Law on the Ratification of the Loan and Financing Agreement between KfW, Frankfurt am Main and the Republic of Serbia, amounting to 25,000,000 euros for the Water and Sewerage Programme in Medium-Sized Municipalities in Serbia phase II”

fW, , 25.000.000 , „ II – 2” 1. KfW, , 25.000.000 , „ II – 2”, 30. 2011. , . 2. KfW, , 25.000.000 , „ II – 2”, : 2 L o a n a n d F i n a n c i n g A g r e e m e n t dated 30th September 2011 between KfW, Frankfurt am Main (“KfW”) and The Republic of Serbia ("Borrower") represented by the Minister of Finance for up to EUR 25,000,000. Water and Sewerage Programme in Medium-Sized Municipalities in Serbia II, Phase 2 3 Contents Preamble 1. Loan and Financial Contribution 2. Channelling of Funds 3. Disbursement 4. Fees 5. Interest 6. Repayment and Prepayment 7. Calculations and Payments in General 8. Guarantee from the Federal Republic of Germany 9. Negative Pledge and Pari Passu 10. Costs and Public Charges 11. Special Obligations 12. Termination of the Loan and Suspension of the Financial Contribution 13. Representation and Statements 14. General Provisions Annexes Annex 1 Disbursement Schedule Annex 2 Form of Legal Opinion of the Legal Adviser to the Borrower Annex 3 Confirmation letter from KfW that German Government Guarantee has been obtained (to be enclosed after signing of the Loan and Financing Agreement) 4 Preamble The basis for this Loan and Financing Agreement are the commitments made for the pro gramme “Water Supply and Waste Water Treatment in Medium-Sized Municipalities II”, as per the protocol of the Negotiations on Development Cooperation between the Govern ment of the Federal Republic of Germany and the Government of the Republic of Serbia dated October 16th 2009 on Financial Cooperation (FC). The title of the programme that is subject to this Agreement is herewith changed to “Water and Sewerage Programme in Medium-Sized Municipalities in Serbia II, Phase 2”. The reason for concluding this Agreement is therefore the programme “Water and Sewer age Programme in Medium-Sized Municipalities in Serbia II, Phase 2” (“Programme”) be ing planned by the Borrower. KfW affirms its willingness to finance the Programme by way of extending to the Borrower a combined financing consisting of a financial contribution granted by the Federal Repub lic of Germany represented by the Ministry of Economic Cooperation and Development (“Financial Contribution”) and a Loan extended by KfW under the condition that the Fed eral Republic of Germany will provide interest rate subsidies as approved by the German Government at the time of signing of the Loan and Financing Agreement and under the condition that the Federal Republic of Germany will provide a guarantee for the loan in accordance with the following provisions and Annex 3 (“Loan”). The terms and conditions of the Loan comply with the OECD requirements applicable on the date of signing of this Loan and Financing Agreement for recognition as Official De velopment Assistance (ODA). Along with the financing provided under this Agreement, KfW is prepared to finance expert services for the construction and rehabilitation of water supply and sewerage systems in selected medium-sized municipalities in the Republic of Serbia by way of extending an additional financial contribution granted by the Federal Republic of Germany represented by the Ministry of Economic Cooperation and Development to the Republic of Serbia on the terms and conditions set forth in a Financing Agreement between the Republic of Ser bia and KfW, yet to be concluded. Article 1 Loan and Financial Contribution 1.1 Amount. KfW will extend to the Borrower a development Loan not exceeding a total of EUR 17,500,000 (the “Loan”) and a financial contribution not exceeding EUR 7,500,000 (the “Financial Contribution”) The Loan and the Financial Contribution are hereinafter together referred to as the „Funds”. The Financial Contribution shall not be repayable unless otherwise stipulated in Article 12.5 (Repayment of the Financial Contribution). 1.2 Channelling and purpose. The Borrower will channel the Funds in full to each of the Programme Towns/Municipalities selected by the Borrower and KfW (each such Town/Municipality herinafter referred to as “Municipality”) in accordance with the conditions set forth in Article 2. The Borrower will ensure that each Mu nicipality and their Water and Wastewater Utility will utilise the Funds exclusively for the Rehabilitation and Extension of Water Supply and Sewerage Systems to pay the costs incurred in connection with the Programme (“Programme Costs”), and primarily to pay the foreign exchange costs. 5 1.3 Separate implementation agreement. The Borrower, each Municipality, their Wa ter and Wastewater Utility and KfW will determine by separate implementation agreements the details of the Programme (each a “Separate Agreement”). 1.4 Taxes, charges, customs duties. Taxes and other public charges owed by the Borrower or any of the Municipalities or their Water and Wastewater Utilities as well as customs duties may not be financed from the Funds. 1.5 The goods and services imported into the Republic of Serbia for the Programme shall be exempted from custom fees, while the trade of goods, services and equipment for the Programme shall be exempted from VAT. 1.6 The Borrower will ensure that each Municipality participating in the Programme will not be subject to possible transfer reduction from the Republican budget in case of adjustment of water and wastewater tariffs according to the requirements of the Programme. Article 2 Channeling of Funds 2.1 On-lending agreement. The Borrower shall channel the Financial Contribution as a non-repayable grant and the Loan as a loan to each Municipality and their Wa ter and Wastewater Utility respectively under a separate on-lending and financing agreement to be concluded between the Borrower and each Municipality and their Water and Wastewater Utility (hereinafter referred to as “Trilateral Con tract”) at the terms and conditions set forth in Articles 4 (Fees), 5 (Interest) and 6 (Repayment and Prepayment) hereof. 2.2 Certified translation. Prior to the first disbursement from the Financial Contribu tion and the Loan, the Borrower shall send to KfW a certified translation in Eng lish language of each separate Trilateral Contract specified in Article 2.1. 2.3 No Iiability of the municipalities and their water and wastewater utilities. The channelling of the Financial Contribution and the Loan shall not constitute any li ability of the Municipalities and their Water and Wastewater Utilities to KfW for the payment obligations under this Agreement. Article 3 Disbursement 3.1 Request for disbursement. As soon as all conditions precedent to disbursement pursuant to Article 3.2 (Separate Agreement and disbursement procedure) and 3.5 (Conditions Precedent to Disbursement) are fulfilled, KfW will upon request of the Borrower: a) disburse the Loan in accordance with the progress of the Programme; b) disburse the Financial Contribution in accordance with the progress of the Programme. Disbursement will be effected in accordance with the disbursement schedule con tained in Annex 1 to this Agreement. KfW will make disbursements only up to the maximum amounts determined for each half-year. To the extent the Borrower re quests disbursement of lower amounts within any half-year the undisbursed amounts may be requested in any subsequent half-year period. With the excep tion of the last disbursement, KfW is not obliged to effect disbursements more of ten than every 2 months for amounts less than EUR 1 million. Each request for disbursement shall only be valid if it is made at the same time proportionately a ratio of 70 % of the drawdown request being requested from the Loan and 30 % of such amount from the Financial Contribution. 6 3.2 Separate Agreement and disbursement procedure. In a separate implementation agreement (“Separate Agreement”), the Borrower, each Municipality, their Water and Wastewater Utility and KfW will specify the disbursement procedure including specific conditions precedent to disbursement and in particular the evidence to be furnished by the Borrower proving that the requested Funds are used for the pur pose stipulated in this Loan and Financing Agreement. 3.3 Reduction of programme costs. In the event that the Programme Costs or an individual investment measure will be reduced prior to full disbursement, KfW shall have the right to determine, at its sole discretion, but after prior consultation with the Borrower, whether and to what extent the Loan and/or the Financial Contribution will be reduced (subject to Article 3.6 b)) or utilised for another purpose in the framework of the Programme. 3.4 Deadline for requesting disbursement. KfW may deny disbursements after 30th December 2015. If the execution of the Programme is delayed, KfW will examine after prior consultation with the Borrower whether and under what conditions this deadline may be extended. 3.5 Conditions precedent to disbursement. KfW is obliged to make disbursements of any amount under this Agreement only upon fulfillment of the following conditions precedent in a form and content acceptable to KfW: a) the Borrower will have demonstrated by presenting a legal opinion substantially in the form set forth in Annex 2 and by presenting certified copies (each with a German or English translation) of all documents to which this legal opinion refers that aa) the Borrower has fulfilled all requirements under its constitutional law and other legal provisions for the valid assumption of all its obli gations under this Agreement, and bb) KfW is exempted from all taxes on income from interest, charges, fees and similar costs in Serbia when granting the Loan; b) the specimen signatures mentioned in Article 13.1 (Representation of the Borrower) have been submitted; c) the Guarantee from the Federal Republic of Germany mentioned in Article 8 is in force and effect without any restriction; KfW will inform the Borrower once the Guarantee is in force and effect before the ratification process is initiated with the national assembly of the Republic of Serbia. This confirmation letter from KfW will be enclosed as Annex 3 to this Agreement. d) the Borrower has paid the management fee mentioned in Article 4.2; e) no reason for termination has occurred or is threatening; and f) no extraordinary circumstances have arisen that preclude or seriously jeopardise the implementation, the operation, or the purpose of the Programme, or the performance of the payment obligations assumed by the Borrower under this Loan and Financing Agreement. Prior to disbursement from the Funds KfW has the right to demand such further documents and evidence as it reasonably deems necessary. 7 3.6 Waiver of disbursement. The Borrower may a) renounce the disbursement of undisbursed amounts of the Financial Contribution provided the Borrower has fulfilled its obligations under Article 11 (Special Obligations) and; b) renounce the disbursement of Loan amounts only with KfW's consent and only against payment of non-acceptance compensation as per Article 3.7 (Non- acceptance compensation). 3.7 Non-acceptance compensation. If the Borrower waives disbursement of a loan amount, or if a Loan amount is not disbursed at all or is not disbursed by the deadline stated in Article 3.4 (Deadline for requesting disbursements) for other reasons for which KfW cannot be held accountable, the Borrower will promptly pay to KfW upon its request such amount as is necessary to compensate KfW for any losses, expenses or costs incurred by KfW as a result of the non-acceptance of the Loan amount in question. KfW will calculate the amount of the non acceptance compensation and communicate it to the Borrower. Article 4 Fees 4.1 Commitment fee. The Borrower will pay a non-refundable commitment fee of 0.25 % p.a. on undisbursed Loan amounts. The commitment fee will be computed for the period beginning with the elapse of a three-months period following the ratifi cation of this Agreement and lasting until such date the Loan has been disbursed in full, or fully cancelled, as the case may be. The commitment fee is due for payment semi-annually and in arrears on 30 June and 30 December of each year (each a “Payment Date”). It is first due for pay ment on the first Payment Date three months after ratification of this Agreement. 4.2 Management fee. The Borrower will pay KfW a non-refundable, one-time lump sum management fee equalling 0.5% of the principal amount of the Loan stated in Article 1.1 at the latest upon elapse of a three-months period after this Loan and Financing Agreement is ratified but in any case prior to the first disbursement under this Agreement. Article 5 Interest 5.1 Financial contribution. The Borrower shall pay no interest on the Financial Contribution. 5.2 Interest (fixed interest rate set upon commitment of the Loan). The Borrower shall pay interest on the Loan at a rate of 3,49 % p. a. ("Fixed Interest Rate") until the last repayment instalment according to the Repayment Schedule as defined in Article 6.1 (Repayment schedule) has been received. 5.3 Calculation of interest and interest payment dates. The interest on a disbursed Loan amount will be charged from the date (exclusively), on which the respective Loan amount is paid out of the Loan account held with KfW for the Borrower until the date (inclusively) on which the respective repayments are credited to KfW's account stated in Article 7.3 (Account number, time of crediting). Interest will be calculated in accordance with Article 7.1 (Calculation). Interest will be paid in ar rears on the Payment Dates (as defined in Article 4.1). 8 Article 6 Repayment and Prepayment 6.1 Repayment schedule. The Borrower will repay the Loan as follows: Instalment Date Amount 1 December 30, 2014 700.000,00 EUR 2 June 30, 2015 700.000,00 EUR 3 December 30, 2015 700.000,00 EUR 4 June 30, 2016 700.000,00 EUR 5 December 30, 2016 700.000,00 EUR 6 June 30, 2017 700.000,00 EUR 7 December 30, 2017 700.000,00 EUR 8 June 30, 2018 700.000,00 EUR 9 December 30, 2018 700.000,00 EUR 10 June 30, 2019 700.000,00 EUR 11 December 30, 2019 700.000,00 EUR 12 June 30, 2020 700.000,00 EUR 13 December 30, 2020 700.000,00 EUR 14 June 30, 2021 700.000,00 EUR 15 December 30, 2021 700.000,00 EUR 16 June 30, 2022 700.000,00 EUR 17 December 30, 2022 700.000,00 EUR 18 June 30, 2023 700.000,00 EUR 19 December 30, 2023 700.000,00 EUR 20 June 30, 2024 700.000,00 EUR 21 December 30, 2024 700.000,00 EUR 22 June 30, 2025 700.000,00 EUR 23 December 30, 2025 700.000,00 EUR 24 June 30, 2026 700.000,00 EUR 25 December 30, 2026 700.000,00 EUR 6.2 Undisbursed loan amounts. Undisbursed Loan amounts will be offset against the respective last repayment instalment due pursuant to the repayment schedule unless KfW after prior consultation with the Borrower, at its own discretion chooses another offsetting alternative in an individual case. 6.3 Disbursements after the start of repayment. If Loan amounts are disbursed after repayment has started, the repayment schedule as listed in Article 6.1 will remain unaffected as long as the respective repayment instalment due in accordance with the repayment schedule is less than the Loan amounts already disbursed. If the repayment instalment due for payment exceeds the outstanding loan amount, KfW will deduct the amount equal to the difference from the repayment instalment due, divide it by the remainder of the repayment instalments still outstanding, and add this sum to each outstanding repayment instalment. KfW reserves the right to postpone taking disbursements into consideration that are made within 45 days prior to the respective Payment Date for the determination of the outstanding Loan amount until the second Payment Date following the disbursement. 9 6.4 Prepayment. The following will apply to prepayments: a) Right to make prepayments. The Borrower may subject to the sub paragraphs (b) to (e) below effect an early repayment with respect to a Loan amount provided that such early repayment shall be at least in the amount of one repayment instalment pursuant to Article 6.1. b) Notice. A prepayment of a Loan amount pursuant to Article 6.4 a) is subject to notification of the prepayment by the Borrower to KfW not later than on the fifteenth Banking Day (as defined in Article 14.1) prior to the intended prepayment date. Such notice is irrevocable; it must specify the date on which the prepayment is to be made, the amount thereof, and it obliges the Borrower to pay to KfW the stated amount on the stated date. c) Amounts due. Together with the prepayment the Borrower will also pay the following amounts together with the prepayment pursuant to Article 6.4 a), b) and d). aa) any prepayment compensation due as a result of the prepayment pursuant to Article 6.4 d); and bb) all interest accrued on the prepaid Loan amount up until the date of the prepayment. d) Prepayment compensation. If the Borrower repays an amount of the Loan prior to the scheduled Payment Date the Borrower will pay to KfW a prepayment fee for this premature repayment. The prepayment fee will be computed on the basis of the difference between (i) the interest which KfW could have charged for the corresponding Loan amount until the end of the fixed interest rate period and (ii) the interest which KfW can earn by reinvesting the corresponding Loan amount in consideration of the agreed repayments performed up until the end of the fixed interest rate period, for which the difference will have to be discounted on the basis of the interest curve for reinvestments. KfW will determine the amount of the prepayment compensation and communicate it to the Borrower. e) Offsetting. Article 6.2 (Undisbursed loan amounts) will apply mutatis mutandis to the offsetting of prepayments. 6.5 Revised repayment schedule. In the event that Article 6.2 (Undisbursed loan amounts), Article 6.3 (Disbursements after the start of repayment) or Article 6.4 (Prepayment) applies, KfW will send the Borrower a revised repayment schedule that will become an integral part of this Loan and Financing Agreement and will replace the repayment schedule valid until such time. Article 7 Calculations and Payments in General 7.1 Calculation. Interest, the commitment fee, default interest pursuant to Article 7.5 (Default interest), lump-sum compensation for overdue amounts pursuant to Article 7.6 (Lump-sum compensation), non-acceptance compensation and prepayment compensation will be calculated on the basis of a 360-day year with 30-day months. 7.2 Due date. If a payment to be made in connection with this Agreement falls due on a date that is not a Banking Day (as defined in Article 14.1), the Borrower must make such payment on the following Banking Day. If the following Banking Day falls within the next calendar month, the respective payment shall be effected on the last Banking Day of the then current calendar month. 10 7.3 Account number, time of crediting. The Borrower will be released from its payment obligations arising from this Agreement if and as soon as the respective amounts have been credited to KfW at its free disposal without any deductions in EUR and not later than at 16:00 a.m. in Frankfurt am Main to KfW's account IBAN DE92 5002 0400 3122 3012 32 held with KfW, Frankfurt am Main, with the additional indication of the due date "Ref. YYYYMMDD" or to another account specified in writing by KfW. 7.4 Counterclaims of the Borrower. The Borrower is not entitled to assert any rights of retention or set-off or comparable rights against payment obligations under this Agreement unless such rights are recognised by final judgment or have not been contested by KfW. 7.5 Default interest. If any repayment instalments or prepayments pursuant to Article 6.4 (Prepayment) are not at the disposal of KfW when due, KfW may without prior reminder charge default interest at a rate of 300 basis points p.a. above the Base Rate for the period beginning on the due date and ending on the date on which such payments are credited to the account of KfW specified in Article 7.3. This rate must at least equal the loan interest rate. The "Base Rate" is the interest rate announced by the German Central Bank (Deutsche Bundesbank) as base rate prevailing on the respective due date. Such default interest must be paid immediately upon KfW's first demand. 7.6 Lump-sum compensation. For overdue amounts (with the exception of such re payment instalments and prepayments as mentioned in Article 7.5 (Default inter est) KfW may, without prior reminder, request lump-sum compensation of a rate of 300 basis points p.a. above the Base Rate applicable on the respective due date for the period beginning on the due date and ending on the date of payment of such overdue amounts. The lump-sum compensation must be paid immedi ately upon KfW's first demand. The Borrower shall be free to prove that no dam age was in fact incurred or that the damages were not incurred in the amount as stated. 7.7 Calculations made by KfW. Unless the Borrower proves that KfW has made a mistake, KfW's determinations and its calculation of amounts under this Agree ment and in connection with this Agreement are binding. Article 8 Guarantee from the Federal Republic of Germany KfW will have payment claims under this Loan and Financing Agreement guaranteed by the Federal Republic of Germany prior to the first disbursement. Article 9 Negative Pledge and Pari Passu 9.1 Prohibition of pledge or mortgage. The Borrower will do anything within its power to procure that the municipalities may neither pledge, nor mortgage nor alienate the Programme assets before repayment in full of the Loan nor conclude any other agreement or arrangement the effect of which is the creation of security or any right conferring a priority of payment in respect of any obligation of any per son without the prior consent of KfW and the Borrower will do anything within its power to procure that neither the municipalities nor any of their Water and Wastewater Utilities pledge, mortgage or alienate any of the Programme assets before repayment in full of the Loan or conclude any other agreement or ar rangement the effect of which is the creation of security or any right conferring a priority of payment in respect of any obligation of any person without the prior consent of KfW. 11 9.2 Pari passu. To the extent permitted by law, the Borrower undertakes to perform the obligations under this Agreement pari passu with all its other existing or future unsecured and not subordinated payment obligations. Article 10 Costs and Public Charges 10.1 No deductions or withholdings. The Borrower will make all payments under this Agreement without any deductions for taxes, other public charges or other costs. In the event that the Borrower is obliged by law or for other reasons to effect any such deductions or withholdings on payments, the Borrower shall pay any such necessary additional amounts to KfW so that the net amount remaining after any withholding or deduction corresponds to the amount which would have been pay able under this Agreement had no such deduction or withholding been made. 10.2 Costs. The Borrower will bear all costs and expenses accruing in connection with the disbursement and repayment of the Funds, in particular remittance and trans fer costs (including conversion fees), as well as all costs and expenses accruing in connection with the maintenance or enforcement of this Agreement. 10.3 Taxes and other charges. The Borrower will bear all taxes and other public charges accruing outside the Federal Republic of Germany in connection with the conclusion and execution of this Agreement. If KfW advances such taxes or charges, the Borrower will transfer them without delay upon request to KfW’s account as specified in Article 7.3. Article 11 Special Obligations 11.1 Project implementation and special information. The Borrower will ensure itself and ensure that each Municipality and their Water and Wastewater Utility a) will prepare, implement, operate and maintain the Programme in conformity with sound financial and technical practices and substantially in accordance with the Programme conception agreed upon between the Borrower and KfW; b) will assign the preparation, implementation and supervision of the Programme to independent, qualified consulting engineers or consult ants, and the implementation of the Programme to qualified firms; c) will award the contracts for the goods and services to be financed from the Funds by way of international, national or limited national competitive bidding depending on the contract volume; d) will ensure the full financing of the Programme and furnish to KfW upon its request evidence proving that the costs not paid from these Funds are covered; e) will keep books and records or have books and records kept that unequivocally show all costs of goods and services required for the Programme and clearly identify the goods and services financed from the Funds; f) will enable the representatives of KfW at any time to inspect such books and records and any and all other documentation relevant to the implementation and operation of the Programme, and to visit the Programme sites and all the installations related thereto; 12 g) will furnish to KfW any and all such information and records on the Programme and its further progress as KfW may request; h) will, immediately and of its own accord, aa) forward to KfW any queries received by the Borrower or any Municipality and/or their Water and Wastewater Utility from the Organisation for Economic Co-operation and Development (OECD) or its members under the so-called "Agreement for Untied ODA Credits Transparency" following the award of the contracts for the supplies and services to be financed from the Funds and will coordinate the reply to any such queries with KfW, and bb) notify KfW of any and all circumstances that preclude or seriously jeopardise the implementation, the operation or the purpose of the Programme. 11.2 Separate Agreement. The Borrower, each Municipality, their Water and Wastewater Utility and KfW will determine the details of Article 11.1 (Project implementation and special information) by a Separate Agreement. 11.3 Compliance. The Borrower will ensure that the persons whom it or any of the Municipalities and their Water and Wastewater Utilities entrusts with the preparation and implementation of the Programme, the award of any contract for the supplies and services to be financed, and with requesting amounts from the Funds do not demand, accept, make, grant, promise or accept the promise of unlawful payments or other advantages in connection with these tasks. 11.4 Transport of goods. With regard to the transport of the goods to be financed from the Funds, the free choice of transport enterprises for such transportation by sea, land or air of persons and goods as results from the granting of the contribution must generally be ensured and the Borrower and each Municipality and their Water and Wastewater Utility shall abstain from taking any measures that might exclude or impair the participation on equal terms of transport enterprises having their place of business in the Federal Republic of Germany. Article 12 Termination of the Loan and Suspension of the Financial Contribution 12.1 Events of default. KfW may exercise the rights set forth under Article 12.2 (Legal consequences of an event of default for the Loan) if an event occurs which con stitutes a material reason (wichtiger Grund). In particular, the following events shall each constitute a material reason: a) the Borrower fails to perform its obligations to KfW to make payments when due; b) obligations under this Agreement or under any Separate Agreement pertinent to this Agreement have been violated; c) this Loan and Financing Agreement or any parts thereof cease to have a binding effect upon the Borrower or ceases to be enforceable against the Borrower; d) any declaration, confirmation, information or representation or warranty considered by KfW to be essential for the granting and maintaining of the Loan and/or the Financial Contribution proves to be false, misleading or incomplete; 13 e) other extraordinary circumstances occur which delay or preclude the performance of obligations under this Loan and Financing Agreement; f) the Borrower and/or any Municipality and/or its Water and Wastewater Utility is unable to prove that the amounts from the Funds have been used for the stipulated purpose; g) any of the following events occurs with respect to the Borrower: aa) the Borrower, is unable to pay its debts as and when due; bb) commencement of negotiations with one or more of the Borrower's creditors (with the exception of KfW) on a waiver of debts outstanding or on a standstill agreement or settlement. 12.2 Legal consequences of an event of default for the Loan. If any of the events specified in Article 12.1 has occurred and has not been resolved within a period of five days (in the case of Article 12.1a) or, in all other cases specified in Article 12.1, has not been resolved (if possible to be resolved) within a period determined by KfW that may not, however, be less that 30 days in continuity, KfW may terminate the Loan in full or in part with the consequence that a) its obligations under this Agreement related to the Loan terminate, and b) KfW may demand full or partial repayment of the outstanding Loan amount together with the interest accrued and any and all other amounts due under this Agreement, with Articles 7.5 (Default interest) and 7.6 (Lump-sum compensation) applying to accelerated amounts mutatis mutandis. 12.3 Compensation for damages. In the event that the Loan is terminated in full or in part, the Borrower will pay non-acceptance compensation in accordance with Clause 3.7 (Non-acceptance compensation) and/or prepayment compensation in accordance with Clause 6.4d (Prepayment compensation). 12.4 Suspension of Disbursements from the Financial Contribution. KfW may not sus pend disbursements from the Financial Contribution unless a) the Borrower has failed to perform its obligations to KfW to make payments when due, b) obligations under this Agreement or under any Separate Agreement pertaining to this Agreement have been violated, c) the Borrower and/or any Municipality and/or its Water and Wastewater Utility is unable to prove that the amounts from the Funds have been used for the stipulated purpose, or d) extraordinary circumstances arise that preclude or seriously jeopardise the implementation, the operation or the purpose of the Programme. 12.5 Repayment of the Financial Contribution. If any of the situations specified in Arti cle 12.4b) or c) has occurred and has not been eliminated within a period deter mined by KfW, which shall however, be at least 30 days in continuity, KfW may, after prior consultation with the Borrower, a) in the case specified in Article 12.4 b), demand the immediate repayment of the Financial Contribution; and b) in the case specified in Article 12.4 c), demand the immediate repayment of such amounts from the Financial Contribution as the Borrower and/or any Municipality and/or its Water and Wastewater Utility is unable to prove to have been used for the stipulated purpose. 14 Article 13 Representation and Statements 13.1 Representation of the Borrower. The Minister of Finance of the Republic of Serbia and such persons as designated by him or her to KfW and authorised by specimen signatures authenticated by him or her shall represent the Borrower in the execution of this Agreement. The powers of representation will not expire until their express revocation by the representative authorised at such time has been received by KfW. 13.2 Addresses. Notices or statements in connection with this Agreement must be in writing. They must be sent as originals or – with the exception of requests for dis bursement - via facsimile. Any and all notices or statements made in connection with this Agreement must be sent to the following addresses: For KfW: KfW Postfach 11 11 41 60046 Frankfurt am Main Germany Fax: +49 69 7431-2944 For the Borrower: Ministry of Finance Attn. Public Debt Administration Pop Lukina 7-9 11000 Beograd Fax: +381-11-2629055 Article 14 General Provisions 14.1 Banking day. Where reference is made in this Agreement to a "Banking Day", this means a day, other than a Saturday or Sunday, on which commercial banks are open for general business in Frankfurt am Main, Federal Republic of Germany. 14.2 Place of performance. The place of performance for all obligations under this Agreement is Frankfurt am Main, Federal Republic of Germany. 14.3 Partial invalidity and gaps. If any provision of this Agreement is or becomes invalid, or if there is a gap in any of the provisions of this Agreement, this will not affect the validity of the remaining provisions hereof. The parties to this Agreement will replace any invalid provision by a legally valid one which comes as close as possible to the spirit and purpose of the invalid provision. The parties will fill any gap in the provisions with a legally valid provision which comes as close as possible to the spirit and purpose of this Agreement. 14.4 Written form. Changes and supplements to this Agreement must be in writing. Any waiver of this requirement of written form must be declared by the parties in writing. 14.5 Assignment. The Borrower may not assign or transfer, pledge or mortgage any claims from this Agreement. 14.6 Applicable law. This Agreement is governed by the laws of the Federal Republic of Germany. 15 14.7 Limitation period. All claims of KfW under this Agreement expire after five years from the end of the year in which any such claim has accrued and in which KfW has become aware of the circumstances constituting such claim or could have become aware of them without gross negligence. 14.8 Waiver of immunity: To the extent that the Borrower may now or in future in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity, the Borrower, in relation to any and all obligations of the Borrower under this Agreement and the enforcement of such obligations, hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity. Foregoing waiver of immunity shall not apply to property which is (i) used by a diplomatic, consular, special missions and missions to international organizations or to international conferences of the Borrower’s Country or (ii) of a military character and under the control of a military authority. 14.9 Legal disputes. Arbitration. All disputes arising out of or in connection with this Agreement which cannot be settled amicably by the parties themselves, shall be settled exclusively and finally by an arbitration tribunal. In this regard, the following will apply: aa) The arbitration tribunal will consist of three arbitrators who will be appointed and will act in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC) as amended from time to time. bb) The arbitration proceedings will be conducted in Frankfurt am Main. The proceedings will be held in the English language. 14.10 Transmission of information. KfW is entitled to transmit to the issuer of the federal guarantee mentioned in Article 8 and to the Federal Republic of Germany infor mation in connection with the conclusion and the execution of this Agreement. KfW, the issuer of the federal guarantee and the Federal Republic of Germany are entitled to pass on information related to the Loan, the Financial Contribution and to the Programme including the award of the contracts for the supplies and services to be financed from the Funds to international organisations engaged in the collection of statistical data, particularly in connection with matters related to debt service and/or the collection and publication of data related to the award of the contracts for the supplies and services to be financed from the Funds. The above right to forward information to international organisations also includes the right to directly pass on such information to members of such organisations. This Agreement is executed in 3 originals in the English language. Belgrade, this 30th day of September, 2011 KfW Republic of Serbia (Juergen Welschof ) (Mirko Cvetkovic) (Vibeke Christensen) 16 Annex 1 Disbursement Schedule By the end of each period indicated below, the Borrower may have requested disbursement of loan amounts not exceeding in total the amount indicated below for each period. all figures in EUR Disbursed in cur rent period Disbursed in previ ous periods Total disbursements 30.06.2013-30.12.2013 EUR 2,5 million - EUR 2,5 million 1.1.2014-30.6.2014 EUR 6,25 million EUR 2,5 million EUR 8,75 million 1.7.2014-31.12.2014 EUR 6,25 million EUR 8,75 million EUR 15 million 1.1.2015-30.6.2015 EUR 1,25 million EUR 15 million EUR 16,25 million 1.7.2015-31.12.2015 EUR 1,25 million EUR16,25 million EUR 17,5 million 17 Annex 2 Note: Please amend “Republic of Serbia” / “Serbia” appropriately. Form of Legal Opinion of the Legal Adviser to the Borrower [Letterhead of Legal Adviser] KfW (date) Department [ ] Attn: [ ] Palmengartenstrasse 5 - 9 Postfach 11 11 41 60325 Frankfurt am Main Federal Republic of Germany Loan and Financing Agreement dated . . . . and made between KfW, [. . . ] ("Borrow er") and [. . . ] for an amount not exceeding in aggregate EUR 25,000,000.--, consist ing of a Loan in the amount of EUR 17,500,000 and a Financial Contribution in the amount of EUR 7,500,000. Dear Sirs, I am [Minister of Justice of] [legal adviser to] [head of the legal department of the . . . . . (please specify ministry or other authority) of] The Republic of Serbia. I have acted in that capacity in connection with a Loan and Financing Agreement (the "Loan and Financing Agreement"), dated . . , and made between the Borrower, [. . . . ] and yourselves with respect to a Loan to be granted by yourselves to the Borrower in an amount not exceeding in aggregate EUR 25,000,000.--, consisting of a Loan in the amount of EUR 17,500,000 and a Financial Contribution in the amount of EUR 7,500,000. 1. Documents examined I have examined: 18 1.1 an authentic signed original of the Loan and Financing Agreement; 1.2 the constitutional documents of the Borrower, in particular: (a) the Constitution of The Republic of Serbia, dated . . . . . . . . . . . . ., duly pub lished in . . . . ., No. . . . . . . . . ., page. . . . . , as amended; (b) Law(s) No . . . . . dated . . . . . . . . . . . . ., duly published in . . . . ., No. . . . . . . . . ., page. . . . . , as amended [please insert here, if existing, laws (e.g. budget laws) concerning the borrowing of money by The Republic of Ser bia]; (c) . . . . . . . . . . . . [please refer here to other documents, e.g. decrees or reso lutions by governmental or administrative bodies of Serbia relating to the conclusion of Loan agreements by Serbia in general or with regard to the conclusion of the Loan and Financing Agreement]; and (d) the Financial Co-operation Agreement between the Government of the Re public of Serbia and the Government of the Federal Republic of Germany dated . . . . . .. (the “Co-operation Agreement”) and such other laws, regulations, certificates, records, registrations and documents and have made such investigations as I have deemed necessary or desirable for the purpose of giving this opinion. 2. Opinion For the purposes of Article 3.5 a) of the Loan and Financing Agreement, I am of the opi nion that under the laws of The Republic of Serbia at the date hereof: 2.1 According to Article . . . . of the Constitution / Article . . . . of the law on . . . . [please specify as appropriate] the Borrower is entitled to enter into the and Financing Agreement and has taken all necessary action to authorize the execution, delivery and performance of the Loan and Financing Agreement, in particular by virtue of: (a) Law(s) No(s). . . . . . . . dated . . . . . . . of the parliament of The Republic of Serbia, ratifying the Loan and Financing Agreement / approving the execu tion, delivery and performance of the Loan and Financing Agreement by the Borrower / . . . . . . [please insert as appropriate]; (b) Resolution(s) No(s). . . . . . . . dated . . . . . . . of the Cabinet of Ministers / of the state loan committee / . . . . . . . . . . . . [please insert governmental or administrative bodies of Serbia as appropriate]; (c) . . . . . . . . . . [please refer to other resolutions, decisions etc.]. 2.2 Ms./Mr. . . . . . . . . . . . . . . . . . . . . . . . (and Ms./Mr. . . . . . . . . . . . . . . . . . . . . . . . .) is (are) duly authorized by . . . . . . . . . . . . . . . . [e.g. by law due to her/his position (as Minister of . . / as . . ), by government resolution . . . . , by power of attorney of . . . . dated . . ., etc.] to sign solely / jointly the Loan and Financing Agreement on behalf of the Borrower. The Loan and Financing Agreement as signed by Ms./Mr. . . . . . . . . . . . . . . . (and Ms./Mr. . . . . . . . . . . . . . .) has been duly executed on behalf of the Borrower and constitutes legally binding obligations of the Borrower enforceable against it at law in accordance with its terms. [Alternative 1 for Section 2.3, to be used if in addition to the documents specified in Sec tion 2.1 and 2.2 certain official authorizations etc. must be obtained under the laws of the Republic of Serbia:] 2.3 For the execution and performance of the Loan and Financing Agreement by the Borrower (including without limitation the obtaining and transfer to KfW of all amounts due thereunder in the currencies specified therein), the following official 19 approvals, authorizations, licenses, registrations and/or consents have been ob tained and are in full force and effect: (a) Approval of the . . . . . . . . . . . . . . . [Central Bank/National Bank/. . . . . . . . . . . . ], dated . . . . . . . . . . . . . . ., No. . . . . . . . . . . . . .; (b) Consent of the . . . . . . . . . . . . . [Minister / Ministry of . . . . . . . . . . ], dated . . . . . . . . ., No. . . . . . . . . .; and (c) . . . . . . . . . . . . . . [please list any other official authorizations, licenses and/or consents]. No other official authorizations, consents, licenses, registrations and/or approvals of any governmental authority or agency (including the Central / National Bank of The Republic of Serbia) or court are required or advisable in connection with the execution and performance of the Loan and Financing Agreement by the Borrower (including without limitation the obtaining and transfer to KfW of all amounts due thereunder in the currencies specified therein) and the validity and enforceability of the Borrower’s obligations under the Loan and Financing Agreement. [Alternative 2 for Section 2.3, to be used only if in addition to the documents specified in Section 2.1 and 2.2 no official authorizations etc. must be obtained under the laws of the Republic of Serbia:] 2.3 No official authorizations, consents, licenses, registrations and/or approvals of any governmental authority or agency (including the Central / National Bank of The Republic of Serbia) or court are required or advisable in connection with the execu tion and performance of the Loan and Financing Agreement by the Borrower (in cluding without limitation the obtaining and transfer to KfW of all amounts due the reunder in the currencies specified therein) and the validity and enforceability of the Borrower’s obligations under the Loan and Financing Agreement. 2.4 No stamp tax or similar tax or duty has to be paid in connection with the validity or enforceability of the Loan and Financing Agreement. 2.5 The choice of German law to govern the Loan and Financing Agreement and the submission to arbitration in accordance with Article 13 of the Loan and Financing Agreement are valid and binding. Arbitration awards against the Borrower will be recognized and enforceable in The Republic of Serbia according to the following rules: . . . . [please insert applicable treaty (if any), e.g. the 1958 New York Con vention, and/or the basic principles regarding recognition and enforcement of arbi tration awards in Serbia. 2.6 The courts of the Republic of Serbia are at liberty to give judgment denominated in the currency or currencies specified in the Loan and Financing Agreement. 2.7 The borrowing by the Borrower under the Loan and Financing Agreement and the execution and performance by the Borrower of the Loan and Financing Agreement constitute private and commercial acts and not governmental or public acts. Nei ther the Borrower nor any of its property has any right of immunity from arbitration, suit, execution, attachment or other legal process. 2.8 The Co-operation Agreement is in full force and effect under the constitution and laws of The Republic of Serbia. [Pursuant to Article 3 of the Co-operation Agree ment] [Alternatively please specify treaty or applicable laws and regulations] the Borrower will not be required to make any deduction or withholding from any pay ment the Borrower has to make under the Loan and Financing Agreement. 2.9 KfW is not and will not be deemed to be resident, domiciled, carrying on business or be subject to taxation in Serbia by reason only of the execution, performance or enforcement of the Loan and Financing Agreement. It is not necessary or advis 20 able that KfW be licensed, qualified or otherwise entitled to carry on business or that KfW appoints agents or representatives in The Republic of Serbia. Consequently, the obligations of the Borrower under the Loan and Financing Agreement constitute direct and unconditional, legal, valid and binding obligations of the Borrower which are enforceable against the Borrower in accordance with their respective terms. This legal opinion is limited to the laws of The Republic of Serbia. . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . . . . . . (place) (date) [Signature] Name: Enclosures: Note: Please attach certified photocopies of the documents and legal provisions referred to above under Section 0(a) through 1.2(c) and Sections 0 through 0 (with respect to lengthy laws or the Constitution of The Republic of Serbia, a copy of the relevant provisions would be sufficient) and also provide KfW with a certified Eng lish or German translation of each of the above documents if such document is not issued in English or German as an official language. 21 Annex 3 Financial Cooperation between Serbia and Germany Water and Sewerage Programme in Medium-Sized Municipalities in Serbia II, Phase 2, Guarantee of the Federal Republic of Germany for the loan Dear Sirs, We herewith confirm that the Guarantee of the Federal Republic of Germany for the loan, as stipulated in the Preambule of the Loan and Financing contract dated ………. for the Water and Sewerage Programme in Medium-Sized Municipalities in Serbia II, Phase 2, is in force and effect. Yours sincerely KfW ………………………….. ………………………….. 22 30. 2011. KfW, („KfW“) („ “) 25.000.000. II - 2 23 1. 2. 3. 4. 5. 6. 7. 8. 9. „ “ 10. 11. 12. 13. 14. 1 2 3 ( ) 24 „ II”, 16. 2009. ( ). „ II, 2”. „ II, 2“ („ ”) . KfW , („ ”), KfW, 3 („ ”). (OECD) (ODA) . „ ”. , KfW , , KfW . 1 1.1 . KfW 17.500.000 („ ”) , 7.500.000 („ ”) „ ”. , 12.5 ( ). 1.2 . , KfW ( , „ ”), 2. 25 , („ ”) , , . 1.3 . , , KfW („ ”). 1.4 , , . , , . 1.5 , , . 1.6 . 2 2.1 . , ( : „ ”), 4 („ ”), 5 („ ”) 6 („ ”) . 2.2 . , KfW 2.1. 2.3 . KfW- . 3 3.1 . 3.2 ( ) 3.5 ( ), KfW , : ) ; ) ; 1 . KfW . , , 26 . , KfW 2 1 . 70% 30% . 3.2 . , , , KfW , . 3.3 . , KfW , , ( 3.6 ) . 3.4 . KfW 30. 2015. . , KfW , , . 3.5 . KfW , KfW: a) 2 ( ) : aa) , ) KfW, , , , , ; ) 13.1 ( ) ; ) 8 ; KfW . KfW 3 . ) 4.2; ) ; ) , , 27 . , KfW . 3.6 . a) 11 ( ), ; ) KfW 3.7 ( ). 3.7 . , 3.4 ( ) KfW , KfW- , KfW- , KfW- , KfW . KfW . 4 4.1 . 0,25% . , , , . 30. 30. („ ”). . 4.2 . , , KfW 0,5% , 1.1. 5 5.1 . . 5.2 ( ). 3,49% . („ ”) 6.1 ( ). 5.3 . ( ) 28 KfW ( ) KfW- 7.3 ( , ). 7.1 ( ). ( 4.1). 6 6.1 . : 1 30. 2014 700.000,00 2 30. 2015 700.000,00 3 30. 2015 700.000,00 4 30. 2016 700.000,00 5 30. 2016 700.000,00 6 30. 2017 700.000,00 7 30. 2017 700.000,00 8 30. 2018 700.000,00 9 30. 2018 700.000,00 10 30. 2019 700.000,00 11 30. 2019 700.000,00 12 30. 2020 700.000,00 13 30. 2020 700.000,00 14 30. 2021 700.000,00 15 30. 2021 700.000,00 16 30. 2022 700.000,00 17 30. 2022 700.000,00 18 30. 2023 700.000,00 19 30. 2023 700.000,00 20 30. 2024 700.000,00 21 30. 2024 700.000,00 22 30. 2025 700.000,00 23 30. 2025 700.000,00 24 30. 2026 700.000,00 25 30. 2026 700.000,00 6.2 . , KfW . 6.3 . , , 6.1, („ ”) 29 . , KfW . KfW 45 . 6.4 . : a) . , ( ) ( ) , , , 6.1. ) . 6.4 ), KfW- 15. 14.1) . ; , , KfW- . ) . , 6.4 ), ) ). aa) 6.4 ); ) . ) . , KfW- . (1) KfW , (2) KfW , . KfW . ) . 6.2 ( ) mutatis mutandis . 6.5 . 6.2 ( ), 6.3 ( ), 6.4 ( ), KfW . 30 7 7.1 . , , 7.5 ( ), 7.6 ( ), 360 30 . 7.2 . 14.1, . , . 7.3 , . KfW- KfW , 16 , KfW- IBAN DE92 5002 0400 3122 3012 32, KfW, , „Ref. YYYYMMDD”) KfW . 7.4 . , KfW- . 7.5 . 6.4 ( ) KfW , KfW , , 300 , KfW- 7.3. . „ ” (Deutsche Bundesbank) . , KfW- . 7.6 . ( 7.5 ( ) KfW , , 300 . , KfW . . 7.7 KfW- . , KfW . 31 8 KfW . 9 „ ” 9.1 . , , KfW- . 9.2 ”. , „ ” . 10 10.1 . , . , KfW . 10.2 . , ), . 10.3 . . KfW , , KfW- , KfW 7.3. 11 11.1 . a) , , , KfW ; ) , , - , ; 32 ) , , ; ) KfW- , , ; ) ; ) KfW , ; ) KfW KfW ; ) , aa) KfW (OECD) . ” KfW- , ) KfW , . 11.2 . , , 11.1 ( ) . 11.3 . , , , , , . 11.4 . , , , , , , . 33 12 12.1 . KfW 12.2 ) (wichtiger Grund). : a) KfW- ; ) ; ) ; ) , , KfW , , ; ) ; ) ; ) : aa) ; ) ( KfW- ) . 12.2 . 12.1 5 ( 12.1 ) 12.1 ( ) KfW , , 30 , KfW , : a) KfW- , ) KfW , , 7.5 ( ) 7.6 ( ) mutatis mutandis. 34 12.3 . , 3.7 ( ) 6.4 ( ). 12.4 . KfW a) KfW , ) , ) , ) , . 12.5 . 12.4 ) ) KfW, , , 30 , KfW , , a) 12.4 ), ; ) 12.4 ), . 13 13.1 . , KfW . KfW . 13.2 . . – – . : KfW: KfW Postfach 11 11 41 60046 Frankfurt am Main Germany Fax: +49 69 7431-2944 35 : : 7-9 11000 : +381 11 2629055 14 14.1 . „ ”, , , , . 14.2 . , . 14.3 . , , . . . 14.4 . . . 14.5 . , . 14.6 . . 14.7 . KfW KfW . 14.8 : , , , , , , . (i) , , (ii) . 14.9 . . 36 . , : aa) (ICC) . ) . . 14.10 . KfW 8 . KfW, , , , , . . 3 . , 30. c 2011. KfW (Juergen Welschof ) ) (Vibeke Christensen) 37 1 , . 30.6.2013-30.12.2013. 1.1.2014-30.6.2014. 2,5 6,25 2,5 2,5 8,75 1.7.2014-31.12.2014. 6,25 8,75 15 1.1.2015-30.6.2015. 1,25 15 16,25 1.7.2015-31.12.2015. 1,25 16,25 17,5 38 2 : „ / „ ” . [ ] KfW ) [ ] : [ ] Palmengartenstrasse 5 - 9 Postfach 11 11 41 60325 Frankfurt am Main ( ) KfW- , (...) („ ”) (...) 25.000.000 , 17.500.000 7.500.000 . , ( ) ( ) ( ) ( ) . („ “) ( ) , (...) , , 25.000.000 , 17.500.000 7.500.000 . 1. a a : 39 1.1 ; 1.2 , : (a) , ( ), ..., . ..., . ..., ; ) . ..., ( ), ... . ..., . ..., ( ( . ) , ); ) ...( , . , ); . . . . . . . . . . . . ) ( ) („ ”) , , , , . 2. 3.5( ) , : 2.1 ... ... ... ( ) , , : (a) . .... ( ) , / , /... ( ); ) . ....... ( ) / /... ( ); ) ... ( , .) . . . . . . . . . .. 2.2 .... ( ......) ) ... ( . ( .., ...), ..., ... ( ), ) / . ... ( ...) . [ 1 2.3, , 2.1 2.2 . ] 40 2.3 ( , , KfW ), , , , : (a) ... ( /...), ( ), .; ) ... ( ...), ( ), . ...; ) . . . . . . . . . . . . . . ( , ). , , , , , ( ) , , KfW ). [ 2 2.3, 2.1 2.2, , . ] 2.3 , , KfW ) , , , , ( ) . 2.4 . 2.5 13 . : ... ( ) . 1958. , . 2.6 . 2.7 , . , , , . 2.8 . ( 3 ) ( , ), 41 . 2.9 KfW , . KfW , . , , . . . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . . . . . . ) ) [ ] : : : 0( ) 1.2( ) 0 0 , ). KfW 42 3 II - 2, , , a .. ... .... e II 2, . KfW 43 3. „ – ”.