Zakon o ratifikaciji Kreditne pogodbe (Projekt slovenskih avtocest vzhod-zahod) med Republiko Slovenijo in Evropsko banko za obnovo in razvoj (MKPEBAC)

LOAN AGREEMENT

(SLOVENIA EAST-WEST HIGHWAY PROJECT)

BETWEEN REPUBLIC OF SLOVENIA AND

EUROPEAN BANK

FOR RECONSTRUCTION AND DEVELOPMENT

Dated 10 June 1994

Whereas the Bank has been established to provide financing for specific projects to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in the Central and Eastern European countries committed to and applying the principles of multiparty democracy, pluralism and market economics;

whereas the Borrower intends to implement the project described in Schedule I to this Agreement (the "Project"'), which is designed to assist with regional integration within Slovenia through the improvement and upgrading of road sections on the main east-west highway route in Slovenia;

whereas the Borrower has requested assistance from the Bank in the financing of part of the Project;

whereas the PHARE Programme (as hereinafter defined) is in the process of arranging funds on a grant basis to assist in implementing Part D of the Project as described in Schedule I; and

whereas the Bank has agreed on the basis, inter alia, of the foregoing, to extend a loan to the Borrower in the amount of thirty million Dollars (USD 30.000.000) (the "Loan") upon the terms and conditions set forth in this Agreement;

now, therefore, the parties hereby agree as follows:

Section 1.01. Definitions

Wherever used in this Agreement or the Schedules hereto, the terms defined in the Preamble have the meanings ascribed therein, and the following terms have the following meanings:

"Agreement Establishing the Bank" means the Agreement Establishing the European Bank for Reconstruction and Development, dated 29 May 1990;

"assest" means property, revenue and claims of any kind;

"Available Amount" means so much of the Loan as shall not, from time to time, have been cancelled, disbursed or subject to a conditional or unconditional Reimbursement Commitment; provided, however, for purposes of calculating the commitment fee due under Section 2.8(a) of this Agreement, the amount of the Loan that is subject to a conditional Reimbursement Commitment shall be included in the definition of Available Amount;

"Business Day" means a day on which banks are open for the transaction of business in the interbank market for the relevant Loan Currency in London, England, and on which commercial banks and foreign exchange markets settle payments in the Loan Currency in the relevant financial center;

"Category" means a category of items to be financed out of the proceeds of the Loan as set forth in the table in paragraph 2 of Schedule 2 to this Agreement;

"conditional Reimbursement Commitment" means any revocable commitment made by the Bank at the request of the Borrower pursuant to Section 2.06 of this Agreement;

"Default Interest Period" means, with respect to an amount overdue under the Loan Agreement, a period commencing on the Business Day on which such payment becomes overdue or, as the case may be, on the last Business Day of the previous Default interest Period, and ending on a Business Day selected by the Bank or, as the case may be, determined in accordance with Section 2.12;

"Default Interest Rate" means the interest rate applicable to amounts overdue under the Loan Agreement, as determined in accordance with Section 2.12;

"Dollars" or "USD" means the lawful currency of the United States of America;

"EBRD Disbursement Handbook" means the Disbrusement Handbook of the European Bank for Reconstruction and Development, as the same may be amended from time to time by the Bank;

"EBRD Procurement Rules" means the Procurement Policies and Rules for Projects financed by the European Bank for Reconstruction and Development, as the same may be amended from time to time by the Bank;

"external debt" means any debt which is or may become payable in a currency other than the currency of the Borrower;

"Interest Determination Date" means, as to any Interest Period, the second Business Day before the beginning of such Interest Period;

"Interest Payment Date" means any day which (except as specified in the following sentence) falls on 21 March and 21 September in any year. If any Interest Payment Date is not a Business Day, it shall be postponed to the next day which is a Business Day;

"Interest Period" means each period of six (6) months commencing on an Interest Payment Date and ending on the next Interest Payment Date, except in the case of the first Interest Period applicable to each disbursement when it shall have the following meaning:

(1) if such disbursement is made at least fifteen (15) business Days prior to the next Interest Payment Date, the period commencing on the date on which such disbursement is made and ending on the next Interest Payment Date, and

(2) if such disbursement is made less than fifteen (15) Business Days prior to the next Interest Payment Date, the period commencing on the date on which such disbursement is made and ending on the Interest Payment Date succeeding the next Interest Payment Date;

"Interest Rate" means the rate of interest payable on the Loan from time to time in accordance with Section 2.07 of this Agreement;

"lien" includes mortgages, pledges, charges, privileges and priorities of any kind;

"Loan Currency" means the currency or currencies in which the Loan is denominated, initially Dollars;

"Margin" means one per cent (1%) per annum;

"PHARE Programme" means the technical assistance funding programme established by the European Communities pursuant to Council Regulation (EEC) No. 3906/89 or December 1989, as amended, revised or supplemented from time to time;

"PIU" means the Project implementation unit established and operating as part of the Borrower's Ministry of Transport and Communications, ("MTC"), in accordance with Section 3.02 of this Agreement;

"public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of the Borrower or any such subdivision, including gold and foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilisation fund, or similar functions, for the Borrower;

"Road Expenditure Programme and Financing Plan" means the Borrower's annual expenditure programme and financing plan for road transport, including but not limited to the construction, upgrading and maintenance of roads and operation and maintenance of services in conjunction thereto, as the same may be amended and updated from time to time;

"Road Scheme" means a civil works project which fulfils the feasibility criteria for Road Schemes set out in Section 3.06, utilises the proceeds of the Loan and is to be financed under the Road Expenditure Programme and Financing Plan;

"Telerate Page 3750" means the display page of London interbank offered rates (commonly known as "LIBOR") of major banks for deposits in the Loan Currency, designated as page 3750 on the Telerate Service (or such other page as may replace the Telerate Page 3750 for the purpose of displaying such LIBOR rates for deposits in the Loan Currency;

"unconditional Reimbursement Commitment" means any irrevocable commitment made by the Bank at the request of the Borrower pursuant to Section 2.06 of this Agreement.

Section 1.02. Headings

The headings and the Table of Contents are inserted for convenience of reference only and do not form part of this Agreement.

Section 2.01. Loan and Currency

The bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount of thirty million Dollars (USD 30.000.000).

Section 2.02. Disbursement and Special Account

(a) The Available Amount may be disbursed from time to time in accordance with the provisions of Schedule 2 to this Agreement for expenditures made (or if the Bank shall so agree, to be made) in respect of the reasonable cost of goods, works and services required for the Project and to be financed out of the proceeds of the Loan and in respect of other charges required on the Loan.

(b) The Borrower shall for the purposes of the Project open and maintain a special deposit account (the "Special Account") with a commercial bank acceptable to the Bank denominated in Dollars on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure or attachment. Disbursements into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. The Borrower shall ensure that interest, if any, earned on the Special Account is credited to a separate account in the name of the Borrower.

Section 2.03. Disbursement Period

The Borrower's right to disbursements of the Available Amount shall terminate on 30 June 1998 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date.

Section 2.04. Applications for Disbursements

(a) Applications for disbursements shall be submitted to the Bank by the representative of the Borrower designated in, or in accordance with, Section 10.02. Each disbursement application submitted shall be in accordance with, and in the form prescribed in, the EBRD Disbursement Handbook and delivered to the Bank at least fifteen (15) Business Days prior to the proposed value date of the disbursement. Each disbursement application shall be in substance satisfactory to the Bank and shall be accompanied by such documents and other evidence sufficient in form and substance to satisfy the Bank that the Borrower is entitled to the amount of the disbursement from the Available Amount and that the disbursement will be used exclusively for the purposes of the Project specified in this Agreement.

(b) Except for the last disbursement, disbursement under Part B of the Project as described in Schedule I, or unless the Bank shall otherwise agree, disbursements of the Available amount shall be made in amounts of not less than USD 100,000.

Section 2.05 Currency of Disbursements

(a) Except as the Bank shall otherwise agree, disbursements shall be made by the Bank in the Loan Currency in an amount equivalent to the expenditures to be financed out of the proceeds of the Loan.

(b) Disbursements in respect of expenditures in the currency of the Borrower shall be made by the Bank in the Loan Currency on the basis of the official rate of exchange for commercial transactions at least two (2) Business Days prior to the date of disbursement and, in the absence of such a rate, on the basis of such reasonable rate as the Bank shall determine.

(c) In case payment shall be requested by the Borrower in a currency other than the Loan Currency the Borrower hereby authorises the Bank to effect the purchase of such currency in such manner as the Bank may deem appropriate. Such payment shall be effected by the Bank on the basis of the actual cost in the Loan Currency incurred by the Bank in meeting the request.

Section 2.06. Conditional and Unconditional Reimbursement Commitments

(a) Upon the Borrower's request and on such terms and conditions as shall be agreed upon by the Borrower and the Bank, the Bank may issue unconditional or conditional Reimbursement Commitments to disburse amounts to the Borrower or others in respect of expenditures to be financed under the Loan. Under an unconditional Reimbursement Commitment, the obligation of the Bank to pay shall not be affected by any subsequent suspension or cancellation of the Loan. Under a conditional Reimbursement Commitment, the obligation of the Bank to pay shall cease immediately upon any suspension or cancellation of the Loan.

(b) In the case of an unconditional Reimbursement Commitment, the Borrower shall pay to the Bank a Commitment charge of 1% on the principal amount of the unconditional Reimbursement Commitment. The unconditional Reimbursement Commitment charge shall be paid in lieu of the commitment charge that would otherwise be applicable to the amount of such unconditional Reimbursement Commitment pursuant to Section 2.08(a) of this Agreement. The carhe shall accrue from the date of issuance of the unconditional Reimbursement Commitment on the principal amount thereof outstanding from time to time and shall be prorated on the basis of a 360-day year for the actual number of days elapsed in the relevant period. The unconditional Reimbursement Commitment charge shall be payable on each Interest Payment Date commencing on the first Interest Payment Date following the issuance of the unconditional Reimbursement Commitment.

Section 2.07 Interest

Interest on the Loan shall be determined, and payable, as follows:

(a) The principal amount of the Loan from time to time disbursed and not repaid shall bear interest during the relevant Interest Period at the relevant Interest Rate, calculated in accordance with this Section.

(b) Interest shall accrue from day to day, pro-rated on the basis of a 360-day year for the actual number of days, including the first but excluding the last day, in the relevant Interest Period and shall be due and payable on the Interest Payment Date at the end of the relevant Interest Period.

(c) The Interest Rate shall be the sum of the Margin and the offered rate which appears on the Telerate Page 3750 as of 11:00 a. m. London time, on the relevant Interest Determination Date for one month, two months, three months, four months, five months or six months, whichever period is closest to the duration of the relevant Interest Period (or. if two periods are equally close to the duration of the relevant Interest Period, the average of the two periods).

(d) On each Interest Determination Date, the Bank shall, in accordance with subsection (c) above, determine the Interest Rate applicable to the relevant Interest Period and promptly give notice thereof to the Borrower.

(e) If, for any reason, the Interest Rate cannot be determined by reference to the Telerate Page 3750 on any Interest Determination Date, or if the services of the Telerate Page 3750 cease to be available as a result of discontinuance of such services or if the Bank shall decide to discontinue the determination of the Interest Rate by reference to Telerate Page 3750, the Bank shall notify the Borrower and shall determine the Interest Rate on the relevant Interest Determination Date in accordance with subsection (c) above mutatis mutandis, using offered rates advised to the Bank by three (3) major banks active in the Loan Currency on the Interbank Market in London selected by the Bank after consultation with the Borrower.

Section 2.08. Commitment Charge and Front-End Fee

(a) The Borrower shall pay to the Bank a commitment charge at the rate of one half of one percent (0.5%) per annum on the Available Amount. The commitment charge shall accrue from the date sixty (60) days after the date of this Agreement, and shall be pro-rated on the basis of a 360-day year for the actual number of days elapsed in the relevant period. The commitment charge shall be payable on each Interest Payment Date commencing on the first Interest Payment Date following the date upon which the Agreement becomes effective.

(b) Within seven days after the date upon which this Agreement becomes effective, the Borrower shall pay to the Bank a front-end fee equal to one per cent (1.0%) of the amount of the Loan. The Borrower authorises the Bank to disburse and pay to itself the front-end fee on behalf of the Borrower.

Section 2.09. Repayment

(a) The Borrower shall repay the principal amount of the Loan disbursed in accordance with the amortisation schedule set forth below:

(b) If any date for repayment of the Loan set forth in paragraph (a) of this Section is not a Business Day it shall be postponed to the next day which is a Business Day.

Section 2.10. Prepayment

(a) The Borrower may prepay all or part of the Loan disbursed and not repaid together with accrued and unpaid interest thereon on any Interest Payment Date on not less than thirty (30) Business Days' prior written notice to the Bank.

(b) The Borrower shall pay to the Bank, on the date of prepayment, a prepayment administrative fee of one eighth of one per cent (0.125%) of the principal amount of the Loan to be repaid.

(c) In the case of partial prepayment such prepayment:

(1) shall be in an amount equal to the lesser of: (A) a minimum of USD 1.000,000: or B) the total amount of the Loan disbursed and not repaid, together with accrued and unpaid interest and other charges; and

(2) shall be applied:

(A) first to pay interest and other charges, and

(B) second to prepay in inverse order of maturity repayment instalments of the principal amount of the Loan disbursed and not repaid.

Section 2.11. Cancellation by the Borrower

(a) Except as provided in Section 6.03 of this Agreement, the Borrower may cancel all or part of the Available Amount on any Interest Payment Date on not less than thirty (30) Business Days prior written notice to the Bank. Such cancellation shall be in an amount equal to the lesser of:

(1) a minimum of USD 1.000.000; or

(2) the Available Amount.

(b) In the event of a cancellation pursuant to Subsection (a) above, the Borrower shall pay to the Bank, on the date of cancellation, a cancellation fee of one eighth of one percent (0.125%) of the amount being cancelled.

(c) Any cancellation pursuant to this Section shall be applied pro-rata to the several maturities of the principal amount of the Loan disbursed and not repaid after the date of such cancellation.

Section 2.12. Default Interest

(a) If the Borrower fails to pay any amount payable by it under the Loan Agreement, the overdue amount shall bear interest at the relevant Default Interest Rate, calculated in accordance with this Section.

(b) Default interest shall:

(1) accrue from clay to day from the due dale to the date of actual payment.

(2) be prorated on the basis of a 360-day, year for the actual number of days in the relevant Default Interest Period,

(3) be compounded at the end of each Default Interest Period; and

(4) be payable forthwith upon demand.

(c) Except as provided in subsection (d) below, the Default Interest Rate shall be the sum of:

(1) two per cent (2%) per annum, and

(2) the Margin, and

(3) the rate for a deposit in the Loan Currency of an amount comparable to the overdue amount offered in the London interbank market for a period equal to the relevant Default Interest Period;

provided, however, that if the Bank determines that deposits in the Loan Currency are not at the relevant time being offered in the London interbank market for a period equal to the relevant Default Interest Period, the Default lnterest Rate shall be determined by reference to the cost of funds to the Bank from whatever sources it selects.

(d) If the overdue amount is of loan principal to which a Variable Interest Rate applies and has become due on a date other than an Interest Payment Date, the first Default Interest Period shall end on the next Interest Payment Date and the Default Interest Rate applicable during such period shall be the sum of: two percent (2%) per annum and the interest rate applicable to that amount immediately before it came due.

(e) The determination by the Bank, from time to time, of the Default Interest Period and the Default Interest Rate shall be final and conclusive and shall be binding on the Borrower.

Section 2.13. Payments

Payments of principal, interest, commitment charge, unconditional Reimbursement Commitment charge, front-end fee, prepayment administrative fee, late payment penalty, and any other payment due to the Bank under this Agreement shall be made in the Loan Currency, in immediately available funds at such bank or banks as the Bank shall reasonably request. The determination by the Bank of each such amount shall be final and conclusive unless shown by the Borrower to the satisfaction of the Bank that any such determination has involved manifest error.

Section 3.01. Affirmative Project Covenants

Unless the Bank shall otherwise agree, the Borrower shall:

(a) carry out the Project through NRA with due diligence and efficiency in accordance with sound engineering, administrative, financial, environmental and highway transport standards and practices and shall provide, promptly as needed, the funds, facilities, services and other resources for the Project;

(b) insure or cause the Project to be insured, or make adequate provision satisfactory to the Bank for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incidental to the acquisition, transportation and delivery thereof to the place of use or installation and against hazards during the construction period; arid the indemnity under such insurance shall be payable in a freely usable currency to replace or repair such goods;

(c) at all times operate and maintain, or cause to be operated and maintained, in good working condition any facilities relevant to the Project, and promptly as needed, make or cause to be made all necessary repairs and renewals thereof;

(d) at all times maintain, or cause to be maintained in good condition the roads and other equipment, facilities and infrastructure financed under this Agreement, and make promptly, as required, all necessary repairs and renewals thereof in accordance with sound engineering and public utility practices; and

(e) cause all goods, works and services financed out of the proceeds of the Loan for the Project to be used exclusively for the purposes of the Project.

Section 3.02. Project Implementation Unit

In order to coordinate, manage, monitor and evaluate ail aspects of the implementation of the Project, including the procurement of goods, works and services for the Project, the Borrower shall, unless otherwise agreed with the Bank establish within MTC, and at all times during execution of the Project operate, a PIU with adequate resources and suitably qualified personnel, under terms of reference acceptable to the Bank.

Section 3.03. Consultants

In order to assist in the implementation of the Project, the Borrower shall, unless otherwise agreed with the Bank, employ or cause to be employed as required, and use consultants whose qualifications, experience and terms of reference shall be satisfactory to the Bank, including consultants to assist in the implementation of Part C of the Project as described in Schedule 1.

Section 3.04. Procurement

(a) Except as the Bank shall otherwise agree, procurement of goods, works and services, including consultants' services, required for the Project and to be financed out of the proceeds of the Loan shall be governed by the EBRD Procurement Rules and the provisions of Schedule 3 to this Agreement.

(b) The Borrower shall not launch tenders for any Road Scheme until:

(A) final planning approvals and location decrees shall have been issued; and

(B) all land and planning approvals necessary for the Road Scheme shall have been obtained.

Section 3.05. Road Expenditure Programme

The Borrower shall:

(a) commencing with the Road Expenditure Programme and Financing Plan for 1995, prepare and furnish to the Bank for review and comment, not later than 30 October of each of its fiscal years beginning in October 1994 and until the Loan is fully disbursed, the following information of such scope and detail as the Bank shall reasonably request:

(1) a report on the progress achieved in carrying out the current Road Expenditure Programme and Financing Plan;

(2) proposed revisions to the current Road Expenditure Programme and Financing Plan and the proposed Road Expenditure Programme and Financing Plan for the following fiscal year including the allocation for routine and periodic maintenance and major new construction;

(b) afford the Bank a reasonable opportunity to review and comment on the information to be furnished to the Bank in accordance with subsection (a) above, and thereafter, promptly introduce any revisions in a manner that such Road Expenditure Programme and Financing Plan for the following year are satisfactory to the Bank: and

(c) with respect to the foregoing and except as the Bank shall otherwise agree, the Borrower shall not introduce any material change in the Road Expenditure Programme or the Financing Plan as agreed between the Bank and the Borrower, including the Road Expenditure Programme and Financing Plan for 1994.

Section 3.06. Feasibility Criteria for Road Schemes

(a) The Borrower will ensure that Road Schemes submitted to the Bank for consideration under the Project fulfil the following criteria:

(1) the preparation and analysis relating to each Road Scheme shall be in such detail as the Bank may reasonably request:

(2) the economic return of each Road Scheme shall be at least equal to 12 percent (12%); and

(3) an environmental assessment shall have been carried out and the recommended actions reflected in the implementation programme.

(b) Thereafter, except as the Bank shall otherwise agree, the Borrower shall:

(1) include in Part A of the Project only such Road Schemes which have been approved by the Bank in accordance with this Section; and

(2) carry out such Road Schemes:

(A) in accordance with this Section: and

(B) in their order of priority as determined by their economic rates of return.

Section 3.07. Feasibility Study and Environmental Assessment Guidelines

Unless the Bank shall otherwise agree the Borrower shall ensure that Part D of the Project will be implemented in accordance with a timetable agreed with the Bank and shall in any event be completed not later than 30 June 1995.

Section 3.08. Cooperation and Information

The Bank and the Borrower shall cooperate fully to assure that the purposes for which the Loan is made will be accomplished. To that end, the Bank and the Borrower shall from time to time, at the request of either of them, exchange views with regard to the progress of the Project, the purposes for which the Loan is made, and the performance of the Borrower's obligations, under this Agreement and furnish to the other party all such information related thereto as it shall reasonably request, and the Borrower shall promptly inform the Bank of any proposed change in the nature or scope of the Project and of any event or condition which might materially affect the carrying out of the Project.

Section 3.09. Records and Reports

(a) The Borrower shall:

(1) maintain procedures and records adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods, works and services financed out of the proceeds of the Loan, and to disclose their use in the Project, and will make such records available to the Bank's representatives on request of the Bank;

(2) enable the Bank's representatives at the Bank's request to visit any facilities and construction sites included in the Project and to examine the goods, works and services financed out of the proceeds of the Loan and any plants, installations, sites, works, buildings, property, equipment, records and documents relevant to the performance of the obligations of the Borrower under this Agreement;

(3) furnish to the Bank's representatives semi-annually all such information as the Bank shall reasonably request concerning the Project, including information on environmental matters relating to the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods, works and services financed out of such proceeds; and

(4) furnish, or cause to be furnished, to the Bank's representatives promptly upon their preparation, any plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request.

(b) Promptly after completion of the Project, but in any event not later than six months after the date specified in or established under Section 2.03 or such later date as may be agreed for this purpose between the Bank and the Borrower, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and operation of the Project, including information on environmental matters relating to the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under this Agreement and the accomplishment of the purposes of the Loan.

Section 3.10. Land Acquisition

The Borrower shall take, or cause to be taken, all such action as shall be necessary to acquirers and when needed all such land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Bank, promptly upon its request, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project.

Section 4.01. Financial Reporting Requirements

(a) The Borrower shall maintain procedures, records and accounts, necessary for the complete and fair presentation in accordance with consistently maintained sound accounting practices, of the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower, including NRA, responsible for carrying out the Project or any part thereof, including its costs and the benefits to be derived from it.

(b) The Borrower shall:

(1) have the records and accounts referred to in paragraph (a) of this Section, including the records and accounts for the Special Account for each fiscal year prepared and audited, in accordance with international generally accepted auditing principles consistently applied, by independent auditors acceptable to the Bank;

(2) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such fiscal year, the report of such audit by said auditors of such scope and in such detail as the Bank shall have reasonably requested; and

(3) furnish to the Bank such other information concerning said records and accounts as well as the audit thereof, as the Bank shall from time to time reasonably request.

Section 4.02. Negative Pledge

(a) The Borrower undertakes to ensure that no other external debt shall have priority over the Loan in the allocation, realisation or distribution of foreign exchange held under the control or for the benefit of the Borrower. If any lien shall be created on any public assets as security. for any external debt, or any arrangement having an equivalent effect, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realisation or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto, and at no cost to the Bank, equally and rateably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lies, shall make express provision to that effect; provided, however, that if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank.

(b) The foregoing undertaking shall not apply to:

(1) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of that property or as security for the payment of debt incurred for the purpose of financing the purchase of such property; and

(2) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date.

Section 4.03. Financial and Economic Data

(a) The Borrower shall furnish to the Bank all such information as the Bank shall reasonably request:

(1) with respect to financial and economic conditions in its territory, including its balance of payments and its external debt as well as that of its political or administrative subdivisions and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, and of any institution performing the functions of a central bank or exchange stabilisation fund, or similar functions, for the Borrower, and

(2) with respect to proposals to implement economic reforms, including proposed measures for privatisation, in the road sector which' may have an impact on the Project, including reforms in the legal or regulatory framework for such sector.

(b) The Borrower shall afford all reasonable opportunity for representatives of the Bank to visit any part of its territory for purposes related to the Loan or the Project.

Section 5.01. Taxes

(a) This Agreement and any related document shall be free from any and all taxes levied by, or in the territory of, the Borrower on or in connection with the execution, delivery, registration or performance thereof.

(b) The proceeds of the Loan shall not be disbursed on account of payments for any taxes levied by or in the territory of the Borrower.

(c) The Bank may, by notice to the Borrower, increase or decrease the percentage for disbursement from any Category in Schedule 2 of this Agreement as required to be consistent with paragraph (b) of this Section.

Section 5.02. Fees and Costs

The Borrower shall bear any professional, banking transfer or exchange fees and costs incurred in the preparation, execution, registration and implementation of this Agreement and any related document.

Section 5.03. Manner of Payment

All amounts payable to the Bank under this Agreement shall be paid in the Loan Currency:

(a) at such places as the Bank shall reasonably request; and

(b) without deduction for, and free from, any and all taxes, charges and restrictions of any kind imposed by, or in the territory of, the Borrower. Amounts due to the Bank hereunder shall be deemed paid when received without such deductions by the Bank.

Section 6.01. Suspension

(a) If any of the following events shall have occurred and be continuing, the Bank may, by notice to the Borrower, suspend in whole or in part the right of the Borrower to make application for disbursements:

(1) the Borrower shall have failed to make payment (notwithstanding the fact that such payment may have been made by a third party) of principal or interest or any other amount due to the Bank,

(A) under this Agreement, or

(B) under any other loan or guarantee agreement between the Bank and the Borrower, or

(C) in consequence of any guarantee or other financing of any kind provided by the Bank to any third party with the agreement of the Borrower;

(2) the Borrower shall have failed to perform any other obligation under this Agreement, or under Article 21.2 of the Agreement Establishing the Bank;

(3) the Bank shall have suspended in whole or in part the right of the Borrower to make application for disbursements under any other loan agreement with the Bank because of a failure by the Borrower to perform any of its obligations under such agreement or any guarantee agreement with the Bank;

(4) a situation shall have arisen which in the opinion of the Bank shall make it improbable that the Project can be carried out or that the Borrower will be able to perform its obligations under this Agreement;

(5) after the date of this Agreement and prior to the date referred to in Section 9.04 of this Agreement, any event shall have occurred which would have entitled the Bank to suspend the Borrower's right to make applications for disbursements if this Agreement had been effective on the date such event occurred;

(6) the legislative and regulatory framework applicable to the road sector in the territory of the Borrower shall have been amended, suspended, abrogated, repealed or waived;

(7) any event specified in Section 7.01(c) shall have occurred;

(8) the Bank shall have suspended or otherwise modified access by the Borrower to Bank resources pursuant to a decision of the Board of Governors of the Bank under Article 8.3 of the Agreement Establishing the Bank.

(b) The right of the Borrower to make application for disbursements shall continue to be suspended in whole or in part, as the case may be, until the event or events which gave rise to suspension shall have ceased to exist, unless the Bank shall have notified the Borrower that the right to make applications for disbursements has been restored; provided, however, that in the case of any such notice of restoration the right to make application for disbursements shall be restored only to the extent and subject to the conditions specified in such notice, and no such notice shall affect or impair any right, power or remedy of the Bank in respect of any other subsequent event described in this Section.

Section 6.02. Cancellation by the Bank

(a) If:

(1) the right of the Borrower to make application for disbursements shall have been suspended with respect to any amount of the Loan for a continuous period of thirty (30) days, or

(2) 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

(3) at any time the Bank determines that the procurement of any item is inconsistent with the procedures set forth or referred to in this Agreement and establishes the amount of expenditures in respect of such item which would otherwise have been eligible for financing out of the proceeds of the Loan, or

(4) at any time the Bank determines that the utilisation of funds deposited in the Special Account is inconsistent with the procedures set forth or referred to in this Agreement, or

(5) after the date Specified in Section 2.03, any Available Amount shall not have been disbursed, the Bank may, by notice to the Borrower, terminate the right of the Borrower to make application for disbursements with respect to such amount. Upon the giving of such notice, such amount of the Loan shall be cancelled.

(b) Any cancellation pursuant to this Section shall be applied pro-rata to the several maturities of the principal amount of the Loan disbursed and not repaid after the date of such cancellation.

Section 6.03. Unconditional Reimbursement Commitment Unaffected by Suspension or Cancellation

No cancellation or suspension by the Bank shall apply to amounts subject to any unconditional Reimbursement Commitment entered into by the Bank pursuant to Section 2.06 except as expressly provided in such commitment.

Section 6.04. Obligations of the Borrower

Notwithstanding any cancellation or suspension, all the provisions of this Agreement shall continue in full force and effect except as specifically provided in this Article.

Section 7.01. Events of Acceleration

If any of the following events shall occur and shall continue for any period specified below then at any subsequent time during the continuance of that event the Bank may by notice to the Borrower declare the principal of the Loan then outstanding to be due and payable immediately together with the interest and other charges thereon, and upon any such declaration such principal, together with the interest and other charges, shall become due and payable immediately:

(a) any event specified in Section 6.01(a) (1) shall have occurred and shall continue for a period of fifteen (15) days;

(b) any event specified in Section 6.01(a)(2) or (6) shall have occurred and shall continue for a period of thirty (30) days after notice thereof shall have been given by the Bank to the Borrower;

(c) any external debt of the Borrower is declared to be and payable prior to its specified maturity.

Section 8.01. Enforceability

The rights and obligations of the parties to this Agreement shall be valid and enforceable in accordance with their terms notwithstanding any local law to the contrary. No party to this Agreement shall be entitled under any circumstances to assert any claim that any provision of this Agreement is invalid or unenforceable for any reason.

Section 8.02. Arbitration

The parties to this Agreement shall endeavour to settle amicably all disputes or differences between them arising out of this Agreement or in connection therewith. If the dispute or difference cannot be amicably settled, it shall be submitted to arbitration by the Arbitral Tribunal as hereinafter provided:

(a) Arbitration proceedings may be instituted by the Borrower against the Bank or vice versa. In all cases, arbitration proceedings shall be instituted by a notice given by the complainant party to the respondent party.

(b) The Arbitral Tribunal shall consist of three arbitrators appointed as follows: one by the claimant party, a second by the respondent party and the third (the "Umpire") by agreement of the two arbitrators. If within thirty days after notice of the institution of arbitration proceedings the respondent party fails to appoint an arbitrator, such arbitrator shall be appointed by the President of the International Court of Justice upon the request of the party instituting the proceedings. If the two arbitrators fail to agree on the Umpire within sixty days after the date of the appointment of the second arbitrator, such Umpire shall be appointed by the President of the International Court of Justice.

(c) The Arbitral Tribunal shall convene at the time and place fixed by the Umpire. Thereafter, it shall determine where and when it shall sit. The Arbitral Tribunal shall determine all questions of procedure and questions relating to its competence.

(d) All decisions of the Arbitral Tribunal shall be reached by majority vote. The award of the Tribunal, which may be rendered even if one party defaults, shall be final and binding on both parties by the arbitration proceedings.

(e) Service of any notice or process in connection with any proceedings under this Section 8.02 or in connection with any proceedings to enforce any award rendered pursuant to this Section shall be made in the manner provided in Section 10.01.

(f) The Arbitral Tribunal shall decide on the manner in which the cost of arbitration shall be borne by either or both parties to the dispute.

Section 8.03. Evidence of Indebtedness

In any arbitral proceeding arising out of this Agreement the certificate of the Bank as to any amount due to the Bank under this Agreement shall be prima facie evidence of such amount.

Section 9.01. Effective Date

This Agreement shall become effective on the date upon which the Bank dispatches to the Borrower notice of its acceptance of the evidence required by Sections 9.02 and 9.03.

Section 9.02. Conditions Precedent to Effectiveness

The Borrower shall furnish the Bank with documentary evidence in form and substance satisfactory to the Bank that:

(a) the execution and delivery of this Agreement by the Borrower have been duly authorised and ratified and that this Agreement is legally binding upon the Borrower in accordance with its terms; and

(b) the Borrower has established in association with NRA the PIU in accordance with Section 3.02.

Section 9.03. Legal Opinion

The Borrower shall furnish the Bank with a legal opinion of the Minister of Justice of the Borrower, in form and substance satisfactory to the Bank, to the effect that this Agreement has been duly authorised and ratified by, and executed and delivered on behalf of, the Borrower and constitutes a valid and binding obligation of the Borrower in accordance with its terms together with such other matters as shall be reasonably requested by the Bank in connection therewith.

Section 9.04. Termination for Failure to Become Effective

If this Agreement shall not have come into force and effect ninety (90) days after the date hereof, this Agreement and all obligations of the parties hereunder shall terminate unless the Bank, after consideration of the reasons for the delay, shall establish a later date for the purposes of this Section.

Section 9.05. Termination on Performance

When the entire principal amount of the Loan shall have been repaid and the interest and all charges which shall have accrued on the Loan shall have been paid, this Agreement and all obligations of the parties thereunder shall fortwith terminate.

Section 10.01. Notices

Any notice or request required or permitted to be given or made under this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it has been delivered by hand, mail, cable, telex or telefax to the party to which it is required to be given or made, at the party's address specified below or at any other address as the party shall have specified in writing to the party giving the notice or making the request.

For the Borrower:

Minister of Finance

Republic of Slovenia

Župančičeva 3, 61000 Ljubljana, Slovenia

Telephone: 010 386 61 1765 248

Telefax: 010 386 61 214 640

For the Bank:

European Bank for Reconstruction and Development

Attention: Operations Administration Unit

One Exchange Square London EC2A 2EH England

Telephone: (44-71) 338 6000

Telefax: (44-71) 338 6100

Telex: 881 2161

Section 10.02. Authority to Act

Any action required or permitted to be taken, and any documents required or permitted to be executed under this Agreement on behalf of the Borrower, including the right to withdraw funds from the Special Account, shall be taken or executed by the Borrower's Minister of Finance or such other officer of the Borrower as the Minister of Finance shall designate in writing, and the Borrower shall furnish to the Bank and to the commercial bank referred to in Section 2.02(b) sufficient evidence of the authority and the authorised specimen signature of each such officer of the Borrower.

Section 10.03. Modification

Any modification of the provisions of this Agreement may be agreed to on behalf of the Bank by any officer of the Bank authorised from time to time to execute such modification, and on behalf of the Borrower by written instrument executed on behalf of the Borrower by the officer designated by; or pursuant to, Section 10.02; provided, that in the opinion of such officer of the Borrower the modification is reasonable in the circumstances and will not substantially increase the obligations of the Borrower under this Agreement. The Bank may accept the execution by such representative of any such instrument as conclusive evidence that in the opinion of the Borrower the modification requested by such instrument will not substantially increase the obligations of the Borrower hereunder.

Section 10.04. English Language

Any document delivered pursuant to this Agreement shall be in the English language. Documents in any other language shall be accompanied by an English translation thereof certified as being an approved translation and such approved translation shall be conclusive between the parties hereto.

In witness whereof the parties hereto acting through their duly authorised representatives, have caused this Agreement to be signed and delivered at London, England in three (3) copies in the English language, each considered an original as of the day and year first above written.

SCHEDULE 1 – DESCRIPTION OF THE PROJECT

The purpose of the Project is to i) assist with regional integration within Slovenia and the development of international trade through removal of bottlenecks on the main east-west highway route; ii) encourage more cost-effective road construction and maintenance activities through competitive tendering; iii) ensure that the road construction and maintenance programme is prepared with due regard to economic, technical and environmental criteria; iv) foster the introduction of private sector investment in the operation of existing motorways and/or in further development of the network; and v) ensure improved recovery of road infrastructure costs.

The Project consists of the following Parts, subject to such modifications thereof as the Bank and the Borrower may agree upon from time to time:

Part A: Road Schemes

Construction, or upgrading and maintenance of Road Schemes including:

(1) reconstruction/upgrading of the route between Pocehova and Lendava;

(2) reconstruction/upgrading of the route between Slovenska Bistrica and Ptuj; and

(3) widening of the road between Črnuče to Domžale.

Part B: Improvement of NRA's Road Monitoring Capabilities

Acquisition and utilisation of road monitoring equipment to improve NRA's construction supervision capability and enhance the utilisation of its road data bank.

Part C: Institutional Development

Institutional Development including assistance in building up expertise in transport planning and project finance in the road sector.

Part D: Road Planning Studies

(1) Preparation of new feasibility study guidelines and updating of evaluation of new investment methodology; and

(2) strategic environmental assessment for the main transport network.

The Project is expected to be completed by 31 December 1997.

SCHEDULE 2 – DISBURSEMENT OF THE PROCEEDS OF THE LOAN

The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category:

2. Notwithstanding the provisions of paragraph 1 above, no disbursement shall be made in respect of payments made for expenditures prior to the date of this Agreement.

3. Notwithstanding the allocation of the amount of the Loan or the percentages for disbursement set forth in this Schedule, if the Bank has reasonably estimated that the amount of the Loan then allocated to any disbursement Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower:

(a) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and

(b) if such reallocation cannot fully meet the estimated shortfall, reduce the percentage for disbursement then applicable to such expenditures in the Category where the shortfall exists in order that further disbursements under such Category may continue until all expenditures thereunder shall have been made.

SCHEDULE 3 – PROCUREMENT

1. Tendering Procedures for goods and works and services:

(a) Goods, works and services (excluding consultants' services which are covered under paragraph (2) of this Schedule) shall be procured through open tendering, except that contracts for goods and services for the introduction of road monitoring equipment under Part B of the Project described in Schedule 1, in an aggregate amount not exceeding the equivalent of USD 400,000 and not exceeding the equivalent of USD 200,000 per contract may be procured through shopping.

(b) For purposes of this paragraph, the procedures for open tendering and shopping are set out in Section 3 of the EBRD Procurement Rules.

2. Consultants' Services:

Consultants to be employed by the Borrower to assist in the carrying out the Project shall be selected in accordance with the procedures set out in Section 5 of the EBRD Procurement Rules.

3. Review by the Bank:

(a) All contracts shall be subject to the review procedures set out in Appendix 1 to the Procurement Rules.

(b) The following contracts shall be subject to prior review:

(i) Contracts for works estimated to cost USD 5,000,000 or more;

(ii) Contracts for goods estimated to cost USD 200,000 or more; and

(iii) Contracts for consultants' services estimated to cost USD 50,000 or more.

SCHEDULE 4 – SPECIAL ACCOUNT

1. For the purposes of this Schedule the following terms shall have the following meaning:

"eligible Category" means Categories 1 and 2 set forth in the table in paragraph 2 of Schedule 2 to this Agreement;

"eligible expenditures" means expenditures in respect of the reasonable cost of works and services required for the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Category in accordance with the provisions of Schedule 2 to this Agreement;

"Special Account Maximum Balance" means an amount equalling three million Dollars (USD 3,000,000); and

"Special Account Minimum Disbursement Amount" means an amount equalling one hundred thousand Dollars (USD 100,000).

2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule.

3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened in accordance with terms and conditions acceptable to the Bank, including appropriate protection against set-off. seizure, or attachment, the Borrower may request the Bank to disburse from the Available Amount and deposit into the Special Account an initial amount that shall not exceed the Special Account Maximum Balance nor be less than the Special Account Minimum Disbursement Amount.

4. Thereafter, the Borrower may request the Bank to disburse additional amounts from the Available Amount and deposit such amounts into the Special Account, subject to the limitations specified in paragraph 6 below and satisfaction of the following conditions for each requested drawdown:

(a) The Borrower shall have submitted to the Bank account statements and documents, and any other evidence requested by the Bank, to demonstrate that amounts disbursed from the Special Account have been properly applied.

(b) After giving effect to the requested disbursement from the Available Amount and deposit of the amount of such disbursement into the Special" Account, the balance of the Special Account shall not exceed the Special Account Maximum Balance.

(c) Except as the Bank may from time to time agree, the amount of the requested disbursement from the Available Amount for deposit into the Special Account shall not be less than the Special Account Minimum Disbursement Amount.

5. Without prejudice to the requirement of paragraph 4(a) above, the Borrower shall furnish, at any time the Bank shall reasonably request, a report on the balance and other details of the Special Account, including account statements and such other documents and other evidence as the Bank may request to show that payments made from the Special Account have been in accordance with the requirements set forth in this Schedule.

6. Notwithstanding the provisions of paragraph 4 of this Schedule, the Bank, unless it agrees otherwise, shall not disburse funds from the Available Amount for deposit, into the Special Account:

(a) if, at any time, the Bank shall have determined that all further disbursements from the Available Amount should be made in accordance with the provisions of Section 2.02(a) of this Agreement; or

(b) once the Available Amount allocated to the eligible Categories shall equal twice the amount of the Special Account Maximum Balance.

Thereafter, disbursements from the Available Amount allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further disbursements shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilised in making payments for eligible expenditures.

7. (a) If the Bank shall have determined at any time that any payment out of, or any use of, the Special Account:

(i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or

(ii) was not justified by the evidence furnished to the Bank;

(b) then the Bank may require the Borrower to:

(i) provide such additional evidence as the Bank may request; or

(ii) deposit into the Special Account (or, if the Bank shall so request, repay to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified.

In the event the Bank makes such a determination under (a) (i) or (ii) above, no further disbursements shall be made from the Available Amount for deposit into the Special Account (unless the Bank agrees otherwise) until such time as the Borrower has (x) deposited into the Special Account or repaid to the Bank an amount equal to the amount, of such payment (or portion thereof)

determined not to be eligible or justified, or (y) provided additional evidence, which satisfies the Bank, that the amounts previously disbursed from the Special Account were applied properly.

8. (a) If the Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, then the Borrower shall, promptly upon notice from the Bank prepay to the Bank such outstanding amount. Likewise, if the Bank shall direct the Borrower to repay to the Bank an amount pursuant to paragraph 7(b)(ii), then the Borrower shall promptly upon notice from the Bank prepay to the Bank such outstanding amount. For these purposes, the requirement that prepayments must occur on Interest Payment Dates is waived subject to paragraph 8(c) below.

(b) The Borrower, upon prior notice to the Bank given in accordance with Section 2.10(a) of this Agreement, may prepay on any Interest Payment Date all or any portion of the funds deposited into the Special Account.

(c) Any prepayments of the amounts identified in subparagraphs (a) and (b) above shall be made in accordance with Section 2.10 of this Agreement; provided, however, that such prepayments shall not be subject to the minimum amounts specified in Section 2.10(c)(1) of this Agreement; and provided further that any prepayments that are made on a date other than an Interest Payment Date shall be subject to payment by the Borrower of any costs to the Bank arising from the unwinding of the financial position or foreign exchange position, or both, taken by the Bank in order to provide the Loan or any part thereof, assessed by the Bank (and notified to the Borrower). Furthermore, prepayments of the amounts identified in subparagraphs (a) and (b) above shall be applied by the Bank as provided in Section 2.10(c)(2) of this Agreement.