LOAN AND FINANCING AGREEMENT DATED 13. APRIL,
2006 BETWEEN KfW, FRANKFURT AM MAIN AND REPUBLIC OF SERBIA, BELGRADE
|
represented by the Minister of Finance Mlađan Dinkić,
authorized by the Government of the Republic of Serbia
for up to
EUR 20,000,000.--
- REHABILITATION OF THE DISTRICT HEATING SYSTEMS IN SERBIA - PHASE III -
On the basis of the protocols dated May 13, 2003 and July 13, 2004 between the Government of the Federal Republic of Germany and the Government of the Republic of Serbia on Financial Cooperation ("Protocol"), as well as the recitals made hereafter, the Borrower and KfW hereby enter into the following Loan and Financing Agreement (the "Agreement").
KfW is prepared to finance the Rehabilitation of District Heating Systems in Serbia by way of extending to the Borrower a combined financing consisting of a financial contribution granted by the Federal Republic of Germany represented by the Ministry of Cooperation and Development and accompanied by a loan, provided that the Loan shall be guaranteed by export credit agencies acceptable to KfW ("ECA").
Along with the financing provided under the following Agreement, KfW is prepared to finance expert services for the rehabilitation of the district heating systems in the Republic of Serbia by way of extending a further financial contribution granted by the Federal Republic of Germany represented by the Ministry of Cooperation and Development to the Republic of Serbia on the terms and conditions set forth in the separate financing agreement between the Republic of Serbia and KfW dated March 28th, 2005.
Article 1
Amount and Purpose of the Loan and Financial Contribution
1.1 KfW shall extend to the Borrower a loan not exceeding EUR 12,000,000.-- (the "Loan") and a financial Contribution not exceeding EUR 8,000,000.-- (the "Financial Contribution").
The Loan and Financial Contribution hereinafter together referred to as the "Funds".
1.2 The Borrower shall (i) channel the Funds in full to selected district heating companies in the Republic of Serbia as program executing agencies (each of which hereinafter referred to as a "Program Executing Agency" or "PEA") and ensure pursuant to Article 2 of this Agreement that each PEA uses the Funds exclusively for the rehabilitation of their district heating systems (the "Program"), and primarily to pay the foreign exchange costs. The Borrower and KfW shall determine the details of the Program, including the criteria for the selection of the PEAs and the goods and services delivered pursuant to the export contracts to be concluded in relation to the Program and to be financed from the Funds (the "Export Contracts") by a separate agreement which shall also include any stipulations to be made for the purpose of compliance with the conditions of the ECAs.
1.3 Taxes and other public charges to be borne by the Borrower or the PEAs as well as import duties shall not be financed from the Funds.
Article 2
Channelling of the Funds to the Program Executing Agencies
2.1 The Borrower shall channel the Funds in full to the PEAs under separate loan agreements at an interest rate of 2% per annum. The separate loan agreements shall have a tenor of 12.5 years, including a grace period of 2.5 years, beginning from the date of the first disbursement under the respective separate loan agreements.
2.2 By a separate agreement, the Borrower and KfW shall agree upon
- the use by the Borrower of the interest paid by the PEAs pursuant to the separate loan agreements, respectively, so far as such interest shall exceed the interest to be paid by the Borrower under this Agreement ("Interest Differential Funds"), and
- the use by the Borrower of the repayment instalments paid by the PEAs pursuant to the separate loan agreements, respectively, so far as such repayment instalments shall exceed the repayment instalments to be paid by the Borrower under this Agreement ("Repayment Instalments Differential Funds")
for financing projects in the field of district heating and energy efficiency that are particularly worthy of promotion from the aspect of development policy.
2.3 The separate loan agreements pursuant to Article 2.1 shall, inter alia,
a) oblige the PEA to use the Funds exclusively for the Program,
b) oblige the PEA to prepare, implement, operate and maintain the Program in accordance with the provisions set forth in Article 10 of this Agreement,
c) provide for appropriate rights of the Borrower as well as KfW and its representatives to monitor the preparation, implementation, operation and maintenance of the Program by the PEAs, respectively, and
d) provide for a disbursement procedure which mirrors the disbursement procedure pursuant to Article 3 of this Agreement.
By a separate agreement, KfW and the Borrower shall agree upon the form and substance of the separate loan agreements.
2.4 Prior to each disbursement from the Funds for the first use by a specific PEA, the Borrower shall send KfW a certified translation of the respective loan agreement specified in Article 2.1 and to be entered into with such PEA for approval.
2.5 The payment obligations of the Borrower under this Agreement are independent from the debt service of the PEAs.
Article 3
Disbursement
3.1 Subject to the conditions precedent set forth in Article 9 of this Agreement, KfW shall
a) disburse the Loan in accordance with the execution of the supply of the goods and rendering of services agreed upon in the export contracts;
b) disburse the Financial Contribution in accordance with the progress of the Program.
3.2 By a separate agreement, the Borrower and KfW shall determine the disbursement procedure, in particular the evidence proving that the requested funds are used for the purpose of the Loan and the Financial Contribution stipulated in this Agreement.
3.3 In the event that the total prices of the goods and services to be financed from the Funds, agreed upon in the Export Contracts, are reduced prior to full disbursement, KfW shall have the right to determine, at its sole discretion, but after consultation with the Borrower, whether it reduces the Loan and/or Financial Contribution. If the total price agreed in one or more Export Contracts is reduced and one of the portion of Funds, i.e. the Loan or Financial Contribution, is fully disbursed, KfW may effect transfers so as to re-establish the initial proportion between the Loan and Financial Contribution as set forth in Article 1.1.
3.4 KfW has the right to refuse to make disbursements after August 31, 2009. In the event that the execution of the Export Contracts is delayed, KfW shall examine whether and on what conditions this deadline may be extended.
Article 4
Commitment Charge, Management Fee, Interest, and Repayment
4.1 The Borrower shall pay a commitment charge of 0.25% p. a. on undisbursed Loan amounts. The commitment charge shall be computed for a period beginning on the date of signing by both parties of the first separate loan agreement between the Republic of Serbia and the respective PEA, and ending at the date at which disbursements are debited.
4.2 The Borrower shall pay a management fee of 0.5% on the total amount of the Loan.
4.3 a)
aa) The Borrower shall pay interest on the Loan at a rate to be fixed by KfW two days prior to the date of disbursement of the respective Loan portion on the basis of KfW's effective funding costs in the Euro capital market at the time of disbursement for maturities matching as closely as possible that of the Loan portion to be disbursed, plus a margin of 1.2 % p.a. The rate of interest thus fixed shall be binding for the entire term of the respective Loan portion.
bb) KfW shall combine the interest rates fixed for each disbursement following the last disbursement from the Loan in order to form one single interest rate. This combined interest rate shall correspond to the weighted average of the individual interest rates - rounded off to 1/10,000% if the first deleted decimal is less than 5 or rounded up to 1/10,000% if the first deleted decimal is equal to or greater than 5 - and from the date of each disbursement up to the next disbursement shall be the basis for the further calculation of interest.
cc) KfW shall notify the Borrower without delay of the interest rates fixed according to Article 4 a) aa) or Article 4 a) bb). The interest rate thus notified shall be binding as of the date specified in the notice.
dd) The interest rate calculated after the final disbursement shall be the basis for the calculation of interest from the date of the said final disbursement up to repayment in full. KfW shall inform the Borrower of the thus established weighted average interest rate. This shall be done by way of a registered airmail letter, which shall contain the repayment schedules. The interest rate thus communicated shall be made binding by the pertinent confirmation.
b) Interest shall be charged from the dates at which disbursements are debited to the dates at which repayments are credited to KfW's account specified in Article 4.11.
4.4 a) The Borrower shall pay the commitment charge for the Loan semi-annually on June 30 and on December 30 of each year for the half-year then ending.
b) The Borrower shall pay the management fee prior to the first disbursement from the Funds, but not later than three months after the signing of this Agreement.
c) Prior to the due date of the first repayment instalment of the Loan the Borrower shall pay the interest for the Loan in accordance with Article 4.5 semi-annually on June 30 and on December 30 of each year for the half-year then ending. Once the first repayment instalment becomes due pursuant to Article 4.5, interest shall fall due for payment together with said repayment instalment and forthwith shall fall due at the end of each half-year at the further due dates specified in Article 4.5.
4.5 Subject to compliance with the relevant ECA conditions, the Borrower shall repay the Loan in 18 equal consecutive semi-annual instalments, the first of which shall fall due six months after the date of commissioning or the weighted mean date of physical possession of the goods (depending on the nature of the supplies to be procured under the export contracts as well as the obligations of the exporter under the respective export contract) but not later than three years after the first disbursement. Evidence proving the date of commissioning / weighted mean date of physical possession of the goods shall be furnished through a confirmation made out in conformity with Annex 2 to this Agreement. As soon as the repayment schedule has been established, KfW shall send it to the Borrower by registered airmail letter. The repayment schedule thus shall constitute an integral part of this Agreement.
In the event that the Export Contracts are subject to separate ECA-covers, which would not allow for a fixing of a joint date for the first repayment and, consequently, a joint repayment schedule for the entire Loan, the Loan shall be split into separate tranches to accomodate for individual dates for the first repayment and repayment schedules. Once the Loan is disbursed in full, KfW shall, if in compliance with the conditions of the respective ECA-covers, be entitled to consolidate the repayment of the separate tranches into one joint repayment schedule for the entire Loan. The third and fourth sentence of this Article 4.5 shall apply accordingly.
4.6 If repayment instalments of the Loan are not at KfW's disposal when due, KfW shall have the right to raise the interest rate on arrears by 2% p. a. for the period beginning with the due date and ending at the date at which repayments are credited to KfW's account specified in Article 4.11. Interest on overdue repayment instalments shall be paid without delay at the first request of KfW.
4.7 KfW may require the Borrower to pay damages for overdue payments other than repayment instalments in a lump sum of 2% above the base rate effective at the due date. The "Base Rate" is the interest rate disclosed by the Deutsche Bundesbank as base rate at the rate applicable on the relevant due date. Such lump sum shall be calculated from the due date to the date at which the relevant payments are credited to KfW's account specified in Article 4.11 and shall be paid at the first request of KfW.
4.8 The commitment charge, interest, and any additional charges on arrears pursuant to Article 4.6 and 4.7 shall be calculated on the basis of a 360-day year and 30-day months.
4.9 Undisbursed or prematurely repaid Loan amounts shall be credited against the repayment instalments due last in accordance with the repayment schedule, unless a different offsetting mode is agreed upon in a particular case.
4.10 KfW may apply any sums received in the following order: first to costs and fees hereunder and to amounts due under Articles 4.6 and 4.7 above, second to interest and Prepayment Compensation hereunder, third to repayment instalments hereunder and fourth to any other outstanding payment obligation of the Borrower vis-a-vis KfW. The application shall be made, in each case, in the direct order of maturities.
4.11 The Borrower shall remit all payments in Euro to KfW's account No. 3122301232 at KfW, Frankfurt am Main (BLZ 500 204 00, S.W.I.F.T.: KFWIDEFF), no setoff of counterclaims against such payments being permitted. The Borrower's payment obligations shall terminate only if and to the extent that payments have been credited to said account in Euro and are at KfW's free disposal.
Article 5
Suspension of Disbursements and Premature Repayment
5.1 The Borrower may renounce the disbursement of Loan amounts only upon prior consent of KfW.
5.2 The Borrower may, in observance of a 30 days' prior notice, prematurely repay the Loan only in the amount of one or more repayment instalments together with the payment of a compensation for premature repayment to be determined by KfW and calculated on the basis of the capital market situation prevailing at the time and taking into account the lost interest earnings and the reinvestment possibilities for the original remaining term of the Loan.
5.3 KfW may not suspend disbursements of amounts from the Fund unless
a) the Borrower fails to perform payment obligations to KfW as and when due,
b) obligations under this Agreement or the separate agreement pertaining to this Agreement have been violated,
c) obligations under the separate loan agreements specified in Article 2.1 of this Agreement have been violated,
d) the Borrower is unable to prove that the proceeds from the Funds have been used for the stipulated purpose,
e) extraordinary circumstances arise that preclude or seriously jeopardize the implementation, the operation or the purpose of the Program, or the performance of the payment obligations assumed by the Borrower under this Agreement.
5.4 If any of the situations specified in Article 5.3 a), b) or c) has occurred and has not been eliminated within a period specified by KfW, which shall, however, be at least 30 days, KfW may,
a) in the case specified in Article 5.3 a) demand the immediate repayment of all disbursed Loan amounts, all interest accrued thereon and all other incidental charges;
b) in the case specified in Article 5.3 b) demand the immediate repayment of all disbursed Funds, all interest accrued thereon and all other incidental charges;
c) in the case specified in Article 5.3 c) demand the immediate repayment of such disbursed funds which have been channelled to the PEA being party to the respective separate loan agreement;
d) in the case specified in Article 5.3 d), demand the immediate repayment of such amounts of the Funds as the Borrower is unable to prove to have been used for the stipulated purpose.
Article 6
Costs and Public Charges
6.1 The Borrower shall make any and all payments to be effected under this Agreement without any deduction for taxes, other public charges or other costs, and shall pay the transfer and conversion costs accruing in connection with the disbursement of the Funds.
6.2 The Borrower shall bear all taxes and other public charges accruing outside the Federal Republic of Germany in connection with the conclusion and execution of this Agreement. If such costs and charges accrue within the Federal Republic of Germany, the Borrower shall pay them only to the extent that they have occurred upon the Borrower's initiative. If KfW advances such costs or charges, the Borrower shall transfer them without delay upon request to KfW's account specified in Article 4.11. Any taxes or charges withheld by way of deduction outside the Federal Republic of Germany shall be borne or refunded by the Borrower. In the event that this obligation is prohibited by law, the payments made by the Borrower shall be raised by the amounts necessary for KfW to receive in full the amount calculated pursuant to Article 4 after deduction of taxes and charges.
6.3 Prior to the first disbursement from the Funds, the Borrower shall prove in form and substance satisfactory to KfW that KfW is exempted from any and all taxes on interest and commitment charge earnings in the Republic of Serbia when granting the Loan.
Article 7
Guarantee by Export Credit Agency
KfW shall have claims arising from the Loan guaranteed by ECAs. The unrestricted effectiveness of the ECA guarantees shall be a prerequisite for the disbursement of the Loan.
Article 8
Validity of this Agreement and Representation
8.1 In due course prior to the first disbursement the Borrower shall furnish to KfW evidence satisfactory to KfW proving that the Borrower has met all requirements under its constitutional and other laws for the valid assumption of all its obligations under this Agreement.
8.2 The Minister of Mining and Energy and such persons as designated by him or her to KfW and authorized by specimen signatures authenticated by him or her shall represent the Borrower in the implementation of this Agreement. The power of representation shall not expire until its express revocation by the representative of the Borrower authorized at the time has been received by KfW.
8.3 Amendments or addenda to this Agreement and any notices and statements delivered by the contracting parties under this Agreement shall be in writing. Any such notice or statement shall have been received once it has arrived at the following address of the corresponding contracting party or at such other address of the corresponding contracting party as notified to the other contracting party:
For KfW: |
KfW |
|
Postfach 11 11 41 |
|
60046 Frankfurt am Main |
|
Federal Republic of Germany |
|
Telefax: 0049 69 74 31-29 44 |
|
Telex: 4 15 25 60 kw d |
The Borrower: |
Ministry of Finance |
|
20 Kneza Miloša Street |
|
11000 Beograd |
|
Republic of Serbia |
|
Telefax: 00381 11 36 14 365 |
For Borrower: |
Ministry of Mining and Energy |
|
Nemanjina 22-26 |
|
11000 Beograd |
|
Republic of Serbia |
|
Telefax: +381-11-3616-535 |
Article 9
The Program
9.1 The Borrower shall ensure that each PEA, insofar as it is involved in the Program,
a) prepares, implements, operates and maintains the Program in conformity with sound financial and engineering practices and substantially in accordance with the Program conception agreed upon between the Borrower and KfW;
b) assigns the preparation and supervision of construction of the Program to independent, qualified consultants, and the implementation of the Program to qualified firms;
c) awards the contracts for goods and services to be financed from the Funds in compliance with KfW's procurement standards and, as regards the Export Contracts with ECA cover, only by way of international competitive bidding;
d) maintains, or causes to be maintained, books and records unequivocally showing all costs of goods and services required for the Program and clearly identifying the goods and services financed from the Loan and the Financial Contribution;
e) enables the representatives of KfW at any time to inspect said books and records as well as any and all other documentation relevant to the implementation of the Program, and to visit the Program and all installations related thereto;
f) furnishes to KfW any and all such information and records on the Program and its further progress as KfW may request;
g) until December 31, 2006 implements a consumption-based tariff system;
h) prior to the disbursement from the Funds for the first use by such PEA, provides evidence that it has introduced an adequate cost allocation system and has elaborated business plans applicable for a perennial period, in each case satisfactory to KfW.
9.2 The Borrower shall by itself and procure that each PEA shall, insofar as it is involved in the Program,
a) ensure the full financing of the Program and, upon request of KfW, submit to KfW evidence proving that the costs not paid from the Funds are covered;
b) of its own accord promptly inform KfW of any and all circumstances that preclude or seriously jeopardize the implementation, the operation or the purpose of the Program;
c) not pledge, mortgage, sell or otherwise dispose of assets forming part of the Program before repayment in full of the Loan without the prior consent of KfW.
9.3 The Borrower shall
a) assist each PEA in conformity with sound engineering and financial practices in the implementation of the Program and in the performance of the PEA obligations under the respective separate loan agreement specified in Article 2.1 and, in particular, grant each PEA any and all permissions necessary for the implementation of the Program;
b) not amend or terminate any of the separate loan agreements specified in Article 2.1 or grant any waiver thereunder without the prior written consent of KfW;
c) use its best endeavours to transfer as soon as practicable the ownership of the PEAs from the Borrower to the respective municipalities.
d) use its best efforts to procure that the first separate loan agreement mentioned in Article 4.1 is signed by both parties to it not later than December 31, 2006.
9.4 The Borrower and KfW shall determine the details pertinent to Article 9.1 to 9.3 in a separate agreement.
Article 10
Miscellaneous Provisions
10.1 The Borrower shall by itself and procure that each PEA shall ensure that the persons charged with the preparation and implementation of the Program, the award of any contract on the supplies and services to be financed and with requesting disbursements of Funds do not demand, assume, render, grant, promise or obtain a promise of unlawful payments or other advantages in connection with these tasks.
10.2 If any provision of this Agreement is or becomes invalid, this will not affect the validity of the remaining provisions. The invalid provision will be replaced by a valid one which is consistent with the purpose of this Agreement.
10.3 This Agreement is legally independent from the Export Contracts and the separate loan agreements with the PEA specified in Article 2.1 of this Agreement. The Borrower may not, in performing its obligations under this Agreement, put forward defences arising in connection with the Export Contract or such separate loan agreements.
10.4 The Borrower may not assign or transfer, pledge or mortgage any claims from this Agreement.
10.5 This Agreement shall be governed by the law of the Federal Republic of Germany. The place of performance shall be Frankfurt am Main.
10.6 All disputes arising from this Agreement and all disputes on the validity of this Agreement and of the Arbitration Agreement that cannot be settled amicably between the contracting parties shall be submitted to arbitration proceedings in accordance with the Arbitration Agreement (Annex 1) forming an integral part of this Agreement.
Done in 2 originals in English.
Belgrade, |
Belgrade, |
|
|
|
|
Republic of Serbia, represented |
KfW |
With reference to Article 10.6 of the Loan and Financing
Agreement
between
KfW, Frankfurt am Main
("KfW")
and
Republic of Serbia, Belgrade
("Borrower"),
represented by the Minister of Finance Mlađan Dinkić,
authorized by the Government of the Republic of Serbia
dated 13. April, 2006
- Rehabilitation of the District Heating Systems in Serbia - Phase III -
Article 1
All disputes arising from the Loan and Financing Agreement and all disputes on the validity of the Loan and Financing Agreement and of the Arbitration Agreement that cannot be settled amicably by the contracting parties shall finally and exclusively be decided by an Arbitration Tribunal.
Article 2
The parties to the arbitration proceedings shall be KfW and the Borrower.
Article 3
3.1 The Arbitration Tribunal shall consist of three arbitrators appointed as follows: one arbitrator shall be appointed by KfW, a second arbitrator by the Borrower; the third arbitrator ("Chairman") shall be appointed by agreement of both parties or, if both parties fail to agree within 60 days after receipt of the request for arbitration by the defendant, on application of either party by the president of the International Chamber of Commerce or, failing appointment by him, by the chairman of the Swiss National Committee of the International Chamber of Commerce. If either side fails to appoint an arbitrator such arbitrator shall be appointed by the Chairman.
3.2 In case any arbitrator appointed pursuant to the foregoing provisions wishes to resign or becomes unable to act as arbitrator his successor shall be appointed in the same manner as the original arbitrator. The successor shall have all the powers and duties of said original arbitrator.
Article 4
4.1 Arbitration proceedings shall be instituted by the submission of a written statement of claim by one party to the other. Such statement of claim shall state the nature of the claim, the remedy or compensation requested, and the name of the arbitrator appointed by the claimant.
4.2 Within 30 days upon receipt of such statement of claim, the defendant shall notify the claimant of the name of the arbitrator appointed by him.
Article 5
The Arbitration Tribunal shall convene at such time as shall be fixed by the Chairman. Unless the parties have agreed on the place of the arbitration proceedings, such place shall also be determined by the Chairman.
Article 6
The Arbitration Tribunal shall decide on its own competence. It shall determine its procedure according to generally recognized rules of procedure. In any case both parties shall be afforded an oral hearing in a regular sitting. The Arbitration Tribunal may, however, reach a decision notwithstanding any failure to appear on the part of either party. All decisions of the Arbitration Tribunal shall require the approval of at least two arbitrators.
Article 7
The Arbitration Tribunal shall deliver its award together with its reasons therefor in writing. An award signed by at least two arbitrators shall constitute the award of the Arbitration Tribunal. Each party shall receive a signed counterpart of the award. The award shall be binding and final. By signing this Agreement both parties assume the obligation to comply with such award.
Article 8
8.1 The parties shall agree on the remuneration of the arbitrators and such persons as shall be required for the conduct of the arbitration proceedings.
8.2 If the parties fail to agree before the Arbitration Tribunal convenes, the Arbitration Tribunal shall fix an adequate remuneration. Each party shall bear its own expenses arising from the arbitration proceedings. The costs of the Arbitration Tribunal shall be borne by the party against which the award is rendered. If neither party obtains a full award the costs shall be borne proportionally by the parties.
8.3 The Arbitration Tribunal shall definitely decide on all questions concerning costs.
8.4 The parties shall be jointly and severally liable for the payment of the remuneration to the persons specified in Article 8.1.
Article 9
Any and all notices and statements delivered by the parties and the Arbitration Tribunal in connection with the arbitration proceedings shall be in writing. Such notices and statements shall have been received once they have arrived at the following address of the corresponding contracting party or at such other address of the corresponding contracting party as notified to the other contracting party:
For KfW: |
KfW |
|
Postfach 11 11 41 |
|
60046 Frankfurt am Main |
|
Federal Republic of Germany |
|
Fax: +49 69 7431-2944 |
The Borrower: |
Ministry of Finance |
|
20 Kneza Miloša Street |
|
11000 Belgrade |
|
Republic of Serbia |
|
Telefax: 00381 11 688 835 |
Done in 2 originals in the English language.
Belgrade, |
Belgrade, |
|
|
|
|
Republic of Serbia, represented |
KfW |
To:
KfW
Palmengartenstrasse 5 - 9
D-60325 Frankfurt am Main
Federal Republic of Germany
L I a __ / |
Loan No. ____ |
Loan Agreement dated _______________ |
|
for EUR _____________ |
In accordance with Article 4.5 of the Loan and Financing Agreement, we hereby confirm that the
- Date of commissioning took place on
- Weighted mean of physical possession of the goods accounts for
_______________ .
_________________, |
_________________ |
_________________, |
_________________ |
(place) |
(date) |
(place) |
(date) |
Exporter |
Borrower |
(authorised signatures) |
(authorised signatures) |