Module 3 Template 10 Schedule 10
2.
D:\81919631.doc
28/7/2017
Schedule 10
Form of the Performance Bond and the Final Bond
Both the Performance Bond and the Final Bond shall be in the following form and
content:
[GUARANTOR]
[address of Guarantor]
[Insert name of Institution]
GUARANTEE OF FINANCIAL OBLIGATIONS IN RESPECT OF [PERFORMANCE OF
WORKS AND OPERATION AND MAINTENANCE / MAINTENANCE OF PROJECT
ASSETS
AND
RECTIFICATION
AND
REMEDY
OF
DAMAGE
TO
THE
ENVIRONMENT]
[INSERT NAME AND DETAILS OF PROVIDER OF GUARANTEE]
binds itself in favour of [insert name of institution] as Guarantor and co-principal
debtor in solidum for the due and proper performance and completion by [Private
Party] of its obligations in terms of the PPP Agreement dated [
] in respect of
[describe Project] ("the Agreement"), on the terms of this Bond.
1.
Definitions and Interpretations
1.1
In this Bond, unless inconsistent with the contents, words referring to :
1.1.1
one gender include a reference to the other genders;
1.1.2
the singular include the plural and vice versa;
1.1.3
natural persons include artificial persons and vice versa.
1.2
If any period is referred to in the PPP Agreement by way of reference to a
number of days, the days shall be reckoned exclusively of the first and
inclusively of the last day unless the last day falls on a day which is not a
3.
D:\81919631.doc
28/7/2017
Business Day, in which case the day shall be the next succeeding Business
Day.
1.3
Any annexes to this Bond shall be deemed to form part of this Bond.
1.4
Any reference to legislation or a statute in this Bond shall be a reference to
such legislation or statute as amended, varied or re-enacted from time to
time.
1.5
Any reference in this Bond to another agreement shall be to such agreement
as amended, supplemented, varied, novated or replaced from time to time in
accordance with its terms and conditions.
1.6
Titles of clauses and schedules of and to this Bond are inserted for the sake
of convenience only and shall not be used in respect of or in any way affect
the interpretation of any provision of this Bond.
1.7
A reference in this Bond to any person shall be reference to such person’s
permitted (in terms of this Bond) successor, transferee, statutory and/or
delegatee.
1.8
Terms defined in the PPP Agreement shall, unless defined in this Bond, bear
the meaning assigned to them in the PPP Agreement when used in this Bond.
1.9
Save as otherwise expressly stated, or as the context otherwise requires, the
words and expressions listed below shall, when used in this Bond or in any
Addenda to this Bond, bear the meanings ascribed to them:
1.9.1
"Private Party" – [insert name];
1.9.2
"Bond" - this guarantee;
1.9.3
"Guarantor" - [insert name];
1.9.4
"Institution" – [insert name];
1.9.5
"Obligations" - [EITHER: the obligations of the Private Party to
undertake and performance the Works and the Operation and
Maintenance in the amount of R[ ] during the Development Period and
of R[ ] during the Project Term OR: the obligations of the Private Party
4.
D:\81919631.doc
28/7/2017
to maintain the Project Assets and to rectify and remedy any damage to
the environment by Private Party in the amount of R[... ...];
1.9.6
"PPP Agreement" - the PPP Agreement entered into between the
Institution and the Private Party for the time being on or about [... ...], in
respect of [describe Project].
2.
Introduction
2.1
The Private Party has entered into the PPP Agreement with the Institution.
2.2
It is an obligation of the Private Party under the PPP Agreement that this
Bond is given to the Institution. Accordingly, the Guarantor has agreed to
guarantee as set out below the due and punctual performance by the Private
Party of its Obligations to the Institution.
3.
Bond
3.1
Subject to the terms of this Bond, the Guarantor irrevocably and
unconditionally:
3.1.1
guarantees and undertakes that it shall pay such amount as may from
time to time be demanded by the Institution to the account specified in
the written demand referred to hereafter, within two Business Days of the
Institution delivering a written notice demanding such payment from the
Guarantor ("Demand") substantially in the form annexed to this
guarantee, stating that the Private Party has failed to perform its
obligations in terms of clause 9 of the PPP Agreement, a copy of which
clause is attached to this Bond marked Annexure "A" for information;
3.1.2
subject to the maximum amount of this Bond, the Guarantor agrees, as a
separate independent obligation, to indemnify the Institution from time to
time on demand against any loss, cost, claim, expense or liability of any
kind incurred by the Institution as a result of the Private Party failing to
perform duly and punctually its Obligations, whether or not such
Obligations exist currently or are contemplated at the date of this Bond.
3.2
Save as otherwise stated herein, this Bond is a continuing guarantee and is to
remain valid until all Obligations have been discharged in full to the Institution
5.
D:\81919631.doc
28/7/2017
(notwithstanding any fluctuation in, or temporary extension of such
Obligations).
3.3
This Bond may be terminated on 90 Business Days written notice given to
and received by the Private Party and the Institution. During such period of 90
Business Days:
3.3.1
the Private Party may replace this Bond with a guarantee acceptable to
the Institution; or
3.3.2
the Institution may demand and receive from the Guarantor payment of
all amounts not paid under this Bond.
3.4
This Bond shall be in addition to and not a substitution for any other rights
which the Private Party may have under or by virtue of the PPP Agreement.
4.
Limitation
The liability of the Guarantor under this Bond shall be limited to the amount of the
Private Party’s outstanding Obligations from time to time.
Subject to such
aggregate limit, the rights of the Institution are cumulative and the Institution shall
be entitled to make partial and multiple demands under this Bond, from time to
time, in respect of partial and multiple performance by the Guarantor.
Notwithstanding the aforementioned, the aggregate liability of the Guarantor in
terms hereof is limited to R[………..]{amount in words}.
5.
5.1
Enforcement
The Guarantor warrants that it has a credit rating from [Standard & Poor,
Local Currency Rating of at least BBB-] at the date of signature hereof.
5.2
The Institution shall be entitled to demand payment of the full amount
guaranteed under this Bond and to enforce this Bond 15 days after the credit
ratings of the Guarantor no longer satisfy the credit ratings detailed in clause
6.1 if the Institution has not, within that 15 day period, advised the Guarantor
that an acceptable substitute guarantor has been found. The Guarantor shall
comply with such demand immediately.
6.
D:\81919631.doc
28/7/2017
5.3
The Institution shall be entitled to call up and enforce this Bond and the
Guarantor shall comply with such calling up and enforcement within 2
Business Days of receiving written notice of such calling up and enforcement.
6.
Preservation of the Bond
6.1
This Bond shall at all times be fully and immediately enforceable, despite the
fact that:
6.1.1
any intended security may not have been obtained or perfected or may
have been released or may have ceased to be held for any other reason;
6.1.2
the Institution may not have exercised any of its rights against the Private
Party timeously or at all;
6.1.3
the Institution may have elected any particular remedy against the
Private Party to the exclusion of any other remedy;
6.1.4
the basis of the Institution's arrangements with the Private Party may
have altered;
6.1.5
the Institution may have given extended terms or any other indulgence to
the Private Party or may have accepted a part payment or other benefit
in settlement or any other compromise in respect of the Private Party’s
obligations or may have otherwise so released the Private Party whether
wholly or partly (in which event the Guarantor shall remain indebted to
the Institution as if those terms had not been given or that part payment,
or other compromise or release had not been agreed to);
6.1.6
the obligations of the Private Party may have been varied or novated,
whether by agreement, operation of law or otherwise, in which event, the
Institution may elect to hold the Guarantor liable for the obligations either
as they existed before, or as they exist after, the variation or novation;
6.1.7
the Private Party may have been placed in liquidation, judicial
management or may become subject to any legal disability or to any law
for the benefit or assistance of debtors and/or creditors;
6.1.8
or despite:
7.
D:\81919631.doc
28/7/2017
6.1.8.1
any unenforceability, illegality or invalidity of any obligation of any
person (including, without limitation, the Private Party) under the
PPP Agreement or any other document or security derived in
connection with the PPP Agreement; or
6.1.8.2
any other fact or circumstance which might otherwise have had the
effect of wholly or partially relieving the Guarantor of its obligations,
including any fact or circumstance which has arisen by reason of
any act or omission on the part of the Institution.
6.2
The Guarantor shall not be exonerated from any of its obligations hereunder
for any reason, including (but not limited to) by an arrangement made by the
Institution with the Private Party or by anything that the Institution may do or
omit or neglect to do which, but for this provision, might exonerate the
Guarantor.
6.3
The Guarantor shall not be exonerated from any of its obligations hereunder
in the circumstances in which the Institution is entitled to, but does not,
exercise any of its rights in terms of this Bond or the PPP Agreement.
6.4
The Guarantor authorises the Private Party to amend, add to or vary the
terms of the PPP Agreement, other than in respect of the amounts of the
Obligations.
7.
Undertaking
Provided the Claim is made in accordance with the provisions of this Bond, the
Guarantor undertakes in respect of any claim arising out of this Bond, not to raise
the defence that there is no cause (ie reasonable basis) for the Institution's claim
for the granting of this Bond.
8.
Demand
8.1
The Institution shall not be obliged, before exercising any of its rights or
powers or remedies conferred upon them by this Bond or by law, to:
8.1.1
make any demand, other than a demand required to establish a claim in
terms of the PPP Agreement, or to take any action or obtain judgment in
any court against the Private Party;
8.
D:\81919631.doc
28/7/2017
8.1.2
make or file any claim or proof in the winding-up or dissolution of the
Private Party; or
8.1.3
enforce or seek to enforce any other security as may have been granted
to it by the Private Party, including any claim under the PPP Agreement,
in respect of the Obligations of the Private Party.
9.
9.1
No Deductions
Each payment to be made by the Guarantor to the Institution shall be made
free and clear of and without any withholding, deduction or setoff whatsoever,
including without limitation for or on account of any taxes unless the
Guarantor is required by law to make such a payment subject to the
deductions.
9.2
If the Guarantor is required by law to make a deduction or withholding from
such payment, the relevant sum payable by the Guarantor shall be increased
to the extent necessary to ensure that, after the making of such deduction or
withholding, the Institution receives and retains (free from any liability in
respect of any such deduction or withholding) an amount equal to the sum
which they would have received and so retained had not such deduction or
withholding been made or required to be made.
9.3
Admissions and Acknowledgements
Any admission or acknowledgement made by the Private Party or the
liquidator, trustee, judicial manager, legal or other
representative of the
Private Party, shall be binding on the Guarantor and shall have the same
effect in all respects as if made by the Guarantor.
10. Judgment and Arbitration Awards against the Private Party
Any judgment or arbitration award in favour of the Institution against the Private
Party pursuant to a breach of the provisions as set out in Annexure A hereto shall,
despite the fact that the Guarantor may not have been joined in the proceedings
giving rise to the judgment or arbitration award, preclude the Guarantor from being
entitled in proceedings against the Guarantor to dispute the merits and/or quantum
of the claim in respect of which the judgment or award has been granted.
9.
D:\81919631.doc
28/7/2017
11. Certificate of Indebtedness
11.1
A certificate reflecting any of the following:
11.1.1
the existence of, and/or the amount of the indebtedness of the Guarantor
to the Institution;
11.1.2
the due date for payment of the indebtedness;
11.1.3
the fact that the indebtedness due and owing has not been paid and
otherwise discharged;
11.1.4
and purporting to be signed by someone who is identified in the
certificate or otherwise as the agent of the Institution,
shall be prima facie proof of its contents until the contrary is proved.
12. Acknowledgement of Completeness
The Guarantor acknowledges that this Bond was complete in all essential respects
at the time of signature.
13. Waiver of Benefits
13.1
The Guarantor waives any defence to any claim by the Institution on the
grounds:
13.1.1
that no money, or less money than has been claimed, has been
advanced to the Private Party (ie non numeratae pecuniae);
13.1.2
that errors have been made in calculating the amount claimed (ie errore
calculi); or
13.1.3
of excussion.
14. Notices and Address for Service of Legal Documents
14.1
Any written notice to the Guarantor in connection with this Bond may be
addressed to:
physical address - [... ...]
current fax number - [... ...]
10.
D:\81919631.doc
28/7/2017
and marked for the attention of [... ...]
14.2
Any notice to the Guarantor shall be deemed to have been duly given on
delivery, if delivered to the Guarantor’s physical address in terms of this
clause.
14.3
The Guarantor chooses the physical address detailed in clause 16.1 as the
address at which documents and legal proceedings in connection with this
Bond may be served.
14.4
The Guarantor may change its address for this purpose to another physical
address in the Republic of South Africa, by notice in writing.
15. No Representations
The Guarantor may not rely on any representation which allegedly induced that
Guarantor to enter into this Bond unless the representation is recorded in this
Bond.
16. Variations, Cancellation and Waiver
16.1
No variation, addition to, deletion from or cancellation of this Bond, and no
waiver of any right under this Bond, shall be effective unless reduced to
writing and accepted by or on behalf of the Institution.
16.2
The expiry or termination of the PPP Agreement shall not prejudice the rights
of the Institution to make a Claim under this Bond providing that the Claim
arose prior to the expiry or termination of the PPP Agreement.
17. Indulgences
The grant of any indulgence by the Institution to the Guarantor under this Bond
shall not constitute a waiver of any right by the Institution or prevent or adversely
affect the exercise by the Institution of any existing or future right of the Institution.
18. Invalidity and Severability
If any of the provisions of this Bond becomes invalid, illegal or unenforceable for
any reason, the validity, legality and enforceability of the remaining provisions of
this Bond shall not be impaired or affected in any way by such invalidity, illegality
or unenforceability.
11.
D:\81919631.doc
28/7/2017
19. Delegation and Assignability
19.1
The Guarantor may not cede any of its rights or delegate any of its obligations
under this Bond without the prior written consent of the Private Party and the
Institution.
19.2
The Guarantor agrees that the Institution is entitled to cede its rights under
this Bond, after written notice to the Guarantor.
20. Waiver of Immunity
The Guarantor hereby waives any immunity that it might otherwise have had in
respect of any legal or other action instituted by the Institution in respect of this
Bond.
21. Applicable Law
This Bond is to be interpreted and implemented in accordance with the law of the
Republic of South Africa.
Signed at
on
2017.
Witness:
for [insert name of Guarantor]
………………………………………………
……………………………………………..
12.
D:\81919631.doc
28/7/2017
Notice to Guarantor
From: [Institution]
[Address]
Dated:[insert date]
Dear Sirs
[Final Bond dated [insert date] Number[... ...]] (the "Bond") issued on behalf of
[insert name of Private Party]
We refer to the above Bond issued by you. Terms defined in the Bond shall have the
same meaning when used in this notice.
We are entitled to call on this Bond under clause 12 of the PPP Agreement and we
demand payment of the sum of R[
] under the Bond.
Payment must be made without delay to ourselves by payment to [... ...] Bank
[...branch code...] [ account number…] in the name of [... ...] .
Yours faithfully,
[... ...]
for [Institution]