Document:

<PAGE>

                                                                    EXHIBIT 10.2

                                   CONSENT TO
                                CREDIT AGREEMENT

            CONSENT, dated as of July 15, 2004 (this "Consent"), to the Credit
Agreement referred to below among ATARI, INC., formerly known as INFOGRAMES,
INC., a Delaware corporation ("Borrower"), the other parties signatory thereto
as Credit Parties, the Lenders party thereto (the "Lenders"), and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation, for itself, as a Lender,
and as agent for the Lenders (in such capacity, "Agent").

                               W I T N E S S E T H

            WHEREAS, Borrower and Agent are parties to that certain Credit
Agreement, dated as of November 12, 2002 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"); and

            WHEREAS, Agent has agreed to consent to certain transactions
described herein, all in the manner, and on the terms and conditions, provided
for herein;

            NOW THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

            1. Definitions. Capitalized terms not otherwise defined herein shall
have the meanings ascribed to them in the Credit Agreement.

            2. Consent. As of the Effective Date (as hereinafter defined), the
Requisite Lenders hereby (i) consent to (A) Borrower making, on behalf of
California U.S. Holdings, Inc. ("CUSH"), all payments to Frederic Chesnais
("Chesnais"), the Executive Vice President and Chief Financial Officer of CUSH,
as are required pursuant to the terms of that certain employment letter dated
July 7, 2004 between Chesnais and CUSH, provided that the amounts of any such
payments are promptly set off by Borrower against any amounts owed by Borrower
to Parent or the Subsidiaries or Affiliates of Parent (collectively, the "Parent
Entities") or are promptly reimbursed by Parent, and (B) Borrower entering in to
that certain lease for an apartment to be used by Chesnais and his family until
July 31, 2006 (the "Lease"), and to making monthly lease payments under the
Lease in the amount of $13,995, provided that the amounts of any such lease
payments are promptly set off against any amounts owed by Borrower to the Parent
Entities or are promptly reimbursed by Parent, and (ii) agree that making the
payments contemplated by clause (i) of this paragraph 2 and entering into the
Lease will not violate any provision of the Credit Agreement or any Loan
Document, including, without limitation, Section 6.2, Section 6.4 and Section
6.14 of the Credit Agreement.

            3. Representations and Warranties. To induce Agent to enter into
this Consent, each Credit Party hereby represents and warrants that:

<PAGE>

            (a) The execution, delivery and performance of this Consent by
      Borrower and the other Credit Parties: (i) are within their respective
      organizational powers; (ii) have been duly authorized by all necessary
      corporate and shareholder action; (iii) are not in contravention of any
      provision of their respective certificates or articles of incorporation or
      by-laws or other organizational documents; (iv) do not violate any law or
      regulation, or any order or decree of any court or Governmental Authority;
      (v) do not conflict with or result in the breach or termination of,
      constitute a default under or accelerate or permit the acceleration of any
      performance required by, any indenture, mortgage, deed of trust, lease,
      agreement or other instrument to which any Borrower or any Credit Party is
      a party or by which Borrower or any Credit Party or any of its property is
      bound; (vi) do not result in the creation or imposition of any Lien upon
      any of the property of Borrower or any Credit Party other than those in
      favor of Agent pursuant to the Loan Documents; and (vii) do not require
      the consent or approval of any Governmental Authority or any other Person.

            (b) This Consent has been duly executed and delivered by or on
      behalf of each Credit Party.

            (c) This Consent constitutes a legal, valid and binding obligation
      of each Credit Party enforceable against each Credit Party in accordance
      with its terms, except as enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium or similar laws
      affecting creditors' rights generally and by general equitable principles
      (whether enforcement is sought by proceedings in equity or at law).

            (d) No Default or Event of Default has occurred and is continuing
      both before and after giving effect to this Consent.

            (e) No action, claim or proceeding is now pending or, to the
      knowledge of Borrower and the other Credit Parties, threatened against
      Borrower or the other Credit Parties, at law, in equity or otherwise,
      before any court, board, commission, agency or instrumentality of any
      federal, state, or local government or of any agency or subdivision
      thereof, or before any arbitrator or panel of arbitrators, (i) which
      challenges Borrower's or the other Credit Parties' right, power, or
      competence to enter into this Consent or, to the extent applicable,
      perform any of its obligations under this Consent, the Credit Agreement or
      any other Loan Document, or the validity or enforceability of this
      Consent, the Credit Agreement or any other Loan Document or any action
      taken under this Consent, the Credit Agreement or any other Loan Document
      or (ii) which, if determined adversely, is reasonably likely to have or
      result in a Material Adverse Effect, except those that have been
      previously disclosed to Agent and Lenders in the Disclosure Schedules to
      the Credit Agreement or in the filings of the Borrower with the Securities
      and Exchange Commission, which have been provided to the Agent and Lenders
      pursuant to paragraph (g) of Exhibit E to the Credit Agreement. To the
      knowledge of Borrower and each Credit Party, there does not exist a state
      of facts which is reasonably likely to give rise to such proceedings.

                                       2
<PAGE>

            (f) The representations and warranties of Borrower and the other
      Credit Parties contained in the Credit Agreement and each other Loan
      Document shall be true and correct on and as of the date hereof and the
      Effective Date with the same effect as if such representations and
      warranties had been made on and as of each such date, subject to
      previously provided Disclosure Schedules, except that any such
      representation or warranty which is expressly made only as of a specified
      date need be true only as of such date.

            4. Ratification of Credit Agreement; Remedies.

            (a) Except as expressly provided for, and on the terms and
conditions set forth, herein, the Credit Agreement and the other Loan Documents
shall continue to be in full force and effect in accordance with their
respective terms and shall be unmodified. In addition, this Consent shall not be
deemed a waiver of any term or condition of any Loan Document by the Agent or
the Lenders with respect to any right or remedy which the Agent or the Lenders
may now or in the future have under the Loan Documents, at law or in equity or
otherwise or be deemed to prejudice any rights or remedies which the Agent or
the Lenders may now have or may have in the future under or in connection with
any Loan Document or under or in connection with any Default or Event of Default
which may now exist or which may occur after the date hereof. The Credit
Agreement and all other Loan Documents are hereby in all respects ratified and
confirmed.

            (b) This Consent shall constitute a Loan Document. The breach by any
Credit Party of any representation, warranty, covenant or agreement in this
Consent shall constitute an immediate Event of Default hereunder and under the
other Loan Documents.

            5. Outstanding Indebtedness; Waiver of Claims. The Borrower and the
other Credit Parties hereby acknowledge and agree that as of July 14, 2004 the
aggregate outstanding principal amount of the Revolving Credit Loan is
$9,343,170.28 and such principal amount is payable pursuant to the Credit
Agreement without defense, offset, withholding, counterclaim or deduction of any
kind. The Borrower and each other Credit Party hereby waive, release, remise and
forever discharge Agent, Lenders and each other Indemnified Person from any and
all suits, actions, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys' fees) and disbursements and other
costs of investigation or defense, including those incurred upon any appeal of
any kind or character, known or unknown, which Borrower or any other Credit
Party ever had, now has or might hereafter have against Agent or any Lender
which relates, directly or indirectly, to any acts or omissions of Agent or such
Lender or any other Indemnified Person on or prior to the Effective Date.

            6. Expenses. Each of Borrower and the other Credit Parties hereby
reconfirms its respective obligations pursuant to Section 11.3 of the Credit
Agreement to pay and reimburse Agent for all reasonable out-of-pocket expenses
(including, without limitation, reasonable fees of counsel) incurred in
connection with the negotiation,

                                       3
<PAGE>

preparation, execution and delivery of this Consent and all other documents and
instruments delivered in connection herewith. Borrower shall pay to Agent all
costs and expenses billed and owing in connection with this Consent and the
other Loan Documents and due to Agent (including reasonable legal fees and
expenses) on or before the 30th day following the date hereof.

            7. Effectiveness. This Consent shall become effective as of July 15,
2004 (the "Effective Date") only upon satisfaction in full in the judgment of
the Agent of each of the following conditions:

            (a) Consent. Agent shall have received on or prior to July 23, 2004
      three (3) original copies of this Consent duly executed and delivered by
      Agent, Lenders and Borrower and acknowledged and agreed to by each of the
      Credit Parties.

                  (b) Representations and Warranties. All representations and
      warranties contained in this Consent shall be true and correct on and as
      of the Effective Date.

            8. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK
COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS CONSENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS CONSENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE NEW
YORK COUNTY AND; PROVIDED, FURTHER THAT NOTHING IN THIS CONSENT OR ANY OF THE
OTHER LOAN DOCUMENTS SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT
PARTY MAY HAVE BASED UPON LACK OF

                                       4
<PAGE>

PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX I OF THE CREDIT AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF
OR 3 BUSINESS DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE
PREPAID.

            9. Counterparts. This Consent may be executed by the parties hereto
on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.

                                       5
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Consent to
be duly executed and delivered as of the day and year first above written.

                                        ATARI, INC.

                                        By:/s/ Harry M. Rubin
                                           ------------------
                                        Name: Harry M. Rubin
                                        Title: Senior Executive Vice President

                                        GENERAL ELECTRIC CAPITAL
                                        CORPORATION, as Agent and Lender

                                        By:/s/ E.J. Hess
                                           -------------
                                        Name: E.J. Hess
                                        Its: Duly Authorized Signatory

                       [SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>

The undersigned Credit Parties hereby (i)
acknowledge, agree and consent to this
Consent and (ii) other than with respect to
Reflections Interactive Limited, confirm and
agree that their obligations under the
Guaranty shall continue without any
diminution thereof and shall remain in full
force and effect on and after the
effectiveness of this Consent.

ACKNOWLEDGED, CONSENTED and AGREED to as of
the date first written above.

REFLECTIONS INTERACTIVE LIMITED

By:/s/ Harry M. Rubin
   ------------------
Name: Harry M. Rubin
Title: DirectorSENIOR FACILITY AGREEMENT

 

Exhibit 10.1

	 	 	 
	 

	 	 
	 
	 	 

$185,000,000

TERM LOAN FACILITY

for

NORDURAL hf

arranged by

THE ROYAL BANK OF SCOTLAND PLC

BNP PARIBAS S.A.

and

FORTIS BANK (NEDERLAND) N.V.

SENIOR FACILITY AGREEMENT

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	 	Page
	1.
	 	Interpretation	 	 	1	 
	2.
	 	Facility	 	 	27	 
	3.
	 	Purpose	 	 	28	 
	4.
	 	Conditions Precedent	 	 	28	 
	5.
	 	Drawdown	 	 	29	 
	6.
	 	Repayment	 	 	29	 
	7.
	 	Prepayment and Cancellation	 	 	33	 
	8.
	 	Interest Periods	 	 	36	 
	9.
	 	Interest	 	 	37	 
	10
	 	Payments	 	 	39	 
	11.
	 	Taxes	 	 	41	 
	12.
	 	Market Disruption	 	 	42	 
	13.
	 	Increased Costs	 	 	43	 
	14.
	 	Illegality	 	 	44	 
	15.
	 	Representations and Warranties	 	 	45	 
	16.
	 	Undertakings	 	 	52	 
	17.
	 	Default	 	 	69	 
	18.
	 	Forecasts	 	 	79	 
	19.
	 	The Agent, the Security Trustee, the Arrangers and the Account Bank	 	 	85	 
	20.
	 	Fees	 	 	93	 
	21.
	 	Expenses	 	 	94	 
	22.
	 	Stamp Duties	 	 	95	 
	23.
	 	Indemnities	 	 	95	 
	24.
	 	Evidence and Calculations	 	 	96	 

-2-

 

	 	 	 	 	 	 	 
	Clause	 	 	 	Page
	25.
	 	Amendments and Waivers	 	 	97	 
	26.
	 	Changes to the Parties	 	 	98	 
	27.
	 	Advisers	 	 	100	 
	28.
	 	Disclosure of Information	 	 	101	 
	29.
	 	Set-Off	 	 	101	 
	30.
	 	Pro Rata Sharing	 	 	101	 
	31.
	 	Severability	 	 	102	 
	32.
	 	Counterparts	 	 	103	 
	33.
	 	Notices	 	 	103	 
	34.
	 	Language	 	 	104	 
	35.
	 	Use of websites	 	 	105	 
	36.
	 	Jurisdiction	 	 	106	 
	37.
	 	Governing Law	 	 	107	 
	SCHEDULE 1
	 	Banks and Commitments	 	 	108	 
	SCHEDULE 2
	 	Conditions Precedent Documents	 	 	109	 
	SCHEDULE 3
	 	Form of Request	 	 	120	 
	SCHEDULE 4
	 	Form of Novation Certificate	 	 	121	 
	SCHEDULE 5
	 	Reserved Discretions	 	 	122	 
	SCHEDULE 6
	 	Construction Contracts	 	 	129	 
	SCHEDULE 7
	 	Mandatory Cost Formulae	 	 	130	 
	SCHEDULE 8
	 	Insurances	 	 	133	 
	SCHEDULE 9
	 	Form of Debt Service Reserve, L/C	 	 	157	 

-3-

 

THIS AGREEMENT is dated 2 September 2003 and is between:

	(1)	 	NORDURAL hf (Registered No: 570297-2609) as borrower
(the “Borrower”);
	 
	(2)	 	THE ROYAL BANK OF SCOTLAND PLC, BNP PARIBAS S.A. and
FORTIS BANK (NEDERLAND) N.V. as arrangers (each an
“Arranger” and together the
“Arrangers”);
	 
	(3)	 	THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the “Banks” );
	 
	(4)	 	BNP PARIBAS S.A. as account bank (in this capacity the “Account Bank” );
	 
	(5)	 	THE ROYAL BANK OF SCOTLAND PLC as agent (in this
capacity the “Agent”); and
	 
	(6)	 	BNP PARIBAS S.A. as security trustee (in this capacity the “Security
Trustee” ).

IT IS AGREED as follows:

	1.	 	INTERPRETATION
	 
	1.1	 	Definitions
	 
	 	 	In this Agreement:
	 
	 	 	“Account Agreement”  means the account agreement to be entered into on or
prior to Financial Close between the Borrower, the Account Bank, the
Security Trustee and the Agent.
	 
	 	 	“Additional Cost Rate”  has the meaning given to it in Schedule 7
(Mandatory Cost Formulae).
	 
	 	 	“Additional Shareholder Funding” means the provision of funds to the
Borrower by the Shareholder or any Affiliate of the Shareholder in the
form of:

	 	(a)	 	a subscription for share capital; and/or
	 
	 	(b)	 	the provision of Subordinated Loans, and/or
	 
	 	(c)	 	any other form of capital contribution,

	 	 	in each case in accordance with the terms of the Sponsor Funding
Agreement and the Intercreditor Agreement.
	 
	 	 	“Affiliate” means, with respect to any company or a Bank, a Subsidiary or
a Holding Company of that company or any other Subsidiary of a Holding
Company of that Company.
	 
	 	 	“Agency” includes, in relation to a state or supranational organisation,
any agency, authority, central bank, department, government, legislature,
ministry, official or public person (whether autonomous or not) of, or of
the government of, that state or supranational organisation.

 

 

	 	 	“Aluminium Hedging Agreement” means any agreement relating to the hedging of
the aluminium price entered or to be entered into by the Borrower in accordance
with Clause 16.20 (Hedging).
	 
	 	 	“Aluminium Hedging Counterparty” means any financial institution that is a
counterparty to an Aluminium Hedging Agreement entered into by the Borrower.
	 
	 	 	“Amounts Payable” means, in respect of any Repayment Date, the aggregate of:

	 	(a)	 	Financing Costs; and
	 
	 	(b)	 	Financing Principal (within paragraph (b) of the definition thereof); and
	 
	 	(c)	 	Permitted Payments (including those payable from amounts transferred to
the Onshore Proceeds Account),

	 	 	due on such Repayment Date.
	 
	 	 	“Anode Supply Agreement” means the anode supply agreement dated 7th May, 1997
between VAW Aluminium AG (now Hydro Aluminium Deutschland GmbH) and the
Borrower as amended and restated on 15 June 2000.
	 
	 	 	“Authorised Investment” has the meaning given to it in the Account Agreement.
	 
	 	 	“Banks’ Adviser” means the Banks’ Insurance Adviser, the Banks’ Aluminium
Market Adviser, the Banks’ Model Adviser or the Banks’ Technical Adviser (as
the context requires).
	 
	 	 	“Banks’ Aluminium Market Adviser’ means Metal Bulletin Research of 16 Lower
Marsh, London SE1 7RJ or such other firm of advisers on the aluminium market
as may be appointed pursuant to Clause 27 (Advisers),
	 
	 	 	“Banks’ Insurance Adviser” means Bankrisk Services, a division of Marsh UK
Limited of Tower Place, London, EC3R 5BU or such other firm of insurance
advisers as may be appointed pursuant to Clause 27 (Advisers).
	 
	 	 	“Banks’ Model Adviser” means PriceWaterhouseCoopers of One Embankment Place,
London WC2N 6NN or such other firm of model audit advisers as may be appointed
pursuant to Clause 27 (Advisers).
	 
	 	 	“Banks’ Technical Adviser” means Hatch Associates Ltd. of Regal House, London
Road, Twickenham, Middlesex, TW1 3QQ or such other independent firm of
consultant engineers as may be appointed pursuant to Clause 27 (Advisers).
	 
	 	 	“Base Case Repayment Instalment” means each instalment for repayment of the
Loan calculated as the percentage for each Repayment Date of the Loan
Outstanding on the expiry of the Commitment Period set out in the table in
Clause 6.1, as any such instalment may thereafter be reduced by any
prepayments pursuant to Clause 7 (Prepayment and Cancellation) and/or Clause
14 (Illegality).

 - 2 -

 

	 	 	“Billiton Pledge” means the pledge agreement dated 28 August 2000 by Billiton
Marketing A.G. in favour of the Borrower.
	 
	 	 	“Building Permit” means each building licence issued by the Joint Building
Committee of the Municipalities of Hvalfjardarstrandarhreppur and
Skilmannahreppur.
	 
	 	 	“Business Day” means a day (other than a Saturday or a Sunday) on which banks
are open for business in London and New York.
	 
	 	 	“Calculation Date” means the first Repayment Date and each subsequent
Repayment Date in each year until but excluding the Final Repayment Date,
provided that any adjustment pursuant to Clause 10.6 shall be ignored for this
purpose.
	 
	 	 	“Calculation Period” means:

	 	(a)	 	the period of eleven months ending on the first Calculation Date;
	 
	 	(b)	 	each period of twelve months ending on each subsequent Calculation Date; or
	 
	 	(c)	 	for the purposes of Clause 6.2.1(b) (Deferrals) and Clause 7.4 (Mandatory
Prepayments), each period of six months ending on the subsequent
Calculation Date.

	 	 	“Cash Available for Debt Service”  means, for a period, Gross Revenues received
or for the purposes of Clause 18 (Forecasts) projected to be received during
that period, less the aggregate of the Permitted Payments paid or for the
purposes of Clause 18 (Forecasts) projected to be paid during that period
provided that, for the purposes of determining the Loan Life Cover Ratio, there
shall be excluded from Permitted Payments so deducted Permitted Payments in
respect of Financial Indebtedness.
	 
	 	 	“Cash Collateral”  means, in relation to a Debt Service Reserve L/C, cash cover
equal to the face amount of that Debt Service Reserve L/C and which is
provided on terms acceptable to the Agent (acting reasonably).
	 
	 	 	“Charge and Assignment” means the English Law charge and assignment to be
entered into on or prior to Financial Close between the Borrower and the
Security Trustee.
	 
	 	 	“Commitment” means:

	 	(a)	 	in relation to a Bank which is a Bank on the date of this Agreement, the
amount in Dollars set opposite its name in Schedule 1 and the amount of
any other Bank’s Commitment acquired by it under Clause 26 (Changes to the
Parties); and
	 
	 	(b)	 	in relation to a Bank which becomes a Bank after the date of this
Agreement, the amount of any other Bank’s Commitment acquired by it under Clause
26 (Changes to the Parties),

	 	 	to the extent not cancelled, transferred or reduced under this Agreement.

 - 3 -

 

	 	 	“Commitment Period” means the period from the date of this Agreement up to and
including the date falling one month after the date of this Agreement.
	 
	 	 	“Compensation” means:

	 	(a)	 	all consideration received by the Borrower in respect of the partial or
total nationalisation, expropriation or compulsory purchase of the Project
Facilities or any interest in the Project Facilities;
	 
	 	(b)	 	any sum payable to or for the account of the Borrower in respect of the
release, inhibition, modification, suspension or extinguishment of any
rights, easements or covenants enjoyed by or benefiting the Project Facilities,
or the imposition of any restrictions affecting the Project Facilities, or the
grant of any easement or rights over or affecting the Project Facilities or any
part of them; and
	 
	 	(c)	 	any sum payable to or for the account of the Borrower in respect of the
refusal, revocation, suspension or modification of any authorisation
or exemption subject to conditions, or any other official order or
notice restricting the construction or operation of the Project Facilities;

	 	 	but excluding Insurance Proceeds and any Revenue Damages.
	 
	 	 	“Computer Model” means the computer model in the form accepted by the Agent
pursuant to Clause 4.1 (Documentary Conditions Precedent) which uses the
Forecast Assumptions to produce financial projections and projected cash flows
and represented by material contained in or on computer discs, printouts and
the analyses comprising the Forecast as it may be revised or replaced from
time to time in accordance with this Agreement.
	 
	 	 	“Confidentiality Agreement” means, at any time, the confidentiality
undertaking substantially in the form recommended by the Loan Market
Association from time to time, extended to take effect for the benefit of the
Borrower as well as the Agent, or in any other form agreed between the
Borrower and the Agent.
	 
	 	 	“Construction Contract” means each agreement entered into by the Borrower in
respect of the construction of the Project Expansion as set out in Schedule 6
(Construction Contracts).
	 
	 	 	“Consultancy Assignment Agreement” means the German law assignment agreement
to be entered into on or prior to Financial Close between the Borrower and the
Security Trustee relating to the Technology Consultancy Agreement.
	 
	 	 	“Contract of Affreightment” means the contract of affreightment dated 16th May
2003 between BHP Billiton Marketing A.G. and the Borrower.
	 
	 	 	“Contractor” means each person party to a Construction Contract (other than
the Borrower).

 - 4 -

 

	 	 	“Co-operation Agreement” means the co-operation agreement dated 19th January,
2000 between the Borrower and VAW Aluminium-Technologie GmbH (now Hydro
Aluminium Technologie GmbH).
	 
	 	 	“Debt Service Cover Ratio” means, in relation to a Calculation Period, the
ratio of A:B where:

	 	A 	 	is the Cash Available for Debt Service for that period; and
	 
	 	B 	 	is the Senior Debt Service Obligations for that period (after deducting
any amount of principal repayment falling due in such period that the
Borrower is permitted to defer in accordance with the provisions of
Clause 6.2 (Deferrals)),

	 	 	and, as at any Calculation Date, the Debt Service Cover Ratio for the
applicable Calculation Period ending on that Calculation Date.

	 	 	“Debt Service Reserve Account” has the meaning given to it in the Account
Agreement.
	 
	 	 	“Debt Service Reserve L/C” means each letter of credit in place pursuant to
Clause 6 of the Account Agreement substantially in the form set out in
Schedule 9 (Form of Debt Service Reserve L/C) or such other form as the Agent
(acting reasonably) may agree with the Borrower and with an initial duration
of at least one year.
	 
	 	 	“Declaration of Pledge” means the Icelandic law declaration of pledge to be
entered into on or prior to Financial Close between the Borrower and the
Security Trustee.
	 
	 	 	“Default” means an Event of Default or an event or circumstance which, with
the giving of notice, lapse of time, determination of materiality or
fulfilment of any other applicable condition set out in Clause 17 (Events of
Default) (or any combination of the foregoing), would constitute
an Event of
Default provided that any such event which by reason of express provisions in
any Finance Document requires the satisfaction of a condition as to
materiality before it may become an Event of Default shall not be a Default
unless that condition is satisfied.
	 
	 	 	“Deferral Certificate” has the meaning given to that term in Clause 6.2.3.

	 
	 	 	

“Deferral Conditions” has the meaning given to that term in Clause 6.2
(Deferrals).
	 
	 	 	“Deferral Instalment” means any Base Case Repayment Instalment or the portion
thereof that is not repaid by the Borrower on a Repayment Date as a result of
the operation of the provisions of Clause 6.2 (Deferrals), being an amount
equal to such Base Case Repayment Instalment less the relevant Deferral
Repayment Instalment.
	 
	 	 	“Deferral Repayment Instalment” means each instalment for repayment of the
Loans referred to in Clause 6.2 (Deferrals).

 - 5 -

 

	 	 	“Determination Date” means in respect of any Repayment Date or Calculation
Date, the date falling on the Business Day after the Ratios have been finally
determined in accordance with Clause 18 (Forecasts).
	 
	 	 	“Direct Agreement” means each of:

	 	(a)	 	the direct agreements in the agreed form between the Borrower, the
Security Trustee and (respectively):

	 	(i)	 	the Ministry of Industry, the Treasury and the
Shareholder (relating to the Investment Agreement and the Smelter
Site Agreement);
	 
	 	(ii)	 	Landsvirkjun (relating to the Power Contract);
	 
	 	(iii)	 	BHP Billiton Marketing A.G. (relating to the Tolling
Conversion Agreement); and
	 
	 	(iv)	 	the Harbour Fund (relating to the Harbour Agreement
and the Harbour Usage Agreement);

	 	(b)	 	the letters in the agreed form (if any) from the Security Trustee to the
Borrower and each person listed below, and acknowledgements from the
Borrower and each person listed below:

	 	(i)	 	Hydro Aluminium Technologie GmbH (relating to the
Technology Consultancy Agreement);
	 
	 	(ii)	 	Hydro Aluminium Deutschland GmbH (relating to the
Anode Supply Agreement); and

	 	(c)	 	the Landsbanki Direct Agreement,

	 	 	and any other agreement designated as such by the Borrower and the Agent from
time to time.
	 
	 	 	“Discounted Cash Available for Debt Service” means, as at any Calculation
Date, the Cash Available for Debt Service projected for the period from the
Calculation Date on the basis of the Computer Model to the Final Repayment
Date discounted back to that Calculation Date at the applicable Discount Rate.
	 
	 	 	“Discount Rate” means, as at any Calculation Date with respect to Cash
Available for Debt Service for any period, the discount rate calculated as
follows:

	 	(a)	 	if an Interest Rate Hedging Agreement has not been entered into in
respect of interest payments due for any period in respect of the
Outstanding Senior Debt or part of the Outstanding Senior Debt prior to
the Final Repayment Date, the interest rate applicable to such unhedged
amounts shall be the sum of (i) the relevant fixed swap rate determined
in accordance with Clause 18.10 to be the prevailing market rate in
respect of such amounts for that period, and (ii) the weighted average of
the relevant prevailing Margin applicable to the

 - 6 -

 

	 	 	 	Outstanding Senior Debt for that period (taking into account
applicable increases with respect to the Loan contemplated in the
definition of “Margin” herein); and
	 
	 	(b)	 	if an Interest Rate Hedging Agreement has been entered into in respect of
interest payments due for any period in respect of the Outstanding Senior
Debt or part of the Outstanding Senior Debt, for the period to which such
Interest Rate Hedging Agreement applies, the interest rate applicable to
such hedged amounts shall be the sum of (i) the fixed rate payable under
that Interest Rate Hedging Agreement, and (ii) the weighted average of the
relevant prevailing Margin applicable to the Outstanding Senior Debt
(taking into account applicable increases with respect to the Loan
contemplated in the definition of “Margin” herein), and

	 	 	the Discount Rate applicable to the Cash Available for Debt Service for each
period shall be, if there are no hedged amounts for that period, the interest
rate determined in accordance with paragraph (a) above, and if the entire
Outstanding Senior Debt is hedged for that period, the interest rate
determined in accordance with paragraph (b) above, and if part only of the
Outstanding Senior Debt for that period is hedged, the weighted average of the
interest rate determined in accordance with paragraph (a) for the unhedged
amounts and the interest rate determined in accordance with paragraph (b) for
the hedged amounts.
	 
	 	 	“Distribution” means:

	 	(a)	 	a dividend or other distribution (in cash or in kind) in respect of the
share capital of the Borrower;
	 
	 	(b)	 	any payment (including, without limitation, principal or interest) in
respect of any Shareholder Debt;
	 
	 	(c)	 	any payment (including without limitation, principal or interest) in
respect of any Subordinated Debt; and
	 
	 	(d)	 	management fees and expenses payable to the Shareholder in excess of
$375,000 in any financial year.

	 	 	“Distributions Account” has the meaning given to it in the Account Agreement.
	 
	 	 	“Dividend Reserve Account” shall have the meaning given to it in the Account
Agreement.
	 
	 	 	“Documents” means the Finance Documents and the Project Contracts
	 
	 	 	“Dollars” or “$” means the lawful currency for the time being of the United
States of America.
	 
	 	 	“Drawdown Date” means the date of the advance of the Loan.

 - 7 -

 

	 	 	“DSCR Certificate” shall mean the certificate delivered by the Borrower to the
Agent as described in Clause 18.9.3.
	 
	 	 	“Economic Assumptions” means the economic assumptions as set out in part 4 of
the Model Assumption Book, in each case as input into the Computer Model.
	 
	 	 	“Environmental Approval” means any authorisation of any kind required under
any Environmental Law applicable to the Project and/or the Borrower.
	 
	 	 	“Environmental Claim” means any claim by any person as a result of or in
connection with any violation of Environmental Law and/or any Environmental
Approval and/or any Environmental Contamination which could give rise to any
remedy or penalty against (whether interim or final) or liability of the
Borrower or any Finance Party.
	 
	 	 	“Environmental Contamination” means each of the following and their
consequences:

	 	(a)	 	any release, emission, leakage or spillage of any Substances at or from
the Site into any part of the environment; or
	 
	 	(b)	 	any accident, fire, explosion or sudden event at the Site which is
directly or indirectly caused by or attributable to any Substances; or
	 
	 	(c)	 	any other pollution of the environment at or from the Site other than as
permitted pursuant to the Environmental Operating Permit (save to the
extent that any such pollution permitted pursuant to the Environmental
Operating Permit gives rise to an Environmental Claim).

	 	 	“Environmental Guidelines” means the World Bank and International Finance
Corporation (“IFC”) guidelines including, without limitation, the World Bank
Pollution Prevention and Abatement Handbook, the World Bank General
Environmental Guidelines and the IFC General Health and Safety Guidelines as
they apply to the Project from time to time pursuant to the adoption by the
Agent of the “Equator Principles” on 4 June 2003.
	 
	 	 	“Environmental Law” means any applicable Icelandic or European Economic Area
law, regulation or directive concerning the protection of human health or the
environment or concerning Substances.
	 
	 	 	“Environmental Operating Permit” means the environmental operating permit
issued to the Borrower for the Project by the Government on 26th March, 1997.
	 
	 	 	“Excess Cash” means, as of a Repayment Date, after first deducting (without
double counting) all withdrawals which the Borrower may make pursuant to
sub-paragraphs (a) through to (i) (inclusive) of paragraph 2 of Schedule 3 to
the Account Agreement on such Repayment Date, an amount equal to the aggregate
of the credit balances on each of the Project Accounts (other than, in each
case after the Borrower has provided reasonable evidence to the Banks’
Technical Adviser in relation to the proposed use of the relevant amounts)
credit balance amounts standing to the credit of the Compensation Account (to
the extent that amounts in such account are to be applied by

 - 8 -

 

	 	 	the Borrower to the reinstatement or repair of the asset in relation to which
the relevant payment arose within the following six month period) and amounts
standing to the credit of the Insurance Account (to the extent that amounts in
such account are to be applied in respect of the costs of repair, restoration
or replacement of the Project Facilities or part thereof in accordance with
paragraphs 7.3 to 7.6 of Schedule 8)) which, if the amount so calculated is
negative, shall be deemed to be zero.
	 
	 	 	“Expert” means an expert appointed in accordance with Clause 18.5.3
(Submissions to the Expert).
	 
	 	 	“Event of Default” means an event specified as such in Clause 17.1 (Events of
Default).
	 
	 	 	“Facility” means the $185,000,000 term loan facility, the terms of which are
set out in this Agreement.
	 
	 	 	“Facility Office” means the office(s) notified by a Bank to the Agent:

	 	(a)	 	on or before the date it becomes a Bank; or
	 
	 	(b)	 	by not less than five Business Days’ notice,

	 	 	as the office(s) through which it will perform all or any of its obligations
under this Agreement.
	 
	 	 	“Fee Letter” means each letter dated on or about the date of this Agreement
(or, in respect of arrangement and participation fees, the engagement letter
dated 2 May 2003 together with supplemental letter dated 2 May 2003 and
amended and restated supplemental letter dated 24 July 2003) between certain
Finance Parties and the Borrower setting out the amount of various fees
referred to in Clause 20 (Fees).
	 
	 	 	“Final Repayment Date” means 30 June 2018, as adjusted by deducting six months
for each Base Case Repayment Instalment which is prepaid in full and in
inverse order of maturity pursuant to Clauses 7.1 (Voluntary Prepayment),
Clause 7.3 (Additional Right of Prepayment and Cancellation) or Clause 7.4
(Mandatory Prepayment).
	 
	 	 	“Finance Document” means:

	 	(a)	 	this Agreement;
	 
	 	(b)	 	a Security Document;
	 
	 	(c)	 	the Intercreditor Agreement;
	 
	 	(d)	 	the Account Agreement;
	 
	 	(e)	 	a Hedging Agreement to the extent the Hedging Bank accedes to the Intercreditor Agreement;
	 
	 	(f)	 	a Direct Agreement;

 - 9 -

 

	 	(g)	 	the Sponsor Funding Agreement;
	 
	 	(h)	 	the Debt Service Reserve L/C; and
	 
	 	(i)	 	a Novation Certificate,

	 	 	or any other document designated as such by the Agent and the Borrower.
	 
	 	 	“Finance Party” means an Arranger, a Bank, a Hedging Bank which accedes to the
Intercreditor Agreement, the Account Bank, the Agent or the Security Trustee.
	 
	 	 	“Financial Close” means the date on which the Agent notifies the Borrower and
the Banks that it has received all of the documents and/or evidence set out in
Schedule 2 in the agreed form (if any) or otherwise in form and substance
satisfactory to the Majority Banks.
	 
	 	 	“Financial Indebtedness” means any indebtedness (whether present, future,
actual or contingent) in respect of:

	 	(a)	 	moneys borrowed or debit balances at banks and other financial institutions;
	 
	 	(b)	 	any debenture, bond, note, loan stock or other security;
	 
	 	(c)	 	any acceptance or documentary credit;
	 
	 	(d)	 	receivables sold or discounted (otherwise than on a non-recourse basis);
	 
	 	(e)	 	the acquisition cost of any asset to the extent payable before or after
the time of acquisition or possession by the party liable where the advance or
deferred payment is arranged primarily as a method of raising finance or
financing the acquisition of that asset (excluding for the avoidance of doubt any
deferred payment obligations entered into in the ordinary course of trade and
which do not involve the deferral of payment of any sum for more than 90 days);
	 
	 	(f)	 	any lease entered into primarily as a method of raising finance or
financing the acquisition of the asset leased;
	 
	 	(g)	 	any currency swap (other than a foreign exchange agreement for spot
delivery entered into in the ordinary course of business) interest swap,
cap, commodity swap, collar arrangement, forward currency transactions or
any other derivative instrument;
	 
	 	(h)	 	any transaction which involves or has the commercial effect of the
borrowing of base or precious metals or other minerals as part of an
arrangement for or in substitution for the raising of finance;
	 
	 	(i)	 	any amount raised under any other transaction having the commercial effect
of a borrowing or raising of money; or

 - 10 -

 

	 	(j)	 	any guarantee, indemnity, letter of credit or similar assurance in
respect of any indebtedness of the type described in paragraphs (a) to (i)
above of any person.

	 	 	“Financing Costs” means:

	 	(a)	 	interest, fees, commissions and costs payable by the Borrower under the Finance Documents;
	 
	 	(b)	 	interest payable by the Borrower on the Site Obligations and Harbour Loan
under the Smelter Site Agreement and the Replacement Harbour Loan
Agreement respectively;
	 
	 	(c)	 	amounts payable by the Borrower under Clause 11 (Taxes), by virtue of
market disruption provisions under Clause 12 (Market
Disruption), Clause 13 (Increased Costs), Clause 22 (Stamp Duties) and Clause 23 (Indemnities)
of this Agreement;
	 
	 	(d)	 	amounts payable by the Borrower under any Hedging Agreement;
	 
	 	(e)	 	any value added or other taxes payable by the Borrower in respect of the above,

	 	 	less any amount receivable by the Borrower under any Hedging
Agreement.
	 
	 	 	“Financing Principal” means:

	 	(a)	 	principal amounts outstanding under this Agreement; and
	 
	 	(b)	 	principal amounts outstanding (including capitalised interest) of the
Site Obligations and the Harbour Loan pursuant to the Smelter Site Agreement
and the Replacement Harbour Loan Agreement respectively.

	 	 	“First Amendment to the Investment Agreement” means the first amendment to the
Investment Agreement entered into between the Ministry of Industry and
Commerce, the Shareholder and the Borrower dated 14 June 2000 amending the
Investment Agreement.
	 
	 	 	“First Amendment to the Power Contract” means the first amendment to the Power
Contract entered into between the Borrower and Landsvirkjun on 29th October,
1999 amending the Power Contract.
	 
	 	 	“First Amendment to the Tolling Conversion Agreement” means the first
amendment to the Tolling Conversion Agreement originally entered into between
Billiton Marketing B.V. and the Borrower dated 16 June 2000 amending the
Tolling Conversion Agreement in respect of which the rights and obligations of
Billiton Marketing B.V. were novated to Billiton Marketing A.G. in August
2000.

 - 11 -

 

	 	 	“First Forecast” means the base case forecast approved by the Banks’ Model
Adviser and agreed by the Borrower and initialled for the purposes of
identification by the Agent and the Borrower.
	 
	 	 	“First Repayment Date” means 30 November 2003 (as adjusted, if appropriate,
pursuant to Clause 10.6 (Non-Business Days)).
	 
	 	 	“Forecast” means the results of running the Computer Model in accordance with
the provisions of (and on the basis of the assumptions agreed in) Clause 18
(Forecasts).
	 
	 	 	“Forecast Assumptions” means each of the Economic Assumptions and the
Technical Assumptions.
	 
	 	 	“General Bond” means the Icelandic law general bond to be entered into on or
prior to Financial Close between the Borrower and the Security Trustee.
	 
	 	 	“Good Industry Practice” means the exercise of that degree of skill,
diligence, prudence, foresight and operating practice which would reasonably
and ordinarily be expected from a skilled and experienced operator engaged in
the same type of undertaking as the Borrower under the same or similar
circumstances.
	 
	 	 	“Government” means the Government of the Republic of Iceland.
	 
	 	 	“Gross Revenues” means, for any relevant period, all moneys received by the
Borrower during that period including, without limitation:

	 	(a)	 	moneys received pursuant to the Project Contracts;
	 
	 	(b)	 	any Loss of Revenue Insurance Proceeds;
	 
	 	(c)	 	any Revenue Damages;
	 
	 	(d)	 	amounts representing interest on any Project Account and income of any
kind in respect of Authorised Investments made out of moneys standing to the
credit of any Project Account to the extent that such amounts of
interest and/or income are transferred to the Proceeds Account;
	 
	 	(e)	 	all other amounts (including any such amounts as are of a non-recurring
or extraordinary nature) received by the Borrower during the relevant
period; and
	 
	 	(f)	 	moneys received or receivable pursuant to any Aluminium
Hedging Agreements (less moneys paid or payable pursuant to the Aluminium
Hedging Agreements); and
	 
	 	(g)	 	amounts representing value added taxes or similar taxes in respect of the
foregoing and all refunds of Tax of any kind,

	 	 	but excluding:

	 	(i)	 	Insurance Proceeds (other than Loss of Revenue Insurance Proceeds);

 - 12 -

 

	 	(ii)	 	any amounts receipt of which gives rise to an obligation to prepay the
Loan in accordance with Clause 7.4.1(a)(ii) (Mandatory
Prepayments);
	 
	 	(iii)	 	amounts paid to the Borrower under the Finance Documents;
	 
	 	(iv)	 	amounts paid to the Borrower under the Smelter Site Agreement and/or the
Replacement Harbour Loan Agreement in respect of the Site Obligations
and/or the Harbour Loan;
	 
	 	(v)	 	any moneys received in respect of shares in the Borrower and Financial
Indebtedness; and
	 
	 	(vi)	 	Compensation.

	 	 	“Group Company” means each of the Borrower, the Shareholder and any
Shareholder Affiliate which becomes a party to the Sponsor Funding Agreement
pursuant to Clause 13 thereof and the Intercreditor Agreement pursuant to
Clause 23.11 thereof.
	 
	 	 	“Grundartangi Aluminium Smelter” or “Smelter” means the aluminium reduction
plant and related facilities constructed, owned and operated by the Borrower
on the Smelter Site that had an initial annual production capacity of
approximately 60,000 tonnes of aluminium and, following the completion of the
Project Expansion, has an annual production capacity of approximately 90,000
tonnes of aluminium.
	 
	 	 	“Harbour Agreement” means the harbour agreement dated 7th August, 1997 between
the Harbour Fund and the Borrower.
	 
	 	 	“Harbour Area” has the meaning given to that term in the Harbour Agreement as
in effect on the date of this Agreement.
	 
	 	 	“Harbour Fund” means the Grundartangi Harbour Fund, an independent public fund
jointly owned by the Municipalities of Hvalfjardarstrandarhreppur,
Innri-Akraneshreppur, Leirar and Melahreppur, Skilmannahreppur, the Township
of Akranes and by all Districts of the Counties of Borgarfjardarsysla and
Myrasysla other than those above mentioned.
	 
	 	 	“Harbour Loans” means the loans in an aggregate amount of $3,000,000 plus
capitalised interest (if any) provided under the Replacement Harbour Loans
Agreement.
	 
	 	 	“Harbour Usage Agreement” means the harbour usage agreement dated 12th June,
1997 between the Harbour Fund, Icelandic Alloys Limited and the Borrower.
	 
	 	 	“Hedging Agreement” means any interest rate or foreign currency hedging
agreement entered into by the Borrower pursuant to and in accordance with
Clause 16.20 (Hedging).
	 
	 	 	“Hedging Bank” means any financial institution which is a counterparty to a
Hedging Agreement entered into by the Borrower.

 - 13 -

 

	 	 	“Holding Company” in relation to a person, means an entity of which that person
is a Subsidiary.
	 
	 	 	“Industrial Licence” means the industrial licence issued or to be issued by
Magistrates Court at Borgames pursuant to a power delegated by the Ministry of
Industry.
	 
	 	 	“Information Memorandum” means the Information Memorandum dated 10 June 2003
prepared by the Arrangers in consultation with and as agreed with the Borrower
in connection with syndication of the Facility.
	 
	 	 	“Initial Shareholder Distribution” means the amount of up to $30,000,000
specified by the Borrower in the Request to be transferred to the
Distributions Account out of the Loan advanced to the Borrower.
	 
	 	 	“Insurance Account” has the meaning given to it in the Account Agreement.
	 
	 	 	“Insurance Proceeds” means all proceeds of insurance payable to or received by
the Borrower.
	 
	 	 	“Insurances” means all contracts and policies of insurance and re-insurance of
any kind which are taken out by or on behalf of the Borrower in accordance
with Clause 16.33 (Insurance) or (to the extent of its interest) in which the
Borrower has an interest.
	 
	 	 	“Intercreditor Agreement” means the intercreditor agreement to be entered into
on or about or prior to Financial Close between the Borrower, the Shareholder,
each Bank, each Hedging Bank, the Agent and the Security Trustee.
	 
	 	 	“Interest Period” means each period determined in accordance with Clause 8
(Interest Periods).
	 
	 	 	“Interest Rate Hedging Agreement” means any interest rate hedging agreement
entered or to be entered into between the Borrower and a Hedging Bank pursuant
to Clause 16.20 (Hedging).
	 
	 	 	“Investment Agreement” means the investment agreement dated 7th August, 1997
between the Ministry of Industry, the Shareholder and the Borrower, as amended
by the First Amendment to the Investment Agreement.
	 
	 	 	“Key Licence” means each of:

	 	(a)	 	the Environmental Operating Permit;
	 
	 	(b)	 	the Industrial Licence; and
	 
	 	(c)	 	the Operating Permit.

	 	 	“Key Project Contract” means each Project Contract to which a Major Project
Party is a party.

 - 14 -

 

	 	 	“Landsbanki Direct Agreement” means the letter dated on or about the date
hereof from the Security Trustee to Landsbanki Islands hf, the National Debt
Management Agency and the Borrower.
	 
	 	 	“Legal Opinions” means the legal opinions listed in paragraph 13 of
Schedule 2.
	 
	 	 	“LIBOR” means:

	 	(a)	 	the rate per annum which appears on Telerate Page 3750; or
	 
	 	(b)	 	if no such rate appears, the arithmetic mean (rounded upward to four
decimal places) of the offered quotations which appear on the relevant page (if
any) on the Reuters Monitor Money Rates Service (or such other service as may
replace the Reuters Monitor Money Rates Service for the purposes of
displaying London interbank offered rates of leading banks); or
	 
	 	(c)	 	if no such rate appears on the Telerate Screen and one only or no such
offered quotation appears on the relevant page of the Reuters Screen or there
is no relevant page on the Reuters Screen the arithmetic mean (rounded upward
to four decimal places) of the rates, as supplied to the Agent at its
request, quoted by the Reference Banks to leading banks in the London interbank market,

	 	 	at or about 11.00 a.m. two Business Days before the first day of the relevant
Interest Period for the offering of deposits in Dollars for a period
comparable to the relevant Interest Period.
	 
	 	 	For the purposes of this definition “Telerate Page 3750” means the display
designated as “Page 3750” on the Telerate Service (or such other page as may
replace Page 3750 for that service) or such other service as may be nominated
by the British Bankers’ Association as the information vendor for the purpose
of displaying British Bankers’ Association Interest Settlement Rates for
deposits in the currency concerned.
	 
	 	 	“LME Cash Price” means the London Metal Exchange cash sellers quotation in
Dollars per tonne for high grade aluminium as published by Metal Bulletin
“Aluminium High Grade cash sellers” or, if no such quotation is published,
such alternative internationally recognised quotation for high grade aluminium
as the Agent may reasonably select.
	 
	 	 	“Loan” means, subject to Clause 8
(Interest Periods), the principal amount of
the borrowing by the Borrower under this Agreement or the principal amount
outstanding of that borrowing.
	 
	 	 	“Loan Assignment” means any assignment of subordinated loans entered into
between the Shareholder and the Security Trustee and/or a Shareholder
Affiliate and the Security Trustee pursuant to the Sponsor Funding Agreement.

 - 15 -

 

	 	 	“Loan Life Cover Ratio” means, at any Calculation Date, the ratio of A:B
where:

	 	A	 	is the aggregate of the Discounted Cash Available for Debt Service (as
shown in the then applicable Forecast) and the aggregate of the credit
balances on the Debt Service Reserve Account together with the aggregate
amount available for drawing under any Debt Service Reserve L/C, the
Reserved Cashflow Account (only after deduction of any amounts set out in
paragraph 2(a) to (g) of Schedule 3 of the Account Agreement to the extent
that such amounts are withdrawn from the account pursuant to Clause 4.2 of
the Account Agreement on such date (to the extent such amounts are not
treated as Cash Available for Debt Service)) at the Calculation Date; and
	 
	 	B 	 	the aggregate amount of:

	 	(i)	 	the outstanding amount of the Loan at that time;
	 
	 	(ii)	 	without double counting:

	 	(1)	 	the aggregate of principal and capitalised
interest outstanding in respect of the Harbour Loans and Site Obligations for the
period up to the Final Repayment Date (ignoring for this purpose any
adjustments to the Final Repayment Date); or
	 
	 	(2)	 	if and to the extent that the Harbour Loans
and/or Site Obligations have become prematurely due and payable, the aggregate of
principal and capitalised interest outstanding in respect of
the Harbour Loans and the Site Obligations; and
	 
	 	(3)	 	the outstanding principal amount of any other Financial
Indebtedness incurred by the Borrower (other than Financial
Indebtedness owed to the Shareholder or any Affiliate of the
Shareholder, any Subordinated Debt, and any amounts owing
under any Hedging Agreement or Aluminium Hedging Agreement)
at that time.

	 	 	“Loss of Revenue Insurance Proceeds” means Insurance Proceeds under any
business interruption, loss of revenue, delay in start-up, loss of profit or
similar Insurances.
	 
	 	 	“Major Project Parties” means:

	 	(a)	 	the Shareholder;
	 
	 	(b)	 	the Ministry of Industry;
	 
	 	(c)	 	the Treasury;
	 
	 	(d)	 	Landsvirkjun;
	 
	 	(e)	 	BHP Billiton Marketing A.G (unless replaced under (i) below);

 - 16 -

 

	 	(f)	 	Hydro Aluminium Deutschland GmbH (unless replaced under (i) below);
	 
	 	(g)	 	Hydro Aluminium Technologie GmbH;
	 
	 	(h)	 	the Harbour Fund; and
	 
	 	(i)	 	any replacement or additional tollers, alumina suppliers, aluminium
purchasers or anode suppliers that enter into contracts with the Borrower
to replace or supplement the Borrower’s existing arrangements under the
Tolling Conversion Agreement and the Anode Supply Agreement,

	 	 	and any other person designated as such by both the Borrower and the
Agent.

“Majority Banks” means, at any time, Banks:

	 	(a)	 	whose participations in the Loans then outstanding aggregate more than
662/3 per cent, of all the Loans then outstanding; or
	 
	 	(b)	 	if there are no Loans then outstanding, whose Commitments then aggregate
more than 662/3 per cent, of the Total Commitments; or
	 
	 	(c)	 	if there are no Loans then outstanding and the Total Commitments have
been reduced to nil, whose Commitments aggregated more than 662/3 per cent.
Of the Total Commitments immediately before the reduction.

	 	 	“Mandatory Cost” means the percentage rate per annum calculated and determined
in accordance with and so defined in Schedule 7 (Mandatory Cost Formulae).
	 
	 	 	“Margin” means, subject to Clause 9.1.2
(Interest Rate):

	 	(a)	 	at any time from (and including) the date of this Agreement up to (and
including) 31 December 2009, 1.45% per annum;
	 
	 	(b)	 	at any time from (and including) 1 January 2010 up to (and including) 31
December 2013, 1.55% per annum; and
	 
	 	(c)	 	at any time from (and including) 1 January 2014, 1.65% per annum.

	 	 	“Material Adverse Effect” means a material adverse effect on:

	 	(a)	 	the ability of the Borrower to perform or comply with its payment or
other material obligations under the Documents;
	 
	 	(b)	 	(i) the interests of the Finance Parties under the Finance Documents; or

	 	(ii)	 	the business, operations or financial condition of the Borrower; or
	 
	 	(iii)	 	the Project,

	 	 	Provided that a material adverse effect solely on the ability of the Borrower
to comply with the covenants set out in Clause 16.35.1 or Clause 16.35.2 shall
not be treated as a Material Adverse Effect.

 - 17 -

 

	 	 	“Ministry of Industry” means the Ministry of Industry of the Government of the
Republic of Iceland.
	 
	 	 	“Model Assumption Book” means the model assumption book prepared by the
Arranger (and agreed by the Borrower) delivered to the Agent prior to
Financial Close.
	 
	 	 	“Net Worth” means at any applicable Calculation Date the aggregate of the
amounts paid up or credited as paid up on the issued ordinary share capital of
the Borrower and any consolidated revenue reserves and capital reserves and
any retained earnings,
	 
	 	 	  plus (without double counting):

	 	(a)	 	any amount credited to the share premium account;
	 
	 	(b)	 	any capital redemption reserve fund;
	 
	 	(c)	 	any balance standing to the credit of the consolidated profit and loss
account of the Borrower; and
	 
	 	(d)	 	the outstanding amount of any Additional Shareholder Funding,

	 	 	  but deducting:

	 	(i)	 	any debit balance on the consolidated profit and loss account of the Borrower;
	 
	 	(ii)	 	(to the extent included) any amount shown in respect of goodwill
(including goodwill arising only on consolidation) or other intangible
assets of the Borrower (but only to the extent arising or acquired
following the date of this Agreement);
	 
	 	(iii)	 	(to the extent included) any amount set aside for taxation, deferred
taxation or bad debts not already accounted for in the consolidated
profit and loss account;
	 
	 	(iv)	 	(to the extent included) unless agreed by the Majority Banks any amounts
arising from an upward revaluation of assets made at any time after 31
December 2002; and
	 
	 	(v)	 	any amount in respect of any Distribution declared, recommended or made
by the Borrower to the extent such Distribution is not provided for in
the most recent financial statements,

	 	 	  and so that no amount shall be included or excluded more than once.
	 
	 	 	  “Novation Certificate” has the meaning given to it in Clause 26.3 (Procedure
for Novations).
	 
	 	 	  “Onshore Proceeds Accounts” has the meaning given to that term in the Account
Agreement.

 - 18 -

 

	 	 	“Operating Budget” means a budget itemising the operating expenditures forecast
for a financial year of the Borrower in a form which is consistent with the
format of the Computer Model.
	 
	 	 	“Operating Costs” means all costs and expenses incurred by the Borrower in the
ordinary course of its business for the purpose of the operation and
maintenance of the Project Facilities including but not limited to:

	 	(a)	 	operating costs and expenses set out in the latest Operating Budget;

	 
	 	(b)	 	
 liabilities of the Borrower under the Project Contracts;

	 
	 	(c)	 	
 all Insurance premia;
	 
	 	(d)	 	maintenance expenditure (including, without limitation, expenditure in
relation to cell relining);
	 
	 	(e)	 	capital expenditure on repair and/or replacement of assets up to a
maximum aggregate amount of $2,500,000 in any financial year of the Borrower;
	 
	 	(f)	 	all amounts payable in connection with Aluminium Hedging Agreements (less
amounts receivable in connection with Aluminium Hedging Agreements);
	 
	 	(g)	 	administrative, legal, management, accounting and employee costs (but
only to the extent incurred in connection with the operation and maintenance
of the Project Facilities);
	 
	 	(h)	 	all other costs and expenses which the Majority Banks agree may be
Operating Costs; and
	 
	 	(i)	 	any value added tax in respect of any of the above,

	 	 	  but excluding:

	 	(i)	 	Project Taxes (except for value added tax provided for in paragraph (i) above);
	 
	 	(ii)	 	Financing Principal;
	 
	 	(iii)	 	Financing Costs;
	 
	 	(iv)	 	any other Permitted Financial Indebtedness (except within paragraphs (f)
and (g) or (save as covered by Financing Costs and Financing Principal)
within Clauses 16.12.4, 16.12.6, 16.12.7 and 16.12.8 of Clause 16.12
(Borrowings)) and related interest, costs and expenses;
	 
	 	(v)	 	any Distribution;
	 
	 	(vi)	 	depreciation, other non-cash charges, reserves, amortisation of
intangibles and similar book-keeping entries; and

 - 19 -

 

	 	(vii)	 	capital expenditure or other non-recurring expenditure funded by
Additional Shareholder Funding and/or other Permitted Financial
Indebtedness.

“Operating Permit” means the operating permit issued on 22nd May, 1997 to the
Borrower on behalf of the Occupational Health and Safety Authority together
with confirmation that such operating permit applied to the Project Expansion.

“Outstanding Senior Debt” means, as at any Calculation Date, the aggregate of:

	 	(a)	 	the principal amount of outstanding scheduled Base Case Repayment Instalments;
	 
	 	(b)	 	the principal amount of outstanding Deferral Instalments; and
	 
	 	(c)	 	the principal amount of outstanding scheduled repayments in respect of
the Site Obligations and Harbour Loan in accordance with the Smelter Site
Agreement and the Replacement Harbour Loan Agreement respectively.

	 	 	“Party” means a party to this Agreement.
	 
	 	 	“Permitted Financial Indebtedness” means any Financial Indebtedness which the
Borrower is permitted to maintain or incur pursuant to Clause 16.12
(Borrowings).
	 
	 	 	“Permitted Payments” means at any time and/or for the relevant period and
without duplication, each of the following amounts paid or, in the case of a
Forecast, projected to be payable by the Borrower during that period:

	 	(a)	 	Operating Costs;
	 
	 	(b)	 	Project Taxes;
	 
	 	(c)	 	amounts referred to under Clause 3.1.l(c) (Purpose); and
	 
	 	(d)	 	such other costs and liabilities as the Borrower and the Majority Banks
agree will be Permitted Payments.

	 	 	“Permitted Security Interest” means:

	 	(a)	 	any lien arising by operation of law in the ordinary course of business
and securing amounts not more than 30 days overdue (or any longer period
where such overdue amounts do not exceed in aggregate $100,000, the payment
of such amounts is being contested in good faith by any appropriate
proceedings and unless the enforcement of such lien over the relevant asset is
likely, in the reasonable opinion of the Majority Banks, to have a Material Adverse
Effect);
	 
	 	(b)	 	any Security Interest arising under the Security Documents;
	 
	 	(c)	 	any Security Interest created in favour of Billiton Marketing A.G.
pursuant to and in accordance with the terms of the Tolling Conversion Agreement
(as in force on the date of this Agreement);

 - 20 -

 

	 	(d)	 	any Security Interest created under the Smelter Site Agreement, the
Harbour Agreement or the Replacement Harbour Loan Agreement (in each case as in
force on the date of this Agreement); and
	 
	 	(e)	 	any Security Interest arising in respect of the Precedent Facility
Agreement that will be irrevocably discharged upon the Drawdown Date (or, in
respect of any Icelandic general bond, as soon as possible thereafter).

	 	 	“Power Contract” means the power contract dated 7th August, 1997 between
Landsvirkjun and the Borrower, as amended by the First Amendment to the Power
Contract.
	 
	 	 	“Precedent Facility Agreement” means the $167,200,000 senior facility
agreement dated 16 June 2000 between Nordural hf as borrower (1), BNP Paribas
S.A. and Dresdner Bank AG London Branch as arrangers (2), the financial
institutions listed in Schedule 1 thereof as banks (3), BNP Paribas S.A. as
account bank (4), BNP Paribas S.A. as agent (5) and BNP Paribas S.A. as
security trustee (6).
	 
	 	 	“Proceeds Account” has the meaning given to it in the Account Agreement.
	 
	 	 	“Project” means the design, development, financing, construction, testing,
commissioning, operation and maintenance of the Grundartangi Aluminium Smelter
and the Harbour Area.
	 
	 	 	“Project Account” has the meaning given to it in the Account
Agreement.
	 
	 	 	“Project Contract” means:

	 	(a)	 	the Technology Consultancy Agreement;
	 
	 	(b)	 	the Investment Agreement;
	 
	 	(c)	 	the Harbour Agreement;
	 
	 	(d)	 	the Harbour Usage Agreement;
	 
	 	(e)	 	the Smelter Site Agreement;
	 
	 	(f)	 	the Power Contract (together with any supplement thereto or replacement thereof);
	 
	 	(g)	 	the Tolling Conversion Agreement and the First Amendment to the Tolling
Conversion Agreement (together with any supplement thereto or replacement
thereof);
	 
	 	(h)	 	the Anode Supply Agreement (together with any supplement thereto or
replacement thereof);
	 
	 	(i)	 	each Aluminium Hedging Agreement;
	 
	 	(j)	 	the Billiton Pledge; and

 - 21 -

 

	 	(k)	 	the Replacement Harbour Loan Agreement,

	 	 	and any other material contract entered into by the Borrower relating to the
Project which both the Borrower and Agent designate as a Project Contract.

	 	 	“Project Expansion” means the completed expansion of the Grundartangi
Aluminium Smelter to reach an output level of 89,100 tonnes of aluminium per
annum.
	 
	 	 	“Project Facilities” means:

	 	(a)	 	the Site; and
	 
	 	(b)	 	the Project.

	 	 	“Project Taxes” means all Taxes payable or to be payable by the Borrower.
	 
	 	 	“Qualifying Issuer” means a bank or financial institution that has a credit
rating for its unsecured and unsubordinated long or medium term debt of at
least A with Standard & Poor’s.
	 
	 	 	“Ratio” means the Debt Service Cover Ratio or the Loan Life Cover Ratio.
	 
	 	 	“Reference Banks” means, subject to Clause 26.4 (Reference Banks), the Agent,
BNP Paribas S.A. and Fortis Bank (Nederland) N.V.
	 
	 	 	“Repayment Date” means the First Repayment Date, the Final Repayment Date and
each other date for the payment of a Repayment Instalment specified in Clause
6.1 (Repayment Instalments) (as adjusted if appropriate pursuant to Clause
10.6 (Non-Business Days)).
	 
	 	 	“Repayment Instalment” means each-Base Case Repayment Instalment, Deferral
Repayment Instalment and/or any additional amounts which the Borrower is
required to repay pursuant to Clause 6.1 (Repayment Instalments).
	 
	 	 	“Replacement Harbour Loan Agreement” means the US$3,000,000 loan agreement
dated 23rd June, 1998 between the Borrower as borrower and Landsbanki Islands
hf as lender.
	 
	 	 	“Request” means a request made by the Borrower for the Loan, substantially in
the form of Schedule 3 (Form of Request).
	 
	 	 	“Required DSRA Balance” has the meaning given to that term in the Account
Agreement.
	 
	 	 	“Reserved Cashflow Account” has the meaning given to that term in the Account
Agreement.
	 
	 	 	“Reserved Discretion” means the rights of the Borrower under the Project
Contracts listed in Schedule 5 (Reserved Discretions).

 - 22 -

 

	 	 	“Revenue Damages” means all damages paid under the Anode Supply Agreement (or
any supplement thereto or replacement thereof), the Power Contract (or any
supplement thereto or replacement thereof), the Tolling Conversion Agreement
(or any supplement thereto or replacement thereof), any liquidated damages paid
for delay under any construction contract (including any associated claim under
any bond and/or guarantee in respect of such construction contract) and any
other damages paid under any Project Contract compensating the Borrower for
loss of its revenue or increase in its Operating costs.
	 
	 	 	“Security Asset” means any asset the subject of any Security Interest under
the Security Documents.
	 
	 	 	“Security Documents” means:

	 	(a)	 	the Shares Pledge;
	 
	 	(b)	 	the Charge and Assignment;
	 
	 	(c)	 	the Assignment Agreement;
	 
	 	(d)	 	the General Bond;
	 
	 	(e)	 	the Declaration of Pledge;
	 
	 	(f)	 	any shares pledge entered into pursuant to Clause 4 of the Sponsor
Funding Agreement;
	 
	 	(g)	 	any Loan Assignment; and
	 
	 	(h)	 	any security document entered into pursuant to Clause 2.3 Of Schedule 8 (Insurances),

	 	 	and any other document evidencing or creating any Security Interest over any
asset Of a Group Company to secure any obligations of the Group Company to a
Finance Party under the Finance Documents.
	 
	 	 	“Security Interest” means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or arrangement
having the effect of conferring rights equivalent to security (for the
avoidance of doubt, retention of title is not a Security Interest on the
Borrower’s assets).
	 
	 	 	“Senior Debt Service Obligations” means in respect of any period:

	 	(a)	 	the aggregate principal amount of scheduled Base Case Repayment
Instalments that have fallen due or will fall due (or which would have
fallen due if Clause 6.2 (Deferrals) had not applied) during such period
in accordance with the provisions of this Agreement;

 - 23 -

 

	 	(b)	 	the aggregate principal amount of Deferred Instalments that have fallen
due or will fall due during such period in accordance with the provisions of
this Agreement;
	 
	 	(c)	 	the aggregate principal amount of scheduled repayments that have fallen
due or will fall due during such period in respect of the Site Obligations
and Harbour Loan in accordance with the Smelter Site Agreement and the
Replacement Harbour Loan Agreement respectively; and
	 
	 	(d)	 	Financing Costs accruing during such period.

	 	 	“Shareholder” means Columbia Ventures Corporation incorporated in the State of
Washington, United States of America.
	 
	 	 	“Shareholder Debt” has the meaning given to that term in the Intercreditor
Agreement.
	 
	 	 	“Shares Pledge” means the Icelandic law shares pledge to be entered into on or
about Financial Close between the Borrower, the Shareholder, any other
shareholders and the Security Trustee.
	 
	 	 	“Site” means the Smelter Site and the Harbour Area.
	 
	 	 	“Site Obligations” means the sums provided in an aggregate amount of
$7,000,000 plus capitalised interest under the Smelter Site Agreement.
	 
	 	 	“Smelter Site” has the meaning given to that term in the Smelter Site
Agreement as in effect on the date of this Agreement.
	 
	 	 	“Smelter Site Agreement” means the smelter site agreement dated 20th March,
1997 between the Treasury and the Borrower and the first amendment agreement
dated 7th August, 1997 between the same parties.
	 
	 	 	“Sponsor Funding Agreement” means the sponsor funding agreement to be entered
into On or prior to Financial Close between the Shareholder, the Borrower and
the Security Trustee.
	 
	 	 	“Subordinated Debt” has the meaning given to that term in the Intercreditor
Agreement.
	 
	 	 	“Subordinated Loan” has the meaning given to that term in the Sponsor Funding
Agreement.
	 
	 	 	“Subsidiary” means an entity from time to time of which a person has direct or
indirect control, or owns directly or indirectly more than fifty per cent.
(50%) of the share capital or similar right of ownership.
	 
	 	 	“Substances” means any radioactive emissions and any natural or artificial
substance (whether in solid or liquid form or in the form of a gas or vapour
and whether alone or in combination with any other substance) capable of
causing harm to man or any Other

 - 24 -

 

	 	 	living organism or damaging the environment or public health or welfare
including but not limited to any controlled, special, hazardous, toxic,
radioactive or dangerous waste.
	 
	 	 	“Taxes” means any present or future income and other tax, levy, impost,
duty, charge, fee, deduction or withholding in the nature of tax
(including interest thereon and penalties in respect thereof), whatever
called, wherever imposed, levied, collected, withheld or assessed and
“Tax” shall be construed accordingly.
	 
	 	 	“Technical Assumptions” means the technical assumptions as set out in
part 3 of the Model Assumption Book in each case as identified by line
items from the Computer Model.
	 
	 	 	“Technical Committee” means the Agent, the Arrangers and the Banks’
Technical Adviser.
	 
	 	 	“Technology Consultancy Agreement” means the technology consultancy
agreement dated 24th April, 1997 between VAW Aluminium-Technologie GmbH
(now Hydro Aluminium Technologie GmbH) and Columbia Aluminium Corporation
together with the side letter relating thereto dated 17th May, 2000.
	 
	 	 	“Tolling Conversion Agreement” means the tolling conversion agreement
dated 23rd September, 1997 between Billiton Marketing B.V. (formerly
Billiton Marketing and Trading B.V.) and the Borrower, as amended by the
First Amendment to the Tolling Conversion Agreement and in respect of
which the rights and obligations of Billiton Marketing B.V. were novated
to Billiton Marketing A.G. (“BMT”) in August 2000.
	 
	 	 	“Total Commitments” means the aggregate for the time being of the
Commitments, being $185,000,000 at the date of this Agreement.
	 
	 	 	“Treasury” means the State Treasury of the Government of the Republic of
Iceland.
	 
	 	 	“Working Capital Balance” means $500,000 or such other amount as may be
agreed with the Majority Banks from time to time.

	1.2	 	Construction

	 	1.2.1	 	In this Agreement, unless the contrary intention appears, a reference to:

	 	(a)	 	“agreed form” means in the form agreed
between the Borrower and the Agent and initialled by them for
the purposes of identification;
	 
	 	 	 	an “amendment” includes a supplement, replacement, novation
or reenactment and “amend” and “amended” are to be construed
accordingly;
	 
	 	 	 	“assets” includes properties, contracts, revenues and rights
of every description, present, future and contingent;

 - 25 -

 

	 	 	 	an “authorisation” includes an authorisation, consent, approval,
resolution, licence, permit, exemption, filing, registration and
notarisation;
	 
	 	 	 	“control” means the power to direct the management and policies of an
entity, whether through the ownership of voting capital, by contract or
otherwise and/or the power to appoint or remove a majority of an entity’s
directors;
	 
	 	 	 	“(indexed)” after a figure means that the Figure shall be increased from
time to time to reflect increases since the date of this Agreement in
the Consumer Price Index produced by the Bureau of Labor Statistics in
the United States or, if such index is no longer published, the index
that replaces it (adjusted to take account of any rebasing);
	 
	 	 	 	“international accounting standards” means accounting principles issued
by the International Accounting Standards Committee;
	 
	 	 	 	a period of one or more “months” is a reference to a period starting on
one day in a calendar month and ending on the numerically corresponding
day in the relevant later calendar month, except that:

	 	(i)	 	if there is no numerically corresponding day in the month in
which that period ends, that period shall end on the last day in
that calendar month; or
	 
	 	(ii)	 	if an Interest Period commences on the last Business Day of a
calendar month, that Interest Period shall end on the last Business
Day in the calendar month in which it is to end;

	 	 	 	a “regulation” includes any regulation, rule, Order, official directive,
request or guideline (whether or not having the force of law) of any
governmental, inter-governmental or supranational body, agency,
department or regulatory, self-regulatory or other authority or
organisation;
	 
	 	 	 	“force majeure”, for the purposes of Clause 17.19 (Project Events), means
any event outside the reasonable control of the Borrower;

	 	(b)	 	a provision of law is a reference to that provision as amended or re-enacted;
	 
	 	(c)	 	a Clause or a Schedule is a reference to a clause of or a schedule to this Agreement;
	 
	 	(d)	 	a person includes its successors, assigns, transferees and, in relation
to a Major Project Party, a permitted replacement thereof;

 - 26 -

 

	 	(e)	 	a Finance Document or (without limitation) any other
document is a reference to that Finance Document or other document as
amended (in the case of the Project Contracts as permitted
pursuant to this Agreement);
	 
	 	(f)	 	a time of day is a reference to London time (unless Otherwise provided);
	 
	 	(g)	 	a Ratio is a reference to that Ratio as most
recently determined in accordance with the Clause 18 (Forecasting); and
	 
	 	(h)	 	words importing the singular shall include the plural and
vice versa.

	 	1.2.2	 	Unless the contrary intention appears, a term used in any
other Finance Document or in any notice given under or in connection with any
Finance Document has the same meaning in that Finance Document or notice
as in this Agreement.
	 
	 	1.2.3	 	The index to and the headings in this Agreement are for
convenience only and are to be ignored in construing this Agreement.
	 
	 	1.2.4	 	(a) Unless expressly provided to the contrary in a Finance
Document, a person who is not a party to a Finance Document may not
enforce any of its terms under the Contracts (Rights of Third
Parties) Act 1999.

	 	(b)	 	Notwithstanding any term of any Finance
Document, the consent of any third party is not required for
any variation (including any release or compromise of any
liability under) or termination of that Finance Document.

	2.	 	FACILITY
	 
	2.1	 	Facility
	 
	 	 	Subject to the terms of this Agreement, the Banks agree to make a Loan
during the Commitment Period to the Borrower up to an aggregate principal
amount not exceeding the Total Commitments. No Bank is obliged to lend
more than its Commitment.
	 
	2.2	 	Nature of a Finance Party’s Rights and Obligations

	 	2.2.1	 	The obligations of a Finance Party under the Finance Documents
are several. Failure of a Finance Party to carry out those obligations does not
relieve any other Party of its obligations under the Finance Documents. No
Finance Party is responsible for the obligations of any other Finance Party
under the Finance Documents.
	 
	 	2.2.2	 	The rights of a Finance Party under the Finance Documents are
divided rights. Subject to Clause 17.24 (No Independent Action) a Finance Party
may, except as otherwise stated in the Finance Documents, separately enforce
those rights.

 - 27 -

 

	3.	 	PURPOSE

	 	3.1.1	 	The Borrower shall apply the Loan drawn down under this
Agreement only towards:

	 	(a)	 	repayment of all amounts outstanding under the
Precedent Facility Agreement;
	 
	 	(b)	 	funding directly the Distributions Account in
an amount equal to the Initial Shareholder Distribution;
	 
	 	(c)	 	amounts payable pursuant to Clauses 20 (Fees) and 21 (Expenses);
	 
	 	(d)	 	stamp duty, notarial fees and registration fees
payable (if any) in respect of the Finance Documents; and
	 
	 	(e)	 	any other purpose approved by the Majority Banks in writing.

	 	3.1.2	 	Without affecting the obligations of the Borrower in any way, no Finance
Party is bound to monitor or verify the application of the Loan.

	4.	 	CONDITIONS PRECEDENT
	 
	4.1	 	Documentary Conditions Precedent
	 
	 	 	The Borrower may not deliver the Request until the Agent has notified the
Borrower and the Banks that it has received all of the documents and/or
evidence set out in Schedule 2 (Condition Precedent Documents) in the
agreed form (if any) or otherwise in form and substance satisfactory to
the Banks. The Agent undertakes to so notify the Borrower promptly upon
satisfaction of this condition precedent.
	 
	4.2	 	Further Conditions Precedent
	 
	 	 	The obligation of each Bank to participate in the Loan under Clause 5.3
(Advance of Loan) is subject to the further conditions precedent that:

	 	4.2.1	 	on both the date of the Request and the Drawdown Date:

	 	(a)	 	the representations and warranties in Clause 15
(Representations and Warranties) to be repeated on those dates are correct and
will be correct immediately after the Loan is made; and
	 
	 	(b)	 	no Default is outstanding or would result from the Loan;

	 	4.2.2	 	the amount of the Loan does not exceed the Total Commitments.

 - 28 -

 

	5.	 	DRAWDOWN
	 
	5.1	 	Commitment Period
	 
	 	 	The Borrower may borrow the Loan during the Commitment Period if the
Agent receives, not later than 11.00 a.m. (London time) three Business
Days before the proposed Drawdown Date, a duly completed Request. The
Request is irrevocable.
	 
	5.2	 	Completion of Requests
	 
	 	 	A Request will not be regarded as having been duly completed unless:

	 	5.2.1	 	the Drawdown Date is a Business Day falling on or before the expiry of the Commitment Period;
	 
	 	5.2.2	 	the amount of the Loan is:

	 	(a)	 	equal to the amount of the Total Commitments; or
	 
	 	(b)	 	such other amount as the Agent may agree;

	 	5.2.3	 	the first Interest Period selected complies with Clause 8 (Interest Periods); and
	 
	 	5.2.4	 	the payment instructions comply with Clause 10 (Payments).

	 	 	The Request must specify one Loan only and the Borrower may not deliver
more than one duly completed Request during the Commitment Period.
	 
	5.3	 	Advance of Loan

	 	5.3.1	 	The Agent shall promptly notify the Account Bank and each Bank of the
details of the requested Loan and each Bank of the amount of its participation
in the Loan.
	 
	 	5.3.2	 	Subject to the terms of this Agreement, each Bank shall make its participation
in the Loan available to the Agent for the account of the Borrower
on the relevant Drawdown Date. The amount of each Bank’s participation in
the Loan will be the proportion of the Loan which its Commitment bears
to the Total Commitments at close of business on the date of the Request.

	6.	 	REPAYMENT
	 
	6.1	 	Repayment Instalments
	 
	 	 	The Borrower shall repay the Loan on each Repayment Date set out in the
table below in an amount equal to:

	 	6.1.1	 	the aggregate of:

	 	(a)	 	the Base Case Repayment Instalment relating to that Repayment Date; and

 - 29 -

 

	 	(b)	 	the sum of (A/B)X C

	 	 	 	 	 
	where:
	 	 	 	 
	A

	 	=
	 	the Base Case Repayment Instalment relating to that Repayment Date;
	 
	 	 	 	 
	B

	 	=
	 	the aggregate amount of all outstanding Base Case Repayment Instalments (including the Base Case
Repayment Instalment relating to that Repayment Date); and
	 
	 	 	 	 
	C

	 	=
	 	the aggregate principal amount of all outstanding Deferral Instalments; or

	 	6.1.2	 	if Clause 6.2 (Deferrals) applies, but not otherwise, in an amount
equal to the Deferral Repayment Instalment,

	 	 	and all other amounts outstanding under this Agreement shall be paid on the
Final Repayment Date if not previously due.
	 
	 	 	This is the table referred to above:

	 	 	 	 	 
	    Repayment Date	 	Base Case Repayment
Instalment %
	30th November, 2003
	 	 	3.61	 
	30th June, 2004
	 	 	3.75	 
	31st December, 2004
	 	 	3.75	 
	30th June, 2005
	 	 	3.23	 
	31st December, 2005
	 	 	3.23	 
	30th June, 2006
	 	 	2.91	 
	31st December, 2006
	 	 	2.91	 
	30th June, 2007
	 	 	3.16	 
	31st December, 2007
	 	 	3.16	 
	30th June, 2008
	 	 	3.38	 
	31st December, 2008
	 	 	3.38	 
	30th June, 2009
	 	 	3.63	 
	31st December, 2009
	 	 	3.63	 

 - 30 -

 

	 	 	 	 	 
	    Repayment Date	 	Base Case Repayment Instalment %
	30th June, 2010
	 	 	3.88	 
	31st December, 2010
	 	 	3.88	 
	30th June, 2011
	 	 	3.70	 
	31st December, 2011
	 	 	3.70	 
	30th June, 2012
	 	 	2.74	 
	31st December, 2012
	 	 	2.74	 
	30th June, 2013
	 	 	2.94	 
	31st December, 2013
	 	 	2.94	 
	30th June, 2014
	 	 	3.08	 
	31st December, 2014
	 	 	3.08	 
	30th June, 2015
	 	 	3.24	 
	31st December, 2015
	 	 	3.24	 
	30th June, 2016
	 	 	3.39	 
	31st December, 2016
	 	 	3.39	 
	30th June, 2017
	 	 	3.49	 
	31st December, 2017
	 	 	3.48	 
	30th June, 2018
	 	 	3.36	 

	6.2	 	Deferrals

	 	6.2.1	 	Subject to Clauses 6.2.2 to 6.2.5, if on any Repayment Date
other than the First Repayment Date or any Repayment Date falling in
the 12 month period ending on the Final Repayment Date:

	 	(a)	 	the Borrower cannot pay both the Base Case
Repayment Instalment due and the amount determined due by the
formula in Clause 6.1. l(b) (or, in each case, which would
have been due but for this Clause 6.2 (Deferrals)) in full on
that Repayment Date using (other than Amounts Payable and the
Working Capital Balance) the proceeds of amounts standing to
the credit of the Proceeds Account and after demand has been
made of all amounts outstanding under the Debt Service
Reserve L/C and application of any amounts standing to the
credit of the Debt Service Reserve Account or any other
Project Account (other than, the Dividend Reserve Account
and, in each case, after the Borrower has

 - 31 -

 

	 	 	 	provided reasonable evidence to the Banks’ Technical Adviser in
relation to the proposed use of the relevant amounts, the
Compensation Account (to the extent that amounts in such account
are to be applied by the Borrower to the reinstatement or repair
of the asset in relation to which the relevant payment arose
within the following six month period) and the Insurance Account
(to the extent that amounts in such account are to be applied in
respect of the costs of repair, restoration or replacement of the
Project Facilities or part thereof in accordance with paragraph
7.3 to 7.6 of Schedule 8)) on that Repayment Date; and
	 
	 	(b)	 	the Debt Service Cover Ratio (as evidenced in the
Deferral Certificate) is
	 
	 	 	 	less than 1.1:1; and
	 
	 	(c)	 	the average LME Cash Price for the six months prior to
that Repayment
	 
	 	 	 	Date is less than $1,230 per metric tonne,

	 	 	 	(together, the “Deferral Conditions”), then the Borrower shall only
repay the Loan on that Repayment Date (subject to Clause 6.2.4
(Deferrals)) in an amount equal to the balance of amounts (other than
Amounts Payable on such date and the Working Capital Balance) standing
to the credit of the Proceeds Account, together with all amounts
Outstanding under the Debt Service Reserve L/C and application of any
amounts standing to the credit of the Debt Service Reserve Account or
any other Project Account (other than, the Dividend Reserve Account
and, in each case, after the Borrower has provided reasonable evidence
to the Banks’ Technical Adviser in relation to the proposed use of the
relevant amounts, the Compensation Account (to the extent that amounts
in such account are to be applied by the Borrower to the reinstatement
or repair of the asset in relation to which the relevant payment arose
within the following six month period) and the Insurance Account (to
the extent that amounts in such account are to be applied in respect
of the costs of repair, restoration or replacement of the Project
Facilities or part thereof in accordance with paragraph 7.3 to 7.6 of
Schedule 8)) on that Repayment Date (each a “Deferral Repayment
Instalment”). Deferral Repayment Instalments shall be applied firstly
against relevant Base Case Repayment Instalments and secondly against
Deferral Instalments (in the order that they have been outstanding).
	 
	 	6.2.2	 	Notwithstanding the subsistence of the Deferral Conditions at any time
and subject to Clause 6.2.6, no more than 3 Deferral Instalments in respect
of the Loan may be outstanding at any time on or prior to 31 December 2010 and
no more than 2 Deferral Instalments in respect of the Loan may be
outstanding at any time after 1 January 2011.
	 
	 	6.2.3	 	If the Borrower wishes to rely on the provisions of this Clause 6.2 in
order to make a Deferral Repayment Instalment, it shall provide the Agent with a
certificate (the “Deferral Certificate”) 5 Business Days preceding the
relevant Repayment Date. The Deferral Certificate shall specify the Debt
Service

 - 32 -

 

	 	 	 	Cover Ratio which shall be calculated up to the relevant
Calculation Date, using actual financial information to the extent
available, otherwise using reasonable estimates, on the basis set
out in Clauses 18.9.1 and 18.9.2.
	 
	 	6.2.4	 	The provisions of this Clause 6.2 (Deferrals) shall only apply
if the Deferral Conditions are satisfied and, for the avoidance of doubt, shall only apply to
payments of principal under this Agreement and not to any other amounts
payable under this Agreement. The provisions of this Clause 6.2 (Deferrals)
shall not apply to the Base Case Repayment Instalment payable on the First
Repayment Date.
	 
	 	6.2.5	 	Any amount repaid by the Borrower pursuant to Clause 6.1.1(b) shall be
applied against Deferral Instalments in the order that they became outstanding.
	 
	 	6.2.6	 	If, as at 1 January 2011, 3 Deferral Instalments are outstanding, on each
subsequent Repayment Date until such time as only the two most
recent Deferral Instalments are outstanding, the Borrower shall apply all
Excess Cash as of that Repayment Date towards repayment of the Deferral
Instalment that has been outstanding for the longest period of time until such
time that only the two most recent Deferral Instalments remain outstanding.

	7.	 	PREPAYMENT AND CANCELLATION
	 
	7.1	 	Voluntary Prepayment
	 
	 	 	The Borrower may, by giving not less than five Business Days prior
written notice to the Agent, prepay the Loan on the last day of an
Interest Period in whole or in part (but, if in part, either (a) in a
minimum amount of $3,000,000 and an integral multiple of $500,000) or (b)
in the amount of any outstanding Deferral Instalment (or the aggregate of
2 or more outstanding Deferral Instalments). Any such prepayment shall be
applied firstly against Deferral Instalments (in the order that they have
been outstanding) and second against the Base Case Repayment Instalments,
pro-rata or in inverse order of maturity at the Borrower’s option.
	 
	7.2	 	Automatic Cancellation
	 
	 	 	The Commitment of each Bank shall be automatically cancelled at the close
of business in London on the expiry of the Commitment Period.
	 
	7.3	 	Additional Right of Prepayment and
Cancellation
	 
	 	 	If:

	 	7.3.1	 	the Borrower is required to pay to a Bank any additional amounts under Clause 11 (Taxes); or
	 
	 	7.3.2	 	the Borrower is required to pay to a Bank any amount under Clause 13
(Increased Costs); or

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	 	7.3.3	 	interest on a Bank’s participation in the Loan is being
calculated in accordance with Clause 12.4.3 (Alternative Basis for Outstanding Loans); or
	 
	 	7.3.4	 	any Lender notifies the Agent of its Additional Cost Rate
under paragraph 3 of Schedule 7 (Mandatory Cost Formulae),

	 	 	then, without prejudice to the obligations of the Borrower under those
Clauses, the Borrower may, whilst the circumstances continue or whilst
(in the case of Clause 7.3.4 above) that Additional Cost Rate is greater
than zero, serve a notice of prepayment and cancellation on that Bank
through the Agent. Subject to Clause 7.6 (Limitations on Certain
Prepayments), on the date falling five Business Days after the date of
service of the notice:

	 	(a)	 	the Borrower shall prepay that Bank’s participation in the Loan; and
	 
	 	(b)	 	the Commitment of that Bank shall be cancelled.

	 	 	Prepayments made pursuant to this Clause 7.3 shall be applied firstly
against Deferral Instalments (in the order that they have been
outstanding) and secondly against the outstanding Base Case Repayment
Instalments pro rata.

	7.4	 	Mandatory Prepayments

	 	7.4.1	 	(a) The Borrower shall, within 10 Business Days following receipt of any:

	 	(i)	 	Compensation;
	 
	 	(ii)	 	damages payments payable pursuant to
any Construction Contract and/or any associated claim
under any bond and/or guarantee in respect of such
Construction Contract (excluding any liquidated damages
for delay thereunder),

	 	 	 	in an amount in each case in excess of $1,000,000, prepay the
Loan in an amount equal to that receipt provided that the
provisions of this paragraph shall not apply to amounts
within paragraph 7.4.1(a)(ii) above if:

	 	(1)	 	the Borrower certifies in writing to the Agent prior to the
expiry of such 10 Business Day period that amounts
are to be applied by it to the reinstatement or repair of the
asset in relation to which the relevant payment arose; and
	 
	 	(2)	 	such amounts are applied or committed in the manner
described in the Borrower’s certificate within six
months of receipt by it of the relevant amount;

	 	(b)	 	The Borrower shall, following receipt of any
Insurance Proceeds apply them in accordance with paragraphs
7.3 to 7.6 of Schedule 8 (Insurances).

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	 	7.4.2	 	If (i) the Debt Service Cover Ratio as of any Calculation Date exceeds
1.75:1; or (ii) the average LME Cash Price exceeds $1,675 per metric tonne, in
each case for the period from the First Repayment Date to the next
Calculation Date (both dates inclusive) and thereafter for any period Of six months
ending on a subsequent Calculation Date (each such period, a “Relevant
Period”) then the Borrower shall prepay within 10 Business Days of the relevant
Calculation Date or the Determination Date (as the case may be) an
amount which is equal to:

	 	(a)	 	if (i) only applies (1) Cash Available for Debt Service
for the Relevant Period, as utilised in calculating the Debt Service Cover Ratio as
at that Calculation Date, exceeds (2) that amount of Cash Available for
Debt Service for the Relevant Period, which if it had been used in
calculating the Debt Service Cover Ratio for the Relevant Period as at that
Calculation Date, would have produced a ratio of 1.75:1; and
	 
	 	(b)	 	if (ii) only applies (1) Cash Available for Debt Service
for the Relevant Period exceeds (2) Cash Available for Debt Service for the
Relevant Period if the LME Cash Price of $1,675 per metric tonne applied
throughout the Relevant Period,

	 	 	 	provided that if (i) and (ii) above apply the Borrower shall prepay an
amount equal to the greater of (a) or (b) above and provided further
that the maximum aggregate amount the Borrower shall be obliged to
prepay under this Clause 7.4.2 (Mandatory Prepayments) shall not
exceed an amount equal to 22 per cent. (22%) of the aggregate
principal amount outstanding under this Agreement at the end of the
Commitment Period.
	 
	 	7.4.3	 	If at the end of any two year period ending on a Calculation Date,
either of the Debt Service Cover Ratio or Loan Life Cover Ratio or both of the Ratios
tested as at that Calculation Date and each of the three previous Calculation
Dates during that two year period was less than 1.25:1 on the occasion of each
and every such test, then within 10 Business Days of the applicable
Determination Date relating to that Calculation Date the Borrower shall apply
all amounts standing to the credit of the Reserved Cashflow Account (if any)
in prepayment of the Loan.
	 
	 	7.4.4	 	If, on 30 November 2013, either the Tolling Conversion Agreement or the
Anode Supply Agreement has not been extended, supplemented or replaced in
each case on terms reasonably satisfactory to the Majority Banks and with a
term that ends on or after the Final Repayment Date, the Borrower shall apply
all amounts standing to the credit of the Dividend Reserve Account at such
date (if any) in prepayment of the Loan.
	 
	 	7.4.5	 	Any prepayment pursuant to paragraphs 7.4.1 to 7.4.4 above shall be applied
against first, Deferral Instalments (in the order that they have been
outstanding) and second, the Base Case Repayment Instalments, in the
case of

 - 35 -

 

	 	 	 	Clauses 7.4.1 or 7.4.2, in inverse order of maturity and in the
case of Clauses 7.4.3 or 7.4.4, pro rata.

	7.5	 	Miscellaneous Provisions

	 	7.5.1	 	Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of any such
notice.
	 
	 	7.5.2	 	All prepayments under this Agreement shall be made together with accrued
interest on the amount prepaid and, subject to Clause 23.2 (Other
Indemnities), without premium or penalty.
	 
	 	7.5.3	 	No prepayment or cancellation is permitted except in accordance with the
express terms of this Agreement.
	 
	 	7.5.4	 	No amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.
	 
	 	7.5.5	 	No amount prepaid under this Agreement may subsequently be re-borrowed.

	7.6	 	Limitations on Certain Prepayments
	 
	 	 	The Borrower:

	 	7.6.1	 	shall only be obliged to prepay outstanding Loans to a particular Bank, and
that Bank’s Commitments shall only be cancelled, under Clause 14 (Illegality);
and
	 
	 	7.6.2	 	may only prepay outstanding Loans to, and cancel the Commitments of, a
particular Bank under Clause 7.3 (Additional Right of Prepayment
and Cancellation),

	 	 	to the extent that the Borrower on any Repayment Date has sufficient funds
which it is entitled to use for such purpose pursuant to the Account
Agreement.
	 
	8.	 	INTEREST PERIODS
	 
	8.1	 	Selection

	 	8.1.1	 	Subject to Clause 8.1.4 (Selection), the Borrower may select
an Interest Period for the Loan in either the Request or, if the Loan has been borrowed, a
notice received by the Agent not later than seven Business Days before the
commencement of that Interest Period. The first Interest Period for the Loan
will commence on the Drawdown Date and subsequent Interest Periods will
commence on the expiry of its preceding Interest Period.
	 
	 	8.1.2	 	Subject to the following provisions of this Clause 8, each Interest Period will
be one, three or six months or any other period agreed by the
Borrower and
the Banks.

 - 36 -

 

	 	8.1.3	 	If the Borrower does not select an Interest Period for an
outstanding Loan in accordance with paragraph 8.1.1 above, that Interest Period will, subject to
the other provisions of this Clause 8, be one month.
	 
	 	8.1.4	 	The Borrower shall select Interest Periods which are consistent with the
Borrower’s interest rate hedging strategy and any Interest Rate Hedging
Agreements it has entered into.

	8.2	 	Non-Business Days
	 
	 	 	If an Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall instead end on the next
Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not).
	 
	8.3	 	Coincidence with Repayment Dates
	 
	 	 	If an Interest Period would otherwise overrun the Final Repayment Date,
it shall be shortened so that it ends on the Final Repayment Date. The
Agent may (in consultation with the Borrower) and shall at the
Borrower’s request also shorten any Interest Period for the Loan (and/or
notionally redesignate the Loan as two Loans) to ensure that the
aggregate principal amount with an Interest Period ending on a Repayment
Date is not less than the Repayment Instalment due on that Repayment
Date.
	 
	8.4	 	Other Adjustments
	 
	 	 	The Agent and the Borrower may enter into such other arrangements as
they may agree for the adjustment of Interest Periods and the
consolidation and/or splitting the Loan.
	 
	8.5	 	Notification
	 
	 	 	The Agent shall notify the Borrower and the Banks of the duration of each
Interest Period promptly after ascertaining its duration.
	 
	8.6	 	Number of Loans
	 
	 	 	There shall at no time be more than two Loans outstanding.
	 
	9.	 	INTEREST
	 
	9.1	 	Interest Rate

	 	9.1.1	 	Subject to Clause 9.1.2, the rate of interest on the Loan for
each of its Interest Periods is the rate per annum determined by the
Agent to be the aggregate of the applicable:

	 	(a)	 	Margin;
	 
	 	(b)	 	LIBOR; and
	 
	 	(c)	 	Mandatory Cost.

 - 37 -

 

	 	9.1.2	 	Without prejudice to Clause 17.12 (Project Contracts
and Direct Agreements), if, any of the following occurs:

	 	(a)	 	at any time in the period 1 January 2010 up to
and including 31 December 2013, the Tolling Conversion Agreement is not in
full force and effect or has not been extended, supplemented or replaced
on terms reasonably satisfactory to the Majority Banks; or
	 
	 	(b)	 	at any time in the period 1 January 2010 up to
and including 31 December 2013, the Anode Supply Agreement is not in full
force and effect or has not been extended, supplemented or replaced on
terms reasonably satisfactory to the Majority Banks; or
	 
	 	(c)	 	at any time on or after 1 August 2008 Hydro
Aluminium Deutschland
GmbH gives notice of its intention to negotiate an amendment to the
basic price and/or negotiate a price adjustment under the Clause 20 of
the Anode Supply Agreement and, following the conclusion of the
resulting arbitration there is a material adverse change to the terms of
the Anode Supply Contract (compared to the terms in existence at the
date of this Agreement),

	 	 	 	then the Margin shall be 1.65% per annum.

	9.2	 	Due Dates
	 
	 	 	Except as otherwise provided in this Agreement, accrued interest on the
Loan is payable by the Borrower on the last day of each Interest Period
and also, if the Interest Period is longer than six months, on the dates
falling at six monthly intervals after the first day of that Interest
Period.
	 
	9.3	 	Default Interest

	 	9.3.1	 	If the Borrower fails to pay any amount payable by it under the Finance
Documents on the due date, it shall, forthwith on demand by the
Agent, pay interest on the overdue amount from the due date up to the date of
actual payment, as well after as before judgement, at a rate (the
“default rate”) determined by the Agent to be two per cent, per annum above the
higher of:

	 	(a)	 	the rate on the overdue amount under Clause 9.1 (Interest Rate) immediately before the due date (if of principal); and
	 
	 	(b)	 	the rate which would have been payable if the overdue amount had,
during the period of non-payment, constituted a Loan in the currency of
the overdue amount for such successive Interest Periods of such duration
as the Agent may determine (each a “Designated Interest Period”).

	 	9.3.2	 	The default rate will be determined by the Agent on each Business Day or the
first day of, or two Business Days before the first day of, the
relevant Designated Interest Period, as appropriate.

 - 38 -

 

	 	9.3.3	 	If the Agent determines that deposits in the currency of the
overdue amount are not at the relevant time being made available by the Reference Banks to
leading banks in the London interbank market, the default rate will be
determined by reference to the cost of funds to the Agent from whatever
sources it may select.
	 
	 	9.3.4	 	Default interest will be compounded at the end of each Designated Interest
Period.

	9.4	 	Notification
	 
	 	 	The Agent shall promptly notify each relevant Party of the determination
of a rate of interest under this Agreement.
	 
	10.	 	PAYMENTS
	 
	10.1	 	Place
	 
	 	 	AH payments by the Borrower or a Bank under the Finance Documents shall
be made to the Agent to its account at such office or bank as it may
notify to the Borrower or Bank for this purpose.
	 
	10.2	 	Funds
	 
	 	 	Payments under the Finance Documents to the Agent shall be made for value
on the due date at such times and in such funds as the Agent may specify
to the Party concerned as being customary at the time for the settlement
of transactions in Dollars.
	 
	10.3	 	Distribution

	 	10.3.1	 	Each payment received by the Agent under the Finance Documents for
another Party shall, subject to paragraph 10.3.2 below, be made
available by the Agent to that Party by payment (on the date and in the currency
and funds of receipt):

	 	(a)	 	in the case of a Party other than the Borrower to
its account with such
office or bank in the principal financial centre of the
country of the
relevant currency as it may notify to the Agent for this
purpose by not
less than five Business Days’ prior notice; and
	 
	 	(b)	 	in the case of the Borrower to the Proceeds Account.

	 	10.3.2	 	Where a sum is to be paid to the Agent under the Finance Documents
for another Party, the Agent is not obliged to pay that sum to that
Party until it has established that it has actually received that sum. The
Agent may, however, assume that the sum has been paid to it in accordance with
this Agreement, and, in reliance on that assumption, make available to
that Party a corresponding amount. If the sum has not been made available but
the Agent has paid a corresponding amount to another Party, that Party shall
forthwith on demand by the Agent refund the corresponding amount together
with

 - 39 -

 

	 	 	 	interest on that amount from the date of payment to the date of
receipt, calculated at a rate determined by the Agent to reflect
its cost of funds.

	10.4	 	Currency

	 	10.4.1	 	Amounts payable in respect of costs, expenses and taxes and the
like are payable in the currency in which they are incurred.
	 
	 	10.4.2	 	Any other amount payable under the Finance Documents is,
except as otherwise provided in the Finance Documents, payable in Dollars.

	10.5	 	Set-off and Counterclaim
	 
	 	 	All payments made by the Borrower under the Finance Documents shall be
made without set-off or counterclaim.
	 
	10.6	 	Non-Business Days

	 	10.6.1	 	If a payment under the Finance Documents is due on a day which is
not a Business Day, the due date for that payment shall instead be the
next Business Day in the same calendar month (if there is one) or the preceding
Business Day (if there is not).
	 
	 	10.6.2	 	During any extension of the due date for payment of any principal
under this Agreement pursuant to Clause 10.6.1 (Non-Business Days) interest is payable
on that principal at the rate payable on the original due date.

	10.7	 	Partial Payments

	 	10.7.1	 	If the Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Borrower under the Finance
Documents, the Agent shall apply that payment towards the
obligations of the Borrower under the Finance Documents in the
following order:

	 	(a)	 	first, in or towards payment pro rata of any
unpaid fees, costs and expenses of the Agent, the Security Trustee and the Account
Bank;
	 
	 	(b)	 	secondly, in or towards payment pro rata of any
accrued interest due but unpaid under this Agreement;
	 
	 	(c)	 	thirdly, in or towards payment pro rata of any
other Financing Costs due but unpaid under this Agreement;
	 
	 	(d)	 	fourthly, in or towards payment of any Deferral
Instalment unpaid (such payment to be applied against Deferral Instalments in the
order they became outstanding);
	 
	 	(e)	 	fifthly, in or towards payment pro rata of any
other Financing Principal due but unpaid under this Agreement; and

 - 40 -

 

	 	(f)	 	sixthly, in or towards payment pro rata of any other
sum due but unpaid under the Finance Documents.

	 	10.7.2	 	The Agent shall, if so directed by all the Banks, vary the order
set out in sub-paragraphs 10.7. l(b) to 10.7.1(f) above.
	 
	 	10.7.3	 	Paragraphs 10.7.1 and 10.7.2 above shall override any appropriation made by the Borrower.

	11.	 	TAXES
	 
	11.1	 	Gross-up
	 
	 	 	All payments by the Borrower under the Finance Documents shall be made
without any deduction and free and clear of and without any deduction for
or on account of Taxes, except to the extent that the Borrower is
required by law to make payment subject to any Taxes. If any Tax or
amounts in respect of Tax must be deducted, or any other deductions must
be made, from any amounts payable or paid by the Borrower, or paid or
payable by the Agent to a Bank, under the Finance Documents, the Borrower
shall pay such additional amounts as may be necessary to ensure that the
relevant Bank receives a net amount equal to the full amount which it
would have received had payment not been made subject to tax or other
deduction.
	 
	11.2	 	Tax Receipts
	 
	 	 	All Taxes required by law to be deducted by the Borrower from any amounts
paid or payable under the Finance Documents shall be paid by the Borrower
when due and the Borrower shall, within 15 days of the payment being
made, deliver to the Agent for the relevant Bank evidence satisfactory to
that Bank (including all relevant tax receipts) that the payment has been
duly remitted to the appropriate authority.
	 
	11.3	 	Tax Credits
	 
	 	 	If the Borrower pays an additional amount under Clause 11.1
(Gross-up) (a
“Tax Payment”) and a Bank effectively obtains a refund of Tax or credit
against Tax by reason of that Tax Payment (a “Tax Credit”) and is able to
identify the Tax Credit as being attributable to the Tax Payment, then
the Bank concerned shall reimburse to the Borrower the amount which that
Bank determines to be the proportion of the Tax Credit which will leave
it (after that reimbursement) in no better or worse position than it
would have been in if the Tax Payment had not been required. Each Bank
shall have an absolute discretion as to whether to claim any Tax Credit
and, if it does claim, the extent, order and manner in which it does so.
No Bank is obliged to disclose any information regarding its tax affairs
or computations to the Borrower.

 - 41 -

 

	12.	 	MARKET DISRUPTION
	 
	12.1	 	Absence of Quotations
	 
	 	 	If LIBOR is to be determined by reference to Reference Banks but a
Reference Bank does not supply an offered rate by 11.30 a.m. two Business
Days before the first day of an Interest Period, the applicable LIBOR
shall, subject to Clause 12.2 (Market Disruption), be determined on the
basis of the quotations of the remaining Reference Banks.
	 
	12.2	 	Market Disruption
	 
	 	 	If:

	 	12.2.1	 	LIBOR is to be determined by reference to the Reference Banks but no, or
only one, Reference Bank supplies a rate by 11.30 a.m. two
Business Days before the first day of an Interest Period or the Agent otherwise
determines that adequate and fair means do not exist for ascertaining LIBOR;
or
	 
	 	12.2.2	 	the Agent receives notification from Banks whose participations in
a Loan exceed 50 per cent, of that Loan that, in their opinion:

	 	(a)	 	matching deposits may not be available to them
in the London interbank market in the ordinary course of business to fund their
participations in that Loan for the relevant Interest Period; or
	 
	 	(b)	 	the cost to them of obtaining matching deposits
in the London interbank market would be in excess of LIBOR for the relevant Interest
Period,

	 	 	the Agent shall promptly notify the Borrower and the Banks of the fact
and that this Clause 12 is in operation.

	12.3	 	Suspension of Drawdowns
	 
	 	 	If a notification under Clause 12.2 (Market Disruption) applies to the
Loan which has not been made, that Loan shall not be made. However,
within five Business Days of receipt of the notification, the Borrower
and the Agent shall enter into negotiations for a period of not more than
30 days with a view to agreeing an alternative basis for determining the
rate of interest and/or funding applicable to the Loan. Any alternative
basis agreed shall be, with the prior consent of all the Banks, binding
on all the Parties.
	 
	12.4	 	Alternative Basis for Outstanding Loans
	 
	 	 	If a notification under Clause 12.2 (Market Disruption) applies to a Loan
which is outstanding, then:

	 	12.4.1	 	within five Business Days of receipt of the notification, the
Borrower and the Agent shall enter into negotiations for a period of
not more than 30 days with a view to agreeing an alternative basis
for determining the rate of interest and/or funding applicable to
that Loan and/or any other Loans;

 - 42 -

 

	 	12.4.2	 	any alternative basis agreed under paragraph 12.4.1 above shall be,
with the prior consent of all the Banks, binding on all the Parties;
	 
	 	12.4.3	 	if no alternative basis is agreed, each Bank shall (through the
Agent) certify on or before the last day of the Interest Period to which the notification relates an
alternative basis for maintaining its participation in that Loan;
	 
	 	12.4.4	 	any such alternative basis may include an alternative method of fixing the
interest rate, alternative Interest Periods or alternative currencies but it must
reflect the cost to the Bank of funding its participation in the Loan from
whatever sources it may select plus the Margin; and
	 
	 	12.4.5	 	each alternative basis so certified shall be binding on the Borrower and the
certifying Bank and treated as part of this Agreement.

	13.	 	INCREASED COSTS
	 
	13.1	 	Increased Costs

	 	13.1.1	 	Subject to Clause 13.2 (Exceptions), the Borrower shall forthwith
on demand by a Finance Party pay to that Finance Party the amount of any
increased cost incurred by it or any of its Holding Companies as a result of:

	 	(a)	 	the introduction of, or any change in, or any
change in the interpretation or application of, any law or regulation; or
	 
	 	(b)	 	compliance with any regulation made after the date of this
Agreement,

	 	 	 	(including any law or regulation relating to taxation, monetary
union, or reserve asset, special deposit, cash ratio, liquidity
or capital adequacy requirements or any other form of banking or
monetary control).
	 
	 	13.1.2	 	In this Agreement “increased cost” means:

	 	(a)	 	an additional cost incurred by a Finance Party or
any of its Holding Companies as a result of it having entered into, or
performing, maintaining or funding its obligations under, any Finance
Document; or
	 
	 	(b)	 	that portion of an additional cost incurred by a
Finance Party or any of its Holding Companies in making, funding or maintaining all or
any advances comprised in a class of advances formed by or
including that Finance Party’s participations in the Loans made or to be made
under this Agreement as is attributable to that Finance Party
making, funding or maintaining those participations; or
	 
	 	(c)	 	a reduction in any amount payable to a Finance
Party or any of its Holding Companies or in the effective return to a Finance
Party or any of its Holding Companies under this Agreement or (to the
extent that it is attributable to this Agreement) on its capital; or

 - 43 -

 

	 	(d)	 	the amount of any payment made by a Finance Party or any
of its Holding Companies, or the amount of any interest or
other return foregone by a Finance Party or any of its
Holding Companies, calculated by reference to any amount
received or receivable by that Finance Party or any of its
Holding Companies from any other Party under this Agreement.

	 	13.1.3	 	Each Finance Party or any of its Holding Companies shall give to
the Borrower such reasonable details as to how such increased cost
has been suffered as the relevant Finance Party considers
appropriate provided that no Finance Party or any of its Holding
Companies shall be under any obligation under this paragraph to
disclose any information relating to its affairs which it in its
sole discretion, determines is confidential, commercially sensitive
or the disclosure of which would be contrary to any of its usual
policies, and no failure to disclose any such information shall
limit the relevant Finance Party’s rights under this Clause 13
(Increased Costs).

	13.2	 	Exceptions
	 
	 	 	Clause 13.1 (Increased Costs) does not apply to any increased cost:

	 	13.2.1	 	compensated for by the operation of Clause 11 (Taxes);
	 
	 	13.2.2	 	compensated for by payment of the Mandatory Cost; or
	 
	 	13.2.3	 	attributable to any change in the rate of, or change in the basis of calculating
Tax on the overall net income of a Bank (or the overall net income
of a division or branch of the Bank) imposed in the jurisdiction in
which its principal office or Facility Office is situate.

	14.	 	ILLEGALITY
	 
	14.1	 	Illegality
	 
	 	 	If it is or becomes unlawful in any jurisdiction for a Bank to give
effect to any of its obligations as contemplated by this Agreement or to
fund or maintain its participation in any Loan, then:

	 	14.1.1	 	that Bank may notify the Borrower through the Agent accordingly; and
	 
	 	14.1.2	 	subject to Clause 7.6 (Limitations on Certain Prepayments);

	 	(a)	 	the Borrower shall prepay the participations of
that Bank in all the Loans together with all other amounts payable by it to that Bank
under this Agreement; and
	 
	 	(b)	 	the Commitment of that Bank will forthwith be cancelled.

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	14.2	 	Mitigation
	 
	 	 	If circumstances arise in respect of a Bank which would, or would upon the
giving of notice, result in the operation of Clause 11.1 (Taxes), Clause
13.1 (Increased Costs), Clause 14.1 (Illegality) or paragraph 3 of
Schedule 7 (Mandatory Cost Formulae) in relation to that Bank then,
without in any way limiting, reducing or otherwise qualifying the
Borrower’s obligations under such clause, the relevant Bank shall, in
consultation with the Agent and the Borrower, use at all times reasonable
endeavours to take such steps as may be reasonably open to it to mitigate
or remove those circumstances, including a change in its Facility Office
or the transfer of its rights and obligations under the Finance Documents
to another bank or financial institution acceptable to the Borrower,
unless to do so might (in the reasonable opinion of the Bank) be
prejudicial to that Bank or conflicts with its banking policies. Nothing
in this provision shall require a Bank to disclose any information as to
its banking policies or any other matters which it regards as confidential
or commercially sensitive.
	 
	15.	 	REPRESENTATIONS AND WARRANTIES
	 
	15.1	 	Representations and Warranties
	 
	 	 	The Borrower makes the representations and warranties set out in this
Clause 15 (Representations and Warranties) to each Finance Party.
	 
	15.2	 	Status

	 	15.2.1	 	It is a limited liability company, duly incorporated and in good
standing and validly existing under the laws of the jurisdiction of its
incorporation.
	 
	 	15.2.2	 	It has the power to own its assets and to carry on its business as
it is being conducted.

	15.3	 	Powers and Authority
	 
	 	 	It has the power to enter into and perform, and has taken or, prior to
entering in to the Documents, will have taken all necessary action to
authorise the entry into, performance and delivery of, the Documents to
which it is or will be a party and the transactions contemplated by those
Documents.
	 
	15.4	 	Legal Validity
	 
	 	 	Each Document to which it is or will be a party constitutes, or when
executed in accordance with its terms will constitute, (subject to
express qualifications as to matters of law as provided in the Legal
Opinions) its legal, valid, binding and enforceable obligations.
	 
	155	 	Non-Conflict
	 
	 	 	The entry into and performance by it of, and the transactions
contemplated by, the Documents to which it is or will be a party do not
and will not:-

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	 	15.5.1	 	conflict with any law or regulation or judicial or official order; or
	 
	 	15.5.2	 	conflict with its constitutional documents; or
	 
	 	15.5.3	 	conflict with any document which is binding upon it or any of its assets.

	15.6	 	No Default

	 	15.6.1	 	No Default is outstanding;
	 
	 	15.6.2	 	no other event or circumstance is outstanding which constitutes a
material default under any document which is binding on the Borrower or any asset of
the Borrower which is likely to have a Material Adverse Effect; and
	 
	 	15.6.3	 	it is not, and, so far as it is aware after making all reasonable internal
enquiries, no Major Project Party is, in breach of the terms of any Project
Contract to an extent which is likely to have a Material Adverse Effect.

	15.7	 	Authorisations

	 	15.7.1	 	All authorisations required in connection with the entry into,
performance, validity and enforceability of the Documents and the transactions
contemplated by the Documents (including the carrying out of the Project) have
been or will be obtained or effected on or before the date they are required in
order to implement the Project, are or will be in full force and effect and
no steps have been taken to revoke or cancel any authorisation obtained or
effected.
	 
	 	15.7.2	 	It has not received any notice from any relevant authority that any
authorisation not yet required but that will be required for the
purposes set out in paragraph (a) above will not be obtained or effected at the
time it is required.
	 
	 	15.7.3	 	As at the date of this Agreement and (subject as updated by the
Borrower) as at Financial Close, to the best of its knowledge and belief (after due enquiry)
the only material licences and permits required in connection with the entry
into, performance, validity and enforceability of the Documents on the part of
the Borrowers and the carrying out of the Project are those set out in part c of
Schedule 2 and the Industrial Licence and Operating Permit.

	15.8	 	Pari Passu Ranking
	 
	 	 	Its obligations under the Finance Documents rank and will rank at least
pari passu with all its unsecured obligations other than those
obligations which mandatorily have priority by operation of law
applicable to companies in Iceland generally.

	15.9	 	Taxes on Payments
	 
	 	 	All amounts payable by it under the Finance Documents may be made free
and clear of and without deduction for or on account of any tax.

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	15.10	 	Ownership of Assets
	 
	 	 	It:

	 	15.10.1	 	has or will have good title to, or freedom to use (in accordance with any
applicable laws, the Smelter Site Agreement and the Harbour Agreement) the
Site and any other assets necessary from time to time to implement and
operate the Project in accordance with the Project Contracts;
	 
	 	15.10.2	 	has good and marketable title to all of the assets which are reflected in its
latest audited financial statements; and
	 
	 	15.10.3	 	has or will have acquired and/or has or will have vested in it at or before the
time at which they are necessary:

	 	(a)	 	access to the Site; and
	 
	 	(b)	 	all easements, wayleaves and other rights
required in order to implement and operate the Project in accordance with the Project
Contracts,

	 	 	 	in each case:

	 	(i)	 	subject to no Security Interest
other than any Permitted Security Interests; and
	 
	 	(ii)	 	free from any material restrictions
and onerous covenants (save as set out in the Smelter
Site Agreement and the Harbour Agreement).

	15.11	 	Stamp Duties
	 
	 	 	Save as expressly provided in any Legal Opinions, no stamp or registration
duty or similar taxes or charges are payable in respect of any Document.
	 
	15.12	 	Immunity

	 	15.12.l	 	The execution by it of each Document to which it is a party
constitutes, and its exercise of its rights and performance of its
obligations under each Document to which it is a party will
constitute, private and commercial acts done and performed for
private and commercial purposes; and

	 	15.12.2	 	It will not be entitled to claim immunity from suit, execution,
attachment or other legal process in any proceedings taken in
relation to any Document to which it is a party.

	15.13	 	Jurisdiction/Governing Law

	 	15.13.1	 	Subject as expressly provided in the Legal Opinions, its:

	 	(a)	 	irrevocable submission under Clause 36
(Jurisdiction) to the jurisdiction of the courts of England;
and

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	(b)	 	agreement that this Agreement is governed by English law; are legal, valid
and binding under the laws of Iceland; and

	15.13.2	 	any judgment obtained in England or Germany will be recognised
and be enforceable by the courts of Iceland.

	15.14	 	Accounts

Its audited accounts most recently delivered to the Agent:

	15.14.1	 	have been prepared in accordance with international accounting standards
consistently applied;
	 
	15.14.2	 	have been audited by PriceWaterhouseCoopers or such other firm of
international auditors acceptable to the Majority Banks; and
	 
	15.14.3	 	fairly represent its financial condition as at the date to which they were drawn
up,

and there has been no undisclosed material adverse change in its
financial condition since the date to which those accounts were drawn up.

	15.15	 	Litigation

No litigation, arbitration or administrative proceedings are current or,
to its knowledge, pending or threatened, which is likely to be adversely
determined and, if adversely determined, is likely to have a Material
Adverse Effect.

	15.16	 	Information

	15.16.1	 	the factual information contained in the Information Memorandum,
to the best
of the Borrower’s knowledge and belief, was true in all material respects as at
its date, or as the case may be, the date on which it was supplied;
	 
	15.16.2	 	all factual information material to the Project supplied to the Arrangers by the
Borrower, the Shareholder, its advisers or the Borrower’s Manager, to the
best of the Borrower’s knowledge and belief, was true in all material respects
as at its date or, as the case may be, the date it was supplied to the Arrangers,
save to the extent corrected by the Borrower or its advisers or the Borrower’s
Manager prior to the date hereof;
	 
	15.16.3	 	the Information Memorandum, to the best of the Borrower’s knowledge and
belief, did not omit as at its date any material factual information which would
be likely to render them untrue or misleading in any material respect;
	 
	15.16.4	 	nothing has occurred since the date of the Information Memorandum which
renders the factual information contained therein untrue or
misleading in any
material respect, save to the extent of any factual information
fully and fairly

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	 	 	disclosed by the Borrower at least five Business Days prior to the
date on which this representation and warranty is repeated;
	 
	15.16.5	 	the statements of opinion or belief attributed to the Borrower
and/or the
Shareholder in the Information Memorandum were, as at its date, made in
good faith and were arrived at bona fide by the Borrower and the Shareholder,
after careful consideration and enquiry and genuinely reflected its views;
	 
	15.16.6	 	the information supplied by the Borrower to the Agent in accordance with
Clause 18 (Forecasting) was true in all material respects as at
the date it was
supplied and the assumptions made by the Borrower and supplied to
the Agent
for the purposes of any Forecast and any assumptions contained in
the Model
Assumption Book represented the genuine views of the Borrower; and
	 
	15.16.7	 	all factual information supplied by the Borrower to a person
preparing a report
referred to in paragraph 8 of Schedule 2 (Conditions Precedent Documents)
was, to the best of the Borrower’s knowledge and belief, true in all material
respects at its date or, as the case may be, the date on which it was supplied
and the report provided by the Banks’ Technical Adviser did not omit, to the
best of the Borrower’s knowledge and belief, as at its date any material factual
information which would be likely to render it, as at such date, untrue or
misleading in any material respect.

	15.17	 	Project Contracts

	15.17.1	 	The copies of the Project Contracts which it has delivered to the Agent are
true and complete copies of those contracts.
	 
	15.17.2	 	There are no other material agreements to which it is a party on the date of
this Agreement copies of which have not been delivered to the Agent prior to
the date of this Agreement.
	 
	15.17.3	 	There are no other material agreements to which it is a party other than the
Finance Documents and Project Contracts listed in the definition thereof.
	 
	15.17.4	 	All of the representations and warranties given by it under the Project
Contracts to which it is a party were true and correct in all material respects
when made.

	15.18	 	Intellectual Property

It has or will have available to it prior to the date upon which it is
required for the Project, all material intellectual property of every
description, including but not limited to, licences, copyrights, design
registrations and know-how, necessary for the implementation of the
Project.

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	15.19	 	Insurances

All Insurances which are currently required to be maintained or effected
by it pursuant to the Documents are in full force and effect and no event
or circumstance has occurred, nor has there been any omission to disclose
a fact, which would entitle any insurer to avoid or otherwise reduce its
liability under any policy relating to the Insurances.

	15.20	 	No other business

	15.20.1	 	It has not engaged in any business or activities, either alone or
in partnership
or joint venture other than those envisaged by the Documents.
	 
	15.20.2	 	It has no Subsidiaries except as permitted by the Majority Banks.

	15.21	 	No Force Majeure

To the best of its knowledge and belief, no event of force majeure as
defined in or contemplated by any Project Contract has occurred and is
continuing for the purposes of that Project Contract.

	15.22	 	Taxes

The Borrower has filed, or procured the filing of, all tax returns that
are required to have been filed by it in any jurisdiction, and has paid
or discharged all taxes due and payable from it or against its assets
(other than any taxes that it is contesting in good faith and by
appropriate proceedings, in respect of which a reasonably adequate
reserve has been established) and, to the extent any taxes are not due,
has established reserves that are adequate for the payment of those taxes
and are required by generally accepted international accounting
standards.

	15.23	 	Budgets and Projections

	15.23.1	 	The First Forecast, the most recent Forecast, DSCR Certificate
and Operating Budget:

	(a)	 	(other than in relation to any Forecast after the
First Forecast) are or
will be based on reasonable assumptions as at their respective
dates as to
all legal and factual matters material to any estimates
included in those
documents;
	 
	(b)	 	are or will be consistent (if applicable) with
the provisions of the
Documents, and the Computer Model in all material respects as
at their
respective dates;
	 
	(c)	 	have been or will be prepared in good faith and
with due care as at their
respective dates; and
	 
	(d)	 	fairly represent the Borrower’s expectation as to
the matters covered in
those documents as at their respective dates.

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	15.23.2	 	Each Operating Budget accurately specifies the Borrower’s
best estimate of all
Operating Costs anticipated to be incurred by it as at its date in
the financial
year to which that Operating Budget relates.
	 
	15.23.3	 	It is not aware of any undisclosed matter which would, if
disclosed, render the
Project Budget, the First Forecast, any other Forecast, any
Operating Budget
or the DSCR Certificate misleading in any material respect.

	15.24	 	Options

No person has any right to call for the issue or transfer of any share
capital or loan stock in the Borrower other than under the terms of the
Sponsor Funding Agreement as in effect at the date of this Agreement or
the Security Documents or on the terms of any agreement relating to a
transfer of shares which would not cause an Event of Default under
Clause 17.20 (Ownership of the Borrower).

	15.25	 	Environmental Matters

	15.25.1	 	It has or will at all relevant times have obtained all
Environmental Approvals
required in connection with the Project and has at all times
complied in all
material respects with the terms of those Environmental Approvals
and all
other applicable Environmental Laws;
	 
	15.25.2	 	save as otherwise disclosed in writing to the Agent prior to the
date of this
Agreement, no Substance has, so far as it is aware, been
disclosed, used,
disposed of, generated, stored, processed, transported, dumped,
deposited,
buried or emitted at, on, from or under the Site in circumstances
where this
has resulted, or would be likely to result, in a Material Adverse
Effect; and
	 
	15.25.3	 	all information supplied by the Borrower to the Minister of
Environment in
order to obtain the Environmental Operating Permit was true in all
material
respects as at its date or, as the case may be, the date on which
it was supplied
and such information did not omit as of its date or, as the case may be, the
date on which it was so supplied, any material information.

	15.26	 	Financial Indebtedness

It has not incurred or permitted to subsist any Financial Indebtedness
other than the Permitted Financial Indebtedness.

	15.27	 	Times for making Representations and Warranties

	15.27.1	 	The representations and warranties set out in this Clause 15
(Representations and Warranties):

	(a)	 	are made on the date of this Agreement and
on Financial Close with reference to the facts and
circumstances then existing; and

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	15.27.2	 	(with the exception of Clauses 15.9, 15.11, 15.16.1 to 15.16.5
and 15.16.7 (Information), 15.17 and 15.21) are deemed to be
repeated by the Borrower on the date of the Request and on each
Drawdown Date with reference (to the extent applicable) to the facts
and circumstances then existing.

	16.  	 	UNDERTAKINGS
	 
	16.1	 	Duration

The undertakings in this Clause 16 (Undertakings) remain in force from
the date of this Agreement for so long as any amount is or may be
outstanding under this Agreement or any Commitment is in force.

	16.2	 	Financial Information

The Borrower shall (at its expense) supply to the Agent (together, in
relation to paragraphs 16.2.1 and 16.2.3 below only, with sufficient
copies for all the Banks) and (in relation to paragraph 16.2.2(c) below)
to the Banks’ Technical Adviser:

	16.2.1	 	as soon as the same are available (and in any event within 120 days
of the end
of each of the applicable financial years) the audited accounts of the Borrower
for that financial year accompanied by a comparison to the Operating Budget
for that financial year and, if the Operating Budget has not been met, a
management commentary thereon;
	 
	16.2.2	 	as soon as the same are available (and in any event within 30 days of the end
of each quarter of its financial years):

	(a)	 	its unaudited accounts for that quarter
accompanied by a comparison to
the Operating Budget for that quarter, and, if the Operating
Budget has
not been met, a management commentary thereon;
	 
	(b)	 	a cashflow statement for that quarter in a form
reasonably acceptable to
the Agent and showing performance against budget, Gross
Revenues
received and Permitted Payments made; and
	 
	(c)	 	such additional information as the Agent and/or
the Banks’ Technical
Adviser (as applicable) may reasonably require to enable it to calculate
or verify (as appropriate) the calculations contemplated by Clause 18
(Forecasts), and the Debt Service Cover Ratio including, without
limitation, any other financial and/or cash flow statements in the form
agreed between the Agent and the Borrower and which are consistent
with the format of the Computer Model;

	16.2.3	 	as soon as the same are publicly available (and in any event within 120 days of
them becoming publicly available) the audited accounts of the
Shareholder,
Billiton Plc, B.H.P. Billiton Marketing A.G., Landsvirkjun and
Hydro
Aluminium Deutschland GmbH for that financial year; and

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	16.2.4	 	not less than 30 days prior to the beginning of each financial
year, an Operating Budget for that financial year.

	16.3	 	Information - Miscellaneous

The Borrower shall (at its expense) supply to the Agent promptly:

	16.3.1	 	upon becoming aware of them, details of any litigation, arbitration or
administrative proceedings which are current, threatened or pending which, if
adversely determined could have a Material Adverse Effect, and, together, in
each case, with its current proposals for conducting the litigation, arbitration
or proceedings or otherwise resolving the dispute in question;
	 
	16.3.2	 	such further information in its possession or control regarding its financial
condition and operations as the Agent may reasonably request;
	 
	16.3.3	 	details of any event of which it is aware which may constitute a
material event
of force majeure under any Project Contract;
	 
	16.3.4	 	details of any event of which it is aware which is likely to have a Material
Adverse Effect;
	 
	16.3.5	 	details of any claim made under any Insurance in accordance with
Schedule 8
(Insurances);
	 
	16.3.6	 	copies of all notices of default, suspension, termination, or
material claims or
material demands made against it under a Project Contract,
otherwise than in
the normal course of performance of any Project Contract, or
affecting the
Project Facilities and details of any action it proposes to take in
relation to the
same;
	 
	16.3.7	 	upon becoming aware of them, details of any damage to or
destruction of the
Project Facilities where the cost of repair or re-instatement is
likely to exceed
$2,000,000;
	 
	16.3.8	 	details of any reduction in production levels of the Smelter which
is likely to
lead to an Event of Default under Clause 17.19.1 (Project Events);
	 
	16.3.9	 	copies of all material documents despatched by it to its Shareholder in its
capacity as such or all of its creditors (or any class of them) at the same time
as they are despatched; and
	 
	16.3.10	 	upon receipt by it, copies of all authorisations which are material in the
context of the Documents and/or the Project;
	 
	16.3.11	 	details of any intermediate compensation agreed by the Borrower
pursuant to
Clause 6.2 of the Tolling Conversion Agreement and in the event
that such
compensation is payable (if requested by the Agent) copies of any
audit
information in the Borrower’s possession or control;

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	16.3.12	 	on the reasonable request of the Agent, any information
held by Borrower’s
insurance broker regarding the Insurances to which the Borrower is entitled to
have access, including, without limitation, any claims correspondence;
	 
	16.3.13	 	in respect of each of the Construction Contracts details of:

	(a)	 	any material amendments or material variations
to the terms of the
Construction Contract;
	 
	(b)	 	any assignment, novation or transfer by the
Contractor of its rights
and/or obligations under the Construction Contract;
	 
	(c)	 	any material claims or any material dispute
which arises under the
Construction Contract, including information on the steps being taken to
resolve the dispute; and

	16.3.14	 	promptly upon receipt by it, any changes or supplements to the terms of the
first back to back loan signed by the Treasury in respect of the Site
Obligations and any amendments or supplements to the Rent and Payment
Schedule in Annex D of the Smelter Site Agreement,

in sufficient copies for all of the Banks, if the Agent so reasonably requests.

	16.4	 	Project Reports

The Borrower shall (at its expense) supply to the Agent in the form
agreed between the Agent and the Borrower, within 45 days of the end of
each of its financial quarters, a report on the operation of the Project,
accompanied by a management commentary on any problems referred to in
such reports in each case in scope and form reasonably acceptable to the
Agent and in sufficient copies for all of the Banks.

	16.5	 	Access and Consultation

	16.5.1	 	Subject to Clause 16.5.4, the Borrower shall procure that the Agent and the
Blanks’ Technical Adviser be allowed access, during normal business hours
and upon giving two Business Days’ notice, to inspect the Project Facilities,
the technical and statistical data, accounting books, records and other data in
the possession or control of the Borrower with respect to the Project Facilities
as they may reasonably require for the purposes of performing their respective
duties in relation to this Agreement (including, for the avoidance of doubt, any
duties of the Banks’ Technical Adviser in connection with Clause 18
(Forecasts)) and to take copies of any documents inspected for such purpose
provided that they shall be accompanied at all times by a representative of the
Borrower and the Borrower shall make such a representative available;
	 
	16.5.2	 	Subject to Clause 16.5.4, the Borrower shall procure that the Agent and the
Banks are together allowed access during normal business hours to
the Project
Facilities at least once a year, upon the giving of three weeks’
notice by the
Agent to the Borrower provided that they shall be accompanied at
all times by

- 54 -

 

	 	 	a representative of the Borrower and the Borrower shall make such
a representative available; and
	 
	16.5.3	 	Without prejudice to Clause 17.15 (Equity, Letters of Credit and
DSRA), if at
any time the provisions of Clause 6.2 (Deferrals) come into effect, and whilst
they remain in effect, or the amount available for drawing under the Debt
Service Reserve L/C together with the amount standing to the credit of the
Debt Service Reserve Account is less than the Required DSRA Balance for
any Repayment Date, and whilst there is such a shortfall, the Borrower shall
regularly consult with the Agent and provide it with such information as it
may reasonably require in relation to the Deferral Conditions and the
Borrower’s proposals for returning to payment of Base Case Repayment
Instalments or for ensuring that the amount available for drawing under the
Debt Service Reserve L/C together with amounts standing to the credit of the
Debt Service Reserve Account is equal to or greater than Required DSRA
Balance (as the case may be).
	 
	16.5.4	 	The rights of access granted to each Finance Party and the Banks’ Technical
Adviser pursuant to Clauses 16.5.1 and 16.5.2 above are subject
to:

	(a)	 	that Finance Party or the Banks’ Technical
Adviser (as the case may be)
entering into a confidentiality agreement with the Borrower
substantially
in the form agreed by the Borrower and the Agent and
initialled by them
for the purposes of identification prior to Financial Close
(and the
Borrower agrees that it shall enter into such confidentiality
agreement as
soon as possible after receipt thereof, duly executed by the
relevant
Finance Party or the Banks’ Technical Adviser (as the case may
be));
and,
	 
	(b)	 	complying with the Project Facilities’
applicable health and safety
standards from time to time whilst they are inspecting the Project
Facilities.

	16.6	 	Notification of Default

The Borrower shall notify the Agent of any Default (and the steps, if any,
being taken to remedy it) promptly upon its occurrence.

	16.7	 	Compliance Certificates

The Borrower shall supply to the Agent:

	16.7.1	 	together with the accounts specified in Clause 16.2.1 and 16.2.2 (Financial
Information); and
	 
	16.7.2	 	promptly at any other time, if the Agent reasonably so requests,

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a certificate signed by two of its senior officers on its behalf
certifying that no Default is outstanding or, if a Default is
outstanding, specifying the Default and the steps, if any, being taken to
remedy it.

	16.8	 	Authorisations

	16.8.1	 	The Borrower shall promptly:

	(a)	 	obtain, maintain, comply in all material
respects with the terms of, and
comply to the extent that non-compliance would lead to
termination,
suspension, loss or revocation of; and
	 
	(b)	 	supply certified copies to the Agent of,

any authorisation required under any law or regulation as and
when required to enable it to perform its obligations under, or
for the validity or enforceability of, any Document or to
implement the Project.

	16.8.2	 	Clause 16.8.1 above shall not apply to any authorisation which a
person other
than the Borrower is obliged to obtain under any Project Contract.

	16.9	 	Pari Passu Ranking

The Borrower shall procure that its obligations under the Finance
Documents do and will rank at least pari passu with all its other present
and future unsecured obligations, except for obligations mandatorily
preferred by law applying to Icelandic companies generally.

	16.10	 	Negative pledge

	16.10.1	 	The Borrower shall not create or permit to subsist any Security Interest on any
of its assets.
	 
	16.10.2	 	Paragraph 16.10.1 does not apply to any Permitted Security Interest.

	16.11	 	Transactions similar to Security

The Borrower shall not:

	16.11.1	 	sell, transfer or otherwise dispose of any of its assets on terms whereby it is or
may be leased to or re-acquired or acquired by it or any of its related entities;
or
	 
	16.11.2	 	sell, transfer or otherwise dispose of any of its receivables on recourse terms,
except for the discounting of bills or notes in the ordinary course
of trading,

in circumstances where the transaction is entered into primarily as a
method of raising finance or of financing the acquisition of an asset.

- 56 -

 

	16.12	 	Borrowings

The Borrower shall not incur or have outstanding any Financial
Indebtedness except:

	16.12.1	 	liabilities under the Finance Documents or the Precedent Facility
Agreement
(up to the time of prepayment under Clause 3.1. l(a));
	 
	16.12.2	 	liabilities under the Sponsor Funding Agreement including, without
limitation,
any loans made to the Borrower in accordance with the provisions thereof;
	 
	16.12.3	 	the Site Obligations and liabilities in respect thereof;
	 
	16.12.4	 	the Harbour Loans and liabilities in respect thereof;
	 
	16.12.5	 	liabilities under any Hedging Agreements;
	 
	16.12.6	 	any other Financial Indebtedness provided by a person other than the
Borrower expressly provided for under any Project Contract on its
original
terms as at the date of this Agreement;
	 
	16.12.7	 	in respect of leases of equipment and vehicles provided that the
aggregate
value of such equipment and vehicles at no time exceeds $3,000,000
(indexed)
and the aggregate amount payable by way of rental does not
exceed
$1,000,000 (indexed) per annum; and
	 
	16.12.8	 	any other Financial Indebtedness approved in writing by the
Majority Banks.

	16.13	 	Loans and Guarantees etc.

The Borrower shall not make any loans or provide credit or financial
accommodation, or give any guarantee of any person’s Financial
Indebtedness, except for:

	16.13.1	 	loans, guarantees or credit approved in writing by the Majority
Banks;
	 
	16.13.2	 	loans made to an employee of the Borrower or any guarantee of such
loans up
to an aggregate maximum amount of $750,000;
	 
	16.13.3	 	loans made by the Borrower to the Shareholder in accordance with the
Borrower’s constitutional documents and applicable law, which are
funded
solely from amounts standing to the credit of the Distribution
Account;
	 
	16.13.4	 	any deferred payment rights in the ordinary course of trade and
which do not
involve the deferral of payment of any sum for more than 90 days; and
	 
	16.13.5	 	Authorised Investments.

	16.14	 	Capital Expenditures

Other than with the prior written approval of the Majority Banks, the
Borrower shall not incur any capital expenditure, other than:

	16.14.1	 	Operating Costs within paragraphs (d) and (e) of the definition
thereof;

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	16.14.2	 	capital expenditure funded from amounts standing to the credit
of the
Distributions Account, in an amount not exceeding $3,000,000 in
any of its
financial years provided that if the capital expenditure incurred
under this
paragraph 16.14.2 in any financial year is less than $3,000,000,
an amount
equal to the difference between the amount so incurred and
$3,000,000 can be
carried forward to the immediately following financial year only
and may be
incurred in that financial year; or
	 
	16.14.3	 	capital expenditure funded by any Additional Shareholder Funding
or any
other Permitted Financial Indebtedness provided that, in the case of
non-essential capital expenditure, no Deferral Instalments are outstanding at the
relevant time.

	16.15	 	Disposals

	16.15.1	 	The Borrower shall not either in a single transaction or in a series of
transactions, whether related or not and whether voluntarily or involuntarily,
sell, transfer, grant or lease or otherwise dispose of all or any part of its
assets.
	 
	16.15.2	 	Paragraph 16.15.1 does not apply to:

	(a)	 	disposals made in the ordinary course of trade
of the disposing entity on
arm’s length terms;
	 
	(b)	 	Permitted Security Interests;
	 
	(c)	 	disposals required by the provisions of the Project Contracts;
or
	 
	(d)	 	disposals of obsolete or redundant assets which
are no longer required
for the efficient operation of its business and are not replaced, on arm’s
length terms and in an aggregate amount not exceeding $1,000,000 in
any financial year.

	16.16	 	Mergers and acquisitions

The Borrower shall not:

	16.16.1	 	enter into any amalgamation, demerger, merger or reconstruction; or
	 
	16.16.2	 	acquire any assets or business if the assets or business are
substantial save
where expressly contemplated by the Documents or expressly permitted by
this Agreement.

	16.17	 	Set-off Arrangements with Billiton

Other than the Tolling Conversion Agreement, the Borrower shall not enter
into or permit to subsist any agreements with BHP Billiton Marketing A.G.
which would allow it to exercise any right of set off in respect of
amounts owed by it to the Borrower and shall not permit BHP Billiton
Marketing A.G. to give any guarantee or

- 58 -

 

other assurance against loss in respect of any of the Borrower’s
liabilities or obligations.

	16.18	 	Operation and maintenance

The Borrower shall:

	16.18.1	 	diligently operate and maintain the Project Facilities in a safe, efficient and
business-like manner, in accordance with Good Industry Practice and in such a
manner as to ensure that it does not prejudice its ability to claim against any
person (including any Contractor) for breach of any material manufacturer,
supplier or other warranties;
	 
	16.18.2	 	not cease to be the operator;
	 
	16.18.3	 	not enter into any agreement with an associated company under which the
Borrower will incur Operating Costs except on arm’s length terms;
	 
	16.18.4	 	employ a sufficient number of trained personnel to operate and maintain the
Project Facilities in accordance with Good Industry Practice and in order to
comply with applicable law and its contractual obligations;
	 
	16.18.5	 	not without the consent of the Majority Banks (after consultation with the
Banks’ Technical Adviser) reduce or allow depletion of the stocks of carbon
anode blocks at the Smelter Site to a level below that which would be
sufficient to enable the Smelter to operate at its full production capacity of
89,100 Tonnes of aluminium per annum for a period of three weeks except
that the Borrower may utilise such stocks following a failure by Hydro
Aluminium Deutschland GmbH to provide carbon anode blocks in the
required quantity.

	16.19	 	Project Contracts

	16.19.1	 	The Borrower shall comply in all material respects with its obligations under
the Project Contracts.
	 
	16.19.2	 	Subject to paragraph 16.19.5, the Borrower shall not, without the prior
written consent of the Majority Banks (such consent not to be
unreasonably
withheld), agree to:

	(a)	 	any material amendment or variation to; or
	 
	(b)	 	waive compliance with any material provision of;

any Project Contract (other than the Construction Contracts) and,
if such amendment, waiver or variation or any material amendment
or variation to the scope of works thereunder is likely to have a
Material Adverse Effect, the Construction Contracts.

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	16.19.3	 	Subject to paragraph 16.19.5, the Borrower shall not, without the
prior
written consent of the Majority Banks, agree to or give notice of the
termination, repudiation or abandonment of any Project Contract or any
Construction Contract or suspension of all or a material part of the obligations
of any other party under any Project Contract or any Construction Contract.
	 
	16.19.4	 	The Borrower shall not, without the prior written consent of the Majority
Banks, amend its constitutional documents.
	 
	16.19.5	 	The Borrower shall exercise each Reserved Discretion in accordance with
Schedule 5 (Reserved Discretions).
	 
	16.19.6	 	The Borrower shall not enter into any material agreements other than the
Documents without the consent of the Majority Banks (such consent not to be
unreasonably withheld) except for a labour contract with its employees or any
short-term (up to three years) or temporary arrangements reasonably required
to carry on its business in the ordinary course and the Borrower shall keep the
Agent reasonably informed in respect of discussions it has with counterparties
to Project Contracts in respect of any proposed replacement, extension or
supplement to such contracts, or with third parties in respect of any proposed
replacement or supplement to any Project Contract that has terminated or is
due to terminate before the Final Repayment Date. The Borrower shall
provide the Banks with a reasonable period of time in which to approve the
terms of any new Project Contract and the Agent shall inform the Borrower of
the consent (or otherwise) of the Majority Banks as soon as reasonably
practicable (taking into account the need for the Banks to engage advisers,
consult amongst themselves, and agree and enter into any direct agreements
with the relevant counterparties).
	 
	16.19.7	 	Subject to paragraph 16.19.5 above, the Borrower shall maintain and, in good
faith and in the best interests of the Borrower, take all reasonable steps to
enforce its rights and exercise its discretions under the Project Contracts and
the Construction Contracts to comply with applicable laws and its contractual
obligations.
	 
	16.19.8	 	In the event that Hydro Aluminium Deutschland GmbH gives notice of its
intention:

	(a)	 	to negotiate an amendment or other change to the basic
price and/or to
make a price adjustment under the Anode Supply Agreement as a
result
of or in contemplation of the Rheinwerk-Smelter being closed after
1st
August, 2008; or
	 
	(b)	 	to terminate the Anode Supply Agreement after 30th June,
2013, to the
extent there are outstandings under this Agreement,

the Borrower will promptly after receipt of such notice consult fully
with the Banks with regard to any such change, price adjustment and/or
as to the

- 60 -

 

choice of a new anode supplier and the terms and conditions of any
replacement anode supply contract, which shall be reasonably
satisfactory to the Majority Banks.

	16.20	 	Hedging

	16.20.1	 	The Borrower shall not enter into an Aluminium Hedging Agreement or a
Hedging Agreement (in respect of its interest rate exposure) unless the Agent
has approved in writing (such approval not to be unreasonably withheld) the
structure of the proposed arrangements together with the identity of the
Aluminium Hedging Counterparty or, as the case may be, the Hedging Bank.
	 
	16.20.2	 	The Borrower shall not enter into a Hedging Agreement (in respect of its
foreign exchange rate exposure) without the Agent’s prior written consent,
other than in respect of Hedging Agreements with a term of less than 12
months, a notional amount of no more than $10 million and based on a margin
free forward contract in a form common in the market at the relevant time.
	 
	16.20.3	 	The Borrower shall ensure that each Hedging Bank with respect to an Interest
Rate Hedging Agreement or any Hedging Agreement in respect of the
Borrower’s foreign exchange rate exposure that requires the Agent’s prior
written consent under Clause 16.20.2 accedes to the Intercreditor Agreement
and that each Hedging Agreement is based on the prevailing ISDA Master
Agreement.

	16.21	 	Compliance with Laws and Payment of Taxes

	16.21.1	 	The Borrower shall comply in all material respects with all laws and
regulations applicable to it provided that nothing in this Clause shall prevent
the Borrower from contesting in good faith the application to it of such laws
and regulations.
	 
	16.21.2	 	The Borrower shall pay all its Taxes when due, except to the extent the Taxes
are contested in good faith and by appropriate means, and a reserve
reasonably regarded as adequate and generally required by international
accounting standards has been set aside for payment of those contested Taxes.

	16.22	 	Environmental Matters

	16.22.1	 	The Borrower shall comply in all material respects with:

	(a)	 	all applicable Environmental Law; and
	 
	(b)	 	the terms and conditions of all Environmental Approvals
applicable to it,

and to the extent that non-compliance would lead to loss,
termination, revocation or suspension of the Environmental
Operating Permit and for this purpose will implement procedures in
accordance with Good Industry Practice

- 61 -

 

or which are reasonably necessary to monitor compliance and
contain liability under Environmental Law.

	16.22.2	 	Promptly upon receipt of the same, the Borrower shall notify the
Agent of any claim, notice or other communication served on it in
respect of any alleged breach of any Environmental Law which, if
substantiated, is likely to have a Material Adverse Effect.

	16.23	 	Scope of business

The Borrower shall not engage in any business or activities, either
alone or in partnership or joint venture with any other person, other
than those directly associated with the Project and contemplated by the
Facilities Description and the Documents.

	16.24	 	Share Capital

Other than the redemption in capital to take effect on or about the
Drawdown Date in accordance with the resolution referred to in paragraph
2(k) of Schedule 2 (Conditions Precedent), the Borrower shall not
purchase, cancel or redeem any of its share capital or issue any further
voting capital, save pursuant to the Sponsor Funding Agreement or any
issue of new shares to the Shareholder or, provided there will be no
Event of Default under Clause 17.20, an Affiliate of the Shareholder
which are subject to the Shares Pledge.

	16.25	 	Investments

The Borrower shall not:

	16.25.1	 	acquire any share or loan capital of any corporate body or other investments
except Authorised Investments in accordance with the Account Agreement
and/or investments acquired with proceeds standing to the balance of the
Distributions Account;
	 
	16.25.2	 	save as agreed with the Agent, and except for Authorised Investments
pursuant to the Account Agreement or investments made with proceeds
standing to the credit of the Distributions Account, open or maintain any
accounts other than the Project Accounts, the Onshore Proceeds Accounts and
the Distributions Account and any other account into which proceeds standing
to the credit of the Distributions Account are paid; or
	 
	16.25.3	 	have or acquire any Subsidiary whether by formation or otherwise.

	16.26	 	Distributions

The Borrower shall not declare, make or pay any Distribution other than
out of amounts standing to the credit of the Distributions Account. Other
than the Initial Shareholder Distribution, the Borrower shall not
transfer an amount to the Distributions Account save in accordance with
the Account Agreement in circumstances where all of the following
conditions are satisfied:

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	16.26.1	 	the transfer is made on or up to 30 days after a Repayment Date or (if
later)
30 days after the relevant Determination Date after the Borrower has paid the
applicable Repayment Instalment due on that Repayment Date;
	 
	16.26.2	 	the Debt Service Cover Ratio exceeded 1.25:1 and the Loan Life Cover Ratio
exceeded 1.40:1 (in respect of the Loan Life Cover Ratio, on the assumption
that the LME Cash Price is US$1,330 per metric tonne) as at the Calculation
Date for that Repayment Date and would continue to be exceeded after the
relevant transfer is made and that Ratio recalculated assuming that such
transfer to the Distributions Account had already occurred;
	 
	16.26.3	 	no Default has occurred and is continuing and no Default would result from
the payment of such amount to the Distributions Account;
	 
	16.26.4	 	to the extent that there is sufficient cash available to pay the same standing to
the credit of the Proceeds Account or Holding Account (treating Authorised
Investments as cash for this purpose);
	 
	16.26.5	 	the amount standing to the credit of the Debt Service Reserve Account
together with any amount available for drawing under the Debt Service
Reserve L/C is equal to or greater than the Required DSRA Balance for the
applicable Repayment Date;
	 
	16.26.6	 	the Borrower has complied with its obligations under Clause 6.1 (Repayment
Instalments), any amount of principal repayment that has been previously
deferred pursuant to Clause 6.2 (Deferrals) has been repaid;
	 
	16.26.7	 	in respect of the period after 1 January 2010, both the Tolling Conversion
Agreement and the Anode Supply Agreement have been replaced or
supplemented by tolling arrangements or, as the case may be, arrangements
for anode supply, on terms reasonably satisfactory to the Majority Banks and
with a term that ends after the Final Repayment Date; and
	 
	16.26.8	 	if a notice has been delivered under Clause 16.34 (Major
Project Parties), a
period of one year from the date of such notice has expired or, if
earlier, the
Borrower has demonstrated to the reasonable satisfaction of the Majority
Banks that the Notifiable Event does not have or no longer has a
Material
Adverse Effect,

provided that:

	(a)	 	in addition to the conditions set out above, no transfer
to the Distributions Account shall be made or paid if at that
time the Environmental Operating Permit does not or will not
permit the operation of the Project to continue for the next two
years or, if earlier, until the Final Repayment Date on terms
satisfactory to the Agent (acting reasonably); and

- 63 -

 

	(b)	 	in the case of a transfer where the Repayment
Date is the first
Repayment Date there is a cash balance of at least US$10
million
standing to the credit of the Proceeds Account at the opening
of business
on the first Repayment Date; and
	 
	(c)	 	if all the conditions in Clauses 16.26.1 to
16.26.8 are satisfied apart
from the condition in Clause 16.26.7, the Borrower shall transfer an
amount to the Dividend Reserve Account up to an amount it would
otherwise have been able to transfer to the Distributions Account (and
the balance standing to the credit of the Dividend Reserve Account shall
not be taken into consideration for the purposes of determining whether
the Borrower has cash available for making any Distribution or in
determining whether the condition in Clause 16.26.2 has been satisfied).

	16.27	 	Financial Year-End

The Borrower shall not change its financial year-end from 31st December.

	16.28	 	Assignability

The Borrower shall ensure that its interest under each Project Contract
entered into by it, and (to the extent practicable) each material
authorisation granted to it, after the date of this Agreement is capable
of being charged or assigned by way of security on and subject to the
terms of the Security Documents.

	16.29	 	Further Assurance

	16.29.1	 	The Borrower shall, at its own expense, execute and do all such assurances,
acts and things as the Agent and/or the Security Trustee may reasonably
require for perfecting or protecting the security constituted or evidenced or
purported to be constituted or evidenced by any of the Finance Documents or
for exercising its rights under any Direct Agreement.
	 
	16.29.2	 	The Borrower shall, on terms no more onerous than any other Security
Document, (i) enter into any updates or supplements to any Security
Documents governed by Icelandic law; and (ii) enter into any security
documents relating to Construction Contracts and/or other Project Contracts
entered into by it after Financial Close.
	 
	16.29.3	 	The Borrower, by way of security, irrevocably appoints the Agent, the
Security Trustee and any of their delegates or sub-delegates to be
its attorney
to take any action which the Borrower is obliged to take and fails
to do so
under this Clause 16.29. The Borrower ratifies and confirms
whatever any
attorney does or purports to do pursuant to its appointment under
this
paragraph 16.29.3.

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	16.30	 	Power to Remedy

	16.30.1	 	In case of default by the Borrower in complying with Clauses 16.33
(Insurances), 16.17 (Project Works) and 16.18 (Operation and
Maintenance),
the Borrower shall permit the Agent or its agents and contractors
to enter the
Project Facilities and to comply with or object to any notice
served on the
Borrower in respect of the Project Facilities and to effect such
repairs or
insurance or generally do such things or pay all such costs,
charges and
expenses as the Agent may reasonably consider necessary or
desirable to
prevent or remedy any breach of Clause 16.33 (Insurances) or those
Clauses
or to comply with or object to any notice.
	 
	16.30.2	 	The Borrower will indemnify and keep the Agent indemnified
against all
losses, costs, charges and expenses reasonably incurred in connection with the
exercise of the powers contained in this Clause 16.30 (Power to
Remedy).

	16.31	 	Payments and Account Agreement

The Borrower shall ensure that all payments to it (including, without
limitation, the Loan) are made in accordance with the Account Agreement
and shall comply with its obligations set out in the Account Agreement.

	16.32	 	Equator Principles

	16.32.1	 	Subject to the provisions of this Clause 16.32 (Equator
Principles), the
Borrower shall comply with Environmental Guidelines.
	 
	16.32.2	 	Subject to Clause 16.32.3 below, the Banks acknowledge and agree
that if the
Borrower complies with the terms of the Environmental Operating
Permit (in
the form applicable at the date of this Agreement or in more
stringent terms)
then it will be treated as in compliance with its obligations
under Clause
16.32.1.
	 
	16.32.3	 	The Borrower acknowledges that if the Environmental Operating
Permit is
amended and/or replaced so that the terms of the amended Environmental
Operating Permit (or the replacement) are less stringent with respect to the
protection of the environment than the Environmental Operating Permit in
place at the date hereof, the Borrower and the Agent (acting on the advice of
the Technical Adviser) shall meet in good faith to devise a proposed course of
action so as to ensure that any resulting changes to the operating and reporting
procedures of the Borrower will be in compliance with the Environmental
Guidelines.

	16.33	 	Insurances

The Borrower shall comply with its obligations set out in Schedule 8
(Insurances).

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	16.34	 	Major Project Parties

	16.34.1	 	The Borrower shall notify the Agent promptly after it becomes
aware of the
occurrence of any event specified in any of Clauses 17.5.1 and
17.5.3 and
Clauses 17.6 (Insolvency) to 17.10 (Analogous
Proceedings) (each a
“Notifiable Event”) in relation to any of BHP Billiton Marketing
A.G.,
Landsvirkjun and Hydro Aluminium Deutschland GmbH, unless any of
the
foregoing shall cease to be a Major Project Party, in which case
in relation to
the replacement thereof for the time being, (each a “Material
Company”)
provided that in respect of Clauses 17.5.1 and 17.5.3 the
aggregate amount of
Financial Indebtedness in respect of each such company
shall exceed
$5,000,000.
	 
	16.34.2	 	After the Borrower has given a notice pursuant to paragraph
16.34.1 above or
after the Agent has given a notice of a Notifiable Event in relation to a
Material Company to the Borrower, the Borrower shall consult with the Agent
regularly as to the consequences for it of any such Notifiable Event, keep the
Agent informed as to any steps it proposes to take as a consequence of such
Notifiable Event and provide the Agent with such information as it may
reasonably request in relation to such Notifiable Event, until the earlier of (i)
the later of one year from the date of any such notice or the date on which any
Event of Default which exists at the expiry of such period is waived by the
Majority Banks or ceases to exist or (ii) the Borrower demonstrates to the
reasonable satisfaction of the Majority Banks that the Notifiable Event does
not have or no longer has a Material Adverse Effect.

	16.35	 	Financial Covenants

Subject to Clause 16.36, the Borrower shall ensure that as at each
applicable Calculation Date:

	16.35.1	 	the Debt Service Cover Ratio is greater than or equal to 1.10:1;
	 
	16.35.2	 	the Loan Life Cover Ratio is greater than or equal to 1.10:1 (on
the
assumption that the LME Cash Price is US$1,330 per metric tonne);
	 
	16.35.3	 	the ratio of the aggregate of its Outstanding Senior Debt to its
Net Worth is
less than that in the right hand column below, by reference to the
most recent
financial statements drawn as at its financial year end delivered
by it pursuant
to Clause 16.2 (Financial Information).

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	As at the Calculation Date 	 	 
	falling on 31 December 	 	 
	for the following years 	 	Permitted Ratio
	2003

	 	3.25:1
	2004

	 	3.10:1
	2005

	 	3.00:1
	2006

	 	2.80:1
	2007

	 	2.60:1
	2008

	 	2.40:1
	2009

	 	2.20:1
	2010

	 	2.00:1
	2011

	 	1.80:1
	2012

	 	1.60:1
	2013

	 	1.40:1
	2014

	 	1.20:1
	2015

	 	1.00:1
	2016

	 	0.80:1
	2017

	 	0.60:1

	16.36	 	Remedy

	16.36.1	 	After becoming aware of the occurrence a breach of any of the
covenants in Clause 16.35 (Financial Covenants), the Borrower shall
notify the Agent (and provide such details about the breach as the
Agent may request) and, within 10 Business Days of becoming so aware:

	(a)	 	the Borrower may seek to remedy such breach by
procuring the
provision to it of Additional Shareholder Funding (such
funding to be
provided in the case of a breach of Clause 16.35.1 or 16.35.2
no later
than 45 days from the relevant Calculation Date unless the
Agent or its
advisers have delayed the determination of any of the Ratios
(other than
where any delay arose as a consequence of an act or omission
of the
Borrower or its advisers), and in the case of a breach of
Clause 16.35.3
no later than 45 days after the delivery of relevant financial
statements);
and
	 
	(b)	 	following the provision of such Additional
Shareholder Funding in
accordance with the Sponsor Funding Agreement and the
Intercreditor
Agreement, the Borrower shall confirm to the Agent by notice
in writing
signed by the chief financial officer of the Borrower (a
“Cure Notice”)
that such breach has been remedied (and shall provide such
further
evidence of or information about such remedy and/or such
breach as the
Agent may request).

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	16.36.2	 	For so long as the Borrower shall have the rights conferred to
it under Clause 16.36.1 above, the relevant breach shall not constitute a Default or a breach of
this Agreement.
	 
	16.36.3	 	The amount of any Additional Shareholder Funding provided to the Borrower
pursuant to this Clause 16.36 shall (subject to compliance by the
Borrower
with the other provisions of Clause 16.36.1 above within the stated 10
Business Day period) be included as a positive amount in the
recalculation of
the Debt Service Cover Ratio and/or the Loan Life Cover Ratio and/or the
Borrower’s Net Worth as at the Calculation Date to which such breach
related
provided that:

	(a)	 	other than as provided in Clause 16.36.5 below, nothing
in this Clause
16.36.3 shall in any way relieve the Borrower of its obligations
under
Clause 16.35 (without prejudice to Clause 16.36.2); and
	 
	(b)	 	the Borrower may deliver no more than two consecutive
Cure Notices at
any time and no more than three Cure Notices during the lifetime of this
Agreement.

	16.36.4	 	If the Borrower anticipates the occurrence of any breach referred to in Clauses
16.35.1 or 16.35.2 above, it may at any time after it anticipates that a
breach
may occur seek to avoid that breach by obtaining Additional Shareholder
Funding under this Clause 16.36.4. In this case:

	(a)	 	the Borrower shall notify the Agent of its intention to
seek such
Additional Shareholder Funding and shall provide the Agent with
such
details about the anticipated breach as the Agent may request; and
	 
	(b)	 	the provisions of Clauses 16.36.1 to 16.36.3 above shall
apply in respect
of the provision of that Additional Shareholder Funding except
that:

	(i)	 	such Additional Shareholder Funding must be
provided prior to any actual breach of any covenant in
Clauses 16.35.1 or 16.35.2 (Financial Covenants); and
	 
	(ii)	 	within 10 Business Days of the provision of
such Additional Shareholder Funding, the Borrower shall
confirm this to the Agent by notice in writing signed by the
chief financial officer of the Borrower, and such notice
given under this Clause 16.36.4(b)(ii) will be a Cure Notice
for the purpose of this Clause 16.36.4(b)(ii).

	16.36.5	 	Notwithstanding Clause 16.35 and the foregoing provisions of this
Clause
16.36, if the conditions set out in paragraphs 6.2.1(b) and 6.2.1(c) of
Clause
6.2.1 are satisfied with respect to a Repayment Date, whether or not any
principal amount falls to be deferred under Clause 6.2 as a result
thereof, the
Borrower shall not as at the Calculation Date corresponding to that
Repayment

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	 	 	Date be treated as in breach of Clause 16.35.1 nor shall any
requirement to cure or remedy arise.
	 
	16.36.6	 	Any steps taken by the Borrower to prevent or avoid a breach of
any of the covenants in Clause 16.35 other than in accordance with
the provisions of this Clause 16.36 shall not be treated as
constituting the giving of a Cure Notice.

	16.37	 	Replacement Harbour Loan Agreement

The Borrower shall not make any prepayment under the Replacement Harbour
Loan Agreement without the prior written consent of the Agent.

	17.	 	DEFAULT

	17.1	 	Events of Default

Each of the events set out in Clauses 17.2 (Non-payment) to 17.22
(Material Adverse Change) of this Clause 17 is an Event of Default
(whether or not caused by any reason whatsoever outside the control of
die Borrower or any other person).

	17.2	 	Non-Payment

Any Group Company does not pay on the due date any amount payable by it
under the Finance Documents except where such non-payment is due solely
to technical or administrative reasons and is paid within three Business
Days of its due date, in each case at the place at and in the currency in
which it is expressed to be payable.

	17.3	 	Breach of other Obligations

	17.3.1	 	The Borrower does not comply with any of Clauses 16.10
(Negative Pledge),
16.11 (Transactions similar to Security), 16.12
(Borrowings),
16.13 (Loans and Guarantees), 16.15 (Disposals), 16.20
(Hedging) or 16.26
(Distributions).
	 
	17.3.2	 	Subject to Clause 16.36 (Remedy), the Borrower is in breach of
Clause 16.35
(Financial Covenants) and such breach is not remedied in
accordance with
Clause 16.36 (Remedy).
	 
	17.3.3	 	A Group Company does not comply with any other provision of a
Finance
Document (other than those referred to in Clause 17.2
(Non-payment), Clause
17.3.1 or Clause 17.3.2 above) and such non-compliance, if capable of
remedy in the reasonable opinion of the Majority Banks, is not remedied
within 15 Business Days after its occurrence.

	17.4	 	Misrepresentation

	17.4.1	 	A representation, warranty or statement made or repeated in
or in connection with any Finance Document or in any document
delivered by or on behalf of a Group Company under or in connection
with any Finance Document is

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	 	 	incorrect in any material respect when made or deemed to be made
or repeated.

	17.4.2	 	Any representation and warranty set out in any of Clauses 15.2
(Status), to Clause 15.5 (Non-Conflicts), Clause 15.7
(Authorisations), Clauses 15.10 (Ownership of Assets), Clauses
15.12 (Immunity) to 15.15 (Litigation), Clause 15.18 (Intellectual
Property), Clause 15.20 (No Other Business), Clauses 15.22 (Taxes)
to 15.25 (Environmental Matters) would have been incorrect in any
material respect if it had been repeated on the first day of any
Interest Period with reference (if applicable) to the facts and
circumstances then existing.

	17.5	 	Cross-Default

	17.5.1	 	Any Financial Indebtedness (other than Financial Indebtedness of the nature
referred to in paragraph 16.12.7 of Clause 16.12 (Borrowings) up to a
maximum aggregate amount of $100,000) of the Borrower is not paid when
due; or
	 
	17.5.2	 	an event of default howsoever described occurs under any document relating
to Financial Indebtedness of the Borrower; or
	 
	17.5.3	 	any Financial Indebtedness of the Borrower becomes prematurely due and
payable or is placed on demand as a result of an event of default (howsoever
described) under the document relating to that Financial Indebtedness; or
	 
	17.5.4	 	any commitment for, or underwriting of, any Financial Indebtedness of the
Borrower is cancelled or suspended as a result of an event of default
(howsoever described) under the document relating to that Financial
Indebtedness; or
	 
	17.5.5	 	any Security Interest securing Financial Indebtedness over any material asset
of the Borrower becomes enforceable.

	17.6	 	Insolvency

	17.6.1	 	The Borrower is deemed for the purposes of any law to be, unable to pay its
debts as they fall due or to be insolvent, or admits inability to pay its debts as
they fall due; or
	 
	17.6.2	 	The Borrower suspends making payments on all or any class of its debts or
announces an intention to do so, or a moratorium is declared in respect of any
of its indebtedness; or
	 
	17.6.3	 	The Borrower by reason of financial difficulties, begins negotiations with one
or more of its creditors with a view to the readjustment or
rescheduling of any
of its indebtedness.

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	17.7	 	Insolvency proceedings

	17.7.1	 	Any step (including petition, proposal or convening a meeting) is
taken with a
view to a composition, assignment or arrangement with any creditors of the
Borrower; or
	 
	17.7.2	 	a meeting of the Borrower is convened for the purpose of considering any
resolution for (or to petition for) its winding-up, liquidation, a moratorium or
for its administration or any such resolution is passed; or
	 
	17.7.3	 	any person presents a petition for the winding-up, liquidation, moratorium or
for the administration of the Borrower; or
	 
	17.7.4	 	an order is made for the winding-up, liquidation, moratorium or
administration of the Borrower; or
	 
	17.7.5	 	any other step (including petition, proposal or convening a meeting) is taken
with a view to the rehabilitation, administration, custodianship,
liquidation,
winding-up, dissolution or a moratorium of the Borrower or any
other
insolvency proceedings involving the Borrower are commenced,

	 
	save for any step or petition referred to in Clause 17,7.3 or 17.7.5
which is frivolous or vexatious and is discharged with 14 days of its
presentation and which does not relate to any administration, moratorium
or similar proceedings.

	17.8	 	Appointment of Receivers and Managers

	17.8.1	 	Any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or the like is
appointed in respect of the Borrower or any part of its assets; or
	 
	17.8.2	 	the directors of the Borrower request the appointment of a liquidator, trustee
in bankruptcy, judicial custodian, compulsory manager, receiver,
administrative receiver, administrator or the like; or
	 
	17.8.3	 	any other steps are taken to enforce any Security Interest over any part of the
assets of the Borrower.

	17.9	 	Creditors’ Process

Any attachment, sequestration, distress or execution affects any asset of
the Borrower, in an amount exceeding $100,000 and is not discharged
within 14 days.

	17.10	 	Analogous Proceedings

There occurs in relation to the Borrower any event anywhere which, in the
reasonable opinion of the Majority Banks, corresponds with any of those
mentioned in Clauses 17.6 (Insolvency) to 17.9 (Creditors’ Process)
(inclusive).

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	17.11	 	Cessation of Business
	 
	 	 	The Borrower ceases, or threatens to cease, to carry on all or a
substantial part of its business.

	17.12	 	Project Contracts and Direct Agreements

	17.12.1	 	Any party to a Key Project Contract or a Direct Agreement (other
than a
Finance Party) breaches in any material respect any material
provision of that
Key Project Contract or Direct Agreement and such breach, if
capable of
remedy, is not remedied within such grace period as may be provided
for in
the relevant Key Project Contract or Direct Agreement or, in the
case of the
Power Contract, the period until Landsvirkjun is entitled to
suspend power
supply to the Borrower.
	 
	17.12.2	 	Any Key Project Contract or Direct Agreement is repudiated
(otherwise than
by the Borrower with the consent of the Majority Banks or by a
Finance
Party) or is or becomes void or unenforceable and, in the case of a
Key
Project Contract, is not replaced on terms and, where applicable,
with a
substitute party which in each case is reasonably acceptable to the
Majority
Banks within 45 days of such event.
	 
	17.12.3	 	Any material obligation expressed to be assumed by a party under a
Key
Project Contract or Direct Agreement is not or ceases to be a valid
and
binding obligation of, or is repudiated by, that party (otherwise
than by the
Borrower with the consent of the Majority Banks or by a Finance
Party) or is
or becomes void or unenforceable and, in the case of a Key Project
Contract
or any material obligation under it, is not replaced on terms and,
where
applicable, with a substitute party which is reasonably acceptable
to the
Majority Banks within 45 days of such event.
	 
	17.12.4	 	Otherwise than by the acts or omissions of the Borrower acting
with the
consent of the Majority Banks or of a Finance Party:

	(a)	 	any Key Project Contract or any Direct Agreement terminates; or
	 
	(b)	 	(after expiry of any applicable grace period) any
Key Project Contract or
any Direct Agreement is or becomes capable of being
terminated; or
	 
	(c)	 	a party to a Key Project Contract, or a Direct
Agreement issues a notice
of termination of, or (after the expiry of any applicable
grace period) a
notice of intention to terminate, any Key Project Contract or
any Direct
Agreement,

(in each case otherwise than by reason of full performance of the
agreement or expiry of its term) and, in the case of a Key Project
Contract, such contract is not replaced on terms and, where
applicable, with a substitute party which is reasonably acceptable
to the Majority Banks within 45 days of such event.

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	17.12.5	 	The Borrower (otherwise than with the consent of the Majority
Banks) issues a
notice of termination or a notice of intention to terminate any Key Project
Contract or Direct Agreement.
	 
	17.12.6	 	As at 31 December 2013, either of the Tolling Conversion Agreement or the
Anode Supply Agreement has not been renewed, extended or replaced, in each
case (i) as required to ensure that the expiry of the term of each such contract
will not occur prior to the Final Repayment Date, and (ii) on terms reasonably
satisfactory to the Majority Banks.
	 
	17.12.7	 	Any event in Clause 17.12.1 to 17.12.6 above occurs in relation to a Project
Contract (other than a Key Project Contract) and any such event in the
reasonable opinion of the Majority Banks is likely to have a Material Adverse
Effect and (in the case of Clauses 17.12.2, 17.12.3 and 17.12.4) such Project
Contract is not replaced on terms and, where applicable, with a substitute
party which is reasonably acceptable to the Majority Banks within 45 days of
such event or (in the case of paragraph 17.12.1 above) such non-compliance,
if capable of remedy, is not remedied within such grace period as may be
provided for in the relevant Project Contract.
	 
	17.12.8	 	Any Key Licence required by the Borrower is amended or modified and is
likely to have a Material Adverse Effect.
	 
	17.12.9	 	Any Key Licence required by the Borrower is terminated and not reinstated
or, where applicable, replaced within 30 Business Days.

	17.13	 	Illegality

	17.13.1	 	It is or becomes unlawful for any person (other than a Finance Party) to
perform any of its material obligations under the Documents.
	 
	17.13.2	 	Any Document or any material provision of any Document is required in any
material respect by any law or regulation having the force of law to be
waived, amended, modified or abandoned and, in the case of any Project
Contract, such event, in the reasonable opinion of the Majority Banks, is
likely to have a Material Adverse Effect.
	 
	17.13.3	 	Any material authorisation required in relation to the Project is (i) revoked or
(ii) amended in a manner which in the reasonable opinion of the Majority
Banks is likely to have a Material Adverse Effect.

	17.14	 	Effectiveness of Security

	17.14.1	 	Any Security Document is not or ceases to be effective (and is not remedied
forthwith) or is alleged by a Group Company to be ineffective for
any reason.
	 
	17.14.2	 	Any Security Interests created pursuant to any Security Document
is subject to
any prior or pari passu Security Interests (other than Permitted
Security
Interests).

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	17.15	 	Equity, Letters of Credit and DSRA

	17.15.1	 	The Borrower registers the issue or transfer of any of its share capital in
circumstances where that issue or transfer was made in breach of any
provision of the Sponsor Funding Agreement or any Finance Document.
	 
	17.15.2	 	The issuer fails to pay any amount properly claimed pursuant to any Letter of
Credit within three Business Days of the time permitted under that Letter of
Credit.
	 
	17.15.3	 	At any time the issuer of any Debt Service Reserve L/C required to be in
place under the Account Agreement or any other Finance Document ceases to
be a Qualifying Issuer (and Cash Collateral has not been provided) and the
issuer and such Debt Service Reserve L/C are not replaced with a further Debt
Service Reserve L/C and a bank or other financial institution which is a
Qualifying Issuer within 20 Business Days of the Agent notifying the
Borrower of the occurrence of such event.
	 
	17.15.4	 	Any Debt Service Reserve L/C ceases to be in place and in full force and
effect at any time when it is required to be in place pursuant to the Account
Agreement or any other Finance Document or, in relation to the Debt Service
Reserve L/C, is not renewed or replaced as required by the Account
Agreement or any other Finance Document.
	 
	17.15.5	 	At any time prior to 31 December 2010 3 Deferral Instalments are
outstanding, or at any time after 31 December 2010 2 Deferral Instalments are
outstanding, if, in addition, after 30 days of the third Deferral Instalment
becoming outstanding, or after 31 December 2010, the later of 31 December
2010 and the second Deferral Instalment becoming outstanding, and at any
time thereafter, whilst there are 3 Deferral Instalments outstanding (prior to 31
December 2010) or 2 Deferral Instalments outstanding (at any time after 31
December 2010) the amount available for drawing under the Debt Service
Reserve L/C together with the amount standing to the credit of the Debt
Service Reserve Account is less than the Required DSRA Balance for each
subsequent Repayment Date following that date.

	17.16	 	Abandonment

The Borrower abandons all or a material part of the Project Facilities or
all or a material part of the Project Facilities are damaged or
destroyed, unless, in the case of damage or destruction, risk of the
occurrence of the event concerned is covered by Insurance and the
Borrower is able to utilise the Insurance Proceeds in reinstatement
pursuant to Schedule 8 (Insurance).

	17.17	 	Nationalisation

	17.17.1	 	The Government of Iceland or any Agency of that Government
takes, or states officially that it proposes to take, any step with
a view to the seizure,

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	 	 	expropriation, nationalisation or acquisition (whether compulsory
or otherwise, in whole or in part, and whether or not for fair
compensation) of the Borrower or any of its material assets or of
any other party to any Project Contract or any of its material
assets.
	 
	17.17.2	 	All or a material part of the Project Facilities is
requisitioned.
	 
	17.17.3	 	The Government of Iceland takes any step (save as provided for in
the
Investment Agreement as in effect on the date of this Agreement) with a view
to the regulation, administration or limitation of, or the assertion of any form
of administrative control over, rates applied, prices charged or rates of return
achievable, by the Borrower in connection with the Project and any such step,
in the reasonable opinion of the Majority Banks, is likely to have a Material
Adverse Effect.

	17.18	 	Insurance

Any Insurance is not, or ceases to be in full force and effect or (at the
time it is required to be effected) is unavailable, or is avoided or any
insurer is or will be entitled to avoid or otherwise reduce its liability
under any policy relating to an Insurance in breach of Schedule 8.

	17.19	 	Project Events

	17.19.1	 	The average production level of aluminium from the Grundartangi
Aluminium
Smelter is less than ninety per cent. (90%) of 89,100 tonnes per
annum
applied pro rata for a period of thirty consecutive days (excluding
from the
calculation any reduction in production level which is as a
consequence of:

	(a)	 	an event of force majeure where any losses and/or
liabilities incurred by
the Borrower in such circumstances and as a result of such
event are
covered by Insurances and the Borrower is able to utilise the
Insurance
Proceeds to fully cover such losses and/or liabilities; or
	 
	(b)	 	unavailability of Secondary Power under (and as
defined in) the Power
Contract),

unless the Borrower produces a remedial plan within fifteen days
of the end of any such period which is in form and substance
satisfactory to the Majority Banks (acting reasonably) and such
plan is then implemented in accordance with its terms.

	17.19.2	 	(a) The Borrower ceases to have title to or the right to possess
and use the
Site; and/or

	(b)	 	the Borrower ceases to have title to or the
right to possess and/or use any buildings or fixtures on the
Site or any easements and wayleaves necessary to implement
the Project in accordance with the Documents

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	 	 	and such cessation, in the reasonable opinion of the Majority
Banks, is likely to have a Material Adverse Effect.

	17.20	 	Ownership of the Borrower

	17.20.1	 	The Shareholder ceases to hold (legally and beneficially) 100% of
the share
capital and voting rights of the Borrower, but holds more than
50.1% of the
share capital and voting rights provided that it shall not be an
event of default
if the conditions set out in Clause 17.20.3 are complied with in
respect of any
transfer.
	 
	17.20.2	 	The Shareholder ceases to hold (legally and beneficially) at
least 50.1 % of the
share capital and voting rights of the Borrower provided that it
shall not be an
event of default if the Shareholder holds (legally or
beneficially) less than
50.1 % of the share capital and voting rights of the Borrower and:

	(a)	 	any transferee of such share capital and voting
rights is approved in
writing by the Majority Banks (such approval not to be
unreasonably
withheld); and
	 
	(b)	 	the conditions set out in Clause 17.20.3 are
complied with in respect of
any transfer.

	17.20.3	 	The conditions that must be complied with in respect of any
transfer permitted
under Clauses 17.20.1 and 17.20.2 are as follows:

	(a)	 	any transfer would not breach the Investment
Agreement or any
applicable law;
	 
	(b)	 	unless the Majority Banks otherwise consent,
any such share capital and
voting rights are transferred subject to the Shares
Pledge or the
transferee creates a new Security Interest over such share
capital and
voting rights in form and substance reasonably satisfactory to
the Agent;
	 
	(c)	 	any such transferee agrees to be bound by the Intercreditor
Agreement;
	 
	(d)	 	the transferee’s obligations under the
Documents to which it is or will
become a party or subject to are legal, valid and binding on
it, and the
Agent has received any relevant legal opinions which are
satisfactory to
it; and
	 
	(e)	 	following any transfer, the Shareholder
maintains control of the
Borrower (unless the Majority Banks agree otherwise).

	17.21	 	Environmental Matters

	17.21.1	 	The Borrower (i) fails to comply in any material respect with any
Environmental Law or Environmental Approval or to the extent that
such non-compliance would lead to loss, termination, revocation or
suspension of the

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	 	 	Environmental Operating Permit, or (ii) becomes subject to any
Environmental Claim which, in the reasonable opinion of the
Majority Banks, is likely to have a Material Adverse Effect.
	 
	17.21.2	 	There is a change in applicable Environmental Law which would be
likely to
result in the imposition of any material liability in relation to the Project on
any Finance Party.
	 
	17.21.3	 	There is a change in Environmental Law which will cause the rights of any
person in relation to any claim against the Borrower in relation to non-
compliance with an Environmental Law or Environmental Licence to rank
ahead of the rights of any Finance Party against the Borrower and the Agent
gives notice of such event to the Borrower within 90 days of becoming aware
of the relevant change in Environmental Law.
	 
	17.21.4	 	The Environmental Operating Permit terminates for any reason or the
Government issues a notice of termination of or (after expiry of
any applicable
grace period) a notice of intention to terminate the Environmental
Operating
Permit.
	 
	17.21.5	 	The Environmental Operating Permit becomes capable of being
terminated by
reason of any technical, legal or procedural error or impropriety in connection
with the issuance of the Environmental Operating Permit.

	17.22	 	Material Adverse Change

Any other event or series of events occurs after the date hereof (other
than a reduction in the price of aluminium where the Borrower continues
to have the right to make deferrals under Clause 6.2) which will have a
material adverse effect on the ability of the Borrower to comply with its
payment obligations under the Finance Documents and which, if capable of
remedy, is not remedied within 30 days of the date of any notice given by
the Agent to the Borrower requiring it to be remedied.

	17.23	 	Acceleration

	17.23.1	 	On and at any time after the occurrence of an Event of Default
which is continuing immediately prior to the exercise of any of the
following rights, the Agent may, and shall if so directed by the
Majority Banks (or, in the case of (e) below, the Majority Senior
Creditors), by notice to the Borrower:

	(a)	 	cancel the Total Commitments; and/or
	 
	(b)	 	demand that all or part of the Loans, together
with accrued interest and
all other amounts accrued under the Finance Documents be
immediately
due and payable, whereupon they shall become immediately due
and
payable; and/or
	 
	(c)	 	demand that all or part of the Loans together
with accrued interest and
all other amounts accrued under the Finance Documents be
payable on

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	 	 	demand, whereupon they shall immediately become payable on
demand by the Agent acting on the instructions of the
Majority Banks; and/or
	 
	(d)	 	require the Borrower to exercise its rights to
or exercise the Borrower’s
rights to or require the Security Trustee to exercise its
rights (if any) to:

	(i)	 	call for immediate subscription
of capital under the Sponsor Funding Agreement; and/or
	 
	(ii)	 	request loans under the Sponsor Funding
Agreement; and/or
	 
	(iii)	 	call for immediate payment
under any Letter of Credit; and/or

	(e)	 	require the Security Trustee to exercise its
rights under the Security
Documents; and/or
	 
	(f)	 	give any notice regarding the payment of Insurance Proceeds;
and/or
	 
	(g)	 	give notice to the Account Bank for the
purposes set out in the Account
Agreement; and/or

	17.23.2	 	On and at any time after the occurrence of an Event of Default
which is
continuing immediately prior to the exercise of any of the following rights, the
Security Trustee or the Agent or any person appointed by either of them may
by notice to the Borrower from the Agent or Security Trustee exercise (in
place of the Borrower) all of the Borrower’s rights and discretions and (acting
as agent of the Borrower and/or jointly and severally with the Borrower)
perform any obligations of the Borrower under any Project Contract for which
there is a Direct Agreement.
	 
	17.23.3	 	Nothing in this Clause 17.23 (Acceleration) limits or affects any of the
Finance Parties’ rights or remedies under or in respect of any Finance
Documents.

	17.24	 	No Independent Action

No Finance Party may, except with the prior consent of the Majority Banks:

	17.24.1	 	enforce any Security Interest created or evidenced by any Security Document
or require the Agent to enforce any such Security Interest;
	 
	17.24.2	 	sue for or institute any creditor’s process (including a Mareva injunction,
garnishment, execution or levy, whether before or after judgment) in respect
of any obligation (whether or not for the payment of money) owing to it under
or in respect of any Finance Document;
	 
	17.24.3	 	take any step (including petition, application, notice of meeting or proposal to
creditors) for the liquidation, winding-up or administration of,
or any
insolvency proceeding in relation to, the Borrower, or for a
voluntary
arrangement or scheme of arrangement in relation to the Borrower;
or

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	17.24.4	 	apply for any order for an injunction or specific
performance in respect of the Borrower in relation to any of the
Finance Documents.

	18.	 	FORECASTS

	18.1	 	Time for Delivery of Forecasts

The Borrower shall, as of each Calculation Date, prepare a Forecast (in
consultation with the Agent and the Banks’ Technical Adviser) in the
manner set out in this Clause 18 (Forecasts).

	18.2	 	Contents of Forecast

	18.2.1	 	Each Forecast will set out:

	(a)	 	details of the Forecast Assumptions on which it is based;
	 
	(b)	 	Discounted Cash Available for Debt Service as
at the Calculation Date
for that Forecast;
	 
	(c)	 	details of Cash Available for Debt Service for that Forecast;
	 
	(d)	 	the Loan Life Cover Ratio, as at the
Calculation Date for that Forecast
(on the assumption that the LME Cash Price is US$1,330 per metric
tonne).

	18.2.2	 	All projections and calculations to be made under this Clause 18 (Forecasts)
shall be expressed and made in Dollars.

	18.3	 	Forecast Assumptions

	18.3.1	 	Each Forecast will be prepared and the Loan Life Cover Ratio calculated
using the Computer Model and on the basis of Forecast Assumptions
determined in accordance with this Clause 18 (Forecasts).
	 
	18.3.2	 	Where the manner of preparing any Forecast and determining the Loan Life
Cover Ratio differs between the program on which the Computer Model
operates and the provisions of this Agreement, this Agreement will prevail.

	18.4	 	Procedures for Determining Forecast Assumptions

	18.4.1	 	Not later than 60 Business Days prior to each Calculation Date the
Borrower shall notify the Agent of its proposals (failing which the
Agent shall make its own proposals) as to:

	(a)	 	the additions and amendments (if any) to the
Technical Assumptions (the “Existing Technical Assumptions”)
that were the basis of the preceding Forecast which it
believes are necessary:

	(i)	 	to correct any deficiency in the
form and structure of the Computer Model; or

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	(ii)	 	to take into account any circumstances that are
not taken into account in the Existing Technical Assumptions
but which it reasonably believes should be taken into
account.

	18.4.2	 	Within five Business Days after receipt of the notification referred to
in
paragraph 18.4.1 above, the Agent shall notify the Banks, the Borrower
and
the Banks’ Technical Adviser of:

	(a)	 	the Borrower’s proposals or (if applicable) the Agent’s
proposals under
paragraph 18.4.1 above;
	 
	(b)	 	the additions and amendments (if any) to the Economic
Assumptions (the
“Existing Economic Assumptions”) that were the basis of the
preceding
Forecast which it believes are necessary:

	(i)	 	to correct any deficiency in the form and
structure of the Computer Model; or
	 
	(ii)	 	to take into account any circumstances that
are not taken into account in the Existing Economic
Assumptions but which it reasonably believes should be taken
into account.

	18.4.3	 	Each of the Banks shall, within 10 Business Days of receipt of the
notification
referred to in paragraph 18.4.2 above, notify the Agent whether they accept or
reject the proposals of the Borrower and/or the Agent with respect to the
Forecast Assumptions for that Forecast. If the Majority Banks do not accept
any proposed Technical Assumption it shall be referred to the relevant Expert
for resolution in accordance with Clause 18.5 (Submissions to the Expert). If
the Majority Banks do not accept any proposal with respect to any Economic
Assumption, then (subject to paragraph 18.4.4 below) the Banks shall within
five Business Days, consult together in good faith with a view to agreeing a
mutually acceptable Economic Assumption and the relevant Economic
Assumption shall be the Economic Assumption agreed upon by the Majority
Banks. In making any determination with respect to the Technical
Assumptions pursuant to this Clause, the Banks may consult with the Agent
and the Banks’ Technical Adviser.
	 
	18.4.4	 	If the Majority Banks accept the Agent’s proposals with respect to any of the
Economic Assumptions or agree any of the Economic Assumptions as
contemplated by paragraph 18.4.3 above, the Agent shall promptly notify
the
Borrower of that fact and, within five Business Days of receipt of such
notification, the Borrower shall notify the Agent whether it accepts or
rejects
the relevant Economic Assumptions. If the Majority Banks do not agree
any
of the Economic Assumptions as contemplated by paragraph 18.4.3 above or
the Borrower does not accept any proposal with respect to the Economic
Assumptions made in accordance with this paragraph 18.4.4 then the
dispute

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	 	 	shall be referred to the Expert for resolution in accordance with
Clause 18.5 (Submissions to the Expert).
	 
	18.4.5	 	The assumption with respect to the aluminium price may not be
changed and shall not be referred to the Expert for recalculation in
accordance with Clause 18.5 (Submissions to the Expert).

	18.5	 	Submissions to the Expert

	18.5.1	 	If the Borrower and/or the Majority Banks reject any proposals of
the
Majority Banks or the Borrower (as the case may be) with respect to the
Forecast Assumptions or any additions or amendments to the Computer Model
within any periods provided for in paragraphs 18.5.3 and 18.5.4, the Agent
shall refer the disputed matter to an Expert for determination within five
Business Days of any such rejection.
	 
	18.5.2	 	The Agent shall instruct the Expert to give his decision within 15 Business
Days after the date of receipt of his instructions.
	 
	18.5.3	 	An Expert shall be a person having appropriate expertise with respect to, but
no interest in the outcome of, the matter referred to him and shall be
appointed by agreement between the Borrower and the Agent (after
consultation with the Banks and the Banks’ Technical Adviser). Failing any
such agreement within five Business Days of the first nomination of a person
to be the Expert by either party, the Expert shall be a person having the
characteristics outlined above and nominated on the application of the Agent.
The costs of any reference to the Expert shall be borne by the person whom
the Expert specifies or otherwise by the Borrower.
	 
	18.5.4	 	The Expert shall be given terms of reference agreed between the Borrower
and the Agent properly stating the context in which the relevant referral is
being made to him. The Borrower and the Agent may each provide the
Expert with whatever supporting evidence they think appropriate.
	 
	18.5.5	 	The Expert shall not be bound to choose either the proposal made by the
Borrower or that made by the Agent but shall be free to make his
own
determination of the point referred to him provided that for any
determination
to be final and binding as contemplated by this paragraph 18.5.5,
the
determination of the Expert must be (where applicable) within the
range of
possible Forecast Assumptions or range of possible revisions to the
Computer
Model which falls between and includes the relevant Forecast
Assumption or
revisions to the Computer Model (as the case may be) proposed by
the
Majority Banks or the Agent and the Borrower. The Expert’s
determination,
if it complies with the previous sentence, shall (except in the
case of manifest
error) be final and binding on all the Parties and shall be used in
the relevant
Forecast or Computer Model. If the Expert’s determination
(where
applicable) falls outside the range of possible Forecast
Assumptions or

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	 	 	revisions to the Computer Model referred to in the first sentence
of this paragraph, then the Parties shall be bound by the proposed
Forecast Assumptions or revisions to the Computer Model (as the
case may be) which are closest to the Expert’s determination.
	 
	18.5.6	 	The Expert shall act as an expert in determining the matter
referred to him and not as an arbitrator.

	18.6	 	Preparation of Forecast

	18.6.1	 	The Borrower shall prepare the Forecast within 30 days after each
Calculation
Date, using the Computer Model and on the basis of the Forecast Assumptions
as determined in accordance with Clauses 18.4 (Procedures for determining
Forecast Assumptions) and 18.5 (Submissions to the Expert).
	 
	18.6.2	 	Within 30 days after each Calculation Date, the Borrower shall give a copy of
the Forecast to the Agent, each Bank and the Banks’ Technical Adviser.
	 
	18.6.3	 	The Borrower represents and warrants to each Finance Party that:

	(a)	 	the method of calculating the figures referred to
in Clause 18.2.1 (the
“Relevant Figures”) contained in the Computer Model is
consistent in
all material respects with the method for doing so referred to
in this
Clause 18 (Forecasts); and
	 
	(b)	 	upon delivery of each Forecast, the Relevant
Figures specified in it have
been calculated in accordance with, and using, the Computer
Model.

These representations shall be deemed to be repeated on each
Calculation Date.

	18.6.4	 	Notwithstanding paragraph 18.6.3 above, if the Agent (after
comparison of the
Relevant Figures contained in a Forecast with the figures produced by its own
simulation of the Computer Model (using the same Forecasting Assumptions))
considers that the Relevant Figures have not been so calculated, it may notify
the Borrower (or the Banks’ Technical Adviser, as the case may be)
accordingly within seven Business Days of receipt by it of a Forecast. If any
such notification is given, the Borrower and the Agent shall consult together
within five Business Days of the notification with a view to establishing and
agreeing whether or not the Relevant Figures have been properly calculated as
contemplated by paragraph 18.6.3 above.
	 
	18.6.5	 	If the Borrower and the Agent do not agree any such disputed issue within
five Business Days after the notification under paragraph 18.6.4
above, then
the matter shall be referred to the Expert for resolution and
Clauses 18.5.2 to
18.5.6 shall apply. In the event of any such dispute, unless and
until
resolution of the dispute, the Agent’s simulation of the Computer
Model shall
prevail over the Computer Model so that all references in this
Agreement shall

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	 	 	be construed as references to that simulation and Forecasts shall
be prepared, and the Relevant Figures calculated, using that
simulation but not so as to require a prepayment pursuant to
Clauses 7.4.2 and 7.4.3 or give rise to any breach or Default
pursuant to Clause 16.35.

	18.7	 	Computer Model

	18.7.1	 	By notice to the Borrower, the Agent (after consultation with the Borrower,
the Banks and, if appropriate, the Banks’ Technical Adviser) may,
at any time
and at the expense of the Borrower, make such revisions to the
Computer
Model as may be reasonably required for the purpose of:

	(a)	 	correcting any error in the form or structure of the Computer
Model; or
	 
	(b)	 	incorporating any additional assumptions agreed
or determined pursuant
to any of Clauses 18.3 (Forecast Assumptions), 18.4
(Procedures for
determining Forecast Assumptions) and 18.5 (Submissions to
the Expert).

The Agent’s determination of the revisions that are so required
shall (in the absence of mathematical or manifest error) be final
and conclusive.

	18.7.2	 	If the Computer Model is revised, the Agent shall promptly notify
the
Borrower and the Banks of the revision and provide the Borrower with a
diskette with a copy of the same. Any such notice shall be accompanied by a
certificate from the Banks’ Model Adviser that the relevant revisions have
been made to the Computer Model.
	 
	18.7.3	 	In the event that the Borrower notifies the Agent that there is a mathematical
or manifest error in the revisions made by the Agent to the Computer Model
pursuant to this Clause 18.7 (Computer Model) and the Agent and the
Borrower are unable to agree on the revisions so required, then either party
may refer the same to the Expert for resolution in accordance with Clause
18.5 (Submissions to the Expert).

	18.8	 	Period for which Figures are Valid

The Loan Life Cover Ratio and other dates and figures specified in an
applicable Forecast will once finally determined apply on and as from the
relevant Calculation Date until next recalculated in accordance with this
Clause 18 (Forecasts) in an applicable Forecast.

	18.9	 	Calculation of Debt Service Cover Ratio

The Borrower shall calculate the Debt Service Cover Ratio as of each
Calculation Date within 30 days after each Calculation Date on the
following basis:

	18.9.1	 	figures shall be taken from the financial information for the
relevant period or as at the relevant date provided in accordance
with Clause 16.2.1 and 16.2.2

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\

	 	 	(Financial Information) and in accordance with the provisions of this
Clause 18 (Forecasts);
	 
	18.9.2	 	the calculation shall be made in accordance with:

	(a)	 	such international accounting standards (consistently
applied) as were
applied in the Computer Model at the date of this Agreement; and
	 
	(b)	 	those principles and practices which are consistent with
those applied
and reflected in the Computer Model at the date of this Agreement.

	18.9.3	 	The Borrower shall (at its expense) supply to the Agent and
the Banks’
Technical Adviser within 30 days of each Calculation Date a certificate (the
“DSCR Certificate”) setting out in reasonable detail the Borrower’s
determinations of the Debt Service Cover Ratio.
	 
	18.9.4	 	The Agent and/or the Banks’ Technical Adviser may, by notice to the
Borrower (with a copy to the Banks’ Technical Adviser or the Agent) (as
appropriate) within five Business Days of receipt of any certificate referred to
in Clause 18.9.1 above dispute any of the determinations contained in such
certificate. If the Agent and/or the Banks’ Technical Adviser does so, the
Borrower, the Banks’ Technical Adviser and the Agent shall consult together
within five Business Days of such notification with a view to establishing and
agreeing the figures in the certificate.
	 
	18.9.5	 	In the absence of any notification pursuant to Clause 18.9.4 within the
requisite time period, the Agent and Banks’ Technical Adviser will be deemed
to have accepted the certificate and the calculations contained therein and any
references to Debt Service Cover Ratio in this Agreement as at the date stated
in the Borrower’s certificate shall be construed as references to the amounts
set out in that certificate.
	 
	18.9.6	 	If a notification is given under Clause 18.9.4 above and the Borrower, the
Agent and the Banks’ Technical Adviser fail to reach agreement within five
Business Days after such notification, then the matter shall be referred to the
Expert for determination and Clauses 18.5.2 to 18.5.6 shall apply as if
references to Forecasts and Computer Model were references to the Debt
Service Cover Ratio.
	 
	18.9.7	 	In the event of any such dispute, unless and until resolution of the dispute, the
figures as at a specific date for the Debt Service Cover Ratio for the
purposes
of this Agreement shall be construed as those determined by the Agent
(after
consultation with the Banks’ Technical Adviser) but not so as to require
a
prepayment pursuant to Clauses 7.4.2 and 7.4.3, or give rise to a breach
or
Default pursuant to Clause 16.35.

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	18.10	 	Determination of Discount Rate

The Agent shall determine the applicable Discount Rate at or about 11 am
on the day three Business Days prior to each Calculation Date and shall
notify the Borrower no later than the following Business Day. For this
purpose, the Agent shall seek relevant fixed swap rates from three Banks
(as reasonably selected in consultation with the Borrower) and shall use
the average rate quoted. For the avoidance of doubt, such rate shall not
take into account any credit assessment of the Borrower.

	19.	 	THE AGENT, THE SECURITY TRUSTEE, THE ARRANGERS AND THE ACCOUNT BANK

	19.1	 	Appointment and Duties of the Agent

	19.1.1	 	Each Finance Party (other than the Agent or the Security
Trustee (as the case
    may be)) irrevocably appoints the Agent and the Security Trustee to act as its
agent under and in connection with the Finance Documents.
	 
	19.1.2	 	Each Party appointing the Agent and the Security Trustee irrevocably
authorises each of the Agent and the Security Trustee on its
behalf to:

	(a)	 	perform the duties and to exercise the rights,
powers and discretions that
are specifically delegated to it under or in connection with
the Finance
Documents, together with any other incidental rights,
powers and
discretions; and
	 
	(b)	 	execute as agent for that Party each Finance
Document to which the
Agent and/or the Security Trustee is a party.

	19.1.3	 	The Agent and the Security Trustee have only those duties which are
expressly
specified in the Finance Documents. Those duties are solely of a mechanical
and administrative nature.

	19.2	 	Role of the Arrangers

Except as specifically provided in the Finance Documents, no Arranger has
no obligations of any kind to any other Party under or in connection with
any Finance Document.

	19.3	 	Relationship

The relationship between each of the Agent and the Security Trustee and
the other Finance Parties is that of agent and principal only. Except as
contemplated by the Security Documents, nothing in this Agreement
constitutes the Agent or the Security Trustee as trustee or fiduciary for
any other Party or any other person and neither the Agent nor the
Security Trustee need hold in trust any moneys paid to it for a Party or
be liable to account for interest on those moneys.

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	19.4	 	Majority Banks’ Instructions

	19.4.1	 	Each of the Agent and the Security Trustee will be fully protected
if it acts in
accordance with the instructions of the Majority Banks in
connection with the
exercise of any right, power or discretion or any matter not
expressly
provided for in the Finance Documents. Any such instructions given
by the
Majority Banks will be binding on all the Banks. In the absence
of such
instructions, each of the Agent and the Security Trustee may act
as it
considers to be in the best interests of all the Banks and shall
be deemed to
have acted with the approval of all the Banks.
	 
	19.4.2	 	Neither the Agent nor the Security Trustee is authorised to act in
the name of
a Bank (without first obtaining that Bank’s consent) in any legal
proceedings
in relation to any Finance Document provided that nothing in this
paragraph
shall prevent the Security Trustee enforcing any Security Interest
under the
Security Documents.
	 
	19.4.3	 	Each of the Agent and the Security Trustee may refrain from doing
anything
which would or might in its reasonable opinion (a) be contrary to the law of
any applicable jurisdiction or any applicable official directive or (b) render it
liable to any person, and may do anything which in its reasonable opinion
(acting on legal advice) is necessary to comply with any such law or directive.
If the Agent and/or the Security Trustee is under an obligation to act
reasonably no Bank shall be entitled to require it to act otherwise.

	19.5	 	Delegation

Each of the Agent and the Security Trustee may act under the Finance
Documents through its personnel and agents.

	19.6	 	Responsibility for Documentation

None of the Agent, the Security Trustee, the Arrangers or the Account Bank
is responsible to any other Party for:

	19.6.1	 	the execution, genuineness, validity, enforceability or sufficiency
of any
Finance Document or any other document;
	 
	19.6.2	 	the collectability of amounts payable under any Finance Document; or
	 
	19.6.3	 	the accuracy of any statements (whether written or oral) made in or in
connection with any Finance Document (including the Information
Memorandum).

	19.7	 	Default

	19.7.1	 	None of the Agent, the Security Trustee or the Account Bank is
obliged to monitor or enquire as to whether or not a Default has
occurred. None of the Agent, the Security Trustee or the Account
Bank will be deemed to have

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	 	 	knowledge of the occurrence of a Default unless it has received
actual written notice to that effect from any Party. However, if
the Agent, the Security Trustee or the Account Bank receives
notice from a Party referring to this Agreement, describing the
Default and stating that the event is a Default, it shall promptly
notify the Banks (in the case of the Account Bank, through the
Agent).
	 
	19.7.2	 	Each of the Agent and the Security Trustee may require the
receipt of security satisfactory to it, whether by way of payment
in advance or otherwise, against any liability or loss which it
will or may incur in taking any proceedings or action arising out
of or in connection with any Finance Document before it commences
those proceedings or takes that action.

	19.8	 	Exoneration

	19.8.1	 	Without limiting paragraph 19.8.2 below, none of the Agent, the Security
Trustee or the Account Bank will be liable to any other Party for any action
taken or not taken by it under or in connection with any Document, unless
directly caused by its gross negligence or wilful misconduct.
	 
	19.8.2	 	No Party may take any proceedings against any officer, employee or agent of
the Agent, Security Trustee and/or Account Bank in respect of any
claim it
might have against the Agent, the Security Trustee and/or Account
Bank or in
respect of any act or omission of any kind (including gross
negligence or
wilful misconduct) by that officer, employee or agent in relation
to any
Document. Any such officer, employee or agent may rely on this
paragraph
19.8.2 and enforce its rights under the Contracts (Rights of Third
Parties) Act
1999.

	19.9	 	Reliance

Each of the Agent, the Security Trustee and the Account Bank may:

	19.9.1	 	rely on any notice or document believed by it to be genuine and
correct and to
have been signed by, or with the authority of, the proper person;
	 
	19.9.2	 	rely on any statement made by a director or employee of any person
regarding
any matters which may reasonably be assumed to be within his knowledge or
within his power to verify; and
	 
	19.9.3	 	engage, pay for and rely on legal or other professional advisers selected by it
(including those in its employment and those representing a Party other than
itself).

	19.10	 	Credit Approval and Appraisal

Without affecting the responsibility of the Borrower for information
supplied by it or on its behalf in connection with any Finance Document,
each Bank confirms that it:

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	19.10.1	 	has made its own independent investigation and assessment of the
structure of
the Project, the form and substance of the Documents and the documents listed
in Schedule 2, the financial condition and affairs of the Borrower, the parties
to the Project Contracts and their respective related entities in connection with
its participation in this Agreement and has not relied on any information
provided to it by the Agent, the Security Trustee, the Account Bank or the
Arrangers in connection with any Finance Document; and
	 
	19.10.2	 	will continue to make its own independent appraisal of the matters referred to
in paragraph 19.10.1 above while any amount is or may be outstanding under
the Finance Documents or any Commitment is in force.

	19.11	 	Information

	19.11.1	 	Each of the Agent and the Security Trustee shall promptly forward to the
person concerned the original or a copy of any document which is delivered to
it by a Party for that person.
	 
	19.11.2	 	Each of the Agent and the Security Trustee shall promptly supply a Bank with
a copy of each document received by it under Clause 4 (Conditions Precedent)
(other than any Fee Letter) upon the request of that Bank and at the reasonable
expense of the Borrower.
	 
	19.11.3	 	Except where this Agreement specifically provides otherwise, neither the
Agent nor the Security Trustee is obliged to review or check the accuracy or
completeness of any document it forwards to another Party.
	 
	19.11.4	 	Except as provided above, neither the Agent nor the Security Trustee has any
duty:

	(a)	 	either initially or on a continuing basis to
provide any Bank with any
credit or other information concerning the Borrower whether
coming
into its possession before, on or after the date of this
Agreement; or
	 
	(b)	 	unless specifically requested to do so by a
Bank in accordance with a
Finance Document to request any certificates or other
documents from
the Borrower.

	19.12	 	The Agent, the Security Trustee, the Arrangers and the
Account Bank individually

	 	 	 
	 
	19.12.1	 	If it is also a Bank, each of the Agent, the Security Trustee, the Arranger and
the Account Bank has the same rights and powers under this Agreement as any
other Bank and may exercise those rights and powers as though it were not the
Agent, the Security Trustee, an Arranger or the Account Bank.
	 
	19.12.2	 	Each of the Agent, the Security Trustee, the Arrangers and the Account Bank
may:

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	(a)	 	carry on any business with the Borrower, any party to the
Documents or
their respective related entities;
	 
	(b)	 	act as agent or trustee for, or in relation to
any financing involving, the
Borrower, any party to the Documents or their respective
related
entities; and
	 
	(c)	 	retain any profits or remuneration in
connection with its activities under
this Agreement or in relation to any of the foregoing.

	19.12.3 	 	In acting as the Agent or the Security Trustee, the agency
and/or trustee division of the Agent or the Security Trustee (as
the case may be) will be treated as a separate entity from its
other divisions and departments. Any information acquired by the
Agent or the Security Trustee which, in its opinion, is acquired by
it otherwise than in its capacity as the Agent or Security Trustee
may be treated as confidential by the Agent or the Security Trustee
and will not be deemed to be information possessed by the Agent or
Security Trustee in its capacity as such.
	 
	19.12.4	 	The Borrower irrevocably authorises each of the Agent, the
Security Trustee and the Account Bank to disclose any information
which, in its opinion, is received by it in its capacity as the
Agent, the Security Trustee or the Account Bank to the other Finance
Parties.

	19.13	 	Indemnities

	19.13.1	 	Without limiting the liability of the Borrower under the Finance
Documents,
each Bank shall forthwith on demand indemnify the Agent for that Bank’s
proportion of any liability or loss incurred by the Agent in any way relating to
or arising out of its acting as the Agent, except to the extent that the liability
or loss arises directly from the Agent’s gross negligence or wilful misconduct.
	 
	19.13.2	 	Without limiting the liability of the Borrower under the Finance Documents,
each Bank shall forthwith on demand indemnify the Security Trustee for that
Bank’s proportion of any liability or loss incurred by the Security Trustee in
any way relating to or arising out of its acting as the Security Trustee, except
to the extent that the liability or loss arises directly from the Security Trustee’s
gross negligence or wilful misconduct.
	 
	19.13.3	 	A Bank’s proportion of the liability set out in paragraphs 19.13.1 and 19.13.2
above will be the proportion which its participation in the Loans
(if any) bears
to all the Loans on the date of the demand. If, however, there is
no Loan
outstanding on the date of demand, then the proportion will be the
proportion
which its Commitment bears to the Total Commitments at the date of
demand
or, if the Total Commitments have then been cancelled, bore to the
Total
Commitments immediately before being cancelled.

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	19.13.4	 	The Borrower shall forthwith on demand reimburse each Bank
for any payment made by it under paragraph 19.13.1 and 19.13.2
above.

	19.14	 	Compliance

	19.14.1	 	Each of the Agent, the Security Trustee and the Account Bank may
refrain from doing anything which might, in its opinion, constitute
a breach of any law or regulation or be otherwise actionable at the
suit of any person, and may do anything which, in its opinion, is
necessary or desirable to comply with any law or regulation of any
jurisdiction.
	 
	19.14.2	 	Without limiting paragraph 19.14.1 above, none of the Agent, the
Security Trustee or the Account Bank need disclose any information
relating to the Borrower, any Major Project Party, the issuer of any
Letter of Credit, any Contractor or any of their respective related
entities if the disclosure might, in the opinion of the Agent or the
Security Trustee, constitute a breach of any law or regulation or
any duty of secrecy or confidentiality or be otherwise actionable at
the suit of any person.

	19.15	 	Resignation of the Agent and the Security Trustee

	19.15.1	 	Notwithstanding its irrevocable appointment, the Agent and/or the Security
Trustee may resign by giving notice to the Banks and the Borrower, in which
case the Agent or the Security Trustee (as the case may be) may forthwith
appoint one of its Affiliates as successor Agent or Security Trustee or, failing
that, the Majority Banks may after consultation with the Borrower appoint a
successor Agent or Security Trustee.
	 
	19.15.2	 	If the appointment of a successor Agent and/or the Security Trustee is to be
made by the Majority Banks but they have not, within 30 days after notice of
resignation, appointed a successor Agent and/or the Security Trustee which
accepts the appointment, the Agent may appoint a successor Agent and/or the
Security Trustee may appoint a successor Security Trustee.
	 
	19.15.3	 	The resignation of the Agent or Security Trustee and the appointment of any
successor Agent or Security Trustee will both become effective only upon the
successor Agent or Security Trustee notifying all the Parties that it accepts its
appointment. On giving the notification, the successor will succeed to the
position of the Agent or the Security Trustee and the term “Agent” or
“Security Trustee” will mean that successor.
	 
	19.15.4	 	The retiring Agent or Security Trustee shall, at its own cost, make available to
the successor Agent or Security Trustee such documents and records
and
provide such assistance as the successor may reasonably request for
the
purposes of performing its functions as the Agent or Security
Trustee under
this Agreement.

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	19.15.5	 	Upon its resignation becoming effective, this Clause 19
will continue to
benefit the retiring Agent and/or Security Trustee in respect of any action
taken or not taken by it under or in connection with the Finance Documents
while it was the Agent and/or Security Trustee, and, subject to paragraph
19.15.4 above, it shall have no further obligations under any Finance
Document.
	 
	19.15.6	 	The Majority Banks may, by notice to the Agent and/or the Security Trustee,
require it to resign in accordance with paragraph 19.15.1 above. In this
event, the Agent and/or the Security Trustee shall resign in accordance with
paragraph 19.15.1 above but it shall not be entitled to appoint one of its
Affiliates as a successor pursuant to paragraph 19.15.1 above.

	19.16	 	Banks

	19.16.1	 	Each of the Agent and the Security Trustee may treat each Bank as a Bank,
entitled to payments under this Agreement and as acting through its Facility
Office(s) until it has received not less than five Business Days’ prior notice
from that Bank to the contrary.
	 
	19.16.2	 	Each of the Agent and the Security Trustee may at any time, and shall if
requested to do so by the Majority Banks, convene a meeting of the
Banks.
	 
	19.16.3	 	Each Bank shall supply the Agent with any information required by
the Agent
in order to calculate the Mandatory Cost in accordance with Schedule 7
(Mandatory Cost Formulae).

	19.17	 	Bank Confirmation

Each Bank confirms in writing to the Agent (on the date hereof, or, in
the case of a Bank which becomes a party hereto pursuant to a transfer,
novation or assignment, on the date on which the relevant transfer,
novation or assignment becomes effective) that either:

	19.17.1	 	it is not resident for tax purposes in the United Kingdom and is
beneficially
entitled to the Loans and the interest thereon; or
	 
	19.17.2	 	it is a bank for the purposes of Section 349 of the Income and Corporation
Taxes Act 1988 and is beneficially entitled to the Loans and the
interest
thereon,

and each Bank in favour of the Agent agrees to notify the Agent if there
is any change in its position from that set out above.

	19.18	 	Agent and Security Trustee as Trustee

	19.18.1	 	Each of the Agent and the Security Trustee in its capacity as
trustee or otherwise under the Finance Documents:

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	(a)	 	is not liable for any failure, omission or
defect in perfecting or
registering the security constituted or created by any
Finance Document;
	 
	(b)	 	may accept without enquiry such title as any
Group Company may have
to any asset secured by any Security Document; and
	 
	(c)	 	is not under any obligation to hold any Finance
Document or any other
document in connection with the Finance Documents or the
assets
secured by any Finance Document (including title deeds) in
its own
possession or to take any steps to protect or preserve the
same. The
Agent may permit a Group Company to retain any Finance
Document or
other document in its possession.

	19.18.2	 	Save as otherwise provided in the Finance Documents, all moneys
which under the trusts contained in the Finance Documents are
received by each of the Agent and/or Security Trustee in its capacity
as trustee or otherwise may be invested in the name of or under the
control of the Agent and/or Security Trustee in any investment
authorised by English law for the investment by trustees of trust
money or in any other investments which may reasonably be selected by
the Agent and/or Security Trustee. Additionally, the same may be
placed on deposit in the name of or under the control of the Agent
and/or Security Trustee at such bank or institution (including the
Agent and/or Security Trustee) and upon such terms as the Agent
and/or Security Trustee may reasonably think fit.

	19.19	 	Parallel Debt and Security

	19.19.1	 	For the purpose of ensuring and preserving the validity and
continuity of the security rights created under or pursuant to the
Finance Documents, the Borrower hereby irrevocably and
unconditionally undertakes to pay to the Security Trustee any and
all amounts owing by the Borrower to the Finance Parties under the
Finance Documents and the Borrower and the Security Trustee
acknowledge that for this purpose the Borrower’s obligations to the
Finance Parties under the Finance Documents (the “Obligations”) are
also obligations and liabilities of the Borrower to the Security
Trustee under the Finance Documents which are separate and
independent from, and without prejudice to, the identical
obligations which the Borrower has to the Finance Parties under the
Finance Documents, provided that the amounts due and payable under
this Clause 19.19 (the “Parallel Debt”) shall be decreased to the
extent that the Borrower has paid any amounts to the Finance Parties
or any of them in respect of the Obligations and vice versa and that
the Parallel Debt shall not exceed the aggregate of identical
obligations which the Borrower has to the Finance Parties under the
Finance Documents. Nothing in this Clause 19.19 shall in any way
negate or affect the obligations which the Borrower has to the
Finance Parties under the Finance Documents in respect of the
Obligations. For the purpose of this Clause 19.19 the Security
Trustee acts in its own name and on behalf of itself and not as
agent or representative

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	 	 	of any other party hereto and any security rights granted to the
Security Trustee to secure the Parallel Debt are granted to the
Security Trustee in its capacity as creditor of the Parallel Debt.
	 
	19.19.2	 	Without limiting or affecting the Security Trustee’s rights
against the Borrower (whether under this paragraph or under any
other provision of the Finance Documents), the Security Trustee
agrees with each other Finance Party (on a several and divided
basis) that, subject as set out in the next sentence, it will not
exercise its rights as a joint creditor with a Finance Party except
with the consent of the relevant Finance Party. However, for the
avoidance of doubt, nothing in the previous sentence shall in any
way limit the Security Trustee’s right to act in the protection or
preservation of rights under or to enforce any Finance Document (or
to do any act reasonably incidental to any of the foregoing).

	20.	 	FEES

	20.1	 	Arrangement Fee

The Borrower shall on the date of this Agreement pay to each Arranger an
arrangement fee in the amount agreed in the engagement letter dated 2 May
2003 together with supplemental letter dated 2 May 2003 and the amended
and restated supplemental letter dated 24 July 2003. This fee shall be
distributed by the Arrangers among the Banks in accordance with the
arrangements agreed by each Arranger with the Banks.

	20.2	 	Agent’s and Security Trustee’s Fee

The Borrower shall pay to each of the Agent and the Security Trustee for
its own account an agency fee in the amount agreed in and in accordance
with each Fee Letter.

	20.3	 	Advisers’ Fees

The Borrower shall pay the reasonable costs and expenses of the Banks’
Advisers and any advisers appointed pursuant to Clause 27 (Advisers)
subject to any separate written agreements reached between the Borrower
and the Banks’ Advisers prior to the date of this Agreement.

	20.4	 	Participation Fee

The Borrower shall on the date of this Agreement pay to each Arranger a
participation fee in the amount and at the times agreed in the engagement
letter dated 2 May 2003 together with supplemental letter dated 2 May
2003 and the amended and restated supplemental letter dated 24 July 2003.
This fee shall be distributed by the Arrangers among the Banks in
accordance with the arrangements agreed by each Arranger with the Banks.

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	20.5	 	Commitment Fee

	20.5.1	 	The Borrower shall pay to the Agent for each Bank a commitment fee in
Dollars computed at the rate of 0.50 percent per annum on the
undrawn,
uncancelled amount of that Bank’s Commitment during the Commitment
Period.
	 
	20.5.2	 	Accrued commitment fee is payable quarterly in arrears. Accrued
commitment
fee shall also be payable to the Agent for the relevant Bank on the cancelled
amount of its Commitment at the time the cancellation comes into effect.

	20.6	 	VAT

Any fee referred to in this Clause 20 is exclusive of any value added
tax or any other tax which might be chargeable in connection with that
fee. If any value added tax or other tax is so chargeable, it shall be
paid by the Borrower at the same time as it pays the relevant fee.

	21.	 	EXPENSES

	21.1	 	Initial and Special Costs

The Borrower shall forthwith on demand pay the Agent, the Security
Trustee each Arranger and the Technical Committee the amount of all
reasonable costs and expenses (including legal fees) incurred by them
(in accordance with the terms of any written arrangement recorded in
respect thereof (if one exists)) in connection with:

	21.1.1	 	the review of the Project Contracts and any other agreements to
which any
Group Company is or becomes a party;
	 
	21.1.2	 	the negotiation, preparation, printing and execution of:

	(a)	 	this Agreement and any other documents referred
to in this Agreement;
and
	 
	(b)	 	any other Finance Document (other than a
Novation Certificate)
executed after the date of this Agreement; and

	21.1.3	 	any amendment, waiver, consent or suspension of rights (or any
proposal for
any of the foregoing) requested by or on behalf of the Borrower and relating
to a Finance Document or a document referred to in any Finance Document;
	 
	21.1.4	 	the original syndication of the facility prior to the date of this Agreement; and
	 
	21.1.5	 	any meetings of the Technical Committee provided for in Clause 16.5 (Access
and Consultation).

	21.2	 	Enforcement Costs

The Borrower shall forthwith on demand pay to:

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	21.2.1	 	
 each Finance Party the amount of all costs and expenses (including
legal fees)
incurred by it in connection with the enforcement of, or the preservation of
any rights under, any Finance Document; and

	 
	21.2.2	 	
the Agent and/or Security Trustee the amount of all reasonable costs and
expenses (including legal fees) reasonably incurred by it in
investigating any
Default where the Agent and/or the Security Trustee reasonably
believes that
such Default has occurred.

	22.	 	STAMP DUTIES

The Borrower shall pay, and forthwith on demand indemnify each Finance
Party against any liability it incurs in respect of, any stamp,
registration and similar tax which is or becomes payable in connection
with the entry into, performance or enforcement of any Finance Document
(other than a Novation Certificate).

	23.	 	INDEMNITIES

	23.1	 	Currency Indemnity

	23.1.1	 	If a Finance Party receives an amount in respect of the Borrower’s liability
under the Finance Documents or if that liability is converted into
a claim,
proof, judgment or order in a currency other than the
currency (the
“contractual currency”) in which the amount is expressed to be
payable
under the relevant Finance Document:

	(a)	 	the Borrower shall indemnify that Finance Party
as an independent
obligation against any loss or liability arising out of or as
a result of the
conversion;
	 
	(b)	 	if the amount received by that Finance Party,
when converted into the
contractual currency at a market rate in the usual course of
its business is
less than the amount owed in the contractual currency, the
Borrower
shall forthwith on demand pay to that Finance Party an amount
in the
contractual currency equal to the deficit; and
	 
	(c)	 	the Borrower shall forthwith on demand pay to
the Finance Party
concerned any exchange costs and taxes payable in connection with any
such conversion.

	23.1.2	 	The Borrower waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in which it
is expressed to be payable.

	23.2	 	Other Indemnities

The Borrower shall forthwith on demand indemnify each Finance Party
against any loss or liability which that Finance Party incurs as a
consequence of:

	23.2.1	 	the occurrence of any Default;

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	23.2.2	 	the operation of Clause 17.23 (Acceleration) or Clause 30 (Pro
Rata Sharing);
	 
	23.2.3	 	any payment of principal or an overdue amount by the Borrower
being
received from any source otherwise than on the last day of a relevant Interest
Period or Designated Interest Period (as defined in Clause 9.3 (Default
Interest)) relative to the amount so received;
	 
	23.2.4	 	(other than by reason of negligence or default by a Finance Party) a Loan not
being made after the Borrower has delivered a Request or a Loan (or part of a
Loan) not being prepaid in accordance with a notice of prepayment;
	 
	23.2.5	 	any Environmental Claim or any actual or alleged breach of any
Environmental Law or Environmental Approval to the extent that the loss or
liability incurred by the Finance Party would not have arisen if this Agreement
or any of the other Finance Documents had not been executed (other than as a
result of its grossly negligent acts or wilful misconduct); or
	 
	23.2.6	 	the entry into or performance by it of any Direct Agreement or any step-in
indemnity or similar undertaking or obligations given or assumed
by it under
or in respect of any Direct Agreement (including, without
limitation, any
payments made to or on behalf of the Borrower in connection with
any Direct
Agreement).

The Borrower’s liability in each case includes any loss of margin or
other loss or expense on account of funds borrowed, contracted for or
utilised to fund any amount payable under any Finance Document, any
amount repaid or prepaid or any Loan.

	24.	 	EVIDENCE AND CALCULATIONS

	24.1	 	Accounts

Accounts maintained by a Finance Party in connection with this Agreement
are prima facie evidence of the matters to which they relate.

	24.2	 	Certificates and Determinations

Any certification or determination by a Finance Parry which is required
to be made by it of a rate, amount or calculation under the Finance
Documents is, in the absence of manifest error, prima facie evidence of
the matters to which it relates.

	24.3	 	Calculations

	24.3.1	 	Interest and the fee payable under Clause 20.5 (Commitment Fee) accrue from
day to day and are calculated on the basis of the actual number of days elapsed
and a year of 360 days.
	 
	24.3.2	 	Unless a Finance Document otherwise provides, the Agent’s spot rate of
exchange for the purchase of one currency in the London foreign
exchange
market with another at or about 11.00 a.m. on the day of
calculation for

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	 	 	delivery two Business days’ later shall be used to calculate the
equivalent of one currency in another.

	25.	 	AMENDMENTS AND WAIVERS
	 
	25.1	 	Procedure

	25.1.1	 	Subject to Clause 25.2 (Exceptions), any term of the Finance
Documents may be amended or waived with the agreement of the
Borrower and the Majority Banks and, in the case of any Hedging
Agreement, with the consent of the relevant Hedging Bank. The Agent
may effect, on behalf of the Finance Parties, an amendment or
waiver to which the Majority Banks have agreed.
	 
	25.1.2	 	 The Agent shall promptly notify the other Parties of
any amendment or waiver effected under paragraph 25.1.1 above, and
any such amendment or waiver shall be binding on all the Parties.

	25.2	 	Exceptions

	25.2.1	 	An amendment or waiver not agreed by a Bank and which relates
to:

	(a)	 	the definition of “Majority Banks” in Clause 1.1
(Definitions);
	 
	(b)	 	an extension of the date for, or a decrease in
an amount or a change in
the currency of, any payment to that Bank under the Finance
Documents
(including, without limitation, the Margin and any fee
payable under
clause 20.5 (Commitment Fee);
	 
	(c)	 	an increase in that Bank’s Commitment;
	 
	(d)	 	a term of a Finance Document which expressly
requires the consent Of
that Bank;
	 
	(e)	 	any release of any Security Interest under any
Security Document except where its consent has been
expressly provided in the Finance Documents; or
	 
	(f)	 	Clause 2.2 (Nature of a Finance Party’s Rights
and Obligations), Clause 16.23 (Scope of Business), Clause
26.2 (Transfers by Banks), Clause 30 (Pro Rata Sharing) or
this Clause 25 (Amendments and Waivers),
is not binding on that Bank.

	25.2.2	 	An amendment or waiver which relates to the rights and/or
obligations of the Agent or the Security Trustee may not be effected
without the agreement of the Agent or the Security Trustee.

	25.3	 	Waivers and Remedies Cumulative

The rights of each Finance Party under the Finance Documents:

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	25.3.1	 	may be exercised as often as necessary;
	 
	25.3.2	 	are cumulative and not exclusive of its rights under the general
law; and
	 
	25.3.3	 	may be waived only in writing and specifically.

	 	 	Delay in exercising or non-exercise of any such right is not a waiver of
that right.
	 
	26.  	 	CHANGES TO THE PARTIES

	26.1	 	Transfers by Borrower

The Borrower may not assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under the Finance Documents.

	26.2	 	Transfers by Banks

	26.2.1	 	A Bank (the “Existing Bank”) may, subject to paragraph 26.2.2
below, at any
time assign, transfer or novate any part of its Commitment and/or
any of its
rights and/or obligations under this Agreement to another bank or
financial
institution (the “New Bank”).
	 
	26.2.2	 	A transfer of part of a Commitment must be in a minimum amount of
at least
$5,000,000.
	 
	26.2.3	 	A transfer of obligations will be effective only if either:

	(a)	 	the obligations are novated in accordance with
Clause 26.3 (Procedure
for Novations); or
	 
	(b)	 	the New Bank confirms to the Agent and the
Borrower that it undertakes
to be bound by the terms of this Agreement as a Bank in form
and
substance satisfactory to the Agent. On the transfer becoming
effective
in this manner the Existing Bank shall be relieved of its
obligations
under this Agreement to the extent that they are transferred
to the New
Bank.

	26.2.4	 	Nothing in this Agreement restricts the ability of a Bank to
sub-contract an
obligation if that Bank remains liable under this Agreement for
that obligation.
	 
	26.2.5	 	On each occasion an Existing Bank assigns, transfers or novates any
of its
Commitment and/or any of its rights and/or obligations under this Agreement,
the New Bank shall, on the date the assignment, transfer and/or novation takes
effect, pay to the Agent for its own account a fee of $1,000.
	 
	26.2.6	 	An Existing Bank is not responsible to a New Bank for:

	(a)	 	the execution, genuineness, validity,
enforceability or sufficiency of any
Finance Document or any other document;
	 
	(b)	 	the collectability of amounts payable under any Finance
Document; or

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	(c)	 	the accuracy of any statements (whether written or
oral) made in or in connection with any Finance Document.

	26.2.7	 	Each New Bank confirms to the Existing Bank and the other Finance
Parties
that it:

	(a)	 	has made its own independent investigation and
assessment of the
financial condition and affairs of each Group Company and its
related
entities in connection with its participation in this
Agreement and has not
relied exclusively on any information provided to it by the
Existing Bank
in connection with any Finance Document; and
	 
	(b)	 	will continue to make its own
independent appraisal of the
creditworthiness of each Group Company and its related entities while
any amount is or may be outstanding under this Agreement or any
Commitment is in force.

	26.2.8	 	Nothing in any Finance Document obliges an Existing Bank to:

	(a)	 	accept a re-transfer from a New Bank of any of
the rights and/or
obligations assigned, transferred or novated under this
Clause; or
	 
	(b)	 	support any losses incurred by the New Bank by
reason of the non-
performance by any Group Company of its obligations under the Finance
Documents or otherwise.
	 

	26.2.9	 	Any reference in this Agreement to a Bank includes a New Bank but excludes
a Bank if no amount is or may be owed to or by it under this Agreement and
its Commitment has been cancelled or reduced to nil.

	26.3	 	Procedure for Novations

	26.3.1	 	A novation is effected if:

	(a)	 	the Existing Bank and the New Bank deliver to
the Agent a duly
completed certificate, substantially in the form of
Schedule 4 (a
“Novation Certificate”); and
	 
	(b)	 	the Agent executes it.

	26.3.2	 	Each Party (other than the Existing Bank and the New Bank)
irrevocably
authorises the Agent to execute any duly completed Novation Certificate on its
behalf which, subject to the terms of this Agreement, it shall execute save
where it would incur any liability as a consequence of so executing.
	 
	26.3.3	 	To the extent that they are expressed to be the subject of the novation in the
Novation Certificate:

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	(a)	 	the Existing Bank and the other Parties (the “existing
Parties”) will be
released from their obligations to each other
(the “discharged
obligations”);
	 
	(b)	 	the New Bank and the existing Parties will
assume obligations towards
each other which differ from the discharged obligations only
insofar as
they are owed to or assumed by the New Bank instead of the
Existing
Bank;
	 
	(c)	 	the rights of the Existing Bank against the
existing Parties and vice versa
(the “discharged rights”) will be cancelled; and
	 
	(d)	 	the New Bank and the existing Parties will
acquire rights against each
other which differ from the discharged rights only insofar as
they are
exercisable by or against the New Bank instead of the
Existing Bank,

all on the date of execution of the Novation Certificate by the
Agent or, if later, the date specified in the Novation
Certificate.

	26.4	 	Reference Banks

If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be a Bank, the Agent shall (in
consultation with the Borrower) appoint another Bank or an Affiliate of
a Bank to replace that Reference Bank.

	26.5	 	Register

The Agent shall keep a register of all the Parties and shall supply any
other Party (at that Party’s expense) with a copy of the register on
request.

	26.6	 	Additional Payments

If following any assignment, transfer or novation of all or any part of
the rights or obligations of a Bank to a New Bank under Clause 26.2
(Transfers by Banks) any additional amount is required to be paid to the
New Bank by a Borrower under Clauses 11 (Taxes) or 13 (Increased Costs)
as a result of laws or regulations in force at the time of that
assignment, transfer or novation, then the New Bank will be entitled to
receive any such amount only to the extent that the Existing Bank would
have been so entitled had there been no assignment, transfer or novation.

	27.	 	ADVISERS

	27.1.1	 	Subject to paragraph 27.1.2 below, the Agent may with the prior
approval of
the Majority Banks and following consultation with the Borrower,
if any of
the Banks’ Advisers resign or their appointments otherwise cease
or are
terminated, appoint a new adviser replacing such Banks’ Adviser.
	 
	27.1.2	 	If the Majority Banks are unable to agree on the appointment of a
new Banks’
Adviser within 30 days of notification to them by the Agent of
alternative
advisers, the Agent may appoint a new Banks’ Adviser as it thinks
fit.

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	28.	 	DISCLOSURE OF INFORMATION

A Bank may disclose to one of its Affiliates or any person with whom it
is proposing to enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this Agreement:

	28.1.1	 	a copy of any Document;
	 
	28.1.2	 	the Information Memorandum; and
	 
	28.1.3	 	any information which that Bank has acquired under or in
connection with any
Document,

only after the person (other than any Affiliate) to whom such disclosure
is proposed to be made has executed a Confidentiality Agreement.

	29.	 	SET-OFF

A Finance Party may set off any matured obligation owed by the Borrower
under the Finance Documents (to the extent beneficially owned by that
Finance Party) against any obligation (whether or not matured) owed by
that Finance Party to the Borrower, regardless of the place of payment,
booking branch or currency of either obligation. If the obligations are
in different currencies, the Finance Party may convert either obligation
at a market rate of exchange in its usual course of business for the
purpose of the set-off. If either obligation is unliquidated or
unascertained, the Finance Party may set off in an amount estimated by it
in good faith to be the amount of that obligation.

	30.	 	PRO RATA SHARING

	30.1	 	Redistribution

If any amount owing by the Borrower under the Finance Documents to a
Finance Party (the “recovering Finance Party”) is discharged by payment,
set-off (other than the transaction fees of the Account Bank) or any
other manner other than through the Agent in accordance with Clause 10
(Payments) (a “recovery”), then:

	30.1.1	 	the recovering Finance Party shall, within three Business Days,
notify details
of the recovery to the Agent;
	 
	30.1.2	 	the Agent shall determine whether the recovery is in excess of the amount
which the recovering Finance Party would have received had the recovery
been received by the Agent and distributed in accordance with Clause 10
(Payments);
	 
	30.1.3	 	subject to Clause 30.3 (Exceptions), the recovering Finance Party shall within
three Business Days of demand by the Agent pay to the Agent an
amount (the
“redistribution”) equal to the excess;

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	30.1.4	 	the Agent shall treat the redistribution as if it were a
payment by the Borrower
under Clause 10 (Payments) and shall pay the redistribution to the Finance
Parties (other than the recovering Finance Party) in accordance with Clause
10.7 (Partial Payments); and
	 
	30.1.5	 	after payment of the full redistribution, the recovering Finance Party will be
subrogated to the portion of the claims paid under paragraph 30.1.4 above and
the Borrower will owe the recovering Finance Party a debt which is equal to
the redistribution, immediately payable and of the type originally discharged.

	30.2	 	Reversal of Redistribution

If under Clause 30.1 (Redistribution):

	30.2.1	 	a recovering Finance Party must subsequently return a recovery, or an amount
measured by reference to a recovery, to the Borrower; and

	 
	30.2.2	 	the recovering Finance Party has paid a redistribution in relation to that
recovery,

each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution paid
to that Finance Party, Thereupon, the subrogation in Clause 30.1.5
(Redistribution) will operate in reverse to the extent of the
reimbursement.

	30.3	 	Exceptions

	30.3.1	 	A recovering Finance Party need not pay a redistribution to the extent that it
would not, after the payment, have a valid claim against the Borrower in the
amount of the redistribution pursuant to Clause 30.1.5 (Redistribution).
	 
	30.3.2	 	A recovering Finance Party is not obliged to share with any other Finance
Party any amount which the recovering Finance Party has received
or
recovered as a result of taking legal proceedings, if the other
Finance Party
had an opportunity to participate in those legal proceedings but
did not do so
and did not take separate legal proceedings.

	31.	 	SEVERABILITY

If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:

	31.1.1	 	the validity or enforceability in that jurisdiction of any other provision of the
Finance Documents; or
	 
	31.1.2	 	the validity or enforceability in other jurisdictions of that or any other
provision of the Finance Documents.

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	32.	 	COUNTERPARTS

Each Finance Document may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts were on
a single copy of the Finance Document.

	33.	 	NOTICES

	33.1	 	Giving of Notices

All notices or other communications under or in connection with the
Finance Documents shall be given in writing and, unless otherwise stated
may be made by letter, telex or facsimile. Any such notice will be
deemed to be given as follows:

	33.1.1	 	if by letter, when delivered personally or on actual receipt;
	 
	33.1.2	 	if by telex, when despatched, but only if, at the time of
transmission, the
correct answerback appears at the start and at the end of the sender’s copy of
the notice; and
	 
	33.1.3	 	if by facsimile, when received in legible form.

However, a notice given in accordance with the above but received on a
non-Business Day or after business hours in the place of receipt will
only be deemed to be given on the next Business Day in that place.
Without affecting the validity of any notice delivered in accordance with
paragraph 33.1.3 above, a copy of each notice delivered by facsimile
shall also be sent by letter to the relevant party.

	33.2	 	Addresses for Notices

	33.2.1	 	The address and facsimile number of each Party (other than the Borrower and
the Agent) for all notices under or in connection with the Finance
Documents
are:

	(a)	 	those notified by that Party for this purpose
to the Agent on or before the
date it becomes a Party; or
	 
	(b)	 	any other notified by that Party for this
purpose to the Agent by not less
than five Business Days’ notice.

	33.2.2	 	The address and facsimile number of the Borrower are:

	 	 	 
	

	 	Nordural hf
	

	 	Grundartangi 
	

	 	301 Akranes 
	 
	 	Iceland
	 
	 	 
	

	 	Attention: Managing Director and Finance Manager
	

	 	 Tel: 00 354 430 1000
	

	 	Fax: 00 354 430 1001

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	 	with a copy to:
	 
	 	 
	

	 	Columbia Ventures Corporation
	

	 	16703 S.E. McGillivray Boulevard
	

	 	Suite 210
	

	 	Vancouver
	

	 	Washington
	

	 	98603 USA
	 
	 	 
	

	 	Attention: Kenneth Peterson 
	

	 	Tel: 001 360 882 1052
	

	 	Fax: 001 360 882 2068

or such other as the Borrower may notify to the Agent by not less
than five Business Days’ notice.

	33.2.3	 	The address and facsimile number of the Agent are:

	 	 	 
	

	 	The Royal Bank of Scotland plc 
	

	 	5th Floor, Structured Finance 
	

	 	135 Bishopsgate
	

	 	London EC2M 3UR
	 
	 	 
	

	 	Attention: Graham Boreham 
	

	 	Tel: +44 (0)20 7375 8719
	

	 	Fax: +44 (0)20 7375 8762

or such other as the Agent may notify to the other Parties by not
less than 5 Business Days’ notice.

	33.2.4	 	The address and facsimile number of the Security Trustee are:

	 	 	 
	

	 	BNP Paribas S.A.
	

	 	37 place du Marché Saint-Honoré
	

	 	75031 PARIS Cedex 01
	

	 	France
	 
	 	 
	

	 	Attention: Thierry Bonnel 
	

	 	Tel: +33 1 42 98 18 64
	

	 	Fax: +33 1 42 98 43 17

	 	 	 
	33.2.5 	 	 The Agent shall, promptly upon request from any Party, give to that
Party the
address or facsimile number of any other Party applicable at the
time for the
purposes of this Clause.

	34.	 	LANGUAGE

	34.1.1	 	Any notice given under or in connection with any Finance
Document shall be in English.

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	34.1.2	 	All Other documents (other than financial statements of the
companies referred to in Clause 16.2.3) provided under or in
connection with any Finance Document shall be:

	(a)	 	in English; or
	 
	(b)	 	if not in English, if requested by the Agent,
accompanied by a certified
English translation and, in this case, the English
translation shall prevail
unless the document is a statutory or other official
document.

	35.	 	USE OF WEBSITES

	35.1.1	 	The Borrower may satisfy its obligation under this Agreement to
deliver any information in relation to those Banks (the “Website
Banks”) who accept this method of communication by posting this
information onto an electronic website designated by the Borrower
and the Agent (the “Designated Website”) if:

	(a)	 	the Agent expressly agrees (after consultation
with each of the Banks)
that it will accept communication of the information by this
method;
	 
	(b)	 	both the Borrower and the Agent are aware of
the address of and any
relevant password specifications for the Designated Website;
and
	 
	(c)	 	the information is in a format previously
agreed between the Borrower
and the Agent.

If any Lender (a “Paper Form Lender”) does not agree to the
delivery of information electronically then the Agent shall notify
the Borrower accordingly and the Borrower shall supply the
information to the Agent (in sufficient copies for each Paper Form
Lender) in paper form. In any event the Borrower shall supply the
Agent with at least one copy in paper form of any information
required to be provided by it.

	35.1.2	 	The Agent shall supply each Website Lender with the address of and
any relevant password specifications for the Designated Website
following designation of that website by the Borrower and the Agent.
	 
	35.1.3	 	The Borrower shall promptly upon becoming aware of its occurrence
notify the Agent if:

	(a)	 	the Designated Website cannot be accessed due to technical
failure;
	 
	(b)	 	the password specifications for the Designated Website change;
	 
	(c)	 	any new information which is required to be
provided under this
Agreement is posted onto the Designated Website;
	 
	(d)	 	any existing information which has been provided
under this Agreement
and posted onto the Designated Website is amended; or

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	(e)	 	the Borrower becomes aware that the Designated Website or
any information posted onto the Designated Website is or has
been infected by any electronic virus or similar software.

if the Borrower notifies the Agent under Clauses 35.1.3(a) or
35.1.3(e) above, all information to be provided by the Borrower
under this Agreement after the date of that notice shall be
supplied in paper form unless and until the Agent and each
Website Lender is satisfied that the circumstances giving rise to
the notification are no longer continuing.

	35.1.4	 	Any Website Lender may request, through the Agent, one paper copy
of any information required to be provided under this Agreement
which is posted onto the Designated Website. The Borrower shall
comply with any such request within ten Business Days.

	36.	 	JURISDICTION

	36.1	 	Submission

For the benefit of each Finance Party, the Borrower agrees that the
courts of England have jurisdiction to settle any disputes in connection
with any Finance Document and accordingly submits to the jurisdiction of
the English courts.

	36.2	 	Service of Process

Without prejudice to any other mode of service, the Borrower:

	36.2.1	 	irrevocably appoints DLA (reference Nigel Drew/Matthew Saunders) of 3
Noble Street, London, EC2V 7EE, U.K as its agent for service of process in
relation to any proceedings before the English courts in connection with any
Finance Document;
	 
	36.2.2	 	agrees to maintain such an agent for service of process in England for so long
as any amount is outstanding under this Agreement or any Commitment is in
force.
	 
	36.2.3	 	 agrees that failure by a process agent to notify the Borrower of the process
will not invalidate the proceedings concerned;
	 
	36.2.4	 	consents to the service of process relating to any such proceedings by prepaid
posting of a copy of the process to its address for the time being applying
under Clause 33.2 (Addresses for Notices); and
	 
	36.2.5	 	agrees that if the appointment of any person mentioned paragraph 36.2.1
above ceases to be effective, the Borrower shall immediately
appoint a further
person in England to accept service of process on its behalf in
England and,
failing such appointment within 15 days, the Agent is entitled to
appoint such
person by notice to the Borrower.

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	36.3	 	Forum Convenience and Enforcement Abroad

The Borrower:

	36.3.1	 	waives objection to the English courts on grounds of inconvenient forum or
otherwise as regards proceedings in connection with a Finance Document; and
	 
	36.3.2	 	agrees that a judgment or order of an English court in connection with a
Finance Document is conclusive and binding on it and may be enforced
against it in the courts of any other jurisdiction.

	36.4	 	Non-Exclusivity

Nothing in this Clause 36 limits the right of a Finance Party to bring
proceedings against the Borrower in connection with any Finance Document:

	36.4.1	 	in any other court of competent
jurisdiction; or
	 
	36.4.2	 	concurrently in more
than one jurisdiction.

	37.	 	GOVERNING LAW

This Agreement is governed by English law.

	 	 	This Agreement has been entered into on the date stated at the beginning of
this Agreement.

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