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Law No. 35 Of 25 February 1999

Original Language Title:  LEGE nr. 35 din 25 februarie 1999

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LEGE no. 35 35 of 25 February 1999 on the ratification of the Loan Agreement between Romania and the European Investment Bank and the National Society of Romanian Railways (S.N.C.F.R.) for the financing of the railway modernization project, signed in Luxembourg and in Bucharest at 30 June 1998
ISSUER PARLIAMENT
Published in OFFICIAL MONITOR no. 82 82 of 26 February 1999



The Romanian Parliament adopts this law + Article 1 The Loan Agreement between Romania and the European Investment Bank and the National Society of Romanian Railways (S.N.C.F.R.), amounting to ECU 200 million equivalent, for the financing of the railway modernization project, signed at Luxembourg and Bucharest on 30 June 1998. + Article 2 (1) The Romanian Government is authorized that, through the Ministry of Finance, in agreement with the European Investment Bank, to introduce, during the loan, in relation to the concrete conditions of the loan agreement, amendments to the its content that concerns reallocations of funds, changes in the structure of the loan by category and components, changes of deadlines, as well as any other changes that are not likely to increase Romania's financial obligations to European Investment Bank or to determine new economic conditionings over those originally agreed between the parties. (2) The Romanian Government will periodically report to the Romanian Parliament about the amendments introduced, within the framework of the Report on Romania's external public debt + Article 3 The rights and obligations assumed by the National Society of Romanian Railways within the framework of the Loan Agreement whose ratification is subject to this law will be taken over in their entirety by the National Railway Company "C.F.R." -S.A., established by Government Decision no. 581/1998, following the reorganization of the National Society of Romanian Railways. + Article 4 (1) The funds necessary to repay the loan and to pay interest, commissions and other costs related to the credit will be provided from the state budget, through the budget of the Ministry of Transport ((2) Contribution with funds of the Romanian side (consisting of the value of taxes and fees charged on the territory of the country-T.V.A., customs duties-as well as other local costs of the same nature, which cannot be paid from the external loan) to the realization of the rehabilitation works of the railway on the Bucharest-Brasov sector, included in the project and co-financed by the European Investment Bank, will be ensured from the own sources of the National Railway Company "C.F.R." --S.A. This law was adopted by the Senate at the meeting of December 28, 1998, in compliance with the provisions of art 74 74 para. (2) of the Romanian Constitution. p. SENATE PRESIDENT, CRISTIAN DUMITRESCU This law was adopted by the Chamber of Deputies at its meeting on February 2, 1999, in compliance with the provisions of 74 74 para. (2) of the Romanian Constitution. p. CHAMBER OF DEPUTIES PRESIDENT, ADRIAN NASTASE + LOAN AGREEMENT EUROPEAN INVESTMENT BANK FI No 1.7521 ROMANIA-RAILWAY MODERNIZATION PROJECT between Romania and the European Investment Bank and the National Society of Romanian Railways (S.N.C.F.R.) *) Note * *) Translation. Luxembourg, 30 June 1998 Bucharest, 30 June 1998 This Agreement shall be concluded between: Romania, represented by the Ministry of Finance, based in Bucharest, str. Apolodor no. 17, sector 5, Romania, represented by Mircea Ionuț Costea, State Secretary, hereinafter referred to as the Loan, as the first part, European Investment Bank, headquartered in Bd. Konrad Adenauer nr. 100 100, Luxembourg-Kirchberg, Grand Duchy of Luxembourg, represented by Konstantin J. Andreopoulos, Deputy General Counsel, and Mr Walter Cernoia, Director, hereinafter referred to as the Bank, as the second party, and The National Society of Romanian Railways, based in Bucharest, Bd. Dinicu Golescu no. 38, sector 1, Romania, represented by Mr. Viorel Simut, president, hereinafter referred to as S.N.C.F.R., as the third party. Given that: 1. The European Community and the Lending have concluded a European Association Agreement between the European Community and its Member States, of the one part, and Romania, of the other part, hereinafter referred to as the European Association Agreement; 2. within the framework of the European Association Agreement and in accordance with Council Decision no. 97 97 /256/EC of 14 April 1997, the Board of Governors of the Bank authorized on 9 June 1997 the granting of loans for investment projects on the territory of Romania; 3. in accordance with the Framework Agreement, concluded between Romania and the European Investment Bank, which govern the activities of the European Investment Bank in Romania, signed by the Bank and by the Loan on 4-5 June 1997, ratified by the Loan by Government Ordinance no. 33 of August 25, 1997 and approved by the Loan by Law no. 189 of 17 November 1997, hereinafter referred to as the Framework Agreement, the Government of the Loan has become aware that the financing under this Loan Agreement falls within the scope of the Framework Agreement; 4. The borrower proposes to initiate a project, hereinafter referred to as the Project, to be carried out by S.N.C.F.R. and which consists of: (i) mechanization of railway maintenance and rehabilitation and modernization of a 900 km bus section of railway; (ii) the introduction of an integrated railway system for the railway sector (IRIS); and (iii) the rehabilitation and modernization of a 170 km section between Bucharest and Brasov, as specified in more detail in the technical description presented in the Annex A to this Agreement, hereinafter referred to as Technical Description; 5. The total cost of the Project, as estimated by the Bank, is ECU 439 million (ECU being defined in Annex B to this Agreement), including unforeseen expenses and interest during construction, but excluding taxes and fees; 6. The project cost is to be financed as follows: equivalent million ECU Loan B.I.R.D. 105 Non-refundable funds EU-PHARE32 State contribution 102 Bank loan 200 TOTAL: 439 7. in order to complete the financing, the borrower asked the Bank for a loan in the amount equivalent to ECU 200 million, as referred to in item 6 6 of the preamble; 8. Whereas a portion of the credit made available by this Agreement may be used in the ECU, for the purposes of the purposes of this Agreement, the term currency shall include ECU. The European Council decided, at the High Level Meeting in Madrid on 15 and 16 December 1995, to change the name of the European monetary unit in the ECU to the euro, valid from the beginning of the third stage of the economic union and monetary and Council Regulation (EC) No 1.103/97 of 17 June 1997 implemented certain aspects relating to the introduction of the euro. Further changes may become necessary as a result of the start of the third stage. This is reflected in Annex B; 9. according to art. 3 of the Framework Agreement, the Loan has been committed as " interest and all other payments due to the Bank and arising as a result of the activities contemplated in this Agreement, as well as the Bank's assets and income, related to such activities, will be exempt from taxes. None of the activities of the Bank, carried out on the territory of Romania, contemplated by this Agreement, shall, by itself, subject the Bank or its assets to taxation "; 10. in accordance with art. 4 4 of the Framework Agreement, the Loan has been committed as, " for the entire period of any financial operation concluded in accordance with art. 2 2 of this Agreement, Romania: a) ensure: (i) that the beneficiaries may change in any convertible currency, at the exchange rate prevailing, the amounts in the national currency of Romania, necessary for the timely payment of all amounts due to the Bank for loans and guarantees relating to any project; and (ii) that these amounts are transferable freely, immediately and effectively; b) assures: (i) that the Bank may change in any freely convertible currency, at the exchange rate prevailing, the amounts in the national currency of Romania, received by the Bank as payments related to loans and guarantees or to any other activities, and that the Bank may transfer freely, immediately and effectively, the amounts thus changed; or, if the Bank thus opts, (ii) that it may freely dispose of such amounts on the territory of Romania "; 11. The bank, being convinced that this operation is included in its sphere of activity and is in accordance with the purposes of the Framework Agreement and, taking into account the aforementioned aspects, decided to act on the request of the Loan, granting it, by this loan agreement, hereinafter referred to as the Agreement, a credit in the amount equivalent to ECU 200 million (ECU two hundred million); 12. The loan and S.N.C.F.R. have entered into financial agreements with B.I.R.D., B.E.R.D. and C.E. for "Romania-Railroad modernization project", including for rehabilitation and support investments for a set of political measures contained in the the new railway law, the action plan for restructuring, as well as in the execution contract concluded between S.N.C.F.R. and the Romanian Government; 13. Mr. Mircea Ionuț Costea, State Secretary, is legally authorized, according to the conditions set out in Annex no. I, to sign this agreement on behalf of the Loan, and Mr. Viorel Simut, president, is legally authorized, according to the conditions set out in Annex no. II, to sign this Agreement on behalf of the S.N.C.F.R.; 14. references in this Agreement to articles, preamble, subparagraphs, subparagraphs, paragraphs and annexes shall mean references made respectively to articles, preamble, subparagraphs, subparagraphs, paragraphs and annexes of this Agreement, as agreed, by this Agreement, as follows: + Article 1 Shooting 1.01. Credit amount By this Agreement the Bank grants the Loan and the Loan accepts a credit, hereinafter referred to as credit, in the amount equivalent to ECU 200,000,000 (ECU two hundred million), to be used exclusively for the partial financing of project costs. The ECU is defined in Annex B to this Agreement and will be treated, for the purposes of this Agreement, as a currency. 1.02. Drawing procedures A. If the Bank does not have otherwise, the credit will be made available to S.N.C.F.R., on behalf of the Loan, for drawing in tranches, hereinafter referred to as tranches or, individually, a tranche. Each tranche will have an equivalent value of at least ECU 2,000,000 (ECU two million). The number of cuts will not exceed 25. B. The drawing of each tranche will be carried out on the basis of a written request (request) from the S.N.C.F.R., on behalf of the Loan, according to the conditions mentioned in paragraph 1.04. Each request: a) specify the amount requested for drawing within the tranche; b) specify the currency in which the tranche is requested to be drawn, being a currency referred to in paragraph 1.03; c) specify the date on which the draw is preferred, being understood that the Bank may release the tranche within a maximum of 4 (four) calendar months from the date of the request; d) specify the applicable interest rate, if applicable, previously indicated by the Bank; and e) will be accompanied by the relevant documentation, requested according to subparagraphs 1.04 B, C and D, as the case may be. No application can be made later than June 10, 2003. Subject to the provisions of subparagraphs 1.02 D, each application shall be irrevocable. C. Between 15 (fifteen) and 10 (ten) days before the date of the drawing of each instalment, the Bank shall remit to the Loan and the S.N.C.F.R., if the application complies with subparagraph 1.02 B and to the extent that the justification made available in the conditions of subparagraphs 1.02 B lit. e) is acceptable to the Bank, a notification, hereinafter referred to as the drawing notice, which: a) confirm the value and currency of the tranche, specified in the application b) specify the interest rate applicable to the tranche according to paragraph 3.01; and c) specify the date of the transits. D. If one or more items specified in the drawing notice do not conform to the corresponding item in the application, the Loan, within a period of 3 (three) days in which the Bank is open for transactions in Luxembourg, referred to as further working days, subsequent to the receipt of the drawing notice, may revoke the request by a notification to the Bank and, as a result, the request and the drawing notice will no longer be given course. If The Borrower does not exercise this right, it shall be deemed to have accepted the notice of drawing in all its terms. E. Each draw will be carried out in the account or accounts of the Loan or of the S.N.C.F.R., as S.N.C.F.R., on behalf of the Loan, will notify the Bank no less than 15 (fifteen) days before the date of the draw. Only 1 (a) single account can be nominated for each currency. 1.03. Firing valves Subject to availability of availabilities, the Bank shall lay off each tranche in foreign currency for which the borrower has expressed preference. The shooting currencies will be ECU, a currency of one of the Bank's member states or any other widely traded currency on the main foreign exchange markets. For the calculation of the amounts to be drawn in a foreign currency other than ECU Banca will apply the average exchange rate, which prevails on the foreign exchange market in Brussels, and in the absence thereof, from another market, reasonably chosen by the Bank at once from 15 (fifteen) days before the date of the draw, as the Bank will decide. 1.04. Drawing conditions A. The drawing of the first instalment, in accordance with paragraph 1.02, shall be subject to the satisfactory fulfilment of the following conditions for the Bank, i.e. before the date of the first application: a) The bank will have received a legal opinion, substantially, in the form set out in Annex no. III to this Agreement or in any other form acceptable to the Bank; b) The bank will have received a legal opinion issued by the legal adviser of S.N.C.F.R., substantially, in the form presented in Annex no. IV to this Agreement; c) all approvals necessary for the control of the exchange will have been obtained so as to allow the Loan to receive the drawdowns under the terms of this Agreement, to repay the loan and to pay interest and all other amounts due according to this agreement; these approvals also extend to the opening and maintenance of the accounts in which the Loan and S.N.C.F.R. request the Bank to lay off the amounts of the loan; d) The EU-PHARE grant agreement and the Loan Agreement with B.I.R.D., in the context of the respective partial financing, referred to in item 6 of the preamble of this Agreement, shall be in force; e) The bank will have received documents stating that: (i) a project management unit, adequately framed with personnel, was properly constituted and acceptable to the Bank; and (ii) consulting services were employed, under conditions. acceptable to the Bank in accordance with paragraph 6.11; f) The bank shall have received supporting documents stating that the Loan has authorized and authorized, lawfully, S.N.C.F.R. to request drawdowns and to receive amounts in accordance with this Agreement, on behalf of the Loan and for it. If an application for the first instalment is made before the Bank has received satisfactory evidence for it, demonstrating that these conditions will have been met, that request will be deemed to have been received by the Bank at that time. to which the conditions have been met. B. Each subsequent drawing will continue to be conditional upon receipt by the Bank, prior to the date of the respective request, of satisfactory supporting documents for it, demonstrating that the S.N.C.F.R. has spent on the components The project from the part financed partially by the Bank, as presented in the Technical Description, an amount at least equal to the total (excluding taxes and import duties) of all amounts previously released by the Bank, except for the last Draws, worth ECU 2 million. In addition, each draw will be made provided that the Bank is satisfied that it has been allocated or continues to be made available to S.N.C.F.R. by the Loan for the Project sufficient funds from the state budget and other financial sources, so as to ensure the timely realization and completion of the Project, in accordance with the chart presented in the Technical Description. C. In addition to the conditions set out in subparagraphs 1.04 B above, the last draw will be made on the additional condition that all amounts previously drawn have been spent on the Project, as stated in that article, or that the Loan may be presented, through S.N.C.F.R., satisfactory documents demonstrating that these amounts will be spent within 60 (sixty) days from the date on which the draw was requested. D. Any shooting that finances expenses in advance will be followed, within 90 (ninety) days, by the transmission of satisfactory documents for the Bank, demonstrating that all the amounts of the respective drawdown or drawdowns, as is the case, were Properly spent on Project. E. For the calculation of the ECU equivalent of the amounts spent the Bank will apply the exchange rate in force on the 30th day before the date of the application. F. If any part of the records provided by the Loan, through S.N.C.F.R., is not satisfactory to the Bank, the Bank may either act in accordance with the provisions of the last subparagraph of subparagraphs 1.04 A or may release proportionally less than requested amount. 1.05. Credit cancellation If the cost of the Project will be less than the figure estimated in item 5 of the preamble, the Bank may, through a notification addressed to the Loan and S.N.C.F.R., cancel the portion of the credit corresponding to the difference. The borrower may at any time, through a notification to the Bank, cancel, in whole or in part, any amount not drawn from the credit, provided that, if the Loan cancels any tranche that was the subject of a drawing notice and which has not been revoked in accordance with subparagraphs 1.02 D, it shall pay a calculated fee on the amount cancelled at a fixed rate equal to half the interest rate applicable to that tranche. The bank may at any time, after August 10, 2003, by a notice addressed to the Borrower, cancel any part of the credit for which no drawing request has been made. 1.06. Cancellation and suspension of credit The bank may, through a notification addressed to the Loan, cancel, in whole or in part, the undrawn part of the credit at any time and with immediate effect: a) following the occurrence of any event referred to in paragraph 10.01, subparagraphs A or B; or b) if exceptional situations occur that will negatively affect the Bank's access to the main national or international capital markets. As an alternative, if a situation between those described in letter a) or b) has occurred and, in the opinion of the Bank, has a temporary nature, it may suspend, in whole or in part, through a notification addressed to the Loan, the part not drawn from the credit. In such a case, the suspension will continue until the Bank notices the Loan that the Bank is again able to issue a drawing notice on that part of the credit. The suspension shall not involve any extension of the cancellation date set out in paragraph 1.05. However, the Bank will not be entitled to cancel or suspend, on the basis of the reasons shown in the letter. b), any tranche that has been the subject of a drawing notice. The undrawn part of the credit will be considered cancelled, if the Bank requests the early repayment according to 10. If the credit is cancelled by the Bank according to lit. a), the borrower will pay a commission for the cancelled amount of any undrawn tranche that was the subject of a drawing notice, at an annual rate of 0.75% (zero comma seventy-five percent), calculated from the date of the respective drawing request up to date of cancellation. Such a fee will be paid in addition to any commission payable according to paragraph 1.05. 1.07. Currency of commissions Commissions due by Loan to the Bank according to art. 1 will be calculated and paid in ECU. + Article 2 Loan 2.01. Loan amount The loan, hereinafter referred to as the loan, will comprise the total amounts in the currencies laid off by the Bank as notified by the Bank in accordance with paragraph 2.04. 2.02. Currency of repayment Each refund according to art. 4 or, as appropriate, art. 10 will be carried out in the currencies in which the draws were carried out and in the proportions in which they are contained in the balance of the loan. 2.03. Interest and other payment obligations Interest and other payment obligations due according to art. 3, 4 and 10 will be calculated and paid proportionally in each currency in which the loan is refundable. Any other payment will be made in foreign currency specified by the Bank, considering the currency in which the expenses to be repaid by that payment were made. 2.04. Bank Notifications After the draw of each tranche, the Bank will transmit to the Loan and S.N.C.F.R. a summary situation comprising the amount drawn in the currency indicated in the drawing notice, the date of the draw, the interest rate and the repayment schedule of that tranche and for this. + Article 3 Interest 3.01. Interest rate The default balance of any tranche will be interest bearing at the rate specified in the respective drawing notice, which will be the interest rate applicable on the date of issue of the drawing notice for loans denominated in relevant currency and granted by The bank of its borrowers in repayment and interest payment terms similar to those for the tranche in question. Interest will be paid semi-annually on the dates specified in paragraph 5.03. 3.02. Interest on outstanding amounts Without this being considered a violation of the provisions of art. 10 and, as an exception to the provisions of paragraph 3.01, for any outstanding amount, payable under the terms of this agreement, interest will be accumulated from the due date until the date of actual payment, at an annual rate equal to: a) for an amount due, in any currency, of any tranche, at a rate equal to the amount of: (i) 2,5% and (ii) the rate applicable to that tranche according to paragraph 3.01; or b) for any other amount, at a rate equal to the amount of: (i) 2,5% and (ii) the interest rate charged by the Bank on the maturity date for loans granted in that currency over 20 years. This interest is payable in the same currency as the outstanding amount on which it is cumulated. + Article 4 Reimbursement 4.01. Normal reimbursement The borrower will repay the loan according to the amortization schedule shown in Annex C. 4.02. Voluntary early repayment A. The Borrower may reimburse, in whole or in part, a tranche, on the basis of written communication, hereinafter referred to as early repayment notice, specifying the amount, hereinafter referred to as the amount of the early repayment, which is to be repaid in advance, and the proposed date for early repayment, hereinafter referred to as the date of repayment, which will be a date specified in paragraph 5.03, each hereinafter referred to as the payment date. The early repayment notice will be sent to the Bank at least 1 (o) month before the anticipated repayment date. Early repayment will be conditional upon the payment by the Loan of a compensation, if applicable, due to the Bank in accordance with the provisions of subparagraphs B-D. B. The amount of compensation due for the anticipated repaid tranche will be the sum of the interest difference not collected by the Bank for each semester ended on payment dates after the anticipated repayment date, calculated as specified in the following subparagraph and adjusted in accordance with sub-paragraph C. The amount of the difference will be calculated as the amount by which: x) interest that would have been payable during that semester for the part of the instalment repaid in advance exceeds y) interest that would have been so payable during that semester, if it had been calculated at the reference rate; for this purpose, the reference rate means the annual interest rate [diminished by 15 (fifteen) hundredths of a percentage] that the Bank determine, on the first day of the month preceding the early repayment date, as the standard rate for a loan granted by the Bank in that currency, having the same financial characteristics as the tranche and, in particular, the same periodicity for the payment of interest, the same period remaining until maturity and the same type of reimbursement. C. Each amount calculated in this way will be adjusted on the early repayment date, by applying a discount rate, equal to the rate determined according to lit. y) of subparagraphs B of this paragraph. D. The bank shall communicate to the borrower the amount of compensation due under subparagraphs B and C or, as the case may be, the lack of compensation. If until 5.00 p.m., the time of Luxembourg, at the time of this communication, the Loan does not confirm in writing its intention to make the anticipated payment according to the conditions communicated by the Bank, the anticipated repayment notice will be without effect. Except in the aforementioned case, the Loan will be required to make payment as per the early repayment notice, along with the cumulative interest on the amount of the early repayment as well as any other amount due under this Paragraph. 4.03. Compulsory early repayment A. If The Borrower, voluntarily, partially or fully reimburses any other loan initially contracted over a period of more than 5 (five) years, the Bank may request the early repayment of that portion of the amount of the loan, in the same proportion, represented by the amounts repaid in advance in the total default amount of all those other loans. The bank shall address the borrower's request, if any, within 4 (four) weeks of receipt of the respective notification under subparagraphs 8.02 a). Any amount required by the Bank will be paid, together with the cumulative interest, on the date indicated by the Bank, the date that will not precede the date of the anticipated repayment of the other loan. Early repayment of a loan through a new loan with repayment term at least as high as the unexpired term of the anticipated repaid loan will not be considered early repayment. B. If the total cost of the Project will be significantly below the figure specified in the preamble, the Bank may demand the early repayment of the loan, in proportion to the difference. 4.04. General provisions on early repayment according to art. 4 The early repayment will be made in all currencies of the loan, in proportion to the respective non-reimbursed amounts, unless the Loan can choose, instead of the early repayment according to paragraph 4.02, the repayment of the entire amount drawn and defaulted in a single currency of any tranche. In the case of partial early repayment in all currencies, each amount repaid in advance will be applied by a pro rata reduction of each default rate. Art. 4 will apply without prejudice to the provisions of art. 10. + Article 5 Payments 5.01. Payment place Each amount payable by the Loan under the provisions of this Agreement shall be paid in that account, communicated to the Bank by the Bank. The bank will indicate in writing the account, at least 15 (fifteen) days before the due date, set for the first payment the Loan makes, and will communicate in writing any change of account no less than 15 (fifteen) days. before the date of the first payment to which the amendment relates. This period of notice shall not apply to payments according to art. 10. 5.02. Calculation of payments for a fraction of a year Any amount due as interest, commission or otherwise by the Loan under the provisions of this Agreement and calculated for any fraction of the year will be calculated on the basis of a year of 360 (three hundred and sixty) days and a month of 30 ((thirty) days. 5.03. Payment dates The amounts due on a semi-annual basis, as provided for in this Agreement, shall be payable to the Bank on 10 June and 10 December each year Other amounts due, according to the provisions of this Agreement, shall be payable within 7 working days from the receipt by the Loan of the request issued by the Bank. An amount owed by the Loan will be considered paid at the time it is received by the Bank. + Article 6 Special commitments 6.01. The use of the loan and other S.N.C.F.R. funds, on behalf of the Loan, will use the loan amounts and other funds mentioned in the financing plan described in item 6 of preamble, exclusively for the execution of the Project. 6.02. Project implementation S.N.C.F.R. is committed to carrying out the Project in accordance with the Technical Description and to complete it by the date specified therein. 6.03. Increased cost of the Project If the cost of the Project exceeds the estimated figure presented in item 5 of the preamble, the borrower will obtain financing to cover the cost overtaking without calling the Bank, so as to allow the S.N.C.F.R. to complete the Project in accordance with the Technical Description. Borrower's plans to fund additional costs will be communicated to the Bank without delay. 6.04. Tendering procedure S.N.C.F.R. is committed to acquiring goods and services and ordering works for the Project, adequately and satisfactorily for the Bank, through open international tender for representatives from all countries. 6.05. Insurance As long as the loan is defaulted, S.N.C.F.R. will adequately ensure all the works and properties that are the subject of the Project, in accordance with normal practice for similar works of public interest on the territory of Romania. 6.06. Maintenance As long as the loan is defaulted, the Loan and S.N.C.F.R. will ensure that all properties that are part of the Project will be maintained, repaired, undergo capital repairs and will be renewed, as required, to be repaid. kept in good working order. 6.07. Project Operation As long as the loan is repaid, The borrower, if the Bank is not otherwise agreed in writing, will retain its title of ownership and possession of assets that are part of the Project or, as the case may be, replace and renew those assets, and S.N.C.F.R., on behalf of the Loan, will maintains the Project in permanent operation, in accordance with its original purpose. The Bank may not give its consent only if the proposed action would harm the Bank's interests as a borrower to the Loan or make the Project ineligible for funding from the Bank. 6.08. Budgetary resources allocation The borrower undertakes to allocate sufficient funds from the state budget to the S.N.C.F.R. to ensure: (i) adequate maintenance of the national rail network; (ii) the State contribution to the financing of the Project (iii) the timely completion of the Project in accordance with the Technical Description. 6.09. Annual audit The borrower and S.N.C.F.R. undertake to hold accounts, budget and financial statements of the S.N.C.F.R., audited annually in accordance with international accounting standards (S.C.I.). 6.10. Financial commitments The borrower ensures that the S.N.C.F.R. will promote an appropriate tariff policy in order to strengthen its capability and cover its operating expenses. In addition, S.N.C.F.R. is committed to agreeing to the restructuring of the company and the financial objectives set to achieve this restructuring and the objectives that are provided for in "Romania-the Railway Rehabilitation Project", mentioned in section 12 of the preamble. 6.11. Consulting services and special expertise S.N.C.F.R. is committed to using international consultants, whose qualification, experience and terms of reference will be satisfied for the Bank, for the design and supervision of works in accordance with the Technical Description. Consultants: ((i) shall verify the technical viability of the proposed rehabilitation works; ((ii) ensure their proper quality; and (iii) will supervise their implementation and realization, according to the execution schedule. S.N.C.F.R. is committed to using specialized advice acceptable to the Bank to allow the S.N.C.F.R. to resolve the geotechnical difficulties arising during work on the railway lines envisaged under the Project. + Article 7 Warranty 7.01. Warranty If The Borrower grants a third party a guarantee for the fulfillment of any of its external debt obligations or any kind of preference or priority about them, it will inform the Bank about this and whether The Bank will request, the Loan will provide it with an equivalent guarantee for the fulfilment of its obligations under this Agreement or will give the Bank a preference or equivalent priority. The borrower confirms that there is currently no such guarantee, preference or priority. + Article 8 Information and visits 8.01. Information on Project S.N.C.F. R: a) shall transmit to the Bank, in English or in English translation, approved by the international consultants referred to in paragraph 6.11: ((i) until 31 March 1999 and, subsequently, at the end of each quarter, until the end of the Project, a report on its implementation; ((ii) 6 (6) months after the end of the Project, a report on its conclusion; and ((iii) periodically, any such document or information on the financing, implementation and operation of the Project, as the Bank may reasonably request; b) will submit to the Bank's approval, without delay, any change of material nature in the general plans, financing plan, execution schedule or expenses program of the Project, in connection with the aspects made known to the Bank before signing this Agreement; c) will generally inform the Bank about any fact or event known to the Loan and S.N.C.F.R., which may substantially prejudice or materially affect the conditions of execution or operation of the Project. 8.02. Information on Lending The borrower must immediately inform the Bank: a) about any decision taken by him for any reason, about any situation that obliges him or about any request that has been made to him to repay in advance any loan originally granted for a period of more than 5 (five) years; b) any intention to provide to a third party any guarantees referred to in paragraph 7.01; or c) in general, about any situation or event that could prevent the fulfilment of any obligation of the Loan arising from this Agreement. 8.03. Information on S.N.C.F.R. S.N.C.F.R.: a) will provide the Bank, every year, within one month of their publication, the annual report, the balance sheet, the profit and loss account of the S.N.C.F.R. and, respectively, the auditors ' report performed in accordance with international standards of accounting; and, b) will inform the Bank: ((i) immediately, in connection with any change to its basic documents and any change in its legal status and powers; or ((ii) in general, in respect of any situation or event that could impede the fulfilment of any obligation of the S.N.C.F.R. provided for under this Agreement. 8.04. Visits The borrower and S.N.C.F.R. will allow the persons designated by the Bank, who may be accompanied by representatives of the European Community's Court of Auditors, to visit the sites, facilities and works included in the Project and to make those checks that they want and will give or make sure that all the necessary assistance is given to them for this purpose. + Article 9 Speze and expenditure 9.01. Taxes, fees and commissions The borrower will pay all taxes, fees, commissions and other charges of any kind, including stamp duty and registration fees, related to the signing or implementation of this Agreement or any document related thereto and related thereto. the granting of any loan guarantee. The borrower will pay in full the capital, interest, commissions and other amounts due under this agreement, gross, without the deduction of any national or local taxation of any kind, provided that, if the Loan is legally bound to do any such deduction shall increase the amount of payment to the Bank so that, after deduction, the net amount received by the Bank is equivalent to the amount due. 9.02. Other spates The borrower shall bear any professional, banking, transfer or foreign exchange costs, occasioned to the Bank by the signing or implementation of this Agreement or any documents related to it and the granting of any guarantee for Loan. + Article 10 Early repayment due to a case of fault 10.01. Right to claim early repayment The borrower will repay the loan or any part of it immediately, based on the request made in this regard by the Bank: A. immediately: a) if any information or document delivered to the Bank by or on behalf of the Loan or of the S.N.C.F.R., in connection with the negotiation of this Agreement or during the time it is in force, proves to have been incorrect in any regard to nature material at the time when they were made; b) if the borrower does not reimburse on the due date any part of the loan, from interest to it or does not make any other payment to the Bank, as provided for in this Agreement; c) if, as a result of any culpe in connection with it, the Loan is required to repay in advance a loan originally granted for a term of more than 5 (five) years; d) if an event occurs or a situation which is likely to jeopardise the fulfilment of the payment obligations arising from the loan or adversely affect any guarantee granted to it; e) if the borrower does not fulfil any obligation arising from any other loan granted to him from the resources of the Bank or the European Community; f) if any obligation assumed by the Loan, referred to in item 9 9 or 10 of the preamble, shall cease to be fulfilled with regard to any loan granted to any Loan in Romania from the resources of the Bank or the European Community; or g) if the right of the Loan or of the S.N.C.F.R. to use the amounts of the loan B.I.R.D. will have been suspended, cancelled or terminated in whole or in part, in accordance with their provisions, or if the loan B.I.R.D. will have become refundable; B. upon expiry of a reasonable period specified by the Bank in a communication to the Loan, without the problem being satisfactorily remedied for the Bank: a) if the Loan or S.N.C.F.R. does not fulfill an obligation resulting from this Agreement, other than that mentioned in subparagraph 10.01 A. lit. b); or b) if any essential fact provided for in the preamble changes substantially or proves to be erroneous and whether the modification or error is prejudicial to the interests of the Bank as a borrower of the Loan, or adversely affects its implementation Project operation 10.02. Other legal rights Paragraph 10.01 will not limit any other legal right of the Bank to seek repayment of the loan. 10.03. Damage In the case of the request according to paragraph 10.01, the Loan will pay to the Bank an amount calculated on the date on which the request was made, whichever is higher: a) the total calculated according to the provisions of subparagraphs 4.02 B and C on the amount that has become due, due and payable, and having effect from the date of payment specified in the notification of the Bank on the application; and b) an amount calculated at an annual rate of 0.25% (zero comma twenty-five percent) from the date of the request until the date on which each repayment rate of the requested amount should have been returned in the absence of the request. 10.04. Derogation No non-compliance or delay on the part of the Bank, in the exercise of any of its rights under this Article 10, shall be regarded as a waiver of such a right. 10.05. Use of received The amounts received as a result of a request made under this Article 10, will be used, first of all, for the payment of damages, commissions and interest, in this order, and, secondly, for the reduction of the default rates in order Reverse of the maturity. + Article 11 Law and jurisdiction 11.01. Law This Agreement and its preparation, interpretation and validity will be governed by the French law. The place of conclusion of this Agreement shall be the Head Office 11.02. Jurisdiction All disputes concerning this Agreement will be presented to the Court of Justice of the European Community. The Parties to this Agreement hereby waive any immunity or right to object to the jurisdiction of that Court. A decision of the Court, issued in accordance with this paragraph 11.02, will be final and binding on the parties, without restriction or reserve. 11.03. Proof of amounts In any legal action arising from this Agreement, the Bank's certification of any amount owed to it under this Agreement shall constitute the prima facie evidence of such an amount. + Article 12 Final clauses 12.01. Notifications The notifications and other communications transmitted in connection with this Agreement by one party to the other Party shall be sent to the addresses mentioned below or to any other address which has previously been communicated to the first party, in writing, as a new address for this purpose, with the exception of notifications to the Loan in connection with pending litigation or in release, which will be sent to the addresses specified in item 2 2) below: For The Bank: 100 Boulevard Konrad Adenauer L-2950 Luxembourg-Kirchberg; For Borrower: 1) Str. Apolodor no. 17, sector 5 RO-70060, Bucharest Romania; 2) Romania's mission to the European Community 107, rue Gabrielle B-1180 Bruxelles; For S.N.C.F.R.: 1) Bd Dinicu Golescu no. 38, sector 1 RO-77113, Bucharest Romania; 2) Romania's mission to the European Community 107, rue Gabrielle B-1180 Brussels. 12.02. Notification form The notifications and other communications for which fixed periods are referred to in this Agreement or which fix themselves mandatory periods for the recipient will be transmitted personally, by registered letter, telegram, telex or by other means of transmission which make it possible to prove receipt by the recipient. The date of registration or the declared date of receipt of the submitted document will be conclusive for determining a period. 12.03. Preamble and Annexes The preamble and the following annexes shall form an integral part of this Agreement: -Appendix Technical description-Annex BDefinition ECU-Annex CChart of amortisation The following documents are attached to this Agreement: -Annex IEnabling the signing for the Loan -Annex IIDecision of the Board of Directors and the empowerment of the signing for S.N.C.F.R. -Annex IIIModel of legal opinion (Loan) -Annex IVModel of legal opinion (S.N.C.F.R.). As a result, the present parties agreed that this Agreement should be signed in four original copies in English. This loan agreement was initialled on behalf of the Loan of Mrs. Valentina Siclovan, Deputy Director General in the Ministry of Finance, on behalf of the Bank of Mr. Eric Gallstad, counselor, and on behalf of S.N.C.F.R. by Mr. Vasile Olievschi, vice president. Signed for and on behalf of Romania, Mircea Ionut Costea Signed for and on behalf of the European of Investment, K.J. Andreopoulos W. Cernoia Signed for and on behalf of National Railway Society Roman, Viorel Simut Luxembourg, 30 June 1998. Bucharest, June 30, 1998. + Annex A ROMANIA-RAILWAY MODERNIZATION PROJECT TECHNICAL DESCRIPTION Project definition Within the Project will be rehabilitated about 900 km of railway that suffered destruction due to lack of maintenance over a period of several years and lack of financial resources. The project will also modernize the railway line on the section between Bucharest and Brasov, which is an important national railway line between the Romanian capital and the main industrial centers in the north of the country. This double railway line belongs to the pan-European rail transport corridor no. 4. The project includes the following components 1. Rehabilitation of 900 km of railway and creation of an integrated computer system for railway * Mechanization of railway maintenance and renewal of sleepers and rails, modernization of princesses and macazes on 14 main sections, totaling 900 km of the railway network in Romania. * Creation of an integrated railway system (IRIS) and modernisation of the related communication network. 2. Modernization of the railway line Bucharest-Brasov (170 km) Estimated quantities Works of earthworks (widening of platforms, correction of ballast bags, rectification of levels and correction of curves) 50 km Strengthening of earthworks with pillars and walls of support 13 km Rivers protection works (walls) hardening, gabions, stone walls and drainage works) 10 km Rehabilitation and replacement of 11 poduri400 m Rehabilitation and replacement of 21 tubular bridges 230 m Improvement of water drainage and repair of 4 tunnels 1,200 m rail replacement works Ferata65 km New rail UIC 6055 km Macazuri UIC 60 and UIC 49106 units Electrodynamic centralization6 stations Automatic linear block system270 km Signage crossings at the level of the road/drum8 crossings at the level Semibarers for crossings at the level of the road/drum9 crossings at the level Rehabilitation and modernization of the equipment by telecommunication21 stations Telecommunication cable 50 km Works for catenarach350 km Power supply (substations, sectioning and subsection stations) 14 units Protections400 km Buildings for food equipment Electricity15 units Working payments20,000 m2 With the completion of the modernization works on the Bucharest-Brasov section, the maximum speed will be 160 km/h for passenger trains, respectively 120 km/h for freight trains. The estimated date for the completion of the work on the entire Project is June 2003 and the financing of the Bank will be available for the modernization of the + Annex B ECU The ECU is the same as the ECU which is used as a unit of account of the European Community and is currently composed of certain amounts of currencies in 12 of the Member States of the European Community as set out below. According to Council Regulation (C.E.) no. 3.320/94 of 22 December 1994, the composition of the ECU basket is as follows: -German brand: 0,6242 -pound sterling: 0,08784 -French franc: 1,332 -Italian lira: 151.8 -Dutch guldenum: 0,2198 -Belgian franc: 3,301 -Luxembourg franc: 0,130 -Danish crown: 0,1976 -Irish pound: 0.008552 -Greek drachma: 1,440 -peseta Spanish: 6,885 -escudo Portuguese: 1,393 Changes to the ECU may be made by the European Community, in which case the references to the ECU will be read accordingly (see Information). If the Bank considers that the ECU (see Payment in Euro and Information, presented below) has ceased to be used as a unit of account of the European Community and as the sole currency of the European Union, the Bank will communicate this to the borrower. From the date of such communication the ECU will be replaced by the currencies of which it was composed-or by their consideration in one or more of these currencies-as of the date of its most recent use as a unit of account of the European Community. Payment in euro From the date of replacement of the ECU with euro all payments due in ECU in accordance with this Agreement will be made in euro at the rate of 1 euro for 1 ECU. Replacing the ECU with the euro will not lead to payment in the component currencies referred to in the preceding paragraph. Information Article 109 G of the C.E. Treaty, as introduced by the Treaty on European Union, provides that the currency structure of the ECU basket will not be changed. From the beginning of the third stage of the European Economic and Monetary Union the value of the ECU against the currencies of the Member States participating in the third stage will be irrevocably fixed and the ECU will become a stand-alone currency. The Council of Europe decided at the Madrid Summit in December 1995 that the name of this new currency would be the euro. Consequently, references to the ECU will apply to the euro currency. In the case of contracts expressed by reference to the ECU official basket of the European Community, in accordance with the Treaty, as confirmed by the Council of Europe at the Madrid Summit in December 1995, the replacement of the ECU by euro shall be will do at the rate of 1 to 1. + Annex C ROMANIA-RAILWAY MODERNIZATION PROJECT PAYBACK CHART No. crt. Date of the due rate Amounts to be repaid expressed as a percentage of the loan, as defined in art. 2.01 1.10 December 20033.33% 2.10 June 20043,33% 3.10 December 20043,33% 4.10 June 20053,33% 5.10 December 20053,33% 6.10 June 20063,33% 7.10 December 20063,33% 8.10 June 20073,33% 9.10 December 20073,33% 10.10 June 20083,33% 11.10 December 20083,33% 12.10 June 20093,33% 13.10 December 20093,33% 14.10 June 20103,33% 15.10 December 20103,33% 16.10 June 20113,33% 17.10 December 20113,33% 18.10 June 20123.33% 19.10 December 20123.33% 20.10 June 20133.33% 21.10 December 20133.33% 22.10 June 20143,33% 23.10 December 20143,33% 24.10 June 20153,33% 25.10 December 20153,33% 26.10 June 20163,33% 27.10 December 20163,33% 28.10 June 20173,33% 29.10 December 20173,33% 30.10 June 20183,43% + Annex 1 EMPOWERING THE SIGNATORY FOR THE BORROWER ROMANIA MINISTRY OF FOREIGN AFFAIRS The presence is attested that the President of Romania granted full powers to Mr. Mircea Ionuț Costea, State Secretary in the Ministry of Finance, to sign the Loan Agreement between Romania, the European Investment Bank and the National Society of The Romanian Railways (S.N.C.F.R.) on the Railway Modernization Project. Minister of Foreign Affairs, Andrei Plesu Bucharest, June 29, 1998. No. 195. + Annex 2 EMPOWERING SIGNING FOR S.N.C.F.R. NATIONAL SOCIETY OF THE ROMANIAN RAILWAYS (S.N.C.F.R.) SIGNING POWER Following Decision no. 10 of June 29, 1998 of the Council of Administration of the National Society of Romanian Railways (annexed), Mr. Viorel Simut, president of S.N.C.F.R., is empowered to sign on behalf of S.N.C.F.R. The loan agreement between Romania, through the Ministry of Finance, the European Investment Bank and the National Romanian Railways Society on the railway modernization project (ECU 200 million). Viorel Simut, President of S.N.C.F.R. Legal counsel of the S.N.C.F.R., Gheorghe Scurtu, deputy general manager Legal direction of S.N.C.F.R. NATIONAL SOCIETY OF THE ROMANIAN RAILWAYS (S.N.C.F.R.) Board of Directors JUDGMENT No 10 of 29 June 1998 The Board of Directors of the National Society of Romanian Railways (S.N.C.F.R.), legally constituted, at the meeting of June 29, 1998, analyzing the submitted documents, based on Government Decision no. 235/1991, amended by Government Decision no. 570/1991, and Order of the Minister of Transport no. 129/1998 129/1998 on the appointment of the management board, pursuant to art. 2 2 (37) of the Rules of Organization and Functioning of the Management Board, Decide: -signing on behalf of S.N.C.F.R. of the Loan Agreement between Romania, through the Ministry of Finance, the European Investment Bank and the National Society of Romanian Railways (S.N.C.F.R.) for the railway modernization project (200 million ECU); -the empowerment of Mr. Viorel Simut, president of the National Society of Romanian Railways, for the signing of the Loan Agreement on behalf of S.N.C.F.R. Council President of administration, Viorel Simut + Annex 3 Model of legal opinion (Lending) European Investment Bank 100, Bd. Konrad Adenauer L-2950 Luxembourg-Kirchberg To the Legal Directorate .............. .............. 1998 Ref.: Loan Agreement "Romania-Project for the modernization of railways" Dear gentlemen, I give this legal opinion in accordance with the provisions of subparagraphs 1.04 A a) of the Loan Agreement (Loan Agreement) for "Romania-Project for the modernization of the railways", in the amount equivalent to ECU 200 million, concluded on 30 June 1998 between Romania (Loan), the European Investment Bank (Bank) and the National Society of Romanian Railways (S.N.C.F.R.). All the terms used in the following and which are not defined otherwise will have the same meaning in the Loan Agreement. We examined an original of the Loan Agreement and those laws, documents and other issues that we considered necessary or appropriate to issue this opinion. 1. In view of the above, I consider that: a) in accordance with ..............., ................ is the competent body to authorize the Loan to conclude the Loan Agreement; b) the signing of the Loan Agreement by ................... was legally authorized by .........................; and c) The loan agreement was legally signed and delivered on behalf of the Loan of ........................ in accordance with the empowerment given to it by ........................ 2. In Romania there is no legal provision that for the ratification of the Loan Agreement it is necessary to register it with any court or to any authority to ensure its legality, validity or entry into force. 3. Election of the French law as the law governing the Loan Agreement is valid and applicable. 4. In accordance with paragraph 11.02 of the Loan Agreement, the Court of Justice of the European Community shall have jurisdiction for any complaint or dispute between the Loan and the Bank and any judgment of this court relating to the Loan can be applied in Romania. The exemption from immunity referred to in paragraph 11.02 of the Loan Agreement is a legally binding and binding commitment to the Lending. 5. No tax, no tax or other charges including, without limitation, any registration fee, transfer, stamp duty or similar, imposed by the Loan or any political subdivision or its tax authority, shall not be subject to tax. payable in connection with the signing and remission of the Loan Agreement, nor in relation to any payment to be made by the Loan to the Bank in accordance with the Loan Agreement. 6. All agreements on controlling the exchange of documents that may be required to receive amounts drawn from the loan to repay them and to pay interest and all other amounts due under the Loan Agreement are in force. Based on the above, I believe that all the requirements specified in the legally binding laws, regulations and decisions applied in Romania today and/or governing the Loan Agreement in connection with the Romanian laws were respected and that the Loan Agreement constitutes the obligation of the Loan applicable to it in accordance with its terms. With esteem, ............................................. ((legal counsel from the borrower) + Annex 4 Model of legal opinion (S.N.C.F.R.) European Investment Bank 100, Bd. Konrad Adenauer L-2950 Luxembourg-Kirchberg To the Legal Directorate .............. .............. 1998 Ref.: Loan agreement on "Romania-Railway modernization project" Dear gentlemen, I give this legal opinion in accordance with sub-paragraph 1.04 A b) of the Loan Agreement (Loan Agreement) for "Romania-Railway Modernisation Project", in the amount equivalent to ECU 200 million, concluded on 30 June 1998 between Romania (Borrowed), European Investment Bank (Bank) and the National Society of Romanian Railways (S.N.C.F.R.). All the terms used in the following and which are not defined otherwise will have the same meaning in the Loan Agreement. We examined an original of the Loan Agreement and those laws, documents and other issues, as we considered necessary and appropriate for the purpose of issuing this opinion. 1. In view of the above, I consider that: a) The National Society of Romanian Railways (S.N.C.F.R.) is the autonomous state-owned autonomous direction, responsible for the organization and functioning of public transport by rail in Romania; b) in accordance with ........., ........... is the competent body to authorize the S.N.C.F.R. to conclude the Loan Agreement; c) the signing of the Loan Agreement by .................... has been legally authorized by .............................; and (d) The loan agreement was legally signed and delivered on behalf of the S.N.C.F.R. by ........................, based on the empowerment granted to it by ...................... 2. Election of the French law as the law governing the Loan Agreement is valid and applicable. 3. In accordance with paragraph 11.02 of the Loan Agreement, the Court of Justice of the European Community shall have jurisdiction for any complaint or dispute between the S.N.C.F.R. and the Bank and any decision of that court in connection with the Loan can be applied in Romania. The exemption from immunity referred to in paragraph 11.02 of the Loan Agreement is a binding and valid legal commitment of the S.N.C.F.R. Based on the above, I believe that all the requirements specified in the legally binding laws, regulations and decisions applicable in Romania today and/or governing the Loan Agreement in connection with the Romanian laws have been fulfilled and that the Loan Agreement constitutes an obligation of the S.N.C.F.R. applicable to it in accordance with its terms. With esteem, ................................ (legal adviser to S.N.C.F.R.) ------