FRAMEWORK AGREEMENT

FRAMEWORK AGREEMENT EXECUTION COPY FRAMEWORK AGREEMENT between REPUBLIC OF LITHUANIA and EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT Relating to the Activities of the Ignalina International Decommissioning Support Fund in Lithuania Dated: 5 April 2001 FRAMEWORK AGREEMENT FRAMEWORK AGREEMENT between the REPUBLIC OF LITHUANIA and the EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOMPMENT acting as administrator of grant funds provided by the Fund, dated 5 April 2001. PREAMBLE WHEREAS in 1999, the Republic of Lithuania adopted its National Energy Strategy by Resolution No. VII-1348 of the Seimas (the Lithuanian Parliament on 5 October 1999 (the “National Energy Strategy”) and decided that in line with the Nuclear Safety Account Grant Agreement, Unit 1 of the Ignalina Nuclear Power Plant will be closed down before the year 2005, taking into consideration the terms and conditions of long-term and considerable financial assistance from the European Union, G7 countries and other states as well as international financial institutions; and that the issue pertaining to the conditions and precise final date for the decommissioning of Unit 2 of the Ignalina Nuclear Power Plant shall be solved in the updated National Energy Strategy to be prepared in the year 2004 (the above decisions hereafter being referred to as the “Closure and Decommissioning of Ignalina NPP”); WHEREAS the Republic of Lithuania has adopted the Law No. VIII-1661 on the decommissioning of Unit 1 of the Ignalina Nuclear Power Plant on 2 May 2000, and has drawn up respective implementing plans and decommissioning programmes; WHEREAS the first Donor’s “Conference for the Decommissioning of the Unit 1 of Ignalina NPP” organised by the Lithuanian Government in co-operation with the European Commission and the EBRD which took place on 20 June 2000, represented the start of a long-term process, in the course of which assistance will be solicited from the international community in helping to bear the expenses involved in the decommissioning process itself, as well as in the consequent restructuring of the energy sector; WHEREAS the Government of Lithuania is responsible for the implementation of the Closure and Decommissioning of the Ignalina NPP in accordance with the National Energy Strategy; WHEREAS the public administration and respective specialised agencies of the Republic of Lithuania are responsible to act in the execution of implementation steps and the operator of the Ignalina NPP is charged with the execution of the Closure and Decommissioning of Ignalina NPP and the elaboration of pre-decommissioning and decommissioning projects in line with the countries’ closure decisions as set out in the National Energy Strategy; WHEREAS the parties recognise the importance to Closure and Decommissioning of Ignalina NPP; WHEREAS pursuant to the Rules of the Ignalina International Decommissioning Support Fund (herein called the “Fund") the European Bank for Reconstruction and Development (herein called the "Bank") has agreed to administer grant funds to be made available by the Contributors of the Fund to finance or co-finance, through grants, the preparation and implementation of selected projects concerning the provision of technical assistance and the acquisition, installation and placing into operation of equipment necessary to support the decommissioning of the Ignalina NPP and measures in the energy sector which are consequential to the decision of the Republic of Lithuania for the Closure and Decommissioning of Ignalina NPP which would assist the necessary restructuring, upgrading and modernisation of the energy production, transmission and distribution sectors as well as to improve energy efficiency (herein called the “Projects”); WHEREAS it is recognised by the Republic of Lithuania that the provision of grants through the Fund has to be complemented by Lithuanian resources (e.g. through in-kind contributions and cash contributions from the State Enterprise Ignalina NPP Decommissioning Fund) in all stages of the implementation of the Projects; WHEREAS it is recognised by the Republic of Lithuania that the Bank acts solely in its capacity of administrator of funds for and on behalf of the Contributors to the Fund and that this activity is independent from its role as a financial institution supporting investment projects consistent with sound banking principles; WHEREAS the Republic of Lithuania and the Bank wish to establish a framework to govern the operation of the Fund and the provision of grants for the implementation of the Projects in Lithuania; NOW, THEREFORE, the parties hereby agree as follows: Section 1. Grants and Lithuanian Resources (

1. a)The Bank shall provide financing on a grant basis from the resources of the Fund (herein called the "Grants") to finance or co-finance the implementation of Projects in support of decommissioning work at Ignalina NPP and measures in the energy sector which are consequential to the decisions of the Republic of Lithuania for the closure and decommissioning of Ignalina NPP through the provision of technical assistance and the acquisition, installation and placing into operation of equipment. (
2. b)The provision of Grants will be made in accordance with the Rules of the Fund and shall be subject to the availability of funds contributed to the Fund and to approval by the competent organs of the Fund. (
3. c)Grants will be made available to Ignalina NPP and to other entities relevant to the achievement of the purpose of the Fund (herein called the "Recipient(s)"). (
4. d)The provision of Grants from the resources of the Fund shall be complemented by Lithuanian resources. Such resources will be contributed in-kind, in cash from the State Enterprise Ignalina NPP Decommissioning Fund or otherwise in all stages of the implementation of the Projects. The Lithuanian resources will be specified by reference to the various components of the Projects and will be determined in the Grant Agreements entered into pursuant to Section 2. (
5. e)The Bank shall employ its best efforts to solicit, at the request of the Assembly of Contributors of the Fund, further financial assistance in the form of contributions to the Fund. Section 2. Grant Agreements (
6. a)All Grants provided under Section 1 shall be subject to the conclusion of Grant Agreements between the Bank on behalf of the Fund and the relevant Recipient and shall be implemented in accordance with the terms and conditions set forth or referred to in the relevant Grant Agreements. (
7. b)Grant Agreements shall: (
8. i)be concluded directly between the Bank and the Recipient, (
9. ii)make specific reference to this Framework Agreement, and shall be consistent with it. Section 3. Implementation of the Projects (
10. a)The implementation of each Project shall be managed, coordinated and monitored, by a Project Management Unit (herein called the "PMU") established by the Recipient. The PMU shall establish adequate organisational structures to perform specific engineering, procurement or other services. The PMU shall be staffed with consultants engaged in accordance with the applicable procedures of the Bank and the Fund and with suitably qualified specialists provided by the Recipient. The relevant Grant Agreement shall contain the specific provisions relating to the responsibilities, establishment and operation of the PMU. (
11. b)The goods, works and services, including consultants' services, required for the Projects and to be financed with the resources from any Grant shall be procured in accordance with the Rules of the Fund and the specific provisions of the relevant Grant Agreements. (
12. c)Duly authorised representatives of the Bank shall be authorised from time to time to inspect the records and accounts relating to any Project and to make copies thereof and to audit and examine such records and accounts and the use of any goods and services provided under this Framework Agreement and the relevant Grant Agreement. Section 4. Project Implementation Support Undertakings (
13. a)The Republic of Lithuania shall take all necessary measures to ensure full and punctual performance by each Recipient (who is owned or controlled by the Republic) of its respective obligations under the Grant Agreements. (
14. b)Without limitation to the obligations set forth in paragraph (
15. a)of this Section, the Republic of Lithuania shall take all necessary measures to: (
16. i)take or cause to be taken all action, including the timely provision of funds, insurance replacement guarantees, facilities, services and other resources, necessary or appropriate for the implementation of the Projects, and to enable each Recipient to perform its respective obligations in accordance with the provisions of the Grant Agreements; (
17. ii)not take or permit to be taken any action which would prevent or interfere with such performance; (iii) ensure the timely consideration of applications for all licences, permits, approvals and the prompt customs clearances necessary for the prompt and efficient implementation of all Projects; (
18. iv)ensure that the State Nuclear Power Safety Inspectorate (herein called “VATESI”) and other authorities in charge of the licensing and certification of the Projects are provided with established policies and regulations and sufficient qualified staff resources, facilities and funds with which to be assured that the regulatory approval process scheduled in the Projects will be performed; and (
19. v)ensure that, in the case of merger, reorganisation, liquidation or privatisation of a Recipient, VATESI or other authorities in charge of the licensing and certification of the Projects, the rights and obligations of such entity under the Grant Agreements are transferred to the Government of the Republic of Lithuania or to a legal person or entity which is empowered to and has the necessary resources for exercising such rights and fulfilling such obligations. (
20. c)The Republic of Lithuania shall take all necessary measures to ensure that: (
21. i)in line with the Nuclear Safety Account Grant Agreement, Unit 1 of the Ignalina NPP is closed down before the year 2005, taking into consideration the terms and conditions of long-term and considerable financial assistance from the European Union, G7 countries and other states as well as international financial institutions; and (
22. ii)that the issue pertaining to the conditions and precise final date for the decommissioning of Unit 2 of the Ignalina NPP is solved in the updated National Energy Strategy to be prepared in the year 2004. Section 5. Joint Committee (
23. a)The Republic of Lithuania and the Bank shall establish a Joint Committee in order to exchange information on and discuss the implementation of this Framework Agreement, and in particular: (
24. i)progress achieved in the implementation of the Projects; (
25. ii)obstacles and problems encountered in the implementation of project components; and (iii) other matters relevant to the implementation of the Projects. (
26. b)The Joint Committee will be composed of competent senior representatives of the Lithuanian Government, the Recipient (s), VATESI, other entities involved in the implementation of the Projects and the Bank. The Joint Committee may invite to participate in the work of the Joint Committee representatives from governmental and other entities involved in matters pertaining to this Framework Agreement. Section 6. Taxation (
27. a)All imported and local equipment, materials, works and services financed by the Bank with Grants from the Fund shall be free from any and all taxes, customs duties or other fees or mandatory payments levied by, or in the territory of, the Republic of Lithuania. This clause (
28. a)shall not be interpreted so that any person who shall be remunerated for the provision of such equipment, materials, works and any services shall be exempt from income or corporate tax. (
29. b)All consultants and other personnel financed with resources from the Fund and assigned to assist in the implementation of the Projects shall be free from any and all taxes or any other fees or mandatory payments levied by, or in the territory of, the Republic of Lithuania. This clause (
30. b)shall not apply to any of such consultants or personnel who are permanent residents of Lithuania for tax purposes according to the respective laws of the Republic of Lithuania. Section 7. Indemnity for Nuclear Damage Section 7.1. Indemnity in Favour of the Bank (
31. a)With the exception of claims for damage or injury against individuals arising from their premeditated actions or gross negligence, the Republic of Lithuania irrevocably guarantees that it shall keep the Bank, its employees, agents and subcontractors, both during and after the term of this Framework Agreement, fully and effectively indemnified and held harmless from and against any and all actions, claims, losses, liabilities, expenses or damages, whether in or outside of the Republic of Lithuania in connection with the implementation of the Projects or any relevant Grant Agreement to the extent such actions, claims, losses, liabilities, expenses or damages have arisen in connection with a nuclear incident at Ignalina NPP, including at the Project Facilities together with buildings, facilities or installations connected therewith or auxiliary thereto and located at the site of the Ignalina NPP. (
32. b)The Republic of Lithuania hereby consents to submit to the jurisdiction of any court, whether in or outside of the Republic of Lithuania, in which any such claim or demand is made against the Bank and waives any defence or claim of lack of jurisdiction and any defence or claim of sovereign immunity in any action brought against it by the Bank in any court, whether in or outside of the Republic of Lithuania with respect to the provisions of paragraphs (
33. a)of this Section 7.1. Section 7.2. Indemnity in Favour of Suppliers The Republic of Lithuania may provide, upon request, the contractors, consultants and suppliers of goods, works or services financed through the Grant with adequate indemnities with respect to activities connected to the implementation of the Projects. Such indemnities shall be consistent with the generally accepted principles contained in indemnity agreements provided to such contractors, consultants and suppliers in similar projects and shall be provided on a non-discrimination basis. The Republic of Lithuania shall provide upon request a firm indication of its intention to provide an indemnity within 15 days from the date of receipt of such request. The Republic of Lithuania agrees to designate within three months from the date of this agreement a competent authority for the purpose of receiving indemnity requests and issuing such indemnities. The adequate model form of indemnity agreement will be prepared by the Republic of Lithuania and provided to the Bank as promptly as practicable, but in any event not later than three months after the date of this Framework Agreement. Section 8. Agency and Disclaimer (
34. a)The Bank is not an agent or trustee of, and shall not have any fiduciary relationship with, the Government of the Republic of Lithuania or any other person or entity. (
35. b)The Bank does not accept any responsibility whatsoever with regard to claims related to activities undertaken pursuant to or in connection with this Framework Agreement. (
36. c)The Republic of Lithuania acknowledges and agrees that: (
37. i)the Bank acts solely in its capacity of administrator of funds for and on behalf of the Contributors to the Fund and that this activity is independent from its role as a financial institution supporting investment projects. (
38. ii)any decision relating to the implementation of the Projects, the safe design, construction and operation of the Project Facilities and the operation, closure and decommissioning of Ignalina NPP will be made exclusively by the competent Lithuanian authorities and the entity designated as the operator of the Project Facilities. (iii) the entity designated as the operator of the Project Facilities and the Ignalina NPP shall bear exclusive liability in accordance with the provisions of the Vienna Convention and applicable law for any nuclear damage caused by the Project Facilities and the Ignalina NPP or in connection with the implementation of the Projects and its financing and that the Bank shall not be liable with regard to claims related to activities undertaken pursuant to or in connection with this Framework Agreement. Section 9. Notices Any notice or request required or permitted to be given or made under this Framework Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it has been delivered by hand, mail, cable, telex or telefax to the party to this Framework Agreement to which it is required to be given or made, at the address specified below or at any other address as the party shall have specified in writing to the party giving the notice or making the request. For the Republic of Lithuania: Ministry of Economy Attn. Eugenijus Gentvilas, Minister Gedemino Ave. 38/2 LT-2600 Vilnius Lithuania Telephone: