Loan Number 4183 RU
LOAN AGREEMENT
(EDUCATION INNOVATION PROJECT)
BETWEEN RUSSIAN FEDERATION AND INTERNATIONAL
BANK FOR RECONSTRUCTION AND DEVELOPMENT
(Washington, 9.X.1997)
Agreement, dated October 9, 1997, between Russian Federation (the Borrower) and International Bank for Reconstruction and Development (the Bank).
Whereas (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project, and
Whereas the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement;
Now therefore the parties hereto hereby agree as follows:
Article I
General Conditions; Definitions
Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements for Single Currency Loans" of the Bank, dated May 30, 1995, with the modification of Section 6.03 set forth below (the General Conditions) constitute an integral part of this Agreement:
"Section 6.03. Cancellation by the Bank. If (a) the right of the Borrower to make withdrawals from the Loan Account shall have been suspended with respect to any amount of the Loan for a continuous period of thirty days, or (b) at any time, the Bank determines, after consultation with the Borrower, that an amount of the Loan will not be required to finance the Project's costs to be financed out of the proceeds of the Loan, or (c) at any time, the Bank determines, with respect to any contract to be financed out of the proceeds of the Loan, that corrupt or fraudulent practices were engaged in by representatives of the Borrower or of a beneficiary of the Loan during the procurement or the execution of such contract, without the Borrower having taken timely and appropriate action satisfactory to the Bank to remedy the situation, and establishes the amount of expenditures in respect of such contract which would otherwise have been eligible for financing out of the proceeds of the Loan, or (d) at any time, the Bank determines that the procurement of any contract to be financed out of the proceeds of the Loan is inconsistent with the procedures set forth or referred to in the Loan Agreement and establishes the amount of expenditures in respect of such contract which would otherwise have been eligible for financing out of the proceeds of the Loan, or (e) after the Closing Date, an amount of the Loan shall remain unwithdrawn from the Loan Account, or (f) the Bank shall have received notice from the Guarantor pursuant to Section 6.07 with respect to an amount of the Loan, the Bank may, by notice to the Borrower and the Guarantor, terminate the right of the Borrower to make withdrawals with respect to such amount. Upon the giving of such notice, such amount of the Loan shall be canceled."
Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings:
(a) "Grant" means a grant made or proposed to be made by the Borrower out of the proceeds of the Loan to a Higher Education Institution for a Sub-Project under Part A of the Project;
(b) "Higher Education Institution" means any institution of higher education of the Borrower selected under Part A of the Project in accordance with procedures set forth in the Operational Manual;
(c) "MGPE" means the Ministry of General and Professional Education of the Borrower;
(d) "NTF" means the National Training Foundation, established pursuant to the Decree of the Government of the Russian Federation of August 12, 1994, № 1273-P and registered with the Borrower's Ministry of Justice on September 29, 1994, Certificate No. UP 8;
(e) "NTF Project Coordination Agreement" means the agreement to be entered between the Borrower and NTF in accordance with the provisions of Section 3.01 (b) of this Agreement;
(f) "Operational Manual" means the manual, satisfactory to the Bank, containing, inter alia, eligibility criteria and appraisal, approval and supervision rules and procedures for Sub-Loans and Grants to Higher Education Institutions selected under Part A of the Project, grants to authors and publishers under Part В (2) (b) of the Project and Sub-Loan to the Region under Part С of the Project, as well as other administrative rules to be followed by NTF, as the same may be amended from time to time by agreement between the Bank and the Borrower;
(g) "Project Preparation Advance" means the project preparation advance granted by the Bank to the Borrower pursuant to an exchange of letters dated March 26, 1997 and April 26, 1997 between the Borrower and the Bank;
(h) "Region" means any of the Regions of the Russian Federation to whom the Borrower has made or proposes to make a Sub-Loan under Part С of the Project;
(i) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement;
(j) "Sub-Loan" means a loan made or proposed to be made by the Borrower out of the proceeds of the Loan to a Region under Part С of the Project, or to a Higher Education Institution for a Sub-Project under Part A of the Project;
(k) "Sub-Loan Agreement" means the agreement to be entered into between the Borrower and a Region or a Higher Education Institution referred to in Section 3.01 (e) of this Agreement, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Sub-Loan Agreement; and
(l) "Sub-Project" means a project to be carried out by a Higher Education Institution under Part A of the Project, utilizing the proceeds of a Sub-Loan or a Grant.
Article II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount equal to seventy-one million Dollars (USD 71,000,000).
Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for: (i) expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods, works and services; and (ii) amounts paid (or if the Bank shall so agree, to be paid) by the Borrower for grants to authors and publishers under Part B.2 (b) of the Project to be financed out of the proceeds of the Loan.
(b) The Borrower may, for the purposes of the Project, open and maintain in Dollars a special deposit account in a commercial bank on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure and attachment. Deposits into, and payments out of the Special Account shall be made in accordance with the provisions of Schedule 6 to this Agreement.
(c) Promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be canceled.
Section 2.03. The Closing Date shall be December 31, 2003 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date.
Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time.
Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to LIBOR Base Rate plus LIBOR Total Spread.
(b) For the purposes of this Section:
(i) "Interest Period" means the initial period from and including the date of this Agreement to, but excluding, the first Interest Payment Date occurring thereafter, and after the initial period, each period from and including an Interest Payment Date to, but excluding the next following Interest Payment Date.
(ii) "Interest Payment Date" means any date specified in Section 2.06 of this Agreement.
(iii) "LIBOR Base Rate" means, for each Interest Period, the London Interbank offered rate for six-month deposits in single currency for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the Interest Payment Date occurring on or next preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum.
(iv) "LIBOR Total Spread" means, for each Interest Period: (A) one half of one percent (1/2 of 1%); (B) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include the Loan; as reasonably determined by the Bank and expressed as a percentage per annum.
(c) The Bank shall notify the Borrower of LIBOR Base Rate and LIBOR Total Spread for each Interest Period, promptly upon the determination thereof.
(d) Whenever, in light of changes in market practice affecting the determination of the interest rates referred to in this Section 2.05, the Bank determines that it is in the interest of its borrowers as a whole and of the Bank to apply a basis for determining the interest rates applicable to the Loan other than as provided in said Section, the Bank may modify the basis for determining the interest rates applicable to the Loan upon not less than six (6) months' notice to the Borrower of the new basis. The basis shall become effective on the expiry of the notice period unless the Borrower notifies the Bank during said period of its objection thereto, in which case said modification shall not apply to the Loan.
Section 2.06. Interest and other charges shall be payable June 15 and December 15 in each year.
Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement.
Article III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, and educational practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project.
(b) For the purposes of overall Project coordination, the Borrower shall enter into an agreement with NTF on such terms as shall be acceptable to the Bank which shall include terms specifying the responsibilities of NTF in respect of coordination of Project activities, accounting, preparation of requests for withdrawals from the Loan Account, procurement and administrative support.
(c) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Bank shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 5 to this Agreement.
(d) The Borrower: (i) shall relend out of the proceeds of the Loan amounts allocated from time to time under Category (6) of the table set forth in paragraph 1 of Schedule 1 to this Agreement to Regions under Sub-Loan Agreements to be entered into between the Borrower and each of the Regions under terms and conditions satisfactory to the Bank, including, without limitations, the terms and conditions specified in Schedule 7 to this Agreement; (ii) make available the proceeds of the Loan amounts allocated from time to time under Categories (1), (2) and (3) of the table set forth in paragraph 1 of Schedule 1 to this Agreement to the Higher Education Institutions under financial arrangements which shall include Sub-Loans and Grants in accordance with paragraph 3 of Schedule 5 to this Agreement; and (iii) make available the proceeds of the Loan amounts allocated from time to time under Category (5) (c) of the table set forth in paragraph 1 of Schedule 1 to this Agreement as grants to authors and publishers in accordance with the procedures set forth in the Operational Manual.
(e) The Borrower shall exercise its rights under the Sub-Loan Agreements in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and, except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate, or waive the Sub-Loan Agreements or any provision thereof.
Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement.
Section 3.03. For the purposes of Section 9.08 of the General Conditions and without limitation thereto, the Borrower shall:
(a) prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, a plan for the future operation of the Project; and
(b) afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan.
Article IV
Financial Covenants
Section 4.01. (a) The Borrower shall cause NTF to maintain records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project.
(b) The Borrower shall cause NTF to:
(i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank;
(ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and
(iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request.
(c) For all expenditures