Conformed Copy - B-106 - Ertan II Hydroelectric Project - Indemnity Agreement

Page 1 CONFORMED COPY LOAN NUMBER B-106-0 B-106-1 Indemnity Agreement (Dollar/Deutschmark Loan and Guarantee Agreement) (Ertan II Hydroelectric Project) between PEOPLE'S REPUBLIC OF CHINA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated September 28, 1995 LOAN NUMBER B-106-0 B-106-1 INDEMNITY AGREEMENT AGREEMENT, dated September 28, 1995 between PEOPLE'S REPUBLIC OF CHINA (China) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD). WHEREAS (A) IBRD has agreed to make available to China a loan under a loan agreement to be entered into between China and IBRD (IBRD Loan Agreement), in the aggregate principal amount in various currencies equivalent to four hundred million dollars (US$400,000,000) to assist in the financing of the project (the Project) described in Schedule 2 of the IBRD Loan Agreement; (B) Pursuant to a Loan and Guarantee Agreement (the Loan Agreement) being entered into herewith between China, as borrower, IBRD as partial guarantor, Sanwa International Finance Limited as Agent, and The Financial Institutions named in the First Schedule thereto (the Lenders) as lenders, the Lenders have agreed to make Page 2 available to China a loan (the Loan) in the aggregate principal amount of up to one hundred million Dollars (US$100,000,000) and up to seventy million Deutschmarks (DM70,000,000) to assist in the financing of certain aspects of the Project; (C) At the request and with the agreement of China, IBRD has agreed to guarantee the repayment of a portion of the principal amount of the Loan (the IBRD Guarantee) on the terms and conditions set forth in the Loan Agreement; (D) IBRD has agreed to provide the IBRD Guarantee only on condition that China agree to undertake to make to IBRD prompt payment of all amounts paid by IBRD directly or indirectly in relation to or arising from the IBRD Guarantee and to undertake such other obligations as hereinafter provided; and (E) In consideration of IBRD's entering into the Loan Agreement and providing the IBRD Guarantee, China has agreed to undertake certain obligations towards IBRD as hereinafter provided. NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. IBRD's General Conditions Applicable to Loan and Guarantee Agreements, dated January 1, 1985 (the General Conditions), are hereby incorporated in and constitute an integral part of this Agreement, subject, however, to the following modifications thereto: (a) the terms "Borrower" or "Guarantor", wherever used in the General Conditions, mean China; (b) the term "Loan", wherever used in the General Conditions, means the Loan (as defined herein), except that in Sections 2.01 (12), 8.01 and 9.03, the term "Loan" shall mean the IBRD Guarantee and include any other amount payable under this Agreement. (c) the terms "Loan Agreement" and "Guarantee Agreement", wherever used in the General Conditions, mean this Agreement, except that in Section 9.01 (a) and (b) and Section 9.07 (a) and (c), the terms "Loan Agreement" and "Guarantee Agreement" shall mean this Agreement and the Loan Agreement (as defined herein); (d) the term "Project", wherever used in the General Conditions, means the Ertan II Hydroelectric Project as described in Schedule 2 of the IBRD Loan Agreement; and (e) Sections 2.01 (3), (4), (5), (6), (7), (10), (11), (15), and (20), Article III, Article IV, Article V, Article VI, Article VII, the phrase: "but in any event not later than six months after Page 3 the Closing Date or such later date as may be agreed for this purpose between IBRD and the Borrower," in the first sentence of Section 9.07 (c), the opening phrase: "Except as provided in Section 6.07," in Section 10.02, and Article XII of the General Conditions are hereby deleted. Section 1.02. Wherever used in this Agreement, unless otherwise defined or unless the context otherwise requires, the several terms defined in the Preamble to this Agreement and in the General Conditions (subject to the modifications noted above) have the respective meanings herein and therein set forth and the following additional terms have the following meanings: (a) "Agent", "Bank", "Guarantee Release Date", "Interest Payment Date", "Interest Period", "Release Option", and "Releasing Bank" have the same meanings as in the Loan Agreement. (b) "Dollars" and