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1 LOAN NO.: 4/127AGREEMENT dated Muharam 27, 1401 A.H. corresponding to December5, 1980 A.D. between:1 THE REPUBLIC OF CHINA (hereinafter called the Borrower), repr-esented by H. E. C. C. Chang, Minister of Finance;and 2 THE SAUDI FUND FOR DEVELOPMENT, Riyadh, Kingdom of Saudi Arab-ia(hereinafter called the Fund), represented by H. E. SheikhMohammad Aba Alkhail, Minister of Finance and National Economyand Chairman of the Board of Directors of the Fund.PREAMBLEWHEREASthe Borrower has requested the Fund to grant it a loanto assist in the financing of the Transmission and Substationsproject, described in Schedule (2) to this Agreement (hereinaft-er called the project);WHEREAS the Project will be carried out by Taiwan Power Companywith the Borrower's assistance, and as part of such assistance,the Borrower shall make available to the company the proceeds ofthe Loan as hereinafter provided;WHEREAS the purpose of the Fund is to assist developing countri-es in developing their economies and to provide them with loansnecessary to the execution of their development projects and pr-ograms;HEREAS the Fund is convinced of the importance of the Project a-nd its beneficial effects for the economic development of the f-riendly people of the Republic of China; andWHEREAS the Board of Directors of the Fund has agreed, in viewof the foregoing, by its Resolution No. 5/30/279 dated 22.11.14-00 A. H. to grant the Borrower a loan on the terms and conditio-ns set forth in this Agreement.NOW THEREFORE, the parties hereto hereby agree as follows:ARTICLE ⅠGeneral Conditions; DefinitionsSection 1.01. The parties to this Agreement accept all the prov-isions of the General Conditions Applicable to Loan Agreementsof the Fund issued by Resolution of the Board of Directors of t-he Fund No. 11/14 dated Rajab 29, 1396 A. H., corresponding toJuly 26, 1976 A.D., with the same force and effect as if they were fully set forth herein (said General Conditions Applicableto Loan Agreements of the Fund being hereinafter called the Gen-eral Conditions.)Section 1.02. Wherever used in this Agreement, unless the conte-xt otherwise requires, the several terms defined in the GeneralConditions and in the Preamble to this Agreement have the respe-ctive meanings therein set forth and the following additional t-erms have the following meanings:(a) "The Company" means Taiwan Power Company, a Company establi-shed under the Borrower's Company Law of December 30, 1929Article 387.(b) "Subsidiary Loan Agreement" means the agreement to be enter-ed into between the Borrower and the Company pursuant to theprovisions of Section 3.01 (b) of this Agreement, as the sa-me may be amended from time to time.ARTICLE Ⅱ The LoanSection 2.01. The Fund agrees to lend to the Borrower, on the t-erms and conditions in the Loan Agreement set forth or referredto, a loan in an amount of One hundred forty nine million and f-our hundred thousand (149,400,000) Saudi Riyals.Section 2.02. The amount of the Loan may be withdrawn by the Bo-rrower from the Loan Account in accordance with the provisionsof Schedule I to this Agreement, as such Schedule may be amendedfrom time to time by agreement between the Fund and the Borrower, for expenditures made (or, if the Fund shall so agree, to bemade) in respect of the reasonable cost of the goods and servic-es required for the Project and to be financed out of the proce-eds of the Loan.Section 2.03. The Borrower shall cause the Company to apply theproceeds of the Loan exclusively to financing the reasonable co-st of the goods required for the carrying out of the Project. T-he specific goods to be financed out of the proceeds of the Loanand the methods and procedure for the procurement thereof, shallbe determined by agreement between the Fund and the Borrower, s-ubject to modification by further agreement between them. The B-orrower shall cause the Company to obtain Fund's approval beforeawarding the contracts to be financed out of the proceeds of theLoan and before effecting any modification thereto in the future.Section 2.04. the Closing Date shall be June 30, 1988 or such l-ater date as shall be agreed between the Fund and the Borrower.Section 2.05. The Borrower shall pay a loan charge at the rateof four and half (4.5%) per annum on the principal amount of theLoan withdrawn and outstanding from time to time.Section 2.06. Loan Charge and other charges shall be payable se-mi-annually on March 15 and September 15, in each year.Section 2.07. The term of the Loan is eighteen years including athree-year grace period. The Borrower shall repay the principalamount of the Loan in accordance with the Amortization Scheduleset forth in Schedule (3) to this Agreement.ARTICLE ⅢExecution of the ProjectSection 3.01. (a) The Borrower shall carry out the Project thro-ugh the Company with due diligence and efficiency and in confor-mity with appropriate engineering, financial and public utilitypractices and shall provide, or cause to be provided, promptlyas needed, the funds the facilities, services and other resourc-es required for the purpose.(b) the Borrower shall relend the proceeds of the Loan to the C-ompany under a Subsidiary Loan Agreement to be entered intobetween the Borrower and the Company, under terms and condi-tions which shall have been approved by the Fund. The Subsi-diary Loan Agreement shall provide for the execution by theCompany of all the obligations and conditions which the Bor-rower undertakes by virtue of the provisions of this Agreem-ent to cause the Company to comply with.(c) The Borrower shall exercise its rights under the SubsidiaryLoan Agreement in such a manner as to protect the interestsof the Borrower and the Fund and to accomplish the purposesof the Loan and, except as the Fund shall otherwise agree,the Borrower shall not assign, nor amend, abrogate, or waivethe Subsidiary Loan Agreement or any provisions thereof.(d) Without limiting the generality of paragraph (a) of this Se-ction, the Borrower shall make available or cause to be madeavailable to the Company promptly as needed, all other fundswhich shall be required for the carrying out of the Project(including any funds that may be required to meet any incre-ase in the cost beyond the estimated cost of the Project atthe time of signing this Agreement), all such sums to be ma-de available on terms and conditions acceptable to the Fund.Section 3.02. In carrying out the Project, the Borrower sha-ll cause the Company to employ qualified and experienced Co-ntractors upon terms and conditions acceptable to the Fund.Section 3.02. In carrying out the Project, the Borrower shall c-ause the Company to employ qualified and experienced Contractorsupon terms and conditions acceptable to the Fund.Section 3.03. The Borrower shall cause the Company to insure, ormake adequate provision for the insurance of, the imported goodsto be financed out of the proceeds of the Loan against hazardsincident to the acquisition, transportation and delivery thereofto the place of use or installation, and for such insurance anyindemnity shall be payable in a currency freely usable by the C-ompany to replace or repair such goods.Section 3.04. The Borrower shall ensure that all goods and serv-ices financed out of the proceeds of the Loan shall be used exc-lusively for the Project.Section 3.05. The Borrower shall cause the Company to furnish tothe Fund, promptly upon their preparation, the plans, models, s-pecifications, reports, contract documents, construction and pr-ocurement schedules, for the Project, and any modifications the-reof or additions thereto, in such detail as the Fund shall req-uest, as well as photographs of the completed Project in the ap-propriate size.Section 3.06. (a) The Borrower shall cause the Company to: (i)maintain records adequate to record the progress of the Project(including the cost thereof) and to identify the goods and serv-ices financed out of the proceeds of the Loan, and to disclosethe use thereof in the Project; (ii) enable the Fund's accredit-ed representatives to visit the facilities and construction sit-es included in the Project and to examine the goods financed outof the proceeds of the Loan and any relevant records and docume-nts; and (iii) furnish to the Fund all such information as theFund shall request concerning the Project, the expenditure of t-he proceeds of the Loan and the goods and services financed out of such proceeds. (b) The Borrower shall cause the Company to enable the Fund's r-epresentatives to examine all plants, installations, sitesworks, buildings, property and equipment of the Company andany relevant records and documents.ARTICLE ⅣParticular CovenantsSection 4.01. The Borrower shall, at all times, cause the Compa-ny to maintain its corporate existence and right to carry on itsoperations, and to take all steps necessary to acquire, maintainand renew all rights, powers privileges, concessions and franch-ises which are necessary or useful in the conduct of its busine-ss.Section 4.02. The Borrower shall cause the Company to operate a-nd maintain its plants, equipment and property, and to make, fr-om time to time, all necessary renewals and repairs thereof, allin accordance with appropriate engineering and public utility p-ractices.Section 4.03. The Borrower shall, at times, cause the Company tocarry on its operations, manage its affairs, maintain its finan-cial position and plan the future expansion of its electric pow-er system, ail in accordance with appropriate business, financi-al and public utility principles and practices and under the su-pervision of experienced and competent management.Section 4.04 The Borrower shall cause the Company to take out a-nd maintain with responsible insurers, or make other provisionsatisfactory to the Fund for insurance against such risks and insuch amounts as shall be consistent with appropriate public uti-lity practices.Section 4.05. The Borrower shall cause the Company to maintainrecords adequate to reflect in accordance with consistently mai-ntained appropriate accounting practices its operations and fin-ancial condition.Section 4.06. The Borrower shall cause the Company to; (i) haveits accounts and financial statements (balance sheets, statemen-ts of income and expenses and related statements) for each fisc-al year audited, in accordance with appropriate auditing princi-ples consistently applied, by independent auditors acceptable tothe Fund; (ii) furnish to the Fund as soon as available, but inany case not later than six months after the end of each year,(A) certified copies of its financial statements for such yearas so audited and (B) the report of such audit by said auditors,of such scope and in such detail as the Fund shall have request-ed; and (iii) furnish to the Fund such other information concer-ning the accounts and financial statements of the Company and t-he audit thereof as the Fund shall from time to time request.Section 4.07. (a) The Borrower and the Fund confirm their agree-ment that no other external debt shall enjoy any priority overthe loan by war of a lien created on governmental assets. To th-at end, the Borrower undertakes that, except as the Fund shallotherwise agree, if any lien shall be created on any assets ofthe Borrower as security for any external debt, such lien willipso facto and at no cost to the Fund equally and ratably securethe payment of the principal of the Loan, the Loan Charge and o-ther charges on the Loan and that in the creation of any such l-ien express provision will be bade to that effect.(b) The undertaking provided for in paragraph (a) of this Secti-on shall not apply to:(i) any lien created on property, at the time of purchase t-hereof, solely as security for the payment of the purch- ase price of such property; (ii) any lien on commercial goods to secure a debt maturingnot more than one year after the date on which it is or- iginally incurred and to be paid out of the proceeds of the sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking tran-sactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "governmental assets" mea-ns assets of the Borrower, of any political or administrati-ve subdivision thereof and of any entity owned or controlledby, or operating for the account or benefit of, the Borroweror any such subdivision, including gold and other foreign e-xchange assets held by any institution performing the funct-ions of a central bank or exchange stabilization fund, or s-imilar functions for the Borrower.Section 4.08. The Borrower shall take all such actions as s-hall be necessary to acquire as and when needed all such la-nd and rights in respect of land as shall be required for c-arrying out of the Project.Section 4.09. The Borrower undertakes to provide the Fund w-ithin three months of signing this Agreement with a writtenstatement guaranteeing the provision of all the necessary funds for the completion of the Project from sources and uponterms and conditions that are acceptable to the Fund.ARTICLE ⅤRemedies of the FundSection 5.01. For the purposes of Section 6.02 of the General C-onditions, the following additional events are specified pursua-nt to paragraph (f) thereof:(a) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the borrower or the Company to withdraw theproceeds of any loan made to the Borrower or the Company for the financing of the Project shall have been suspend- ed, cancelled or terminated in whole or in part, pursuant to the terms of the Agreement providing therefor; or (B) any such loan shall have become due and payable prior tothe agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if theBorrower establishes to the satisfaction of the Fund that (A) such suspension, cancellation, termination or premat- uring is not caused by the failure of the Borrower or the Company, as the case may be, to perform any of their res- pective obligations under such agreement, and (B) adequa- te funds for the Project are available to the Borrower or the Company from other sources on terms and conditions c- onsistent with the obligations of the Borrower under this Agreement. (b) A substantial change in the Borrower's Company Law of 1929under which the Company was established and operating, shallhave occurred, which, in the judgement of the Fund, shall m-aterially and adversely affect the ability of the Company tocarry out or operate the Project. Section 5.02. For the purposes of Section 7.01 of the General C-onditions, the following events are specified pursuant to parag-raph (d) thereof, namely, any event specified in paragraph (a)(i) and (B) or paragraph (b) of Section 5.01 of this Agreementshall occur.ARTICLE ⅥEffective date; TerminationSection 6.01. The following event is specified as an additionalcondition to the effectiveness of the Loan Agreement within themeaning of Section 12.01 (b) of the General Conditions:That the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and the Company, respectively, have b-een duly authorized or ratified by all necessary governmental a-nd corporate action.Section 6.02. The following is specified as an additional matte-r, within the meaning of Section 12.02 (b) of the General Condi-tions, to be included in the Legal Opinion or opinions to be fu-rnished to the Fund:That the Subsidiary Loan Agreement has been duly authorized orratified by, and executed and delivered on behalf of, the Borro-wer and the Company, respectively, and is legally binding uponthe Borrower and the Company in accordance with its terms.Section 6.03. The date March 5, 1981 is hereby specified for thepurposes of Section 12.04 of the General Conditions.ARTICLE ⅦRepresentative of the Borrower; AddressesSection 7.01. The Minister of Finance of the Borrower is design-ated as representative of the Borrower for the purposes of Sect-ion 11.03 of the General Conditions.Section 7.02. The following addresses are specified for the pur-poses of Section 11.01 of the General Conditions.For the Fund:Saudi Fund for DevelopmentP. O. Box 1887RiyadhKingdom of Saudi Arabia.Cable Address:SAUDI FUND FOR DEVELOPMENTRIYADHKINGDOM OF SAUDI ARABIATelex:201145 SUNDOQ SJFor the Borrower:Ministry of Finance2, Ai Kuo West RoadTaipei, Taiwan 107Republic of ChinaCable Address:MINISTRY OF FINANCETAIPEI, TAIWANREPUBLIC OF CHINATelex:11840 MOF TAIPEIIN WITNESS WHEREOF, the parties hereto, acting through their re-presentatives thereunto duly authorized, have caused this Agree-ment to be signed in their respective names, in Taipei, Republicof China, as of the day and year first above written, in two co-unterparts in the Arabic language, each of which shall be an or-iginal.ForThe Republic ChinaBy C. C. ChangMinister of Finance andAuthorized Representative.ForThe Saudi Fund for DevelopmentBy Sheikh Mohammad Aba AlkhailMinister of Finance andNational Economy and Chairmanof the Board of Directors of the Fund. SCHEDULE (1)Withdrawal of the Proceeds of the LoanA. The table below sets forth the Categories of items to be fin-anced out of the Proceeds of the Loan, the allocation of theamounts of the Loan to each Category and the percentage of e-xpenditure for items to be financed in each Category:─────────────────────────────── Amount Allocated % of foreign C`tegory(Expressed inexpenditure Saudi Riyals) to be financed ─────────────────────────────── 1 Power Circuit Breakers 92,500,000 100Parts 2,4 and 6 of theProject Description2 Switchgear Equipment 43,000,000 100Parts 2,4 and 6 of theProject Description3 Contingencies13,900,000─────────────────────────────── Total:149,400,000─────────────────────────────── B. For the purposes of this Schedule, the term "foreign expendi-tures" means expenditures for goods produced in, or servicessupplied form, the territories, and in the currency, of anycountry other that the Borrower's.C. Notwithstanding the provisions of paragraph 1 above, no with-drawals shall be made in respect of:(a) expenditures made prior to the date of this Agreement;(b) payments for taxes imposed under the laws of the Borroweror laws in effect in its territories on goods or service- s, or on the importation, manufacture of supply thereof. SCHEDULE (2)Description of the ProjectThe Project is to extend various transmission lines and substat-ions facilities to cover Taiwan Power System requirements by 19-87, and it consists of the following parts:PART (1): 345 KV Transmission LinesPART (2): High Voltage Substations*PART (3): 161 KV Transmission LinesPART (4): Primary Substations*PART (5): Subtransmission LinesPART (6): Secondary Substations*PART (7): Power Control Communication SystemPART (8): Construction Tools. Details of above Parts are shown in Annex (1) of this Schedule.The total cost of the project is estimated at US$1,081,939,000the equivalent of approximately 3,254,931,000 Saudi Riyals.The Project is expected to be completed by December 1987.ANNEX (1) OF SCHEDULE (2)The Fund will finance 100% of the foreign component required forthe procurement of the following major equipment for the earlystage of the Project:──────────────────────────────── Estimated Cost in ItemQuantity Saudi Riyals ──────────────────────────────── (1) Power Circuit Breakers:┐ (A) 345 KV, 4000 A, 63 KA 37 │ (B) 161 KV, 2000 A, 50 KA100 │ (C) 69 KV, 2000 A, 37KA135 │ (D) 69 KV, 2000 A, 37KA, for12 │ capacitor switching│ 92,500,000 (E) 69 KV, 2000 A, 26 KA, for 12 │ capacitor switching│ (F) 69 KV, 1200 A, 19 KA 160 │ (G) 69 KV, 1200 A, In- door d-35 │ rawout type┘ (II) Switchgear Equipment: ┐ (A) 13.8 KV, 1600 A, 12 KA Me-10 │ tal-clad │ (B) 23 KV, 2000 A, 12 KA, Met- 3 │ al-clad│ (C) 69 KV, 1200 A, 26 KA, SF64 │ gas insulated│ (D) 161 KV, 2000 A, 40 KA, SF6 3 │ 43,000,000 gas insulated│ (E) 161 KV, 4000 A, 50 KA, SF6 1 │ gas insulated│ (F) 161 KV, 4000 A, 50 KA, co- 4 │ mbiined SF6 gas insulated│ (G) 161 KV, 2000 A, 50 KA, co- 1 │ mbiined SF6 gas insulated┘ ──────────────────────────────── Total: 135,500,000 ──────────────────────────────── ─────── Part No. in Schedule (2) ─────── (2)(2)&(4)(2)&(4)(4)(6)(6)(6)(6)(4)(4)&(6)(4)(4)(2)&(4)(2)─────── ─────── SCHEDULE (3)Amortization Schedule──────────────────────────── InstallmentDate of Payment of PrincipalNo. Payment (Expressed in SaudiRiyals) ──────────────────────────── 1 March 15,1984 4,980,0002 September 15, 19844,980,0003 March 15,1985 4,980,0004 September 15, 19854,980,0005 March 15,1986 4,980,0006 September 15, 19864,980,0007 March 15,1987 4,980,0008 September 15, 19874,980,0009 March 15,1988 4,980,00010 September 15, 19884,980,00011 March 15,1989 4,980,00012 September 15, 19894,980,00013 March 15,1990 4,980,00014 September 15, 19904,980,00015 March 15,1991 4,980,00016 September 15, 19914,980,00017 March 15,1992 4,980,00018 September 15, 19924,980,00019 March 15,1993 4,980,00020 September 15, 19934,980,00021 March 15,1994 4,980,00022 September 15, 19944,980,00023 March 15,1995 4,980,00024 September 15, 19954,980,00025 March 15,1996 4,980,00026 September 15, 19964,980,00027 March 15,1997 4,980,00028 September 15, 19974,980,00029 March 15,1998 4,980,00030 September 15, 19984,980,000──────────────────────────── Total:149,400,000 ──────────────────────────── * See Annex (1) of Schedule (2) for specific list of goods fina-nced by this Loan Agreement from these Parts.