Conformed Copy - L4016 - Coal Pilot Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 4016 UA Loan Agreement (Coal Pilot Project) between UKRAINE and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated July 11, 1996 LOAN NUMBER 4016 UA LOAN AGREEMENT AGREEMENT, dated July 11, 1996, between UKRAINE, acting on its own behalf or through its agencies or duly authorized representatives (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS: (A) the Borrower has adopted a program of actions, objectives and policies designed to facilitate the restructuring and modernization of the coal sector and, as part of such program, has recognized the need for closing a significant number of unprofitable and uneconomic mines located in the Donetsk Oblast (as hereinafter defined), including the Pravda Mine, the Krasniy Oktyabr Mine and the Removskaya Mine (the Project Mines), all as hereinafter defined; (B) Pursuant to the implementation of the program described in Recital (A) hereof, and in order to demonstrate, on a pilot basis, a possible approach to the closing of mines in the Donetsk Oblast, the Borrower has decided to effect the closure of the Project Mines on the basis of a coordinated approach (the Project, as further described in Schedule 2 to this Agreement), consisting of the carrying out of the Mine Closure Plans (as hereinafter defined) adopted in respect of each of the Project Mines, together with provisions of other specific financial, social, institutional and technical assistance measures for the benefit of affected mine workers and the communities in which the Pilot Mines are located, as may be practical and appropriate to mitigate the consequences of the closure of the Project Mines; (C) 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; Page 2 (D) Parts A, B.1, B.2, D and E of the Project will be carried out jointly by the Borrower and UDKR (as hereinafter defined), on the basis of assistance to be provided to UDKR as provided in this Agreement; (E) Part B.3 and C of the Project will be carried out jointly by the Borrower and Donetsk Oblast, on the basis of assistance to be provided to Donetsk Oblast as provided in this Agreement; 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, in the UDKR Project Agreement of even date herewith between the Bank and UDKR, and in the Donetsk Oblast Project Agreement of even date herewith between the Bank and Donetsk Oblast; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The