Conformed Copy - L3985 - Housing Project - Project Agreement - KHARKIV

Page 1 CONFORMED COPY LOAN NUMBER 3985 UA Kharkiv Project Agreement (Housing Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and KHARKIV Dated December 19, 1996 LOAN NUMBER 3985 UA KHARKIV PROJECT AGREEMENT AGREEMENT, dated December 19, 1996, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and KHARKIV (Kharkiv). WHEREAS (A) by the Loan Agreement of even date herewith between UKRAINE (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to seventeen million Dollars ($17,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Kharkiv agrees to undertake such obligations toward the Bank as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and Kharkiv, the proceeds of the loan provided for under the Loan Agreement will be made available to Kharkiv on the terms and conditions set forth in said Kharkiv Subsidiary Loan Agreement; and WHEREAS Kharkiv, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obliga- tions set forth in this Agreement; Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) Kharkiv declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, shall carry out Part B.1 of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Bank and Kharkiv shall otherwise agree, Kharkiv shall: (i) establish and maintain, until the completion of the Project, a city executing unit (CEU) and ensure that the CEU functions at all times in accordance with procedures satisfactory to the Bank, and is at all times staffed by personnel with qualifications, terms of reference and experience satisfactory to the Bank; (ii) by December 31, 1996, prepare a marketing and sales plan, satisfactory to the Bank, for the sale of land developed under Part B.1 of the Project, which plan shall include provisions related to the method and administration of sales through an open auction, advertisement procedures, documentation, and contract- ing provisions; (iii) offer for sale through an open auction all land developed under Part B.1 of the Project in accordance with the plan referred to in sub-paragraph (ii) of this paragraph; (iv) auction land in accordance with the provisions of the Kharkiv Subsidiary Loan Agreement; and (v) assist the Borrower to carry out the Land and Building Regulations Study referred to in Section 3.02 (a) of the Loan Agreement. Section 2.02. Except as the Bank shall otherwise agree, procurement of the works required for Part B.1 of the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of the Schedule to this Agreement. Section 2.03. Kharkiv shall carry out the obligations set forth in Sections 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to use of services, plans and schedules, records and reports, maintenance and land acquisition, respectively ) in respect of the Kharkiv Project Agreement and Part B.1 of the Project. Page 3 Section 2.04. Kharkiv shall duly perform all its obligations under the Kharkiv Subsidiary Loan Agreement. Except as the Bank shall other- wise agree, Kharkiv shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Kharkiv Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) Kharkiv shall, at the request of the Bank, exchange views with the Bank with regard to progress of the Project, the performance of its obligations under this Agreement and under the Kharkiv Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) Kharkiv shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by Kharkiv of its obligations under this Agreement and under the Kharkiv Subsidiary Loan Agreement. (c) Without limitation upon the provisions of paragraphs (a) and (b) of this Section, Kharkiv shall: (i) 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 Kharkiv and the Bank, a plan for the future operation of the Project; and (ii) afford the Bank a reasonable opportunity to exchange views with Kharkiv on said plan. Section 2.06. Kharkiv shall: (a) maintain policies and procedures adequate to enable it to monitor and evaluate on a continuous basis, in accordance with indicators satisfactory to the Bank, the carrying out of Part B.1 of the Project and the achievement of the objectives thereof; (b) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank on or about March 1, 1997, a report integrating the results of the monitoring and evaluation activities performed pursuant to paragraph (a) of this Section, on the progress achieved in the carrying out of Part B.1 of the Project during the period preceding the date of said report and setting out the measures recommended to ensure the efficient carrying out of Part B.1 of the Project and the achievement of the objectives thereof during the period following such date; and (c) review with the Bank, by June 1, 1997, or such later date as the Bank shall request, the report referred to in paragraph (b) of this Section, and thereafter, take all measures required to ensure the efficient completion of Part B.1 of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Bank's views on the matter. Section 2.07. For the purposes of Section 9.07 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 III Page 4 Management and Operations of Kharkiv Section 3.01. Kharkiv shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and engineer- ing practices under the supervision of qualified and experienced manage- ment assisted by competent staff in adequate numbers . Section 3.02. Kharkiv shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) Kharkiv shall maintain records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of Part B.1 of the Project of the departments and agencies of Kharkiv responsible for carrying out Part B.1 of the Project. (b) Kharkiv shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able 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, (A) certified copies of its financial statements for such year as so audited and (B) 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, accounts and financial statements as well as the audit thereof, as the Bank shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 5.02. This Agreement and all obligations of the Bank and of Kharkiv thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify Kharkiv thereof. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspen- sion under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the Page 5 parties contemplated by this Agreement shall be in writing . Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) For Kharkiv: Principal Department for Economic Development Executive Committee of Kharkiv City Rada pl. Sovetskoi Ukraini, 7 Kharkiv Ukraine Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Kharkiv may be taken or executed by the Head of the Principal Department for Economic Development or such other person or persons as the Head of the Principal Department for Economic Develop- ment shall designate in writing, and Kharkiv shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counter- parts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Wafik Grais Acting Regional Vice President Europe and Central Asia KHARKIV Page 6 By /s/ Yuli Shcherbak Authorized Representative SCHEDULE Procurement Section I. Procurement of Works Part A: General Works shall be procured in accordance with the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the Guidelines) and the following provisions of this Section, as applicable. Part B: International Competitive Bidding 1. Works shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix 1 thereto. 2. Bidders for works shall be prequalified in accordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines. Part C: Review by the Bank of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitations to prequalify for bidding or to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Bank for its review and approval, in accor- dance with the provisions of paragraph 1 of Appendix 1 to the Guide- lines. Procurement of all works shall be undertaken in accordance with such procurement plan as shall have been approved by the Bank, and with the provisions of said paragraph 1. 2. Prior Review With respect to each contract for works, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply.