OFFICIAL DOCUMENTS LOAN NUMBER 8927-CN Loan Agreement (Guizhou Aged Care System Development Program) between PEOPLE'S REPUBLIC OF CHINA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT LOAN AGREEMENT AGREEMENT dated as of the Signature Date between PEOPLE'S REPUBLIC OF CHINA ("Borrower") and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("Bank"). The Borrower and the Bank hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II - LOAN 2.01. The Bank agrees to lend to the Borrower the amount of three hundred five million seven hundred thousand Euro (E305,700,000), as such amount may be converted from time to time through a Currency Conversion ("Loan"), to assist in financing the program described in Schedule 1 to this Agreement ("Program"). 2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section IV of Schedule 2 to this Agreement. All withdrawals from the Loan Account shall be deposited by the Bank into an account specified by the Borrower and acceptable to the Bank. 2.03. The Front-end Fee is one quarter of one percent (0.25%) of the Loan amount. 2.04. The Commitment Charge is one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance. 2.05. The interest rate is the Reference Rate plus the Variable Spread; or such rate as may apply following a Conversion; subject to Section 3.02(e) of the General Conditions. 2.06. The Payment Dates are April 1 and October 1 in each year. 2.07. The principal amount of the Loan shall be repaid in accordance with Schedule 3 to this Agreement. 2.08. (a) If on any given day, the Total Exposure exceeds the Standard Exposure Limit (as said terms are defined in sub-paragraphs (b)(ii) and (b)(iii) of this Section), the Borrower shall pay to the Bank a surcharge at the rate of one half of one percent (0.5%) per annum of the Allocated Excess Exposure Amount (as defined in sub-paragraph (b)(i) of this Section) for each said day ("Exposure Surcharge"). The Exposure Surcharge (if any) shall be payable semi-annually in arrears on each Payment Date. (b) For purposes of this Section the following terms have the meanings set forth below: (i) "Allocated Excess Exposure Amount" means for each day during which the Total Exposure exceeds the Standard Exposure Limit, the product of: (A) the total amount of said excess; and (B) the ratio of all (or, if the Bank so determines, a portion) of the Loan to the aggregate amount of all (or the equivalent portions) of the loans made by the Bank to the Borrower and to other borrowers guaranteed by the Borrower that are also subject to an exposure surcharge, as said excess and ratio are reasonably determined from time to time by the Bank. (ii) "Standard Exposure Limit" means the standard limit on the Bank's financial exposure to the Borrower which, if exceeded, would subject the Loan to the Exposure Surcharge, as determined from time to time by the Bank. (iii) "Total Exposure" means for any given day, the Bank's total financial exposure to the Borrower, as reasonably determined by the Bank. ARTICLE III - PROGRAM 3.01. The Borrower declares its commitment to the objective of the Program. To this end, the Borrower shall cause the Program to be carried out by the Program Implementing Entity in accordance with the provisions of Article V of the General Conditions and the Program Agreement. ARTICLE IV - EFFECTIVENESS; TERMINATION 4.01. The Additional Condition of Effectiveness is that the Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Borrower to make withdrawals under it (other than the effectiveness of this Agreement) have been fulfilled. 4.02. The Effectiveness Deadline is the date ninety (90) days after the Signature Date. ARTICLE V - REPRESENTATIVE; ADDRESSES 5.01. The Borrower's Representative is its Minister of Finance. 5.02. For purposes of Section 10.01 of the General Conditions: (a) the Borrower's address is: -2- Ministry of Finance Sanlihe Xicheng District Beijing 100820 People's Republic of China; and (b) the Borrower's Electronic Address is: Facsimile: (86-10) 6855-2077 5.03. For purposes of Section 10.01 of the General Conditions: (a) the Bank's address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Bank's Electronic Address is: Facsimile: 1-202-477-6391 -3 - AGREED as of the Signature Date. PEOPLE'S REPUBLIC OF CHINA By: Authorized Representative Name: Title: /2= ,, 7 ,L Date: ~~i6 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By: Au rized Representative Name: 1 Sa. Title: ,9 Date: -4- SCHEDULE 1 Program Description The objective of the Program is to increase equitable access to a basic package of aged care services and to strengthen the quality of services and the efficiency of the aged care system. The Program consists of the following activities: A. Expanding Coverage of Basic Aged Care Services for the Elderly 1. Developing a needs assessment toolkit for measuring, inter alia, the functional limitations of the elderly and carrying out needs assessments at the district/county level. 2. Defining the basic package of aged care services and level of subsidy for the basic package. 3. Defining the eligibility criteria for the elderly accessing the basic package of aged care services based on individual functional needs and income/assets test. 4. Delivering the basic package of aged care services in urban and rural areas covering three tiers of home- and community-based care, and institutional care, with an emphasis on home- and community-based care. B. Enhancing Quality of Aged Care Services for the Elderly 1. Improving and implementing aged care quality standards for facilities and services. 2. Introducing case management and promoting coordination of aged care and health care services at the home, community, and institutional levels. 3. Enhancing and expanding aged care skills by providing, inter alia: (a) training to wage and family caregivers, professionals, managers, and government officials; (b) job subsidies to wage caregivers; and (c) financial subsidies and respite services to family caregivers. 4. Establishing a provincial cloud platform for service delivery, quality enhancement, and public financial management. -5- C. Strengthening Efficiency of Aged Care Financing for the Elderly 1. Enhancing the planning and utilization of public financial resources in the aged care sector by introducing a zero-based budget reform. 2. Refining the decision-making process for new infrastructure investment activities in the aged care sector to comply with the provincial investment management guidelines. 3. Enhancing the service delivery and management of public aged care facilities, through the promotion of institutional reforms, and enabling the participation of private providers and operators in the aged care sector. 4. Establishing a monitoring and evaluation system, including setting up a provincial monitoring and evaluation framework, collecting quality data and carrying out evaluations. -6- SCHEDULE 2 Program Execution Section I. Implementation Arran2ements A. Financing Arrangements 1. For the purposes of carrying out of the Program, the Borrower shall make available the proceeds of the Loan to the Program Implementing Entity, under terms and conditions acceptable to the Bank, including the following principal terms: (a) The principal amount shall be made available in Euro or any other Currency as the Loan may be converted from time to time through a Currency Conversion of the value of the currency or currencies so withdrawn (such principal amount determined on the date, or respective dates, of withdrawal from the Loan Account). (b) The principal amount so made available (including an amount equal to the fee paid pursuant to Section 2.03 of this Agreement) shall be recovered over a period of thirty-four (34) years, inclusive of a grace period of six (6) years. (c) Interest shall be charged on such principal amount withdrawn and outstanding from time to time at a rate equal to the rate of interest applicable from time to time to the Loan pursuant to the provisions of Section 2.05 of this Agreement. (d) A Commitment Charge shall be charged equal to one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance. 2. The Borrower shall cause the Program Implementing Entity to: (a) manage, operate, monitor, transfer and reconcile the proceeds of the Loan made available to it pursuant to paragraph 1 above in accordance with arrangements and procedures acceptable to the Bank; (b) take all required actions, including provision of timely consents and approvals as may be necessary, to facilitate the utilization of said Loan proceeds and the implementation of the Program and, to enable the Program Implementing Entity to comply with its undertakings under the Program Agreement; and (c) maintain all relevant records and documents related to the Loan and the Program and provide promptly such documents and records, including all other information related to the Loan and the Program, as may be requested by the Borrower or the Bank from time to time. -7- B. Program Action Plan The Borrower shall take, and shall cause the Program Implementing Entity to take, all measures necessary to comply with, or all measures necessary to enable the Program Implementing Entity to comply with the provisions of Section I.B.2 of the Schedule to the Program Agreement. Section II. Excluded Activities The Borrower shall ensure that the Program excludes any activities which: A. in the opinion of the Bank, are likely to have significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people; or B. involve the procurement of: (1) works, estimated to cost $75 million equivalent or more per contract; (2) goods, estimated to cost $50 million equivalent or more per contract; (3) non-consulting services, estimated to cost $50 million equivalent or more per contract; or (4) consulting services, estimated to cost $20 million equivalent or more per contract. Section III. Pro2ram Monitoring, Reporting and Evaluation The Borrower shall cause the Program Implementing Entity to furnish to the Bank each Program Report not later than sixty (60) days after the end of each calendar semester, covering the calendar semester. Section IV. Withdrawal of Loan Proceeds A. General 1. Without limitation upon the provisions of Article II of the General Conditions and in accordance with the Disbursement and Financial Information Letter, the Borrower may withdraw the proceeds of the Loan to: (a) pay the Front-end Fee; (b) pay interest and Commitment Charge; (c) pay each Interest Rate Cap or Interest Rate Collar premium; and (d) finance Program Expenditures, on the basis of the results ("Disbursement Linked Results" or "DLRs") achieved by the Program Implementing Entity, as measured against specific indicators ("Disbursement Linked Indicators" or "DLIs"); all as set forth in the table in paragraph 2 of this Part A. 2. The following table specifies each category of withdrawal of the proceeds of the Loan (including the Disbursement Linked Indicators as applicable) ("Category"), the -8- Disbursement Linked Results for each Category (as applicable), and the allocation of the amounts of the Loan to each Category: Category Disbursement Linked Amount of the Disbursement (including Disbursement Result (as applicable) Loan Calculation Linked Indicator as Allocated Formula (as applicable) (expressed in applicable) EUR) (1) DLI #1: Development DLR #1.1: DOCA has 5,732,000 n/a of the Needs Assessment developed the Needs Toolkit and number of Assessment Toolkit Program Districts/ Program Counties where DLR #1.2: 22,928,000 EUR 477,666.67 Implementation of the Implementation of the per each Program Needs Assessment Toolkit Needs Assessment District/ Program has occurred Toolkit has occurred in County 48 Program Districts/ Program Counties (2) DLI #2: Development DLR #2.1: DOCA has 5,732,000 n/a of the Basic Package of developed the Basic Aged Care Services and Package of Aged Care number of Program Services Districts/ Program Counties where DLR #2.2: 22,928,000 EUR 477,666.67 Implementation of the Implementation of the per each Program Basic Package of Aged Basic Package of Aged District/ Program Care Services has Care Services has County occurred occurred in 48 Program Districts/Program Counties (3) DLI #3: Number of DLR #3: 402,000 57,320,000 EUR 142.59 per Eligible Elderly receiving Eligible Elderly each Eligible the Basic Package of Aged receiving the Basic Elderly Care Services Package of Aged Care Services (4) DLI #4: Development DLR #4.1: DOCA has 17,196,000 n/a of the Aged Care Quality developed the Aged Standards and number of Care Quality Standards Aged Care Facilities complying with the Aged Care Quality Standards -9- DLR #4.2: 1,500 Aged 40,124,000 EUR 26,749.34 Care Facilities per each Aged complying with the Care Facilities Aged Care Quality complying with Standards Aged Care Quality Standards (5) DLI #5: Number of DLR #5: 19,000 Wage 28,660,000 EUR 1508.43 per Wage Caregivers receiving Caregivers receiving each Wage training and certification in training and Caregiver the age care sector certification in the age receiving training care sector and certification in the age care sector (6) DLI #6: Development DLR #6.1: DOCA has 17,196,000 n/a of the Zero-based Aged developed the Zero- Care Budget Planning and based Aged Care Allocation Guidelines and Budget Planning and number of Program Allocation Guidelines Districts/ Program Counties where DLR #6.2: 40,124,000 EUR 835,916.67 Implementation of the Implementation of the per each Program Zero-based Aged Care Zero-based Aged Care District/ Program Budget Planning and Budget Planning and County Allocation Guidelines has Allocation Guidelines occurred has occurred in 48 Program Districts /Program Counties (7) DLI #7: Development DLR #7.1: DOCA has 5,732,000 n/a of the Operational developed the Management Guidelines Operational for public aged care Management facilities and number of Guidelines for public Program Districts/ aged care facilities Program Counties where Implementation of the DLR #7.2: 22,928,000 EUR 477,666.67 Operational Management Implementation of the per each Program Guidelines for public aged Operational District/ Program care facilities has occurred Management County Guidelines for public aged care facilities has occurred in 48 Program Districts/ Program Counties (8) Front-end Fee to be 764,250 paid pursuant to Section 2.03 of this Agreement in - 10- accordance with Section 2.05 (b) of the General Conditions (9) Interest and 18,335,750 Commitment Charge on the Loan accrued on or before the last Payment Date immediately preceding the Closing Date, to be paid pursuant to Sections 2.05 and 2.04 of this Agreement, respectively, in accordance with Section 2.07 (c) of the General Conditions (10) Interest Rate Cap or 0 Interest Rate Collar premium to be paid pursuant to Section 4.05 (c) of the General Conditions TOTAL AMOUNT 305,700,000 B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) on the basis of DLRs achieved prior to the Signature Date; (b) for any DLR (except DLR #4.2) under Categories (1), (2), (4), (6) and (7), until and unless the Program Implementing Entity has furnished evidence in accordance with the provisions of the Verification Protocol and acceptable to the Bank showing that said DLR has been achieved; and (c) for DLRs #3, #4.2 and #5 under Categories (3), (4) and (5), until and unless the Program Implementing Entity has furnished evidence in accordance with the provisions of the Verification Protocol and acceptable to the Bank showing that the Minimum DLR, and thereafter any DLR above the Minimum DLR, has been achieved. 2. Notwithstanding the provisions of Part B.1(b) and (c) of this Section, the Borrower may withdraw an amount not to exceed E76,425,000 as an advance; provided, however, that if the DLRs in the opinion of the Bank, are not achieved (or only partially achieved) by the Closing Date, the Borrower shall refund such advance (or the portion thereof corresponding - 11 - to the extent of partial achievement of the DLRs, said portion to be calculated in accordance with the Formula (if applicable)) to the Bank promptly upon notice thereof by the Bank. Except as otherwise agreed with the Borrower, the Bank shall cancel the amount so refunded. Any further withdrawals requested as an advance under any Category shall be permitted only on such terms and conditions as the Bank shall specify by notice to the Borrower. 3. Notwithstanding the provisions of Part B. 1(b) and (c) of this Section, the amount of the Loan to be withdrawn upon the verified achievement of any DLR by the end of each calendar year (or such other period as agreed with the Bank), shall be calculated, in accordance with the Formula. 4. Notwithstanding the provisions of Part B. 1(b) and (c) of this Section, if any of the DLRs has not been achieved by the date by which the said DLR is set to be achieved, the Bank may, by notice to the Borrower: (a) only with respect to DLRs #1.2, #2.2, #3, #4.2, #5, #6.2 and #7.2, authorize the withdrawal of such lesser amount of the unwithdrawn proceeds of the Loan then allocated to said Category which, in the opinion of the Bank, corresponds to the extent of achievement of said DLR, said lesser amount to be calculated in accordance with the Formula; (b) reallocate all or a portion of the proceeds of the Loan then allocated to said DLR to any other DLR; and/or (c) cancel all or a portion of the proceeds of the Loan then allocated to said DLR. 5. The Closing Date is December 31, 2024. 6. For purposes of, inter alia, Section 2.03 and 7.04 of the General Conditions, the term "Program Expenditures" means those expenditures incurred by the Program Implementing Entity under its budget codes 208 and 229 (or such other codes as may be notified to the Bank from time to time) and the expenditures financed out of the Loan proceeds, but excluding any expenditures associated with the Excluded Activities. - 12 - SCHEDULE 3 Commitment-Linked Amortization Repayment Schedule The following table sets forth the Principal Payment Dates of the Loan and the percentage of the total principal amount of the Loan payable on each Principal Payment Date ("Installment Share"). Level Principal Repayments Principal Payment Date Installment Share On each April l and October 1 Beginning April 1, 2025 through April 1, 2052 1.79% On October 1, 2052 1.55% - 13 - APPENDIX Definitions 1. "Aged Care Facilities" means various institutional facilities established and operating in Guizhou for delivering aged care services, including urban community daycare centers, rural happiness homes, rural and urban welfare homes, nursing homes, residential homes, aged care service centers, and rehabilitation centers. 2. "Aged Care Quality Standards" means the Program Implementing Entity's set of standards for the quality of age care facilities and services, acceptable to the Bank, setting forth, inter alia the core standards and specifications for aged care infrastructure, equipment, service delivery, human resources, management and governance at the home, community and institutional levels, as the same may be revised from time to time with the prior written agreement of the Bank. 3. "Aged Care Leading Group" means Guizhou's leading group, comprising a provincial representative as chair and representatives of DOCA, key line departments, or any successors thereto, and referred to in Section I.B.1 (a) (i) of the Schedule to the Program Agreement. 4. "Anti-corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to the General Conditions, the Bank's "Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing," dated February 1, 2012, and revised July 10,2015. 5. "Basic Package of Aged Care Services" means the Program Implementing Entity's set of publicly financed aged care services comprising three tiers of home, community and institutional care, acceptable to the Bank, as the same may be revised from time to time with the prior written agreement of the Bank. 6. "Category" means a category set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement. 7. "Co-financier" means Agence Franqaise de Developpement. 8. "Co-financing" means, for purposes of paragraph 16 of the Appendix to the General Conditions, an amount of Euro 100,000,000 to be provided by the Co-financier to assist in financing the Program. 9. "Co-financing Agreement" means the agreement to be entered into between the Borrower and the Co-financier providing for the Co-financing. - 14 - 10. "Disbursement Linked Indicator" or "DLI' means in respect of a given Category, the indicator related to said Category as set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement. 11. "Disbursement Linked Result" or "DLR" means in respect of a given Category, the result under said Category as set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement, on the basis of the achievement of which, the amount of the Loan allocated to said result may be withdrawn in accordance with the provisions of said Section IV. 12. "DOCA" means Guizhou's department of civil affairs, or any successor thereto. 13. "Eligible Elderly" means elderly (above 60 years) who meet the eligibility criteria for accessing to the Basic Package of Aged Care Services, as said criteria are determined based on the functional needs and economic needs of the elderly in the respective Program District/Program County. 14. "Excluded Activities" means the activities that are referred to in Section II of Schedule 2 to this Agreement and Section II of the Schedule to the Program Agreement. 15. "Formula" means in respect of DLRs #1.2, #2.2, #3, #4.2, #5, #6.2 and #7.2, the disbursement calculation formula set forth in the fourth column of the table in Section IV.A.2 of Schedule 2 to this Agreement. 16. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for IBRD Financing, Program-for-Results Financing", dated December 14, 2018. 17. "Guizhou" means the Borrower's province of the same name, or any successor thereto. 18. "Guizhou Aged Care Office" means the office established by DOCA, on July 11, 2017, responsible for supporting the implementation and coordination of the Program, or any successor thereto, and referred to in Section I.B. 1 (a) (iii) of the Schedule to the Program Agreement. 19. "Implementation" means the set of specific actions to be carried out by each Program District or Program County with respect to each of DLIs 1, 2, 6 and 7 and the corresponding DLRs #12, #2.2, #6.2 and #7.2, as set forth in the Program Operations Manual, and verified in accordance with the Verification Protocol. 20. "Minimum DLR" means with respect to: (i) DLR #3, 500 Eligible Elderly receiving the Basic Package of Aged Care Services; (ii) DLR #4.2, 100 Aged Care Facilities complying - 15 - with the Aged Care Quality Standards; and (iii) DLR #5.2, 625 Wage Caregivers receiving training and certification in the age care sector. 21. "Needs Assessment Toolkit" means the Program Implementing Entity's toolkit for assessing functional limitations in the access of aged care services, acceptable to the Bank, setting forth inter alia, methodologies and assessment instruments for measuring the degree of the elderly independence and their living environment, as the same may be revised from time to time with the prior written agreement of the Bank. 22. "Operational Management Guidelines" means the Program Implementing Entity's guidelines for operational management of public aged care facilities, acceptable to the Bank, setting forth, inter alia, rules, procedures and specific requirements to manage and oversee the operations of public aged care facilities, including those that are publicly owned and operated and those that are the publicly owned and privately operated ones, as the same may be revised from time to time with the prior written agreement of the Bank. 23. "Program Action Plan" means Program Implementing Entity's plan dated January 31, 2019 and referred to in Section I.B of Schedule 2 to this Agreement and Section I.B.2 of the Schedule to the Program Agreement, as may be amended from time to time with the agreement of the Bank. 24. "Program Counties" means Guizhou's counties of Kaiyang, Xifeng, Xiuwen, Shuicheng, Tongzi, Suiyang, Zhengan, Fenggang, Meitan, Yuqing, Xishui, Daozhen, Wuchuan, Libo, Guiding, Wengan, Pingtang, Luodian, Changshun, Longli, Huishui, Dushan, Sandu, Xingren, Puan, Qinglong, Anlong, Wangmo, Zhenfeng, Ceheng, or any successors thereto. 25. "Program Districts" means Guizhou's districts of Nanming, Yunyan, Huaxi, Wudang, Baiyun, Guanshanhu,Qingzhen, Zhongshan, Liuzhi, Panzhou, Honghuagang, Huichuan, Bozhou, Chishui, Renhuai, Duyun, Fuquan, Xingyi, or any successors thereto. 26. "Program Prefectures" means Guizhou's prefectures of Guiyang, Liupanshui, Qiannan, Qianxinan and Zunyi, or any successors thereto. 27. "Program Implementing Entity" means Guizhou. 28. "Program Operations Manual" means the Program Implementing Entity's manual, referred to in Section I.B.3 of the Schedule to the Program Agreement, describing: (i) institutional and implementation arrangements; (ii) procurement procedures, and procedures for reporting allegations of fraud and corruption; (iii) a financial management manual, including guidelines on financial management, internal controls, accounting procedures, fund and asset management and withdrawal application procedures; (iv) the procedures for managing the actual and potential adverse environmental and social impacts of the Program - 16- (v) monitoring, evaluation and reporting procedures, including the Verification Protocol; (vi) a sub-manual on land acquisition; and (vii) a sub-manual of public consultation and grievance procedures; as the same may be amended from time to time with the prior written agreement of the Bank, and such term includes any annexes or schedules thereto. 29. "Signature Date" means the later of the two dates on which the Borrower and the Bank signed this Agreement and such definition applies to all references to "the date of the Loan Agreement" in the General Conditions. 30. "Verification Protocol" means the protocol setting forth the actions and mechanism required for verification of DLRs, agreed with the Bank, dated January 31, 2019, and referred to in Section IV.B. 1(b) and (c) of Schedule 2 to this Agreement, as the same may be amended from time to time with the prior written agreement of the Bank. 31. "Wage Caregivers" means wage workers in the age care sector, including nurses, therapists and rehabilitators at aged care facilities or such other type of wage worker as may be set form in the Program Operations Manual, but excluding supporting and managerial staff, professionals, and family caregivers. 32. "Zero-based Aged Care Budget Planning and Allocation Guidelines" means the Program Implementing Entity's guidelines for budget planning, execution, and monitoring, acceptable to the Bank, setting forth inter alia, a budgeting process with zero as its base, and budget planning, execution and monitoring arrangements incorporating actual local needs from market analysis and gaps identified for the aged care system development, as the same may be revised from time to time with the prior written agreement of the Bank. - 17 -