Basic terms and conditions of Shareholder agreement required by GEDF 1. Definitions:
“Call Option Closing Date” means the date no earlier than 10 (ten) days and no later than 30 (thirty) days from the date of Call Exercise Notice.
“Call Option Period” means the period starting on completion of phase 1 (“Call Option Opening Date”) and expiring after 1 year of Call Option Opening Date.
“Put Option Period” means the period starting on completion of phase 1 (“Call Option Opening Date”) and expiring after 1 year of Call Option Opening Date.
“Put Option Closing Date” means the date no earlier than 10 (ten) days and no later than 30 (thirty) days from the date of Put Exercise Notice.
"Project" is defined as activities related to the development, financing, building, and operation of Kvirila HPP. For clarification, a project may include the following activities:
a) Project Development Activities:
- Engineering studies – including Feasibility Study and basic project design; - Environmental and Social Impact Assessment;
- Other studies – including land ownership, power transmission possibility, access roads study and other studies need in order to take construction permit;
- Initial financial projections, financial feasibility and other tasks needed to clarify the project financing scheme.
b) Project Procurement & Construction Activities - Procure equipment
- Construction - Commissioning
c) Project Operation and Generation Activities - Electricity Generation and Sales
- Operations & Maintenance
2. Each project shall be divided into two phases as defined below:
“Phase 1” shall comprise all the activities to develop a Project as listed under the definition of Project subsection (a) – Project Development Activities. Upon completion of the Project Development Activities, should all the Parties agree to proceed with the Project then they shall proceed to Phase 2 as defined below. “Phase 2” shall comprise the activities listed under the definition of Project, subsections b and c
3. Capitalization of the JVC:
The initial equity capital of the JVC shall amount to 1,000,000 (one million) Georgian Lari. The JVC equity capital shall be used solely to finance the development of Phase 1 of agreed upon Projects as determined by the JVC Board. The JVC shall keep records of the equity capital expended on each Project.
For the purposes of equity contribution in the equity capital of the Company Partner will provide up to GEL 826 304 in equity capital, and GEDF will provide up to GEL 173 696 non-cash equity contribution (pre-feasibility study, rights on project and all available information on Kvirila HPP) in equity capital in the ratio of 80% for Partner and 20% for GEDF. No further equity capital shall be required from GEDF. GEDF will provide its equity capital within 5 (five) Business Days after Partner provides at least half of its contribution defined above.
At the end of Phase 1 of each Project, each Shareholder shall decide independently whether it wants to proceed with Phase 2 of the Project. Should all the Parties agree to proceed with the Project, the Project shall remain within the JVC and the Parties rights to share in the profits, losses and cash flow from same will be determined by each Party’s relative contribution.
Following the completion of Phase 1 of a given Project the JVC Board shall review the analyses, studies, reviews, business plans, financial projections, and any other work developed under Phase 1 and present to the Shareholders a business plan for Phase 2 of the Project, including funding needs, timeline, and other available material information. All Parties will notify the Board and the other Parties whether or not they will choose to participate in Phase 2 by notifying the other Parties of such decision in writing within 30 calendar days of the Board meeting. Failure to notify the other Parties of such decision shall be deemed to mean that the Party has chosen not to participate in Phase 2.
Should Partner choose to participate and GEDF choose not to participate in Project Company then Partner will own 100% of Project Company. Within 30 days after such decision, the Project Company shall then compensate GEDF with an amount equal to GEDF’s investment in Phase 1 of Project, in which case the capital contributed by the compensated Shareholder and expended on such Project shall be deemed to be reduced by the amount of such compensation.
Should GEDF choose to participate in and partner choose not to participate in Project Company then GEDF shall own 100% of Project Company. Within 50 days after such decision, the Project Company shall then compensate Partner with an amount equal to partner’s cash investment in Phase 1 of Project, in which case the capital contributed by the compensated Shareholder and expended on such Project shall be deemed to be reduced by the amount of such compensation. Should none of the Shareholders decide to participate in Phase 2 then JVC board will decide about further steps.
4. JVC Board of Directors and CEO
The JVC shall be formed as a joint venture Company under Applicable Laws of Georgia and governed by the JVC Board.
The JVC Board shall be composed of three (3) Board Members, one nominated by GEDF and two nominated by Partner. The decision on their appointment is made by the General Assembly of Shareholders.
One of the Board Members nominated by Partner shall be elected as the Chairman (the "Chairman") of the JVC Board. If the Chairman is unable to attend any meeting of the JVC Board, the Board Members will agree to appoint one of the Board Members to act as chairman at that meeting. If the Board Members are unable to so agree, then the Board Meeting shall not be conducted.
Each Board Member (including the Chairman) shall have one (1) vote at the JVC Board meetings. The meeting quorum shall be 2 members of the JVC Board. All JVC Board’s resolution shall be adopted by the majority of the members attending.
The Board Meetings shall be held at least every 3 months. 5. General Assembly of the Shareholders
The General Assembly of Shareholders is the company’s highest decision-making body. Each share in the company carries one vote in the General Assembly of Shareholders.
The General Assembly of Shareholders is held once per year at a location determined by the JVC Board.
The General Assembly of Shareholders nominates and elects Directors of the Board; informs shareholders of past material financial and business activities and future business plans; makes decisions on distribution of dividends and hiring an auditor.
An extraordinary Shareholder meeting may be called by the Board of Directors or by the Shareholders whose Shares account for 10% (ten percent) or more of the total Shares.
The General Assembly of Shareholders is authorized if a simple majority (greater than 50% of the Shares) of voting Shares are present or represented personally or through notarized power of attorneys. The document of assignment of powers by a Shareholder physical person shall be duly notarized.
. The General Assembly of Shareholders makes decisions on the following matters: (a) Identification of the general principles of the business policy of the Company; (b) Approval of the annual business plan of the Company;
(d) Making changes and amendments in the Charter of the Company; (e) Requesting the payment of dividends; and
(f) in other cases prescribed by law.
The decisions of the meeting of Shareholders shall be reflected in the minutes of the meeting of Shareholders that shall be signed the shareholders and/or their authorized representatives; The General Meeting shall be held at a location decided by the JVC Board. If the venue of meeting is outside Georgia, the decision on the meeting shall be made by unanimous vote.
The following matters are reserved for unanimous decision of the Shareholders at the General Meeting:
(a) Amend the Charter.
(b) Take actions to effect the reorganization or dissolution of the JVC;
(c) Amend or remove any special rights of the Shareholders shall be made by the unanimous vote of all the Shareholders;
(d) Adopt or deny any proposal of the JVC Board in respect of the distribution of profits or dividends;
(e) Increase of the share capital of the JVC. During the phase 1 decision on this issue shall be made by the unanimous vote of all the Shareholders;
(f) Taking of the loans by the JVC. During phase 1 decision on this issue shall be made by the unanimous vote of all the Shareholders;
(g) Determine the remuneration of the members of the JVC Board; and
(h) Incur obligations and expend funds that are not within the line items in the approved Budget.
6. Partner’s Call option
GEDF grants to the Partner an option (“theCall Option”) to purchase from GEDF during the Call Option Period all the shares owned by GEDF ("the Call Option Shares") at the time of delivery by the Partner of a written notice (the “Call Exercise Notice”). Call option might be exercised by delivery to GEDF and the JVC of a Call Exercise Notice at any time during the Call Option Period.
The price to be paid for the Call Option Shares ("the Call Option Exercise Price") shall be calculated by applying XX Annual Interest Rate on GEDF equity contribution (cash or non-cash) calculated as of the Call Option Closing Date with respect to each equity contribution made by GEDF.
7. GEDF’s Put Option
The partner grants to the GEDF an option (“thePut Option”) to Sell GEDF during the put Option Period all the shares owned by GEDF ("the Put Option Shares") at the time of delivery by the GEDF of a written notice (the “Put Exercise Notice”). Put option might be exercised by delivery to the Partner and the JVC of a Put Option Exercise Notice at any time during the Put Option Period.
The price to be paid for the Put Option Shares ("the Put Option Exercise Price") shall be calculated by applying YY Annual Interest Rate on GEDF’s equity contribution (cash or non-cash) calculated as of the Put Option Closing Date with respect to each equity contribution made by GEDF.
The JVC, GEDF and the Partner shall take all steps necessary or desirable to ensure that, as of the Call/Put Option Closing Date, all corporate formalities in connection with the transfer of the Call / Put Option Shares to the Partner have been complied with and all necessary approvals and consents have been obtained.
Litigation
In the event that any dispute is unable to be resolved by Parties, including any dispute as to the validity or existence of Shareholder Agreement, such dispute shall be settled exclusively and finally by the Georgian Courts.
Agreement and the rights and obligations of the Parties shall remain in full force and effect pending the judgement in such litigation proceeding.
Each Party agrees that such judgement of the Court is enforced under laws of Georgia.
The fees of each litigant and the costs of litigation proceedings shall be borne by the Parties to the litigation in the proportion decided by the court and in accordance with the judgement of the court.
