Confidential Draft
Subject to Change Draft Date: 21/03/12
(Operation Number 41175)
LOAN AGREEMENT
between
S.C. COMPANIA AQUASERV S.A.
and
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
Dated ______2012
TABLE OF CONTENTS
ARTICLE I – DEFINITIONS 21
Section 1.01. Definitions 21
Section 1.02. Interpretation 216
Section 1.03. Non-English Terms 217
ARTICLE II - REPRESENTATIONS AND WARRANTIES 217
Section 2.01. Representations Regarding the Project 217
Section 2.02. Representations Regarding the Borrower 219
Section 2.03. Representations Regarding the Agreements 222
Section 2.04. Acknowledgement and Repetition 224
ARTICLE III - LOAN 224
Section 3.01. Amount and Currency 224
Section 3.02. Disbursements 225
Section 3.03. Suspension and Cancellation 225
Section 3.04. Charges, Commissions and Fees 226
Section 3.05. Interest 227
Section 3.06. Default Interest 228
Section 3.07. Market Disruption 229
Section 3.08. Repayment 230
Section 3.09. Prepayment 230
Section 3.10. Payments 231
Section 3.11. Insufficient Payments 232
Section 3.12. Taxes 232
Section 3.13. Unwinding Costs 232
Section 3.14. Increased Costs 234
Section 3.15. Illegality 235
Section 3.16. Mitigation 235
Section 3.17. Loan Account 236
Section 3.18 Refinancing of MELF Loan 236
Section 3.19. Termination of the Guarantee and Project Support Agreement 236
Section 3.20 MRD Account 237
ARTICLE IV - CONDITIONS PRECEDENT 237
Section 4.01. First Disbursement 237
Section 4.02. All Disbursements 240
Section 4.03. First Disbursement under Tranche One 241
Section 4.04. All Disbursements under Tranche One 241
ARTICLE V - AFFIRMATIVE COVENANTS 242
Section 5.01. Project Implementation 242
Section 5.03. Environmental and Social Compliance 243
Section 5.04. Insurance 243
Section 5.05. Accounting 244
Section 5.06. Continuing Governmental and Other Authorisations 244
Section 5.07. Debt Service Reserve Account 244
Section 5.08. Compliance with Other Obligations 244
Section 5.09. Taxes 244
Section 5.10. Project Agreements 245
Section 5.11. Financial Ratios 245
Section 5.12. Tariff Adjustments 246
Section 5.14. Costs and Expenses 247
Section 5.15. Furnishing of Information 248
Section 5.16. Procurement 252
Section 5.17 Benchmarking 252
ARTICLE VI - NEGATIVE COVENANTS 252
Section 6.01. Dividends 252
Section 6.02. Capital Expenditures 253
Section 6.03. Leases 253
Section 6.04. Financial Debt 253
Section 6.05. Liens 253
Section 6.06. Derivative Transactions 254
Section 6.07. Arm's Length Transactions 254
Section 6.08. Profit-sharing and Management Arrangements 254
Section 6.09. Investments 255
Section 6.10. Project Agreements 255
Section 6.11. Changes in Business, Capital and Charter 255
Section 6.12. Prepayment of Long-term Debt 255
Section 6.13. Sale of Assets; Merger 256
Section 6.14. Fraud and Corruption 256
Section 6.15. Contract Value Limitation 256
Section 6.16. Ineligibility 256
ARTICLE VII - EVENTS OF DEFAULT 256
Section 7.01. Events of Default 256
Section 7.02. Consequences of Default 259
ARTICLE VIII - MISCELLANEOUS 260
Section 8.01. Term of Agreement 260
Section 8.02. Entire Agreement; Amendment and Waiver 260
Section 8.03. Notices 260
Section 8.04. English Language 261
Section 8.05. Financial Calculations 261
Section 8.06. Rights, Remedies and Waivers 261
Section 8.07. Indemnification 262
Section 8.08. Governing Law 263
Section 8.09. Arbitration and Jurisdiction 263
Section 8.10. Privileges and Immunities of EBRD 264
Section 8.11. Waiver of Sovereign Immunity 264
Section 8.12. Successors and Assigns; Third Party Rights 265
Section 8.13. Disclosure 265
Section 8.14. Severability 265
Section 8.15. Counterparts 265
Section 8.16. Governing Language 266
PROCUREMENT PLAN 21
EXHIBITS
Exhibit A - Form of Disbursement Application A-2
Exhibit B - Form of Certificate of Incumbency and Authority B-2
Exhibit C - Form of Letter to Auditors C-2
iii
LOAN AGREEMENT
LOAN AGREEMENT (this "Agreement") dated ______2012 between COMPANIA AQUASERV S.A., a joint stock company (in Romanian societate pe actiuni) organised and existing under the laws of Romania with its registered address at 1 Kos Karoly street, 540297, Targu Mures, Mures County, Romania, registered with the Mures Commercial Registry under number J26/464/1998, having the sole registration code (C.U.I.) RO 10755074 (the "Borrower") and the EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT, an international organisation formed by treaty ("EBRD").
ARTICLE I – DEFINITIONS
Section 1.01. Definitions
Wherever used in this Agreement (including the Exhibits and the Schedules), unless the context otherwise requires, the following terms have the following meanings:
"Affiliate" means, with respect to any person, any other person, directly or indirectly, controlling, controlled by, or under common control with, such person.
"ANRSC" means the Romanian Regulatory Body of Local Public Services (in Romanian, Autoritatea Nationala de Reglementare pentru Servicii Comunitare de Utilitati Publice).
"ARA" means the Romanian Water Association (in Romanian, Asociatia Romana a Apei).
"Audited Financial
Statements" means the Borrower’s Financial Statements prepared in accordance with the IFRS for a given Financial Year, together with:
(a) a report of the Auditors thereon; and
(b) a letter from the Auditors to the Shareholders of the Borrower commenting on, among other matters, the adequacy of the Borrower's financial control procedures, accounting systems, and other systems;
all in a form satisfactory to EBRD.
"Auditors" means such firm of independent accountants as the Borrower may from time to time appoint as its auditors in accordance with Section 5.05.
"Authorisation" means any consent, registration, filing, agreement, notarisation, certificate, license, approval, permit, authority or exemption from, by or with any Governmental Authority, whether given or withheld by express action or deemed given or withheld by failure to act within any specified time period and all corporate, creditors' and shareholders' approvals or consents.
"Business Day" means a day on which commercial banks are open for the transaction of general business (including dealings in foreign exchange and foreign currency deposits) in London, England, and which is a TARGET Day.
"City" means the City of Targu Mures.
"Charter" means, in respect of any company, corporation, partnership, enterprise or other entity, its charter, founding act, articles of incorporation and bylaws, memorandum and articles of association, statutes or similar instrument.
"Coercive Practice" means the impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party, as this term is interpreted in accordance with the EBRD Anti-Corruption Guidelines.
"Cohesion Funds
Agreement" means the financing agreement No. 121172 of 8 April 2011 entered into between the Borrower and the Romanian Ministry of Environment and Forests regarding the non-refundable financing for the implementation of the project “Extension and rehabilitation of water and wastewater infrastructure in Mures County”.
"Collusive Practice" means an arrangement between two or more parties designed to achieve an improper purpose, including influencing improperly the actions of another party, as this term is interpreted in accordance with the EBRD Anti-Corruption Guidelines.
"Commitment Period" means:
(a) with respect to Tranche One: the period commencing on the date of this Agreement and terminating on the fourth anniversary of the date of this Agreement; and
(b) with respect to Tranche Two: the period commencing on the date of this Agreement and terminating on 21 February 2013.
"Corrupt Practice" means the offering, giving, receiving or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party, as this term is interpreted in accordance with the EBRD Anti-Corruption Guidelines.
"Country of Operation" means Romania.
"County" means the County of Mures.
"Debt" means, with respect to any person, all obligations of such person, whether incurred as principal or surety and whether present, future, actual or contingent, for the payment or repayment of money, including:
(a) any amounts payable by such person under leases or similar arrangements over their respective periods;
(b) any credit to such person from a supplier of goods or under any instalment purchase or other similar arrangement; and
(c) any liabilities and obligations of third parties to the extent that they are guaranteed by such person or such person has otherwise assumed or become liable for the payment of such liabilities or obligations or to the extent that they are secured by any Lien upon property owned by such person whether or not such person has assumed or become liable for the payment of such liabilities or obligations.
"Debt Service Coverage
Ratio" means the ratio provided under Section 5.11 (a) of this Agreement.
"Debt Service Reserve
Account" means the bank account denominated in EUR contemplated by the Debt Service Reserve Account Agreement wherein the Borrower, on the first Disbursement date and at all times thereafter, shall maintain an amount equal to six months debt service (including repayment of principal amounts and interest) payable in the period of next six months under this Agreement.
"Debt Service Reserve
Account Agreement" means the debt service reserve account agreement to be entered into among, inter alios, the Borrower, EBRD and the Project Bank regulating the funding, management and control of the Debt Service Reserve Account, as such agreement may be amended from time to time in accordance with the provisions thereof in order to cover the debt service obligations of the Borrower hereunder, which agreement shall be in form and substance satisfactory to EBRD.
"Default" means any Event of Default or any event which, with the giving of notice, the passage of time or the making of any determination, or any combination thereof, would become an Event of Default.
"Default Interest
Determination Date" means the date two Business Days prior to the first day of the relevant Default Interest Period (or, at EBRD’s option, the first day of such Default Interest Period).
"Default Interest Period" means, with respect to any amount overdue under this Agreement, a period commencing on the day on which such payment becomes due or, as the case may be, on the last day of the previous Default Interest Period with respect to such overdue amount, and ending on a Business Day selected by EBRD.
"Delegation
Contract" means the water supply and sewerage services management delegation agreement No. 202662 dated 5 March 2010, as amended by the Addendum No. 1 of 8 December 2010 and Addendum No. 2 of 12 May 2011 and further amended through the addendums No. 3/19.01.2011, No. 4/11.02.2011, No. 5/03.05.2011, No. 6/04.05.2011, No. 7/06.06.2011, No. 8/10.06.2011, No. 9/15.09.2011, No. 10/28.09.2011, No. 11/18.10.2011, No. 12/08.11.2011 and No.13/12.12.2011, between 51 territorial-administrative units, including, among others, the City and the County, acting through IDA, as awarding authority, and the Borrower, as regional operator.
"Designated Performance
Requirements" means Performance Requirements 1 through 8 and 10 (or, as the context may require, any one of such Performance Requirements) of the Performance Requirements dated May 2008 and related to EBRD’s Environmental and Social Policy dated May 2008.
"Disbursement" means the disbursement of any portion of the Loan from time to time pursuant to Section 3.02 or, as the context may require, the principal amount thereof from time to time outstanding.
"EBRD Anti-Corruption
Guidelines" means EBRD’s Definitions and Guidelines for Private Sector Operations (Fraud and Corruption) attached hereto as Schedule 1.
"EBRD Project" means any activity or project which EBRD has financed or committed to finance.
"Environmental and
Social Action Plan" means the plan of environmental and social mitigation and improvement measures, a copy of which is attached hereto as Schedule 2 of this Agreement.
"Environmental and
Social Law" means any applicable law or regulation which relates to:
(a) pollution or protection of the environment, including related laws or regulations relating to public access to information and participation in decision-making;
(b) labour and employment conditions;
(c) occupational health and safety;
(d) public health, safety and security;
(e) indigenous peoples;
(f) cultural heritage; or
(g) resettlement or economic displacement of persons.
"Environmental and
Social Matter" means any matter that is the subject of any Environmental and Social Law, any Designated Performance Requirement or the Environmental and Social Action Plan.
"Euro" or "EUR" means the lawful currency of the member states of the European Union that adopt the single currency in accordance with the Treaty Establishing the European Community, as amended by the Treaty on European Union and the Treaty of Amsterdam.
"Event of Default" means any one of the events or occurrences specified in Section 7.01.
"Existing Security" means:
(a) the security over the Borrower’s present and future movable assets and/or receivables resulted from (i) the agreements entered into by the Borrower with its internal or external partners; (ii) all the commercial requests, invoices and any other similar documents; and (iii) any other act from which any receivable can result and the Borrower’s bank accounts, created pursuant to the movable mortgage agreement No. 09031/G1 dated 20 February 2009 between the Borrower and ING, as amended by the amendment agreement No. 1 of 17 November 2010 and as further restated by the amendment agreement No. 2 of 15 November 2011,
(b) the security over the Borrower’s bank accounts opened with ING identified with the following IBAN codes: RO41INGB0011000029150711, RO92INGB0011000029158911, RO16INGB0011000029158921, RO37INGB0011000029158931, created pursuant to the movable mortgage agreement No. 09031/G2 dated 20 February 2009 between the Borrower and ING, as amended by the amendment agreement No. 1 of 17 November 2010 and as further restated by the amendment agreement No. 2 of 15 November 2011;
(c) the first ranking mortgage over certain immovable assets of the Borrower created under the immovable mortgage agreement dated 27 February 2009 authenticated under No. 419 of 27 February 2009 between the Borrower and ING;
(d) the second ranking mortgage over certain immovable assets of the Borrower created under the immovable mortgage agreement dated 18 November 2010 authenticated under No. 2082 of 18 November 2010 between the Borrower and ING; and
(e) assignment in favour ING of the Borrower’s receivables under the insurance policies concluded and which shall be concluded by the Borrower in connection with the assets which are subject to the security described in paragraphs (c) and (d) above;
such security interests being created for the purpose of securing the Borrower’s obligations under the ING Loan Agreement.
"Financial Debt" means, with respect to any person, any Debt of such person for or in respect of:
(a) moneys borrowed;
(b) any amount raised by acceptance under any acceptance credit facility;
(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;