are acquired by the
Class B Shareholder or all of the Class B Shares are
acquired by the Class A Shareholder whether pursuant to a
buy-sell transaction which complies with Section 11.04 or
otherwise.

          Section 5.02  Right of First Negotiation Regarding
Disposal of Shares.  Except in the case of the circumstances
described in Section 11.04 (in which case the provisions of
Section 11.04 shall apply and not this Section 5.02), if any
Shareholder wishes to dispose of any of such Shareholder's
Shares, or otherwise effect any other form of Transfer,
whether voluntary or involuntary, such as, but not limited
to, the execution of a final judgment or assignment for the
benefit of creditors, with respect to such Shares, such
Shareholder shall comply with the following conditions
precedent in order that said disposition or other transfer
of such Shares shall be valid:

          (a)  The Shareholder desiring to dispose of or
otherwise transfer any Shares ("Seller") shall first offer
to sell the Shares ("Offered Shares") to the other
Shareholders ("Offeree"), by transmitting to the Offeree and
the Company a written notice which shall state the terms of
the proposed sale, including the price for the Offered
Shares, which terms shall not require the Seller to provide
representations or warranties, covenants or indemnities of
any kind whatsoever except with respect to title, due
authorization, absence of conflicts and enforceability of
such agreement ("Sale Notice").

          (b)  The Offeree shall have the right to offer to
buy all, but not less than all, of said Shares at the price
stated in the Sale Notice in a written notice provided to
the Seller within thirty (30) days of the Offeree's receipt
of the Sale Notice (the "Offeree's Price").

          (c)  The Seller shall have thirty (30) days to
accept or reject the Offeree's offer, if any, to purchase
the Offered Shares.  If the Seller accepts the Offeree's
offer, the closing of such sale shall be within ninety (90)
days of such acceptance if prior to the Project Completion
Date or within sixty (60) days if such acceptance occurs
thereafter.

          (d)  If the Offeree makes no offer to purchase all
of the Offered Shares, then the consent requirements of
Section 5.01 shall be deemed satisfied and, subject to the
share retention requirements of the MCNIC Consent, the
Seller shall be free to sell the Offered Shares within one
hundred eighty (180) days from the date of the Sale Notice
to any person at not less than the Offeree's Price and on no
more favorable terms and conditions than those contained in
the Seller's original written offer; provided that the
Seller may make representations and warranties to such other
parties covering matters that are customary for a seller in
similar transactions, even if said representations and
warranties and indemnities are more extensive than those
contained in Seller's original written offer.  If the Seller
shall be unable within said period to sell the Offered
Shares at a price that is equal to or higher than the
Offeree's price stated in Offeree's original offer and if it
should desire to sell at a lower price or under amended
terms and conditions (other than changes in the
representations and warranties and indemnities provided for
above), it shall be required to reoffer said Offered Shares
to the Offeree in accordance with this Section and comply
with the provisions of Section 5.01.

          (e)  Failure of the Offeree Shareholder to
purchase any Shares in accordance with the foregoing and a
subsequent sale of such Shares to any other person shall
not, as to any future sale or transfer, discharge any such
Shares from any of the restrictions herein contained.  It is
the intent of the Shareholders that all restrictions hereby
imposed on the sale or transfer of Shares shall apply to all
Shares thereof, whenever, howsoever, or by whomsoever
acquired, in the hands of all holders or owners, whether
original parties or subsequent purchasers or transferees and
whether acquired through the voluntary or involuntary act of
a Shareholder or by operation of law.

          (f)  Any Transfer to which this Article applies in
violation hereof shall not be recognized by the Company and
shall be considered null and void ab initio.  Any Transfer
in violation of the Company Organizational Documents also
shall not be recognized by the Company and shall be
considered null and void.  No Transfer shall be effective
for any purpose unless and until recorded on the Company's
books.

          Section 5.03  Liability of Transferor.  In the
event that any Shareholder Transfers all or any portion of
its Shares in a transaction permitted under this Article,
such Shareholder shall cause the transferee to execute one
or more instruments pursuant to which the transferee adopts
and agrees to be bound as a party to this Agreement and
until the transferee executes said instrument(s), the
transferor shall remain fully liable for the acts, omissions
or defaults of the transferee with respect to such Shares
and the provisions of this Agreement, as if the transferor
were still a party hereto.  No Transfer shall relieve the
transferor of responsibility for its own acts, omissions or
defaults.

          Section 5.04   Expenses in Connection With
Transfers.  Each Shareholder shall reimburse the Company for
all reasonable expenses incurred by the Company in
connection with any Transfer proposed by such Shareholder.

          Section 5.05  Collateral Assignment.
Notwithstanding any other provision of this Agreement, each
of the Parties consents to a collateral assignment to the
Lenders of all of the Class A Shareholder's rights hereunder
pursuant to the MCNIC Consent.


                         ARTICLE VI
          REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 6.01  Panda Global Representations and
Warranties.  Panda Global represents and warrants to MCNIC
Nepal, as of the date hereof, as follows:

          (a)  Panda Global is an exempted company duly
organized, validly existing and in good standing under the
laws of the Cayman Islands.  Panda Global has all requisite
power and authority to own, lease and operate its
properties, to carry out its business as it is now being
conducted and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.

          (b)  The execution, delivery and performance by
Panda Global of this Agreement have been authorized by all
necessary action on the part of Panda Global, and do not and
will not:  (i) require any authorization, consent or
approval that has not been given or obtained from (x) the
owners of Panda Global or (y) any governmental authority;
(ii) violate any law, rule, regulation, order, or decree
presently in effect and having applicability to Panda
Global; (iii) violate the organizational documents of Panda
Global; (iv) violate any permit, concession, grant,
franchise, license or other governmental authorization,
approval, judgment, order or decree, or any mortgage,
agreement, deed of trust, indenture or any other instrument
to which Panda Global is a party or by which Panda Global or
any of its properties or assets are bound or which is
otherwise applicable to Panda Global; or (v) create or
impose any liens, mortgages, pledges, claims, security
interests, charges or encumbrances or obligations to create
a lien, charge, pledge or mortgage (collectively, "Liens"),
except for Liens which would not, individually or in the
aggregate, have a material adverse effect on the financial
condition or prospects or business of Panda Global.

          (c)  This Agreement is the legal and binding
obligation of Panda Global, enforceable in accordance with
its terms against Panda Global; and any other document
required by this Agreement to be delivered by Panda Global,
when duly executed and delivered by Panda Global, will be
the legal and binding obligation of Panda Global enforceable
in accordance with its terms against Panda Global, except to
the extent enforceability is limited by general principles
of equity.

          (d)  There is no litigation pending or, to the
best of Panda Global's knowledge, threatened to which Panda
Global is a party which, if adversely determined, would have
a material adverse effect on the financial condition or
prospects or business of the Company.

          (e)  All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried
out without the intervention of any person acting on behalf
of Panda Global in a manner that could give rise to any
valid claim against the Company, Panda of Nepal or any
Shareholder for any brokerage or finder's commission, fee or
similar compensation.

          (f)  The Company is an exempted company duly
organized, validly existing and in good standing under the
laws of the Cayman Islands.  The Company has all requisite
power and authority to own, lease and operate its
properties, to carry out its business as it is now being
conducted and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.

          (g)  The execution, delivery and performance by
the Company of this Agreement have been authorized by all
necessary action on the part of the Company, and do not and
will not:  (i) require any authorization, consent or
approval that has not been given or obtained from (x) the
owners of the Company or (y) any governmental authority;
(ii) violate any law, rule, regulation, order, or decree
presently in effect and having applicability to the Company;
(iii) violate the organizational documents of the Company;
(iv) violate any permit, concession, grant, franchise,
license or other governmental authorization, approval,
judgment, order or decree, or any mortgage, agreement, deed
of trust, indenture or any other instrument to which the
Company is a party or by which the Company or any of its
properties or assets are bound or which is otherwise
applicable to the Company; or (v) create or impose any
liens, mortgages, pledges, claims, security interests,
charges or encumbrances or obligations to create any Lien,
except for Liens which would not, individually or in the
aggregate, have a material adverse effect on the financial
condition or prospects or business of the Company.

          (h)  This Agreement is the legal and binding
obligation of the Company, enforceable in accordance with
its terms against the Company; and any other document
required by this Agreement to be delivered by the Company,
when duly executed and delivered by the Company, will be the
legal and binding obligation of the Company enforceable in
accordance with its terms against the Company, except to the
extent enforceability is limited by general principles of
equity.

          (i)  There is no litigation pending or, to the
best of the Company's knowledge, threatened to which the
Company is a party which, if adversely determined, would
have a material adverse effect on the financial condition or
prospects or business of the Company.

          (j)  All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried
out without the intervention of any person acting on behalf
of the Company in a manner that could give rise to any valid
claim against the Company, Panda of Nepal or any Shareholder
for any brokerage or finder's commission, fee or similar
compensation.

          (k)  Panda of Nepal is an exempted company duly
organized, validly existing and in good standing under the
laws of the Cayman Islands.  Panda of Nepal has all
requisite power and authority to own, lease and operate its
properties, to carry out its business as it is now being
conducted and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.

          (l)  The execution, delivery and performance by
Panda of Nepal of this Agreement have been authorized by all
necessary action on the part of Panda of Nepal, and do not
and will not:  (i) require any authorization, consent or
approval that has not been given or obtained from (x) the
owners of Panda of Nepal or (y) any governmental authority;
(ii) violate any law, rule, regulation, order, or decree
presently in effect and having applicability to Panda of
Nepal; (iii) violate the organizational documents of Panda
of Nepal; (iv) violate any permit, concession, grant,
franchise, license or other governmental authorization,
approval, judgment, order or decree, or any mortgage,
agreement, deed of trust, indenture or any other instrument
to which Panda of Nepal is a party or by which Panda of
Nepal or any of its properties or assets are bound or which
is otherwise applicable to Panda of Nepal; or (v) create or
impose any liens, mortgages, pledges, claims, security
interests, charges or encumbrances or obligations to create
any Liens, except for Liens which would not, individually or
in the aggregate, have a material adverse effect on the
financial condition or prospects or business of Panda of
Nepal.

          (m)  This Agreement is the legal and binding
obligation of Panda of Nepal, enforceable in accordance with
its terms against Panda of Nepal; and any other document
required by this Agreement to be delivered by Panda of
Nepal, when duly executed and delivered by Panda of Nepal,
will be the legal and binding obligation of Panda of Nepal
enforceable in accordance with its terms against Panda of
Nepal, except to the extent enforceability is limited by
general principles of equity.

          (n)  There is no litigation pending or, to the
best of Panda of Nepal's knowledge, threatened to which
Panda of Nepal is a party which, if adversely determined,
would have a material adverse effect on the financial
condition or prospects or business of the Company or Panda
of Nepal.

          (o)  All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried
out without the intervention of any person acting on behalf
of Panda of Nepal in a manner that could give rise to any
valid claim against the Company, Panda of Nepal or any
Shareholder for any brokerage or finder's commission, fee or
similar compensation.

          (p)  On or before the date hereof, Panda Global
shall provide to MCNIC Nepal an officer's certificate of
Panda Global attaching accurate and complete copies of the
Company organizational documents as currently in effect,
accurate and complete copies of the Panda of Nepal
organizational documents as currently in effect, and
accurate and complete copies of the BKPC Organizational
Documents as currently in effect.

          (q)  On or before the date hereof, Panda Global
shall provide to MCNIC Nepal an officer's certificate of
Panda Global attaching accurate and complete copies of the
Amended and Restated Joint Venture Agreement (as described
in the Investment Agreement) dated as of the Closing Date
and the BKPC Shareholders' Agreement (as defined in the
Investment Agreement) dated as of the Closing Date.

          (r)  All Government Approvals which are required
to be obtained prior to the date hereof by the Company, by
Panda of Nepal and by BKPC have been obtained, and all other
Government Approvals not presently obtained that are
required to be obtained by the Company, by Panda of Nepal
and by BKPC in order to carry out the transactions
contemplated by this Agreement and the Project Contracts are
expected to be obtained in due course, and such Government
Approvals obtained are not, and such Government Approvals to
be obtained are not expected to be, subject to any condition
or limitation which would materially adversely affect the
value of the Shares, the Company, Panda of Nepal, BKPC or
the Project.

          (s)  On or before the date hereof, Panda Global
shall provide to MCNIC Nepal an officer's certificate which
sets forth an accurate and complete list of the authorized,
issued and outstanding stock of each of the Company, Panda
of Nepal and BKPC.

          (t)  All of the Shares, when issued by the Company
in accordance with this Agreement, will be (i) duly and
validly issued and fully paid, and (ii) free from any Lien
or other third party claim or interest, subject to the
rights of the Lenders under the MCNIC Consent.  All of the
outstanding shares of Panda of Nepal and BKPC (except for
shares to be issued to IFC) (i) have been duly and validly
issued and fully paid, and (ii) are free from any Lien or
other third party claim or interest, except for the rights
of the Lenders pursuant to the Financing Documents and the
other Loan Documents.

          (u)  The Company has good and valid title to all
of the authorized and issued shares of Panda of Nepal, and
with respect to all of the authorized shares of BKPC to be
issued ("BKPC Shares"), Panda of Nepal will as of the
Financial Closing Date have good and valid title to seventy-
five (75%) of the BKPC Shares, subject to the pledge of such
BKPC Shares to the Lenders pursuant to the Financing
Documents.

          (v)  Except as provided in this Agreement, the
Company Organizational Documents, the MCNIC Consent and the
Financing Documents, there are no agreements of any kind
which grant any warrants, options, or stock rights of any
kind with respect to the Company's shares, or which
otherwise affect the rights or obligations of the
Shareholders (as shareholders) or of the Directors of the
Company (as directors).

          (w)  Except as provided in this Agreement, the PON
Organizational Documents, and the Financing Documents, and
the security documents other than the Financing Documents
referenced in the Investment Agreement, there are no
agreements of any kind which grant any warrants, options, or
stock rights of any kind with respect to the shares of Panda
of Nepal, or which otherwise affect the rights or
obligations of the shareholders of Panda of Nepal (as
shareholders) or of the Directors of Panda of Nepal (as
directors).

          (x)  Except as provided in this Agreement, the
BKPC Organizational Documents, the Financing Documents and
the other Loan Documents, there are no agreements of any
kind which grant any warrants, options, or stock rights of
any kind with respect to the shares of BKPC, or which
otherwise affect the rights or obligations of the
shareholders of BKPC (as shareholders) or of the Directors
of BKPC (as directors).

          (y)  There is no action, suit or proceeding before
or by any Governmental Authority or any arbitration
proceeding before any body now pending against BKPC, Panda
of Nepal or the Company or any of the directors or officers
of any of them, or, to the best knowledge of such directors
and officers, threatened against or affecting the Project,
BKPC, Panda of Nepal or the Company, or any of the directors
or officers of any of them.

          (z)  Accurate and complete copies in all material
respects of all Project Contracts as of the Closing Date
have been furnished by Panda Global to MCNIC Nepal.
Promptly following the Financial Closing Date Panda Global
shall provide to MCNIC Nepal a listing and accurate and
complete copies of the final versions of all Project
Contracts.

          (aa) Neither Panda Global, the Company, Panda of
Nepal or BKPC is in default under the terms of any Project
Contract, and to the best knowledge of the officers of each
of them, no other party to any Project Contract is in
default thereunder.

          (bb) On or before the date hereof Panda Global
shall provide an officer's certificate which identifies all
officers and directors of each of the Company, Panda of
Nepal and BKPC, none of whom currently receives any
compensation from those companies for such services.

          (cc) As of the date hereof, the Company is unaware
of any circumstances or conditions that could reasonably be
expected to require the Class B Shareholder to make any
financial contribution to the Company in excess of the
$20,121,250 contribution referred to in Section 2.08, except
for the potential for capital contributions required under
Section 2.10(a)(v) if the acquisition of an equity interest
in BKPC from HIPC occurs.

          (dd) Panda Global has furnished to the Class B
Shareholder all information and documentation that would be
material to the evaluation of the transactions contemplated
by this Agreement and the development of the Project. To the
best knowledge of the officers and representatives of Panda
Global and Panda Energy International, Inc., who have
participated in the negotiation of this Agreement, there
exist no materially adverse circumstances regarding the
Company, Panda of Nepal, BKPC or the Project that are not
disclosed in the documents and information furnished by or
on behalf of Panda Global to the Class B Shareholder.  No
document or other writing furnished by or on behalf of Panda
Global to the Class B Shareholder with respect to the
Company, Panda of Nepal, BKPC or the Project (except to the
extent superseded by a subsequent document), when taken as a
whole, contains any untrue statement of a material fact or
omits to state a material fact necessary to make such
information not misleading in any material respect.

          (ee) Each of the Company, Panda of Nepal and BKPC
is a transparent entity for U.S. income tax purposes.

          (ff) The Projections have been provided to MCNIC
Nepal and are, to the best knowledge of the officers and
directors of Panda Global, reasonable in light of pertinent
circumstances and the underlying assumptions used in
preparing the Projections.  THE PROJECTIONS ARE BASED UPON A
VARIETY OF ASSUMPTIONS INVOLVING JUDGMENTS WITH RESPECT TO,
AMONG OTHER THINGS, FUTURE ECONOMIC, FINANCIAL, POLITICAL,
COMPETITIVE AND REGULATORY CONDITIONS, ALL OF WHICH ARE
BEYOND THE CONTROL OF PANDA GLOBAL.  ACCORDINGLY, THERE CAN
BE NO ASSURANCE THAT THE RESULTS INDICATED IN THE
PROJECTIONS WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY
MATERIALLY FROM THE PROJECTIONS.  IN LIGHT OF THE
UNCERTAINTIES INHERENT IN ESTIMATES OF THIS TYPE, THE
PROVISION OF SUCH PROJECTIONS SHOULD NOT BE REGARDED AS A
REPRESENTATION BY PANDA GLOBAL, OR ANY AFFILIATE THEREOF,
THAT ACTUAL RESULTS WILL MEET OR EXCEED THE PROJECTIONS.

          (gg) Each of the Project Contracts to which BKPC,
Panda of Nepal or the Company is a party is enforceable
against BKPC, Panda of Nepal or the Company, as the case may
be, in accordance with its terms and, to the best knowledge
of the officers and directors of Panda Global, each of such
Project Contracts is enforceable against each of the other
parties thereto in accordance with its terms.

          (hh) The Company owns all of the issued and
outstanding shares of Panda of Nepal, and owns no other
assets.  As of the Financial Closing Date, Panda of Nepal
will own 75% of the issued and outstanding shares of BKPC,
and will own no other assets.  The Company and Panda of
Nepal have no liabilities except pursuant to the Financing
Documents, the Loan Documents, and the MCNIC Consent.  BKPC
has all material contract and real estate rights necessary
for the construction, use and operation of the Project.
BKPC has no material liabilities except under the Project
Contracts or as otherwise provided for in the Project Costs
as identified in Schedule 2.2(b) to the IFC Special
Conditions and the DEG Special Conditions.

          Section 6.02  MCNIC Nepal Representations and
Warranties.  MCNIC Nepal represents and warrants to Panda
Global as of the date hereof, as follows:

          (a)  MCNIC Nepal is an exempted company duly
organized, validly existing and in good standing under the
laws of the Cayman Islands.  MCNIC Nepal has all requisite
power and authority to own, lease and operate its
properties, carry out its business as it is now being
conducted and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.

          (b)  The execution, delivery and performance by
MCNIC Nepal of this Agreement and the other documents
referenced herein to which MCNIC Nepal is or is to be a
party have been authorized by all necessary action on the
part of MCNIC Nepal, and do not and will not:  (i) require
any authorization, consent or approval that has not been
given or obtained from (x) the owners of MCNIC Nepal or (y)
any governmental authority; (ii) violate any law, rule,
regulation, order, or decree presently in effect and having
applicability to MCNIC Nepal; (iii) violate the
organizational documents of MCNIC Nepal; (iv) violate any
permit, concession, grant, franchise, license or other
governmental authorization, approval, judgment, order or
decree, or any mortgage, agreement, deed of trust, indenture
or any other instrument to which MCNIC Nepal is a party or
by which MCNIC Nepal or any of its properties or assets are
bound or which is otherwise applicable to MCNIC Nepal; or
(v) create or impose any Liens, except Liens which would
not, individually or in the aggregate, have a material
adverse effect on the financial condition or prospects or
business of MCNIC Nepal.

          (c)  This Agreement is the legal and binding
obligation of MCNIC Nepal, enforceable in accordance with
its terms against MCNIC Nepal; and any other document
required by this Agreement to be delivered by MCNIC Nepal,
when duly executed and delivered by MCNIC Nepal, will be the
legal and binding obligation of MCNIC Nepal, enforceable in
accordance with its terms against MCNIC Nepal, except to the
extent enforceability is limited by general principles of
equity.

          (d)  There is no litigation pending or, to the
best of MCNIC Nepal's knowledge, threatened to which MCNIC
Nepal is a party which, if adversely determined, would have
a material adverse effect on the financial condition or
prospects or business of the Company.

          (e)  All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried
out without the intervention of any person acting on behalf
of MCNIC Nepal in a manner that could give rise to any valid
claim against the Company, Panda of Nepal or any Shareholder
for any brokerage or finder's commission, fee or similar
compensation.

          Section 6.03  Further Assurances.  Each Party
hereby undertakes with each other Party to procure the doing
of all acts, matters and things, the execution or signature
of all other and further deeds or documents, and the
obtaining of any Government Approvals as are necessary or
desirable in order to carry out the purposes of this
Agreement and to give full effect to the transactions
contemplated by this Agreement.

          Section 6.04  No Partnership.  Each Shareholder
agrees that there is no partnership or other relationship
which such Shareholder has or has had in the overall
business or affairs or assets of any other Shareholder or
its Affiliates. No Shareholder is the agent of any other
Shareholder for any purpose hereof, and no Shareholder is
authorized to take any action on behalf of any other
Shareholder, except as expressly set forth herein.

          Section 6.05  Purposes of the Company and Panda of
Nepal.

          (a)  The Parties agree that the Company shall be a
special purpose, exempted company with limited liability
organized and existing under the laws of the Cayman Islands
whose sole purpose shall be the holding of shares of Panda
of Nepal and all matters incidental thereto (including,
without limitation, those matters required under the
Financing Documents) and shall undertake no other activities
except as authorized by the unanimous vote of the Board of
Directors.

          (b)  The Parties agree that Panda of Nepal shall
be a special purpose, exempted company with limited
liability organized and existing under the laws of the
Cayman Islands whose sole purpose shall be the holding of
shares of BKPC and all matters incidental thereto
(including, without limitation, those matters required under
the Financing Documents) and shall undertake no other
activities except as authorized by the unanimous vote the
PON Board of Directors.

          (c)  BKPC will not carry on any business other
than in connection with the completion and operation of the
Project and will take no action whether by acquisition or
otherwise which would constitute or result in any material
alteration to the nature of that business except as
authorized by the unanimous vote of the PON Board of
Directors.


                         ARTICLE VII
                          INDEMNITY

          Section 7.01  Indemnity.

          (a)  Each Shareholder shall indemnify and hold
harmless each other Shareholder, and the officers,
directors, employees, agents and representatives of such
other Shareholder, from and against any and all costs,
losses, claims, damages and liabilities, including
reasonable attorneys' fees, incurred by it, arising out of
(i) the gross negligence or willful misconduct of the
indemnifying Shareholder or its representatives in
connection with the transactions contemplated by this
Agreement, (ii) any breach by the indemnifying Shareholder
of any material obligation or covenant set forth in this
Agreement, and (iii) any material breach of or material
inaccuracy in any representation or warranty of the
indemnifying Shareholder set forth in this Agreement or in
any officer's certificate provided by such indemnifying
Shareholder pursuant to this Agreement.

          (b)  Each Shareholder and its Affiliates and their
officers, directors, employees, agents and representatives
shall be indemnified by the Company to the fullest extent
permitted by law for any third-party liabilities to which
they may become subject arising out of their participation
in the Company; provided that no such Person shall be
indemnified for any act or omission that constitutes gross
negligence or willful misconduct on such Person's part or
that violates the terms of this Agreement.

          (c)  A Person entitled to indemnification
hereunder shall herein be referred to as an "Indemnitee".  A
party obligated to indemnify an Indemnitee hereunder shall
herein be referred to as an "Indemnitor".

          (d)  Promptly after receipt by an Indemnitee of a
notice of any claim or the commencement of any action, or
upon discovery of any facts which an Indemnitee believes may
give rise to a claim for indemnification from an Indemnitor
hereunder, such Indemnitee shall, if a claim in respect
thereof is to be made against an Indemnitor under this
Article VII, notify such Indemnitor in writing in reasonable
detail of the claim or the commencement of such action.

          (e)  If any such claim shall be asserted or
brought against such Indemnitee, it shall notify such
Indemnitor thereof, and the Indemnitor shall be entitled to
participate therein, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnitee, and to
settle or compromise such claim or action; provided that if
the Indemnitee has elected to be represented by separate
counsel pursuant to the proviso to the following sentence,
such settlement or compromise shall be effected only with
the consent of the Indemnitee, which consent shall not be
unreasonably withheld.  After notice to the Indemnitee of
the Indemnitor's election to assume the defense of such
claim or action, the Indemnitor shall not be liable to the
Indemnitee under this Article VII for any legal or other
expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided that the
Indemnitee shall have the right to employ counsel to
represent it if, in the Indemnitee's reasonable judgment, it
is advisable for the Indemnitee to be represented by
separate counsel, and in that event the fees and expenses of
such separate counsel shall be paid by the Indemnitee.  If
the Indemnitor does not elect to assume the defense of such
claim or action, the Indemnitee shall act reasonably and in
accordance with its good faith business judgment with
respect thereto, and unless the Indemnitor fails to
acknowledge its indemnity obligations hereunder, the
Indemnitee shall not settle or compromise any such claim or
action without the consent of the Indemnitor, which consent
shall not be unreasonably withheld.  The Parties agree to
render to each other such assistance as may reasonably be
requested in order to insure the proper and adequate defense
of any such claim or proceeding.


                        ARTICLE VIII
                       CONFIDENTIALITY

          Section 8.01  Confidentiality.

          (a)  Subject to subsection 8.01(b), each Party
undertakes that neither such Party nor its Affiliates,
agents or nominees will reveal to any third party any
information concerning the organization, business, finances,
transactions or affairs of the Company, Panda of Nepal,
BKPC, any Shareholder (except with regard to itself if the
Party in question is a Shareholder), or any Shareholder's
Affiliates (except with regard to its own Affiliates if the
Party in question is a Shareholder), agents or nominees, or
any information related to this Agreement, and that such
Party shall not use any such information in a manner which
may directly or indirectly injure the Company, Panda of
Nepal, BKPC, any Shareholder (except with regard to itself
if the Party in question is a Shareholder), or any
Shareholder's Affiliates (except with regard to its own
Affiliates if the Party in question is a Shareholder),
agents or nominees.  This restriction shall cease to be
binding (w) in respect of information which has become
available as a matter of public record through no act or
omission of the disclosing Party, its Affiliates, agents or
nominees, (x) to the extent such information was in the
possession of the disclosing Party, its Affiliates, agents
or nominees prior to its earliest receipt from any other
Party, (y) in connection with information disclosed to
lenders or potential lenders to any Shareholder or any
Affiliate of a Shareholder or to investors or potential
investors in any Shareholder or an Affiliate of a
Shareholder; prior to such disclosure, provided, in the case
of (y), that such lenders, potential lenders, investors or
potential investors shall have executed, prior to such
disclosure, a confidentiality agreement applicable to such
information, or (z) as may be contained in any report,
statement or testimony required to be submitted to any
municipal, state or national regulatory body having or
claiming to have jurisdiction over the disclosing Party, or
as may be otherwise required by law, regulation, court order
or other governmental authority, including without
limitation in filings with the Securities and Exchange
Commission, or as may be required in response to any summons
or subpoena or in connection with any litigation.

          (b)  In the course of an offer to a third party to
sell any Shares, a Shareholder may disclose information
concerning the Company, Panda of Nepal and BKPC to such
third party; provided; that:

               (i)  the Shareholder promptly informs the
     Company of the substance of all information disclosed;
     and

               (ii) no such information shall be disclosed
     to the third party unless the third party has first
     supplied to the Company an undertaking of
     confidentiality in writing on the same terms as Section
     8.01(a) hereof.


                         ARTICLE IX
                    DEFAULTS AND REMEDIES

          Section 9.01  Defaults.  If any Party commits a
material breach of its obligations under this Agreement,
such Party shall for the purposes hereof be deemed a
"Defaulting Party."

          Section 9.02  Actions Upon Default.  Each Party
other than the "Defaulting Party" shall for the purposes
hereof be deemed "Non-Defaulting Party", and any Non-
Defaulting Party may serve a notice on the Defaulting Party
specifying the event of default (the "Default Notice") and
the Defaulting Party shall have thirty (30) days after the
receipt of the Default Notice within which to remedy the
event of default.  During such thirty (30) day period the
Parties shall use their best efforts to resolve the matter
to their mutual satisfaction.  If at the end of such thirty
(30) day period, the Defaulting Party has not remedied the
default or the matter has not otherwise been settled to the
satisfaction of each Non-Defaulting Party, any Non-
Defaulting Party may refer the matter to arbitration
pursuant to Section 11.03.


                          ARTICLE X
                GOVERNING LAWS AND COMPLIANCE

          Section 10.01  Governing Law.  This Agreement
shall be deemed made and prepared and shall be construed and
interpreted in accordance with the internal laws of the
State of New York, without regard to principles of conflicts-
of-law thereof which may require the application of the law
of another jurisdiction (other than Sections 5-1401 and 5-
1402 of the General Obligations Law of the State of New
York.)

          Section 10.02  Compliance with Laws.  In the
performance of their obligations under this agreement, the
Parties shall, and shall cause their respective directors,
officers, employees and agents to, comply strictly with all
applicable laws, regulations and orders of the Cayman
Islands and other applicable jurisdictions.  The Parties
hereby acknowledge and agree that certain laws of the United
States of America, including the U.S. Foreign Corrupt
Practices Act, prohibit, among other things, the direct or
indirect payment of money or anything of value to any
government official, political party, or candidate for
political office for the purpose of obtaining or retaining
business.  Each Party hereby covenants to each other Party
that in the performance of its obligations hereunder or
otherwise in connection with the Project, such Party will
not make any payment proscribed by such laws.  Panda Global
represents and warrants to MCNIC Nepal that none of Panda
Global, the Company or Panda of Nepal, or any representative
of any of them, has made any payment proscribed by such
laws.  MCNIC Nepal represents and warrants to Panda Global
that neither it nor any of its representatives has made any
payment proscribed by such laws.


                         ARTICLE XI
                        MISCELLANEOUS

          Section 11.01  Effect of Ceasing to Own Shares.
If any Shareholder ceases to own any Shares in the Company,
such Shareholder shall forthwith cease to be a party to this
Agreement (without prejudice to any rights or obligations
then existing or accruing and on the basis that such
Shareholder's obligations under Article VII (Indemnity, in
respect of the period in which it owned Shares), Article
VIII (Confidentiality), Section 11.03 (Arbitration) and
Section 10.01 (Governing Law) shall continue to apply and
this Agreement shall be construed accordingly.

          Section 11.02  Headings.  The headings of this
Agreement are for reference only and shall not be deemed to
form part of the text.

          Section 11.03  Arbitration.

          (a)  Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, if unable
to be resolved by the Parties, shall be finally settled by
arbitration under the Rules of the American Arbitration
Association ("AAA"), by one or more arbitrators appointed in
accordance with said Rules, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof.  The arbitration shall be
conducted in the English language and shall take place in
Washington, D.C.

          (b)  Except as otherwise set forth herein, if
there are only two Parties to the dispute or controversy,
the arbitration shall be conducted by three arbitrators.
The party initiating arbitration (the "Claimant") shall
appoint its arbitrator in its request for arbitration (the
"Request").  The other party (the "Respondent") shall
appoint its arbitrator within thirty (30) days of receipt of
the Request and shall notify the Claimant of such
appointment in writing.  If the Respondent fails to appoint
an arbitrator within such thirty (30) day period, the AAA
shall appoint an arbitrator on its behalf in accordance with
the Rules.  Otherwise, the two arbitrators appointed by the
parties shall appoint a third neutral arbitrator within
thirty (30) days after the Respondent has notified Claimant
of the appointment of the Respondent's arbitrator.  When the
arbitrators appointed by the Claimant and Respondent have
appointed a third arbitrator and the third arbitrator has
accepted the appointment, the two arbitrators shall promptly
notify the parties of the appointment of the third
arbitrator.  If the two arbitrators appointed by the parties
fail or are unable to so appoint a third arbitrator or to so
notify the parties, or if the Parties agree to use a sole
arbitrator, then the appointment of the third arbitrator or
the sole arbitrator, as the case may be, shall be made by
the AAA, which shall promptly notify the parties of such
appointment.  The third arbitrator shall act as chair of any
three-arbitrator panel.

          (c)  If the dispute or controversy involves more
than two Parties, the arbitration shall be conducted by
three arbitrators in accordance with the AAA Rules.

          (d)  The arbitral award shall be in writing and,
unless all the Parties agree otherwise, shall state the
reasons upon which it is based.  The award shall be final
and binding on the Parties.  The award may include an award
of costs, including reasonable attorneys' fees and
disbursements.  Judgment upon the award may be entered by
any court having jurisdiction thereof or having jurisdiction
over the Shareholders or their assets.

          (e)  By execution and delivery of this Agreement
each Party hereby accepts and consents to the jurisdiction
of the aforesaid arbitration panel and, solely for purposes
of the enforcement of an arbitral award under this Section
11.03, to the jurisdiction of any court of competent
jurisdiction, for itself and in respect of its property, and
waives in respect of both itself and its property any
defense it may have as to or based on jurisdiction, improper
venue or inconvenient forum.  Each Party hereby irrevocably
consents to the service of any process or other papers by
the use of any of the methods and to the addresses set for
the giving of notices in Section 11.10.  Nothing herein
shall affect the right of any Party to serve such process or
papers in any other manner permitted by law.

          Section 11.04  Impasse; Buy-Sell Agreement.

          (a)  For the purposes hereof, an "Impasse" shall
mean a matter:

               (i)  which is brought before the Board of
     Directors of the Company or the board of directors of
     Panda of Nepal, as the case may be, for a vote at any
     time prior to the Class B Flip Date and results in a
     deadlocked vote of such board of directors; and

               (ii)  which in the good faith judgment of a
     Shareholder could reasonably be expected to have a
     material adverse effect upon a Shareholder, the
     Company, Panda of Nepal or BKPC.

          (b)  For the purposes hereof, a "Qualified
Appraiser" shall mean an independent appraiser that:

               (i)  is not then performing services or does
     not then have any other business relationship (whether
     as an officer, director, employee, agent, consultant,
     investor, lender, contractor, subcontractor or
     otherwise) with any Shareholder or any Affiliate of any
     Shareholder; and

               (ii)  is an investment banker, member in an
     engineering or consulting firm, or certified public
     accountant, in each case with prior experience in the
     valuation of independent power projects.

          (c)  In the event of an Impasse, it is agreed by
the Shareholders that senior officers of each of the
Shareholders shall promptly meet and in good faith attempt
to resolve the Impasse.

          (d)  At any time within ninety (90) days following
the thirty-first (31st) day after the occurrence of the
Impasse, any Shareholder (the "Notice Shareholder") may give
written notice to the other Shareholder (the "Respondent
Shareholder") of the Notice Shareholder's desire for
appraisals of the fair market value of both the Class A
Shares and the Class B Shares on a separate basis (the
"Appraisal Notice").  For the purposes hereof, "fair market
value" shall be determined by the appraisers appointed
pursuant to this Section 11.04 using the discounted cash
flow methodology and a discount rate consistent with that
used in the valuation of similar projects at the time in
question.

          (e)  The Notice Shareholder shall, in the
Appraisal Notice, appoint a Qualified Appraiser to serve as
an appraiser.  The Respondent Shareholder shall appoint a
Qualified Appraiser to serve as an appraiser within fifteen
(15) days of receipt of the Appraisal Notice and shall
notify the Notice Shareholder of such appointment in
writing.  If the Respondent Shareholder fails to appoint a
Qualified Appraiser within such fifteen (15) day period, the
appraiser appointed by the Notice Shareholder shall be the
sole appraiser.  Otherwise, if two Qualified Appraisers have
been appointed, the two appraisers shall appoint a third
Qualified Appraiser within fifteen (15) days after the
Respondent Shareholder has notified the Notice Shareholder
of the appointment of the Respondent Shareholder's Qualified
Appraiser.  If a third appraiser has not been appointed
within said fifteen (15) days, then either Shareholder may
request that the AAA appoint such third appraiser.  When the
third appraiser has accepted the appointment, the two
appraisers shall promptly notify the Shareholders, in
writing, of the appointment of the third appraiser.

          (f)  Within thirty (30) days following the
acceptance by the third appraiser of the appointment, each
of the appraisers shall separately establish the fair market
value for all of the Class A Shares (the "Class A Buy-Sell
Purchase Price") and the fair market value for all of the
Class B Shares (the "Class B Buy-Sell Purchase Price") and
shall provide a report thereof to each Shareholder and the
Company or Panda of Nepal (depending on which company's
board of directors had the Impasse).  For purposes of
establishing the definitive Class A Buy-Sell Purchase Price
and the definitive Class B Buy-Sell Purchase Price for the
buy-sell procedures set forth below, the highest and lowest
appraisals received from the three appraisers for each of
the Class A Shares and the Class B Shares (regardless of if
such highest and lowest appraisals are rendered by different
appraisers) shall be disregarded, and the remaining
appraisals of the Class A Shares and the Class B Shares
shall be used as the "Definitive Class A Buy-Sell Purchase
Price" and the "Definitive Class B Buy-Sell Purchase Price."

          (g)  At any time during the one hundred eighty
(180) day period following determination of the Definitive
Class A Buy-Sell Purchase Price and the Definitive Class B
Buy-Sell Purchase Price and notification thereof to each
Shareholder and the Company or Panda of Nepal, as the case
may be, either Shareholder (the "Initiating Shareholder")
may give written notice (the "Initiating Notice") to the
other Shareholder (the "Responding Shareholder") of (i) the
Initiating Shareholder's offer to purchase all, but not less
than all, of the Responding Shareholder's Shares at a stated
price, or (ii) its offer to sell all, but not less than all,
of the Shares of the Initiating Shareholder to the
Responding Shareholder for a stated price (the offer made
being referred to herein as the "Initial Offer").

          (h)  The Responding Shareholder shall then have
fifteen (15) days in which to accept or reject the Initial
Offer.

          (i)  If the Responding Shareholder either rejects
the Initial Offer or fails to accept the Initial Offer
within fifteen (15) days after its receipt of the Initiating
Notice, the Responding Shareholder will be deemed to have
made a counteroffer (the "Counteroffer") to the Initiating
Shareholder to effect the  purchase or sale of Shares which
is the opposite of the transaction offered in the Initial
Offer (e.g., if the Initial Offer contained an offer by
Shareholder A to purchase all of Shareholder B's Class B
Shares, the Counteroffer will be deemed to contain an offer
by Shareholder B to purchase all of Shareholders A's Class A
Shares).  If the Initial Offer contained an offer to either
purchase or sell Class A Shares, the Counteroffer will be
deemed to have included a price equal to the price contained
in the Initial Offer multiplied by the ratio equal to the
Definitive Class B Buy-Sell Purchase Price divided by the
Definitive Class A Buy-Sell Purchase Price.  If the Initial
Offer contained an offer to either purchase or sell Class B
Shares, the Counteroffer will be deemed to have included a
price equal to the price contained in the Initial Offer
multiplied by the ratio equal to the Definitive Class A Buy-
Sell Purchase Price divided by the Definitive Class B Buy-
Sell Purchase Price.  The Responding Shareholder's
Counteroffer will be deemed to have been immediately
accepted by the Initiating Shareholder.

          (j)  Following the actual or deemed acceptance of
one of the offers made pursuant to Section 11.04(g) or
Section 11.04(i), as applicable, the Shareholders shall have
sixty (60) days in which to complete the sale of the Shares
of the Initiating Shareholder to the Responding Shareholder
or the sale of the Shares of the Responding Shareholder to
the Initiating Shareholder, as the case may be.  If at any
time prior to the consummation of the sale the Shareholders
resolve the Impasse, neither Shareholder shall thereafter be
obligated to complete the sale.

          (k)  In the event of a sale of Shares under the
terms of this Section 11.04, the selling Shareholder shall
warrant title to all Shares being sold free from liens or
other encumbrances and shall make such other representations
and warranties as are customary in transactions involving
the sale of stock.  The purchase price for such Shares shall
be paid in immediately available funds to such account as
shall be specified by the selling Shareholder.

          (l)  The decision of any Shareholder to undertake
any of the processes established by this Section 11.04 shall
be based on the approval of a majority in interest of the
Shareholders of the relevant class of Shares, if the Shares
of such class are held by more than one (1) Shareholder.
Such decision shall be binding on all Shareholders holding
Shares of such class.

          (m)  The provisions of subsections (d)-(k) of this
Section 11.04 shall be ineffective until such time as
consummation of the buy-sell arrangement described therein
is permitted under the MCNIC Consent.

          Section 11.05  Entire Agreement.  This Agreement
constitutes the entire agreement among the Parties and
supersedes all prior agreements and undertakings, oral or
written, among them or between any of them with respect to
the subject matter hereof.

          Section 11.06  Amendment.  No amendment,
modification, waiver, change or addition hereto shall be
effective or binding on any Party unless the same is in
writing and signed by all Parties.

          Section 11.07  Waivers.  Any waiver, express or
implied, by any Party of any right hereunder or of any
failure to perform or breach hereof by any other Party shall
not constitute or be deemed a waiver of any other right
hereunder or of any other failure to perform or breach
hereof by any Party, whether of a similar or dissimilar
nature, unless the waiver is in writing and signed by each
Party.

          Section 11.08  Severability.  The invalidity or
unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of its other
provisions.  Following the determination that any provision
of this Agreement is unenforceable, the Parties shall
negotiate in good faith a new provision that, as far as
legally possible, most nearly reflects the intent of the
Parties and that restores this Agreement as nearly as
possible to its original intent and effect.

          Section 11.09  Effectiveness.  This Agreement
shall take effect as of the date hereof and, except as
provided herein, shall remain binding on each Shareholder
and its permitted assigns for as long as such Shareholder
owns any Shares in the Company and, to the extent provided
in Section 11.01, thereafter, unless this Agreement is
sooner terminated by the unanimous consent of the Parties.

          Section 11.10  No Third Party Beneficiaries.  This
Agreement is solely for the benefit of the Parties and their
respective successors and permitted assigns, and this
Agreement shall not otherwise be deemed to confer upon or
give to any other third party any right, claim, cause of
action, or other interest herein.

          Section 11.11  Notices.  Any notice to be given
hereunder shall be in writing and shall be delivered by hand
(including without limitation by express courier against
written receipt) or sent by telex or prepaid first class
registered mail or (where subsequently confirmed by letter)
by facsimile copy to the persons and address specific below
(or such other person or address as a Party may previously
have notified all other Parties in writing for the purpose).
A notice shall be deemed to have been served when delivered
by hand at that address or received by telex or facsimile
copy, or, if sent by registered mail as aforesaid, on the
date delivered.  The names and addresses for the service of
notices referred to in this Section are:

          Panda Global Energy Company
          Panda Bhote Koshi
          Panda of Nepal
          c/o Maples and Calder
          P.O. Box 309
          Ugland House
          South Church Street
          Grand Cayman
          Cayman Islands, B.W.I.
          Fax:  (345) 949-8080

          with a copy to:

          Panda Energy International, Inc.
          Attn:  General Counsel
          Suite 1001
          4100 Spring Valley Road
          Dallas, Texas  75244
          Fax:  (972) 980-6815

          MCNIC Nepal Limited
          c/o Maples & Calder
          P.O. Box 309
          Ugland House
          South Church Street
          Grand Cayman
          Cayman Islands, B.W.I.
          Fax:  (345) 949-8080

          with a copy to:

          MCNIC Investment Corporation

          Office of the General Counsel
          500 Griswold, 10th Floor
          Detroit, Michigan  48226
          Fax:  (313) 965-0009

          Section 11.12  Assignment.  The provisions of this
Agreement shall be binding upon and shall inure to the
benefit of the Parties and their respective heirs,
successors and permitted assigns, whether so expressed or
not.  No transferee shall derive any rights under this
Agreement unless and until such transferee has executed and
delivered to the other Parties an assignment and assumption
agreement whereby such transferee becomes bound by the terms
of this Agreement.  Notwithstanding the foregoing, neither
this Agreement nor any rights or obligations hereunder may
be assigned by any Shareholder except in compliance with the
restrictions on Transfer set forth in this Agreement and in
accordance with applicable law and the Company
Organizational Documents or the PON Organizational
Documents, as the case may be, or in connection with the
MCNIC Consent.

          Section 11.13  Survival of Representations and
Warranties.  All representations and warranties contained in
this Agreement or made in writing by or on behalf of any
Party in connection with the transactions contemplated by
this Agreement shall survive the execution and delivery of
this Agreement and the consummation of the transaction
contemplated hereby.

          Section 11.14  Expenses.  Except as otherwise
specifically agreed in writing, each of the Parties shall be
responsible for and pay all expenses, costs and fees
incurred or assumed by such Party in connection with the
preparation, negotiation and execution of this Agreement,
compliance herewith and the consummation of the transactions
contemplated hereby.

          Section 11.15  Computation of Time Periods.  In
the event that the running of time for any action hereunder
would result in the final day for such action being a
Saturday, Sunday, or legal holiday in the State of New York,
the final date for such action shall be the next day
thereafter which is not a Saturday, Sunday, or legal holiday
in the State of New York; provided, if the action in
question requires action by any Person in the Cayman
Islands, the final date for such action shall be the next
day thereafter which is also not a legal holiday in the
Cayman Islands.

          Section 11.16  Execution in Counterparts.  This
Agreement may be executed in one or more counterparts and by
one or more parties to any counterpart, each of which shall
be deemed an original and all of which together shall
constitute one and the same agreement.

          Section 11.17  Covenant of Good Faith and Fair
Dealing.  Each Party convenants with each other Party to
deal fairly and in good faith in connection with all matters
undertaken or required to be undertaken by such Party under
this Agreement.

          IN WITNESS WHEREOF, the undersigned Parties have
entered into this Agreement as of the day and year first
above written.

PANDA BHOTE KOSHI


By:
   Name:
   Title:


PANDA OF NEPAL


By:
   Name:
   Title:


PANDA GLOBAL ENERGY COMPANY

By:
   Name:
   Title:


MCNIC NEPAL LIMITED

By:
   Name:
   Title:


[EXHIBIT A:  See stand alone Exhibit Number 10.68.01 to this filing]

[EXHIBIT B:  See stand alone Exhibit Number 10.68.02 to this filing]


Exhibit C

                                Panda Bhote Koshi
                         Internal Rate of Return Example
<TABLE>
<CAPTION>

       Panda of Nepal      MCNIC       MCNIC Share
        Semi-Annual      Share of     of Semi-Annual     MCNIC        MCNIC Net     MCNIC Rate
 Date  Distributions   Distributions  Distributions  Contributions   Cash Flows     of Return
<C>       <C>                   <C>       <C>          <C>            <C>           <C>
Dec-97                                                 (3,749,925)    (3,749,925)      N/A
Mar-98                                                 (1,697,957)    (1,697,957)      N/A
Jul-98                                                 (2,259,637)    (2,259,637)      N/A
Nov-98                                                 (1,405,851)    (1,405,851)      N/A
Mar-99                                                 (2,655,806)    (2,655,806)      N/A
Jul-99                                                 (2,244,031)    (2,244,031)      N/A
Dec-99                                                 (6,108,043)    (6,108,043)      N/A
Mar-00                                                                          -      N/A
Sep-00     5,159,492            85%       4,385,568                     4,385,568  less than 0%
Mar-01     2,797,107            85%       2,377,541                     2,377,541  less than 0%
Sep-01     2,154,553            85%       1,831,370                     1,831,370  less than 0%
Mar-02     2,276,635            85%       1,935,140                     1,935,140  less than 0%
Sep-02     2,398,718            85%       2,038,910                     2,038,910  less than 0%
Mar-03     2,526,679            85%       2,147,677                     2,147,677  less than 0%
Sep-03     2,654,639            85%       2,256,443                     2,256,443  less than 0%
Mar-04     2,754,960            85%       2,341,716                     2,341,716  less than 0%
Sep-04     2,855,281            85%       2,426,989                     2,426,989      2.27%
Mar-05     2,958,565            85%       2,514,780                     2,514,780      5.20%
Sep-05     3,061,849            85%       2,602,571                     2,602,571      7.63%
Mar-06     3,168,188            85%       2,692,960                     2,692,960      9.66%
Sep-06     3,274,527            85%       2,783,348                     2,783,348     11.39%
Mar-07     3,384,016            85%       2,876,414                     2,876,414     12.85%
Sep-07     3,493,505            85%       2,969,479                     2,969,479     14.10%
Mar-08     3,881,866            85%       3,299,586                     3,299,586     15.26%
Sep-08     4,270,227            85%       3,629,693                     3,629,693     16.31%
Mar-09     4,645,208            85%       3,948,427                     3,948,427     17.27%
Sep-09     5,020,189            85%       4,267,160                     4,267,160     18.12%
Mar-10     5,139,720            85%       4,368,762                     4,368,762     18.86%
Sep-10     5,259,252            85%       4,470,364                     4,470,364     19.49%
Mar-11     6,134,214            85%       5,214,081    (FLIP DATE)      5,214,081     20.11%
Sep-11     7,009,175            10%         700,918                       700,918     20.18%
Mar-12     7,842,050            10%         784,205                       784,205     20.25%
Sep-12     8,674,925            10%         867,493                       867,493     20.33%
Mar-13     8,805,450            10%         880,545                       880,545     20.39%
Sep-13     8,935,976            10%         893,598                       893,598     20.46%
Mar-14     9,070,391            10%         907,039                       907,039     20.51%
Sep-14     9,204,807            10%         920,481                       920,481     20.56%
Mar-15     7,980,481            10%         798,048                       798,048     20.60%
Sep-15     6,756,155            10%         675,616                       675,616     20.63%
Mar-16     6,855,036            10%         685,504                       685,504     20.66%
Sep-16     6,953,918            10%         695,392                       695,392     20.69%
Mar-17     7,055,608            10%         705,561                       705,561     20.71%
Sep-17     7,157,299            10%         715,730                       715,730     20.73%
Mar-18     7,261,893            10%         726,189                       726,189     20.75%
Sep-18     7,366,487            10%         736,649                       736,649     20.77%
Mar-19     7,474,081            10%         747,408                       747,408     20.79%
Sep-19     7,581,676            10%         758,168                       758,168     20.80%
Mar-20     7,692,368            10%         769,237                       769,237     20.82%
Sep-20     7,803,061            10%         780,306                       780,306     20.83%
Mar-21     7,916,954            10%         791,695                       791,695     20.84%
Sep-21     8,030,846            10%         803,085                       803,085     20.85%
Mar-22     8,148,042            10%         814,804                       814,804     20.86%
Sep-22     8,265,239            10%         826,524                       826,524     20.87%
Mar-23     8,385,845            10%         838,584                       838,584     20.88%
Sep-23     8,506,451            10%         850,645                       850,645     20.89%
Mar-24     8,630,576            10%         863,058                       863,058     20.90%
Sep-24     8,754,701            10%         875,470                       875,470     20.91%
Mar-25    21,628,407            10%       2,162,841                     2,162,841     20.92%
Sep-25    51,753,168            10%       5,175,317                     5,175,317     20.95%

</TABLE>