Page 1 CONFORMED COPY LOAN NUMBERS 4080-0 POL 4080-1 POL Loan Agreement (Port Access and Management Project) between REPUBLIC OF POLAND and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated September 9, 1996 LOAN NUMBERS 4080-0 POL 4080-1 POL LOAN AGREEMENT AGREEMENT, dated September 9, 1996, between REPUBLIC OF POLAND (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project; and WHEREAS the Bank has agreed, on the basis, inter alia, of the fore- going, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements for Single Currency Loans" of the Bank, dated May 30, 1995, (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Page 2 Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "DEM Loan Tranche" means the amount in Deutsche Marks provided for in Section 2.01 of this Agreement; (b) "Deutsche Mark" and "DEM" mean the lawful currency of the Federal Republic of Germany, but if such currency shall be replaced with the "Euro" then "Deutsche Mark" and "DEM" shall be replaced by "Euro" for the purposes of the Loan, at the ratio in effect as of the date of such replacement; (c) "Loan Tranche" means any of the USD Loan Tranche or the DEM Loan Tranche; (d) "PMU" means the Project Monitoring Unit which has been established in the Borrower's Ministry of Transport and Maritime Economy; (e) "Special Account A" means any of the accounts referred to in Section 2.02 (b) of this Agreement; and "Dollar Special Account A" and "Deutsche Mark Special Account A" mean the Special Accounts A to be maintained in Dollars and DEM, respectively; (f) "Special Account B" means the account referred to in Section 2.02 (c) of this Agreement; (g) "Special Accounts" means the Special Accounts A and Special Account B; (h) "USD Loan Tranche" means the amount in dollars provided for in Section 2.01 of this Agreement; and (i) "Vessel Traffic Management System" means a radar and real-time communication link with processing software to service and monitor maritime traffic situations. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, the following amounts: (a) an amount equal to thirty-three million five hundred thousand Dollars ($33,500,000); and (b) an amount equal to forty-nine million five hundred thousand Deutsche Marks (DEM 49,500,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower may, for the purposes of Parts A, C and D of the Project, open and maintain in the currency of each Loan Tranche (i.e., in Dollars and Deutsche Marks) a special deposit account, each in a commercial bank acceptable to the Bank, on terms and conditions satis- factory to the Bank, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of the Special Accounts A shall be made in accordance with the provisions of Schedule 5 to this Agreement. (c) The Borrower may, for the purposes of Parts B, E and F of the Project, open and maintain in dollars a special deposit account, in a commercial bank acceptable to the Bank, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account B shall be made in accordance with the provi- Page 3 sions of Schedule 6 to this Agreement. Section 2.03. The Closing Date Shall be June 30, 2002 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of: (i) the USD Loan Tranche withdrawn and outstanding from time to time, at a rate for each Interest Period equal to USD LIBOR Base Rate, plus USD LIBOR Total Spread; and (ii) the DEM Loan Tranche withdrawn and outstanding from time to time, at a rate for each Interest Period equal to DEM LIBOR Base Rate plus DEM LIBOR Total Spread. (b) For the purposes of this Section: (i) "Interest Period" means the initial period from and including the date of this Agreement to but not includ- ing the first Interest Payment Date and thereafter the period from and including any Interest Payment Date to but not including the next Interest Payment Date. (ii) "Interest Payment Date" means any date specified in Section 2.06 of this Agreement. (iii) "USD LIBOR Base Rate" means for each Interest Period the London interbank offered rate for six-month deposits in Dollars for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the Interest Payment Date occurring on or next preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum. (iv) "USD LIBOR Total Spread" means, for each Interest Period: (A) one half of one percent (1/2 of 1%); (B) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include the USD Loan Tranche, as reasonably determined by the Bank and expressed as a percentage per annum. (v) "DEM LIBOR Base Rate" means for each Interest Period the London interbank offered rate for six-month deposits in Deutsche Marks for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the Interest Payment Date occurring on or next preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum. (vi) "DEM LIBOR Total Spread" means, for each Interest Period: (A) one half of one percent (1/2 of 1%); (B) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include the DEM Loan Tranche; as reasonably determined by the Bank and expressed as a percentage per annum. Page 4 (c) The Bank shall notify the Borrower of USD LIBOR Base Rate, USD LIBOR Total Spread, DEM LIBOR Base Rate and DEM LIBOR Total Spread for each Interest Period, promptly upon the determination thereof. (d) Whenever, in light of changes in market practice affecting the determination of the interest rates referred to in this Section 2.05, the Bank determines that it is in the interest of its borrowers as a whole and of the Bank to apply a basis for determining the interest rates applicable to the Loan other than as provided in said Section, the Bank may modify the basis for determining the interest rates applicable to amounts of the Loan not yet withdrawn upon not less than six (6) months' notice to the Borrower of the new basis. The basis shall become effective on the expiry of the notice period unless the Borrower notifies the Bank during said period of its objection thereto, in which case said modification shall not apply to the Loan. Section 2.06. Interest and other charges shall be payable semi- annually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agree- ment, and, to this end, without any limitation or restriction upon any of its other obligations under the Loan Agreement, shall carry out the Project with due diligence and efficiency and in conformity with appropriate financial, administrative, environmental and engineering practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project; and (b) The Borrower shall maintain the PMU in accordance with terms of reference satisfactory to the Bank and shall, by October 1, 1996, appoint a Project Coordinator with qualifications, experience and terms of reference satisfactory to the Bank to coordinate the acti- vities of the Borrower under the Project. Section 3.02. Except as the Bank shall otherwise agree, procure- ment of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 3.03. The Borrower shall maintain policies and procedures adequate to enable it to monitor and evaluate on a continuous basis, in accordance with indicators to be specified in the terms of reference referred to in Section 3.01 (b) above, the carrying out of the Project and the achievement of the objectives thereof, including, but without limitation, the following indicators: (a) monthly port traffic statistics; (b) average dwelling time in port of time-sensitive cargoes; and (c) breakdown of modes of transport used on land before and after transit through ports. Section 3.04. For the purposes of Section 9.08 of the General Conditions and without limitation thereto, the Borrower shall: (a) prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, a plan for the future operation of the Project; and (b) afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan. ARTICLE IV Page 5 Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be main- tained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Accounts for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expendi- tures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Termination Section 5.01. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Transport and Maritime Economy of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes Page 6 of Section 11.01 of the General Conditions: For the Borrower: Ministry of Transport and Maritime Economy ul. Chalubinskiego 4/6 00-928 Warsaw Republic of Poland Telex: 816651 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 248423 (MCI) Washington, D.C. 64145 (MCI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in Warsaw, Republic of Poland, as of the day and year first above written. REPUBLIC OF POLAND By /s/ Boguslaw Liberadzki Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Paul Knotter Authorized Representative SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. 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: Amount of the Amount of the Loan Allocated Loan Allocated % of (Expressed in (Expressed in Expenditures Category Dollars) Deutsche Mark) to be Financed (1) Works 50% (a) for Parts A, 24,100,000 35,559,000 C and D of the Project (b) for Part B 3,100,000 4,578,000 of the Project Page 7 (2) Goods 2,250,000 3,320,000 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and expenditures for other items procured locally (3) Consultants' 650,000 959,000 100% services and training (4) Unallocated 3,400,000 5,084,000 _________ _________ TOTAL 33,500,000 49,500,000 ========== ========== 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $1,000,000, may be made in respect of Category (3) on account of payments made for expenditures before that date but after October 27, 1995. 4. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure for expenditures (i) for good and works under contracts not exceeding $1,000,000 equivalent; and (ii) for services under contracts costing less than $100,000 equivalent for the employment of consulting firms and under contracts costing less than $50,000 equivalent for the employment of individual consultants, under such terms and conditions as the Bank shall specify by notice to the Borrower. SCHEDULE 2 Description of the Project The objectives of the Project are to improve physical access to the ports of Gdansk, Gdynia and Szczecin-Swinoujscie and the management capacity of the port authorities. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Road Access to the Gdansk North Port (1) Construction of a new bridge of about 140m over the Martwa Wisla river (the Martwa Wisla Bridge); (2) construction of an access road to the Martwa Wisla Bridge; and (3) construction of a road connection between the Martwa Wisla Bridge and the E-77 road via an embankment. Part B: Wisla Smiala Outlet Protection (1) Reconstruction of the east and west breakwaters of the Wisla Smiala river and related shore protection; (2) dredging works in the mouth of the Wisla Smiala river to a depth of around 4m; and (3) supply and installation of navigation aids in the Wisla Smiala river outlet. Page 8 Part C: Road Access to Szczecin Central Port Area Construction of: (1) a new bridge of about 560m over the Regalica river, with related access roads and connections to the existing road system; and (2) a fly-over between Gdanska Street in Szczecin and the central port area of Szczecin, over the Parnica river, and connection of the fly-over to the existing road system. Part D: Improvement of the Road Connection between Swinoujscie and Szczecin through Wolin (1) Construction of a by-pass road round the village of Dargobadz; and (2) improvement of the section of road of about 6.3 km running through the Wolin National Park. Part E: First Phase Modernization of the Szczecin - Swinoujscie Fairway Supply and installation of the Vessel Traffic Management System. Part F: Technical Assistance and Training Provision of technical assistance and training for regulation of port activities and port management. * * * The Project is expected to be completed by December 31, 2001. SCHEDULE 3 Amortization Schedule Payment of Principal Payment of Principal Date Payment Due (Expressed in Dollars)* (Expressed in DEMs)** November 15, 2001 1,395,000 2,065,000 May 15, 2002 1,395,000 2,065,000 November 15, 2002 1,395,000 2,065,000 May 15, 2003 1,395,000 2,065,000 November 15, 2003 1,395,000 2,065,000 May 15, 2004 1,395,000 2,065,000 November 15, 2004 1,395,000 2,065,000 May 15, 2005 1,395,000 2,065,000 November 15, 2005 1,395,000 2,065,000 May 15, 2006 1,395,000 2,065,000 November 15, 2006 1,395,000 2,065,000 May 15, 2007 1,395,000 2,065,000 November 15, 2007 1,395,000 2,065,000 May 15, 2008 1,395,000 2,065,000 November 15, 2008 1,395,000 2,065,000 May 15, 2009 1,395,000 2,065,000 November 15, 2009 1,395,000 2,065,000 May 15, 2010 1,395,000 2,065,000 November 15, 2010 1,395,000 2,065,000 May 15, 2011 1,395,000 2,065,000 November 15, 2011 1,395,000 2,065,000 May 15, 2012 1,395,000 2,065,000 November 15, 2012 1,395,000 2,065,000 May 15, 2013 1,415,000 2,005,000 __________ __________ 33,500,000 49,500,000 ______________________________ * The figures in this column represent the amount in Dollars to be repaid, except as provided in Section 4.04(d) of the General Conditions. ** The figures in this column represent the amount in DEMs to be repaid, except as provided in Section 4.04 (d) of the General Page 9 Conditions. SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: General Goods and 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. Goods and 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. The following provisions shall apply to goods and works to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B. (a) Prequalification Bidders for works for the construction of roads and bridges and marine works shall be prequalified in accordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines. (b) Preference for domestically manufactured goods The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Borrower. (c) Dispute Review Board Each contract for works estimated to cost $50,000,000 equivalent or more shall include the provisions for a dispute review board set forth in the standard bidding documents for works referred to in paragraph 2.12 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 Guidelines. Procurement of all goods and 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 (i) each contract for works and (ii) each contract for equipment estimated to cost the equivalent of $1,000,000 or more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II. Employment of Consultants 1. Consultants' services shall be procured under contracts awarded in Page 10 accordance with the provisions of the "Guidelines for the Use of Consultants by World Bank Borrowers and by The World Bank as Executing Agency" published by the Bank in August 1981 (the Consultant Guidelines). For complex, time-based assignments, such contracts shall be based on the standard form of contract for consultants' services issued by the Bank, with such modifications thereto as shall have been agreed by the Bank. Where no relevant standard contract documents have been issued by the Bank, other standard forms acceptable to the Bank shall be used. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Bank review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts, shall not apply to: (a) contracts for the employment of consulting firms estimated to cost less than $100,000 equivalent each; or (b) contracts for the employment of individual consultants estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Bank review shall not apply to: (a) the terms of reference for such contracts; (b) single- source selection of consulting firms; (c) assignments of a critical nature, as reasonably determined by the Bank; (d) amendments to con- tracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above; or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above. SCHEDULE 5 Special Accounts A 1. For the purposes of this Schedule: (a) the term "eligible Category" means Category (1) (a) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of works 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 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount to be with- drawn from the Loan Account and deposited in Special Accounts A pursuant to paragraph 3 (a) of this Schedule, equivalent to $2,250,000 for the Dollar Special Account A (to be withdrawn from USD Loan Tranche) and DEM 3,340,000 for the DEM Special Account A (to be withdrawn from the DEM Loan Tranche), provided, however, that unless the Bank shall other- wise agree, the Authorized Allocation shall be limited to an amount equivalent to $1,000,000 for the Dollar Special Account A and DEM 1,500,000 for the DEM Special Account A until the aggregate amount of withdrawals from the Loan Account plus the total amount of all out- standing special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of $7,500,000 and DEM 11,000,000, respectively. 2. Payments out of the Special Accounts A 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 a Special Account A has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish such Special Account A shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into such Special Account A such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of such Special Account A, the Borrower Page 11 shall furnish to the Bank requests for deposits into such respective Special Account A at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into such respective Special Account A such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the respective Special Account A for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Category, and in the respective equiva- lent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of any Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into a Special Account A: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; (b) if the Borrower shall have failed to furnish to the Bank within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Bank pursuant to said Section in respect of the audit of the records and accounts for the Special Account A; (c) if, at any time, the Bank shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Loan Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Loan Tranche allocated to the eligible Category minus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwith- drawn amount of the Loan allocated to the eligible Category shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals 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 respective Special Account A as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of any Special Account A: (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, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into such Special Account A (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise Page 12 agree, no further deposit by the Bank into such Special Account A shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that any amount outstanding in any Special Account A will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in any Special Account A. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. SCHEDULE 6 Special Account B 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) (b), (2) and (3) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of works, goods 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 Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount to be with- drawn from the Loan Account and deposited in Special Account B pursuant to paragraph 3 (a) of this Schedule, equivalent to $1,500,000 (an amount of $750,000 to be withdrawn from the USD Loan Tranche and an amount of $750,000 equivalent from the DEM Loan Tranche), provided, however, that unless the Bank shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $600,000 until the aggregate amount of withdrawals from the Loan Account plus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of $4,500,000. 2. Payments out of Special Account B 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 Special Account B has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish Special Account B shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account (from the USD Loan Tranche or the DEM Loan Tranche, as appropriate) and deposit into Special Account B such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of Special Account B, the Borrower shall furnish to the Bank requests for deposits into Special Account B at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of Page 13 this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into Special Account B such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of Special Account B for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equi- valent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of Special Account B, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into Special Account B: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; (b) if the Borrower shall have failed to furnish to the Bank within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Bank pursuant to said Section in respect of the audit of the records and accounts for Special Account B; (c) if, at any time, the Bank shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Loan Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of each Loan Tranche allocated to the eligible Categories minus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwith- drawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals 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 respective Special Account B as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of Special Account B: (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, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into Special Account B (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into Special Account B shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that any amount outstanding in Special Account B will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such out- Page 14 standing amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in Special Account B. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.