Korea - Yong San Gang Irrigation Project : Loan 0795 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 795 KO Loan Agreement (Yong San Gang Irrigation Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND AGRICULTURAL DEVELOPMENT CORPORATION DATED FEBRUARY 2, 1972 CONFORMED COPY LOAN NUMBER 795 KO Loan Agreement (Yong San Gang Irrigation Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND AGRICULTURAL DEVELOPMENT CORPORATION DATED FEBRUARY 2, 1972 LOAN AGREEMENT AGREEMENT, dated February 2, 1972, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and Agricultural Development Corporation, (hereinafter called the Borrower), a corporation established under the laws of the Republic of Korea. WHEREAS (A) The Republic of Korea (hereinafter called the Guarantor) has requested the Bank to assist in the financing of the Project described in Schedule 2 to the development credit agreement mentioned hereunder by making the Loan to the Borrower as hereinafter provided; (B) The Guarantor has also requested the International Development Association (hereinafter called the Association) to provide additional financial assistance towards the financing of such Project and by an agreement of even date herewith between the Guarantor and the Association (hereinafter called the Development Credit Agreement) the Association is agreeing to provide such assistance in an aggregate principal amount equivalent to fifteen million dollars ($15,000,000); (C) The Project described in Schedule 2 to the Development Credit Agreement shall be carried out by the Borrower with the Guarantor's assistance and, as part of such assistance, the Guarantor will make available to the Borrower the proceeds of the credit provided in the Development Credit Agreement in accordance with the teims and conditions set forth in a subsidiary loan agreement between the Guarantor and the Borrower (hereinafter called the Subsidiary Loan Agreement); (D) The Guarantor, the Bank and the Borrower intend, to the extent practicable, that the proceeds of the credit provided for in the Development Credit Agreement be disbursed on account of expenditures on the Project before disbursements of the proceeds of the Loan provided for in this Agreement are made; WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: 4 ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions). (a) Section 2.01 (12) is deleted and the following is substituted therefor: "12. The term Project means the project or projects or program or programs for which the Loan is granted, as described in the Development Credit Agreement (as such term is defined in the Loan Agreement) and as the description thereof shall be amended from time to time by agreement among the Guarantor, the Association, the Bank and the Borrower." (b) Section 5.01 is deleted. (c) Section 6.02 (b) is deleted and the following is substituted therefor: "The Borrower or the Guarantor shall have failed to perform any other obligation under the Loan Agreement, the Guarantee Agreement, the Bonds or the Development Credit Agreement (as such term is defined in the Loan Agreement)." (d) Section 6.02 (i) is amended to read as follows: "Any event specified in paragraph (e) or (f) of Section 7.01 shall have occurred." (e) Section 7.01 (d) is amended to read as follows: "A default shall occur in the performance of any other obligation on the part of the Borrower or the Guarantor under the Loan Agreement, the Guarantee Agreement, the Bonds or the Development Credit Agreement (as such term is defined in the Loan Agreement), and such default shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Guarantor and the Borrower, or the Association to the Guarantor, as the case rt y be." 5 Section 1.02. Wherever used in this Agreement, 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) "Act" pneans the Rural Development Encouragement Law of 1969 of the Guarantor, as the same may be amended from time to time. (b) "Land Improvement Association" means an association established pursuant to the Act. (c) "Development Credit Agreement" means the Development Credit Agreement of even date herewith between the Guarantor and the Association, and such term includes the General Conditions Applicable to Development Credit Agreements of the Association dated January 31, 1969, as made applicable thereto, all agreements supplemental to such agreement and all schedules thereto, as such agreement, supplemental agreements and schedules, may be amended from time to time. (d) "Subsidiary Loan Agreement" means the agreement to be entered into between the Guarantor and the Borrower pursuant to Section 3.01 (b) of the Development Credit Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (e) "Economic Planning Board" means the Economic Planning Board established under Article 19 of the Government Organization Law of the Guarantor, Law No. 1506 dated December 14, 1963, as amended up to July 24, 1967, and as the same may be amended from time to time. (f) "Decree" means Enforcement Decree of Rural Development Encouragement Law dated January 27, 1970, as the same may be amended from time to time. (g) "By-Laws" means By-Laws of the Borrower, as the same may be amended from time to time. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to thirty-three million dollars ($33,000,000). 6 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 the Development Credit Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under the Loan Agreement and in respect of interest and other charges on the Loan; provided, however, that, except as the Bank shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. (b) On or before each semi-annual interest payment date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amounts required to pay, on the dates set forth in Section 2.08 of this Agreement, interest and other charges on the Loan accrued and payable on or before the date set forth in said Section, and up to the amount allocated, in Schedule I to the Development Credit Agreement, as such Schedule shall be amended from time to time. Section 2.03. Except as the Bank shall otherwise agree, the goods and services (other than services of consultants) required for the Project and to be financed out of the proceeds of the Loan, shall be procured on the basis of international competition under procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in August 1969, as revised in May 1971, lnd in accordance with, and subject to, the provisions set forth in Schedule 2 to this Agreement. Section 2.04. (a) So long as any part of the Credit provided for under the Development Credit Agreement shall remain outstanding, all actions taken, including approvals given, by the Association pursuant to Sections 1.02, 2.03 and 4.06 of, and Schedules 1 and 2 to, the Development Credit Agreement, or under any of the provisions of the Loan Agreement referred to in Section 3.02 (a) of the Development Credit Agreement, shall be deemed to be taken or given in the name and on behalf of both the Association and the Bank; and all information or documentation furnished by the Borrower to the Association pursuant to the provisions of any such Sections of the Development Credit Agreement or Schedules thereto shall be deemed to be furnished to both the Association and the Bank. (b) If and when the Development Credit Agreement shall terminate prior to the termination of this Agreement, the provisions of Schedules 1 and 2 of the Development Credit Agreement shall be deemed to be in full force and effect for the purposes of the Loan Agreement. 7 Section 2.05. The Closing Date shall be September 30, 1977 or such other date as shall be agreed between the Bank and the Borrower. Section 2.06. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.07. The Borrower shall pay interest at the rate of seven and one-quarter per cent (7-1/4%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.08. Interest and other charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.09. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule I to this Agreement. Section 2. 10. If and as the Bank shall from time to time request, the Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in Article VIII of the General Conditions. Section 2.11. The President of the Borrower or such other person or persons as he shall appoint in writing are designated as authorized representatives of the Borrower for the purposes of Section 8.10 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering and agricultural practices. Section 3.02. In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ engineering and agricultural consultants acceptable to the Bank upon terms and conditions satisfactory to the Bank. Section 3.03. In carrying out civil works under the Project, the Borrower shalH employ contractors acceptable to the Bank upon terms and conditions satisfactory to the Bank. 8 Section 3.04. (a) The Borrower undertakes to insure, or make adrquate provision for the insurance of, the imported goods to be financed c it of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project until its completion. Section 3.05. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, contract documents work and procurement schedules, for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's representatives to inspect the Project, the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. Section 3.06. The Borrower shall take all such action as shall be necessary to acquire as and when needed all such land, and rights in respect of land as shall be required for the construction and operation of the facilities included in the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project. Section 3.07. The Borrower shall (i) review the design criteria for (a) farm service roads, (b) optimum height for Jan Seong and Dam Yang dams and (c) for the link canal, provided for in the Project; and (ii) furnish its findings upon such review to the Bank not later than nine months from the date of this Agreement for the Bank's comments. Section 3.08. The Borrower shall establish and maintain a project field office in Kwang Ju for the execution and supervision of the works included in the Project and shall provide to and maintain at the Borrower's headquarters and such field office such staff, facilities and other resources as shall be necessary for the timely completion of the Project. 9 Section 3.09. The Borrower shall consult with the Bank prior to making (i) initial appointments to the posts of director-in-charge of the Project and the project manager; and (ii) any change in such appointments, sufficiently in advance of such appointments or change, as the case may be, for the Bank to have adequate opportunity to comment on them. Section 3.10. The Borrower shall, not later than three years from the date of this Agreement, prepare a plan, satisfactory to the Bank, for the operation and maintenance of all works and facilities included in the Project. Without limiting the generality of the foregoing provision, the Borrower shall include in such plan provisions as to: (i) the responsibility of the Land Improvement Associations in the Project area in the operation and maintenance of such works and facilities; (ii) a periodic inspection cf the dams included in the Project; and (iii) the date on which such plan shall become operative. Such plan, or any proposed changes therein, shall be furnished to the Bank promptly for its comments. Section 3.11. The Borrower shall exercise every right and recourse available to it to ensure the cooperation of Land Improvement Associations in the Project area in the carrying out and the operation of the Project. ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower 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 sound practice. Section 4.02. The Borrower shall not do any act or thing which would prejudice its corporate existence and right to carry on operations and shall, except as the Bank may otherwise agree in writing, maintain and renew all rights, powers, privileges and franchise owned or held by it and necessary or useful in the conduct of its business. Section 4.03. The Borrower shall promptly inform the Bank (i) of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan, the maintenance of the service thereof or the performance by the Borrower of its obligations under the Loan Agreement or the Subsidiary Loan Agreement; and (ii) of any proposed changes in the Act, Decree or the By-Laws. Section 4.04. (a) The Borrower shall cause all works, facilities and equipment related to the Project to be adequately maintained and shall from time to time 10 cause all necessary renewals and repairs thereof to be made, all in accordance with sound agricultural practices. (b) The Borrower shall exercise every right and recourse available to it to cause to be taken all such action as shall be required to assure that no use, other than domestic use, will reduce the amounts of water available for purposes of the Project below the amounts needed for its operation. ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition. Section 5.02. The Borrower shall: (i) establish and maintain appropriate separate accounts in respect of the Project; (ii) have such accounts for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Bank; (iii) furnish to the Bank as soon as available, but in any case not later than four 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 (iv) furnish to the Bank such other information concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03. Upon the completion of the irrigation system provided for in the Project, the Borrower shall, after consultation with the Bank, set the water charges in the Project area at such levels as would ensure the recovery of (a) the operating and maintenance costs of such irrigation system, and (b) at least forty per cent (40%) of the monies directly invested in such irrigation system with interest at the rate of three and one-half per cent (3-1/2%) per annum payable over a period not exceeding forty years. The levels of such water charges shall be determined in accordance with principles established by the Borrower, taking into account the current level of charges paid by farmers of partially-irrigated lands for irrigation and other facilities. Section 5.04. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) The Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for 11 any debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect: provided, however, that the foregoing provisions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. ARTICLE VI Consultation; Information and Inspection Section 6.01. The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, the Bank and the Borrower shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Loan Agreement, the administration, operations and financial condition of the Borrower and other matters relating to the purpose of the Loan; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. Section 6.02. The Bank and the Borrower shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan, the maintenance of the service thereof or the performance by either of them of its obligations under the Loan Agreement. Section 6.03. The Borrower shall enable the Bank's representatives to inspect all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents. ARTICLE VII Taxes Section 7.01. The Borrower shall pay or cause to be paid all taxes, if any, imposed on or in connection with the execution, issue, delivery or registration of the Loan Agreement, any instrument made pursuant to Section 5.04 of this Agreement, the Guarantee Agreement or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the provisions of this 12 Section shall not apply to taxation, under the laws of the Guarantor or laws in effect in its territories, of payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. ARTICLE VIII Remedies of the Bank Section 8.01. If any event specified in Section 7.01 of the General Conditions or in Section 8.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Bank, at its option, may by notice to the Borrower and the Guarantor declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately together with the interest and other charges thereon and upon any such declaration such principal, interest and charges shall become due and payable immediately, anything to the contrary in the Loan Agreement or in the Bonds notwithstanding. Section 8.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) The Act or the Decree shall have been amended in such a way as to substantially alter the organization, powers or responsibilities of the Borrower without the consent of the Bank. (b) The By-Laws shall have been amended, suspended, abrogated, repealed or waived in such a way as to affect the ability of the Borrower to carry out the covenants and agreements set forth in the Loan Agreement and the Subsidiary Loan Agreement. Section 8.03. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified: Any event specified in Section 8.02 (a) or (b) of this Agreement shall occur. ARTICLE IX Effective Date; Termination Section 9.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 11.01 (c) of the General Conditions: 13 (a) That the consultants referred to in Section 3.02 of this Agreement shall have been employed. (b) That, except as the Bank shall otherwise agree, all necessary acts, consents and approvals to be performed or given by the Guarantor, its political subdivisions or agencies or by any agency of any political subdivision or otherwise to be performed or given in order to authorize the carrying out of the Project and to enable the Borrower to perform all of the covenants, agreements and obligations of the Borrower set forth in the Loan Agreement, together with all necessary powers and rights in connection therewith, have been performed or given. (c) That all the conditions precedent to the effectiveness of the Development Credit Agreement other than the effectiveness of the Loan Agreement and the Guarantee Agreement have been fulfilled. Section 9.02. The following is specified as an additional matter, within the meaning of Section 11.02 (c) of the General conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that all acts, consents and approvals referred to in Section 9.01 (c) of this Agreement together with all necessary powers and rights in connection therewith, have been duly and validly performed or given and that no other acts, consents or approvals are required in order to authorize the carrying out of the Project and to enable the Borrower to perform all of the covenants, agreements and obligations of the Borrower set forth in the Loan Agreement. Section 9.03. The date June 15, 1972 is hereby specified for the purposes of Section 11.04 of the General Conditions. ARTICLE X Addresses Section 10.01. The following addresses are specified for the purposes of Section 10.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America 14 Cable address: Intbafrad Washington, D.C. For the Borrower: Agricultural Development Corporation C.P.O. Box 490 24-1 2-KA, Jeo-Dong Chung-Ku Seoul, Korea Cable address: Agridevelcorp Seoul IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered 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 / J. Burke Knapp Vice President AGRICULTURAL DEVELOPMENT CORPORATION By /s/ HoEulWhang Authorized Representative 15 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* March 15, 1978 265,000 September 15, 1978 275,000 March 15, 1979 285,000 September 15, 1979 295,000 March 15, 1980 305,000 September 15, 1980 315,000 March 15, 1981 325,000 September 15, 1981 340,000 March 15, 1982 350,000 September 15, 1982 365,000 March 15, 1983 375,000 September 15, 1983 390,000 March 15, 1984 405,000 September 15, 1984 420,000 March 15, 1985 435,000 September 15, 1985 450,000 March 15, 1986 465,000 September 15, 1986 485,000 March 15, 1987 500,000 September 15, 1987 520,000 March 15, 1988 540,000 September 15, 1988 560,000 March 15, 1989 580,000 September 15, 1989 600,000 March 15, 1990 620,000 September 15, 1990 645,000 March 15, 1991 665,000 September 15, 1991 690,000 March 15, 1992 715,000 September 15, 1992 745,000 March 15, 1993 770,000 September 15, 1993 795,000 March 15, 1994 825,000 September 15, 1994 855,000 March 15, 1995 885,000 September 15, 1995 920,000 March 15, 1996 955,000 September 15, 1996 985,000 March 15, 1997 1,025,000 September 15, 1997 1,060,000 March 15, 1998 1,100,000 September 15, 1998 1,140,000 March 15, 1999 1,180,000 September 15, 1999 1,220,000 March 15, 2000 1,265,000 September 15, 2000 1,315,000 March 15, 2001 1,360,000 September 15, 2001 1,420,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. Aa 16 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions or on the redemption of any Bond prior to its maturity pursuant to Section 8.15 of the General Conditions: Time of Prepayment or Redemption Premium Not more than four years before maturity 3/4% More than four years but not more than eight years before maturity 2-1/4% More than eight years but not more than fourteen years before maturity 3% More than fourteen years but not more than twenty years before maturity 4-1/2% More than twenty years but not more than twenty-six years before maturity 5-3/4% More than twenty-six years but not more than twenty-eight years before maturity 6-3/4% More than twenty-eight years before maturity 7-1/4% 17 SCHEDULE 2 Procurement 1. With respect to any contract for (a) civil works estimated to cost the equivalent of $100,000 or more; and (b) equipment, materials and supplies estimated to cost $50,000 or more: (a) If bidders are required to prequalify, the Borrower shall, before qualification is invited, inform the Bank in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification, shall be furnished by the Borrower to the Bank for its comments before the applicants are notified and the Borrower shall make such additions or deletions from the said list as the Bank shall reasonably request. (b) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedure as the Bank shall reasonably request. Any further modification to the bidding documents shall require the concurrence of the Bank before it is issued to the prospective bidders. (c) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to whom it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report by the consultants referred to in Section 3.02 of this Agreement on the technical evaluation and comparison of the bids received, and the reasons for the intended award. The Bank shall promptly inform the Guarantor and the Borrower whether it has any objection to the intended award on the ground that it is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement; and if the Bank, after receiving the comments of the Guarantor and the Borrower, determines that such inconsistency exists, the Bank shall promptly inform the Guarantor and the Borrower of such determination and the reasons therefor. (d) The terms and conditions of the contract shall not, without the concurrence of the Bank, materially differ from those on which bids were asked. (e) Two copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of any such contract. 18 2. With respect to any other contract the Borrower shall furnish to the Bank, promptly, after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of any such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract is not consistent with the procedures set forth *r referred to in Section 2.03 of this Agreement, promptly inform the Guarantor and the Borrower, and state the reasons for such determination. 3. For the purpose of evaluating bids for civil works, equipment, materials and supplies and associated services referred to in paragraph 1 of this Schedule, bid prices shall be determined and compared in accordance with the following rules: (a) The term "Local Bid" means a bid submitted by a manufacturer established in the territories of the Borrower for goods manufactured or processed to a substantial extent (as reasonably determined by the Bank) in such territories; any other bid shall be deemed to be a "Foreign Bid". (b) The bid price under a Local Bid shall be the sum of the following amounts: (i) the ex-factory price of such goods; and (ii) inland freight, insurance and other costs of delivery of such goods to the place of their use or installation. (c) For the purpose of comparing any Foreign Bid with any Local Bid, the bid price under a Foreign Bid shall be the sum of the following amounts: (i) the c.i.f. (Korean port of entry) price of such goods; (ii) the amount of any taxes on the importation of such goods into the territories of the Borrower which generally apply to non-exempt importers, or 15% of the amount specified in (i) above, whichever shall be the lower; and (iii) inland freight, insurance and other costs of delivery of such goods to the place of their use or installation.