Grant Program for

Grant Program for Iraqi Small Business Lending Request for Applications July 02, 2004 Issued by: The Army Project & Contracting Office (PCO) Baghdad, Iraq Grant Program for Iraqi Small Business Lending Table of Contents Request for Proposals Section I – Background Information Section II -- Program Description and Objectives Section III – Selection Criteria Section IV – Grant Application Format Section V – Grant Document SECTION I – BACKGROUND INFORMATION This is the Request for Applications (“RFA”) to establish a grant program (the “Program”) that will be operated by the Administrator to provide grants (“Grants”) to financing institutions majority owned and operated by Iraqi citizens in Iraq (“Grantees”), which Grantees will leverage on a one-for-one basis for small business lending to businesses in Iraq majority owned and operated by Iraqi citizens. It is expected to lead to a sustainable commercial lending profile in the Iraqi finance industry with the intention of providing a successful example that would be duplicated in all financial institutions in the country. This is in line with efforts by the now-defunct Coalition Provisional Authority (CPA) (which temporarily exercised governmental authority in Iraq pursuant to the law and usages of war and relevant United Nations Security Council Resolutions, including Resolutions 1483 (2003), 1511 (2003), and 1546 (2004)) to provide economic rehabilitation and reform in Iraq to stimulate domestic and foreign investment, domestic and international trade, employment, and broad-based prosperity through private capital formation. In Iraq, there is strong demand for small business finance activities. Iraq has a relatively large domestic market and deep entrepreneurial roots. Despite recently undergoing economic turmoil, Iraq has the natural resources and infrastructure to support small businesses. A small business commercial lending program delivered by locally present financing institutions, using sound lending methodologies, has great potential to be successful. The country faces large and urgent challenges in revitalizing the economy and creating new jobs. Credit availability is a key factor in revitalizing the economy. The country’s capital stock has been seriously depleted and there has been little investment in plant and equipment for many years. Historically, small-and-medium size businesses have been successfully engaged in trading activities, agribusiness, light manufacturing, and a variety of other sectors. The primary objective of the activities under this Program is to generate a productive and growing private sector, create rapid employment, and lay the foundation for sustainable growth and economic development. SECTION II – GRANT PROGRAM DESCRIPTION AND OBJECTIVES IRAQI SMALL BUSINESS LENDING Anticipated Results and Impact The small business loans made possible by these Grants will provide businesses, some of which have few other alternatives for obtaining needed capital, with financial resources for investment, expansion, working capital and other legitimate business purposes, thereby stimulating job creation and economic growth. The Grants will bolster financial institutions’ balance sheets. The experience gained by the applicants in making loans with Grant funds will increase the technical and managerial competence of the applicants. The Grant funds also will provide applicants with opportunities to increase their customer base by seeking out potential new borrowers to receive loans. The Program has been designed for maximum flexibility and simplicity in order to facilitate a credit flow to small businesses as quickly as feasible in view of the current stressful economic and political situation in Iraq, including high unemployment, large excess manufacturing capacity and severe shortage of medium term credit through currently available financial resources. General Program Description and Focus Objective: Enable funds to be distributed into the economy quickly via small business loans, thus stimulating commercial activity and creating employment in the private sector. Provide impetus and capability to financial institutions to establish medium term lending programs (two years to five years) based on sound financial practices and cash flow analysis. Grantee Criteria: Private sector financial institutions majority owned and operated by Iraqi citizens in Iraq in good standing that engage in lending, including private sector banks and NGOs engaged in microfinance, will be eligible to receive Grants. Grants in the aggregate to an individual Grantee may not comprise more than 50% (giving effect to the Grants) of the total loan portfolio of the Grantee. Loan Characteristics: Funding: Each loan made with Grant funds (“Small Business Loan”) must be comprised 50% of Grant funds and 50% of funds from the Grantee’s own resources. Size: Each Small Business Loan must be between $25,000 and $500,000. Each Grant with respect to a Small Business Loan will therefore be in the range of $12,500 to $250,000. Term: Small Business Loans will have a final maturity within the range of two to five years. Level amortization payments shall begin no earlier than the 12-month anniversary of the loan. Small Business Loans must carry an interest rate that conforms to Iraq financial market standards current at the time of the making of the loan. Borrowers under this Program must be majority owned and operated by Iraqi citizens. State-owned enterprises are not eligible for loans, but a joint venture which includes one or more state-owned enterprises is eligible so long as the joint venture is majority owned and operated by the Iraqi private sector. Borrowers must utilize the funds for legitimate business purposes which exclude, but are not limited to, the Excluded Transactions provided later in this solicitation package. Note that borrowers do not need to be “small businesses”. Grantees may apply their own credit risk standards in making decisions whether or not to extend Small Business Loans. As part of its due diligence and credit analysis process, each Grantee must produce a business plan for each Small Business Loan it intends to make including the following information on the borrower: use of proceeds business description competitive analysis historical financial statements projected future financial statements (giving effect to the loan) projected cash flow debt service coverage ratios description of management description of shareholders Excluded Transactions: Activities related to tobacco Activities related to the production of alcoholic beverages Drug products not certified by applicable health authorities Activities related to gambling Activities related to military - Any loan the purpose of weapons destruction, mine clearing, explosive detection, and related activities is permitted. Any loan the purpose of which is to fund activity substantially related to developing, procuring, servicing or providing training for weapons, weapons platforms, or ammunition is prohibited. Administrator Responsibilities The Administrator and the PCO (the “Grantor”) shall establish a segregated bank account in a reputable bank for the Grant funds (the “Grant Pool”). The Grantor will have signature authority over the account which it may revocably delegate to the Administrator in whole or in part at its discretion. The Grantor at its discretion may transfer all or a portion of available funds at any time into the Grant Pool for onward distribution to Grantees. The Administrator may only transfer funds from the Grant Pool in order to fund Small Business Loans and for no other purpose. For example, the Administrator shall not transfer funds from the Grant Pool to pay any expense or fee or procurement on behalf of the Administrator or any third party. The Administrator shall receive applications for Grants from potential Grantees. Prior to forwarding an application to Administrator, the Grantee will review the application and perform a credit investigation on the prospective borrower. If the Grantee approves the loan, then the Grantee may forward it to Administrator to apply for matching funds. Each such application will include documentary evidence to demonstrate conformance with all items under “Grantee Criteria”, “Loan Characteristics” and “Excluded Transactions” but the Administrator shall not impose onerous or unreasonably burdensome requirements on the Grantee relative to compiling the application. The Administrator will use reasonable judgment in viewing the evidence provided but will not be required to confirm the accuracy or completeness of the evidence and will not be liable for any mistakes or omissions in the evidence Upon successful review and approval of an application, the Administrator shall instruct the Grantee to disburse within 3 working days the amount of the Grantee’s own matching funds (50% of the amount of the proposed Small Business Loan) to the borrower. Within 2 working days of timely receipt of evidence of such disbursement, the Administrator shall transfer the Grant portion of the Small Business Loan from the Grant Pool directly into the account of the borrower. Payment of principal and interest on the entire Small Business Loan will be due and payable to the Grantee, and the Administrator shall have no responsibility for ensuring the borrower’s performance under the loan agreement with the Grantee. The Administrator shall require periodic reports (no less than quarterly) from the Grantee on the performance of the Small Business Loans made with Grant funds. The Administrator shall be empowered (subject to the Grantor’s discretion) to preclude from further participation in the Program any Grantee whose Small Business Loan portfolio performance is materially worse than the aggregate Small Business Loan portfolio, excluding the Grantee in consideration. The Administrator shall not give preference in allocating Grants to particular Grantees. Applications for Grants shall be processed in the order received. In order to allow all Grantees access to the Grant Pool, no Grantee may submit more than two applications per week. The Administrator shall consult periodically with the Grantor on the progress and performance of the Program; shall prepare and provide Quarterly Utilization Reports to the Grantor no later than 15 calendar days after the close of a quarter; and shall provide other information whether in the form of reports or otherwise as requested by the Grantor to fulfill the Grantor’s statutory, regulatory and management responsibilities and objectives. The Grantor in its sole discretion shall have the power to exclude any actual or potential Grantee from the Program or limit participation in the Program. If the Administrator believes that any actual or potential Grantee should be excluded or limited on the basis of financial, legal, moral or other valid reason, it shall promptly consult with the Grantor and carry out the instructions of the Grantor. The Administrator shall not accept applications for Grants from any Grantee under common control or ownership with the Administrator. Start-Up, Implementation, Duration and Termination The Administrator should be prepared to begin administration of the Program within one week of signing the Grant agreement. The Administrator shall promote at its own expense the existence of the Program with potential Grantees in all areas of the country with the intent of achieving a reasonable geographic dispersion of Grant funds. The Program will terminate at the end of one year from the date the Grant document is signed. Any Grant funds not expended by that time will be returned to the Grantor. The Grantor may terminate the Administrator at any time, with or without cause. If so terminated, the Administrator will be eligible to receive fees, in accordance with the Grant document, proportionate to its level of activity prior to termination date. Reporting Requirements Quarterly Utilization Reports of the amount of Grant funds used in the preceding period are required of the Administrator per information noted above using the chart shown below: Date of Loan Amount of Loan Final Maturity Industry Borrower Grantees may be subject to an audit during the 12 months duration of this Program plus the first 12 months after the termination or expiration of this Program. This audit would be limited to review of the loans made under this Program and their general administration and would be paid for by the Grantor using funds from the Grant Pool or otherwise at the Grantor’s discretion. Oversight The Administrator will be accountable to Grantor for achieving tasks set forth in the Grant document. All tasks under the Grant document are to be carried out subject to the supervision, direction, and any necessary redirection by the Grantor. SECTION III - SELECTION CRITERIA The Applicant shall furnish a proposal that describes the broad and detailed capabilities it possesses to carry out the tasks and goals described in Section II. The proposal shall contain a work plan that describes the specific measures the Applicant will undertake to achieve the objectives of the Program. Describe the Program in sufficient detail, to include identification of a clear set of phases. Each phase shall specify realistic and achievable goals and objectives. Proposals will be evaluated on the following criteria:[Legal Dept Comment – You need to announce the method of evaluation (e.g., provide the relative importance of the three criteria. Is it best value? Does low cost technically acceptable win?).] Technical Capability Capability to immediately promote, establish and begin administering the Program. This criterion shall also evaluate the proposed Program phases to determine if the phases comprise a comprehensive, and complete Program, and the degree to which the goals and objectives for each phase of the proposed Program are realistic and achievable. Capability to design and implement financial controls and analytical, management and reporting procedures to effectively administer, monitor, assess and report on the Program. Specific relevant accounting, finance, legal, and business capabilities Capability to operate throughout Iraq. Personnel with demonstrated technical, managerial, legal, accounting, administrative and financial experience and competence, especially with financial institutions and small businesses. Capability to provide agency, trust, fiduciary or other “trusted third party” services. Experience Within the past 5 years, general and specific experience of the organization and relevant personnel in: A) the nature and specific tasks and responsibilities of programs such as the Small Business Loan Grant Program; and B) the Middle East and specifically Iraq. Experience in agency, trust, fiduciary or other “trusted third party” services or transactions Price Applicant may quote a fixed price, a price per service, per transaction, per time period, or any other reasonable metric, or any combination of metrics. For the purpose of analyzing prices, the Grantor will assume a disbursement schedule as follows: $7,000,000 total disbursement, average grant size approximately $135,000, disbursement period one year, frequency one disbursement per week. Prices shall be expressed in USD and must separately identify any third party expenses or fees incurred by the Administrator in performance of the services herein, including, without limitation, bank fees, legal fees, travel expenses, agents, advisors, taxes, and other such costs. SECTION IV - GRANT APPLICATION FORMAT PREPARATION GUIDELINES All applications received by the deadline will be reviewed for responsiveness to the specifications outlined in these guidelines and the application format. Section III addresses the evaluation procedures for the applications. In the interest of time, applications shall be submitted in electronic format, rather than hard copies. Two files should be sent: one for the technical proposal and one for the cost proposal. Applications and modifications thereof shall be submitted according to the instructions in the cover letter of this RFA, and showing the RFA number, and the name and address of the applicant. The application should be prepared according to the format set forth below. Applications must be submitted no later than the date and time indicated on the cover page of this RFA, to the location indicated on the cover letter accompanying this RFA. Applications which are submitted late or are incomplete run the risk of not being considered in the review process. Technical capability applications should be specific, complete and presented concisely. The applications should demonstrate the applicant's capabilities and expertise with respect to achieving the goals of this Program. The applications should take into account the technical capability evaluation criteria found in Section III. Preparation of Applications: Each applicant shall furnish the information required by this RFA. In the interest of saving time and reducing expenses, only electronic submissions (email with attachments) will be accepted. Email should be limited to two attachments (one for Cost and one for Technical), up to 2 MB limit total. The applicant should submit the Technical Application and Cost Application in separate files attached to the email. The Technical Application should not make reference to pricing or cost data in order that the technical evaluation may be made strictly on the basis of technical merit. Submissions should be made using Microsoft Word and Excel, or software compatible with a Microsoft Windows environment (e.g., Portable Document Format (PDF) file in a MS Windows environment). Applicants should be aware that the PCO may use advisory personnel to review and applications. Applicants who include data that they do not want disclosed to the public for any purpose or used by the PCO and their advisors except for evaluation purposes, should: (a) Mark the title page with the following legend: "This application includes data that shall not be disclosed outside the PCO and its advisors and shall not be duplicated, used, or disclosed - in whole or in part - for any purpose other than to evaluate this application. If, however, a grant is awarded to this applicant as a result of - or in connection with - the submission of this data, the PCO shall have the right to duplicate, use, or disclose the data to the extent provided in the resulting grant. This restriction does not limit the PCO's right to use information contained in this data if it is obtained from another source without restriction. The data subject to this restriction are contained in sheets.” and (b) Mark each sheet of data it wishes to restrict with the following legend: "Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this application." Explanation to Prospective Applicants - Any prospective applicant desiring an explanation or interpretation of this RFA must request it in writing by the date on the cover letter to allow a reply to reach all prospective applicants before the submission of their applications. Oral explanations or instructions given before award of the Grant will not be binding. Any information given to a prospective applicant concerning this RFA will be furnished promptly to all other prospective applicants as an amendment of this RFA, if that information is necessary in submitting applications or if the lack of it would be prejudicial to any other prospective applicants. Grant Award: The PCO may award one Grant resulting from this RFA to the responsible applicant whose application conforming to this RFA offers the greatest value (see also Section III of this RFA). The PCO may (a) reject any or all applications, (b) accept other than the lowest cost application, or (c) accept alternate applications. The PCO may award one Grant on the basis of initial applications received, without discussions. Therefore, each initial application should contain the applicant's best terms from a cost and technical standpoint. A written award mailed or otherwise furnished to the successful applicant within the time for acceptance specified either in the application(s) or in this RFA (whichever is later) shall result in a binding Grant without further action by either party. Before the application's specified expiration time, the PCO may accept an application, whether or not there are negotiations after its receipt, unless a written notice of withdrawal is received before award. Negotiations conducted after receipt of an application do not constitute a rejection or counteroffer by the PCO. Neither financial data submitted with an application nor representations concerning facilities or financing, will form a part of the resulting Grant document. Authority to Obligate the PCO - The PCO Grant Officer is the only individual who may legally commit the PCO to the expenditure of funds. No costs chargeable to the proposed Grant may be incurred before receipt of either a fully executed Grant document or a specific, written authorization from the Grant Officer. COST APPLICATION FORMAT The Cost or Business Application is to be submitted in a separate volume (electronic file) from the technical application. Certain documents are required to be submitted by an applicant in order for a Grant Officer to make a determination of responsibility. However, it is PCO policy not to burden applicants with undue reporting requirements if that information is readily available through other sources. The following sections describe the documentation that applicants for Assistance award must submit to the PCO prior to award. While there is no page limit for this portion, applicants are encouraged to be as concise as possible, but still provide the necessary detail to address the following: Include a budget with an accompanying budget narrative, which provides in detail the total costs for implementation of the Program your organization is proposing, including: the breakdown of all costs associated with the Program according to costs of, if applicable, headquarters, regional and/or country offices; the breakdown of all costs according to each partner organization involved in the Program; the costs associated with external, expatriate technical assistance and those associated with local in-country technical assistance; the breakdown of the financial and in-kind contributions of all organizations involved in implementing this Agreement; and potential contributions of private donors to this Agreement. A current Negotiated Indirect Cost Rate Agreement (NICRA), if available for those applicants from the U.S. Applicants who do not currently have a Negotiated Indirect Cost Rate Agreement shall also submit copies of the applicant's financial reports for the previous 3-year period, which have been audited by a certified public accountant or other auditor satisfactory to PCO. For-profit organizations will not be allowed to charge a fee or earn a profit under this Grant. Applicants shall submit any additional evidence of responsibility deemed necessary for the Grant Officer to make a determination of responsibility, e.g. organization’s accounting manual. The information submitted should substantiate that the Applicant: Has adequate financial resources or the ability to obtain such resources as required during the performance of the award. Has the ability to comply with the award conditions, taking into account all existing and currently prospective commitments of the applicant. Has a satisfactory record of performance. Past relevant unsatisfactory performance is ordinarily sufficient to justify a finding of non-responsibility, unless there is clear evidence of subsequent satisfactory performance. Has a satisfactory record of integrity and business ethics. TECHNICAL APPLICATION FORMAT The technical application is the critical item of consideration in selection for award of this Grant. It should be specific, complete, and presented concisely. Section III addresses the technical evaluation criteria for the application. All Applicants are advised that lack of completeness or superficiality of the application may constitute grounds for excluding it from consideration. The technical application must set forth strategies, results, activities and indicators to best accomplish the objective of the Program. This technical application should not exceed 20 pages, but it should be complete and address the evaluation criteria. The technical application can be supplanted by attachments such as curricula vitae of personnel, work plan, matrix summarizing qualifications, etc. SECTION V - GRANT DOCUMENT See Attached GRANT BETWEEN ___________________ AND THE UNITED STATES GOVERNMENT FOR THE SMALL BUSINESS LENDING PROGRAM THIS GRANT is entered into as of _______ 2004 by the United States Government (hereinafter the “Government”) and by _____________________ (hereinafter the “Grantee”). In this Grant, the Government and the Grantee are referred to collectively as the “Parties”. WHEREAS: The Grantee has submitted a comprehensive proposal to the Government which calls for ____________________________ (hereinafter “Project”) to establish a grant program (the “Program”) that will be operated by the Administrator to provide grants (“Grants”) to financing institutions majority owned and operated by Iraqi citizens in Iraq (“Grantees”), which Grantees will leverage on a one-for-one basis for small business lending to businesses in Iraq majority owned and operated by Iraqi citizens. It is expected to lead to a sustainable commercial lending profile in the Iraqi finance industry with the intention of providing a successful example that would be duplicated in all financial institutions in the country. The small business loans made possible by these Grants will provide businesses, some of which have few other alternatives for obtaining needed capital, with financial resources for investment, expansion, working capital and other legitimate business purposes, thereby stimulating job creation and economic growth. The Grants will bolster financial institutions’ balance sheets. The experience gained by the applicants in making loans with Grant funds will increase the technical and managerial competence of the applicants. The Grant funds also will provide applicants with opportunities to increase their customer base by seeking out potential new borrowers to receive loans. The Program has been designed for maximum flexibility and simplicity in order to facilitate a credit flow to small businesses as quickly as feasible in view of the current stressful economic and political situation in Iraq, including high unemployment, large excess manufacturing capacity and severe shortage of medium term credit through currently available financial resources; and WHEREAS: [Insert and tailor if applicable] The Grantee has requested an initial sum of US $____ from the Government to __________ [Examples: . . . begin hiring staff, purchasing equipment and services, renovating property, and otherwise engaging in preparatory efforts needed to commence the Project]; and NOW THEREFORE the Parties hereby agree as follows: ARTICLE I Amount of Grant Section 1.01. Subject to the terms and conditions of this Grant, the Grantee is hereby granted from the Government the sum of U.S. $____. The money used to fund this Grant shall be distributed from Seized Funds. The Government shall not be liable for reimbursing the Grantee for any costs in excess of the granted amount. Section 1.02. Grant funds will be disbursed by the Government ____(TBD)________ [Examples: . . . incrementally in accordance with the designated proportionate amounts within thirty (30) days after receipt of substantiation from Grantee of Grantee’s successful completion of the following milestone events: a) effective date of Grant (15%), b) ______ (___%), c) ______ (___%), and d) ______ (10%). (Note – use as many events as desired, but set forth events and not calendar dates.) Grantee shall not be entitled to payment of a request for milestone payment prior to submitting substantiation of the successful completion of the particular event and Government acceptance thereof; . . . in response to Grantee requests for payments in amounts necessary to meet its current needs; etc.]. ARTICLE II Use of Grant Section 2.01. The Grantee undertakes to use the proceeds of this Grant with due diligence and efficiency, and pursuant to sound professional, accounting, commercial, banking, managerial and administrative principles and practices, and otherwise at all times in a manner that avoids the appearance of and/or actual conflicts of interests and is consistent with the specific purpose of accomplishing the objective of the Project. Section 2.02. The Grantee is authorized to disburse the Grant funds in order to: Enable funds to be distributed into the economy quickly via small business loans, thus stimulating commercial activity and creating employment in the private sector; and Provide impetus and capability to financial institutions to establish medium term lending programs (two years to five years) based on sound financial practices and cash flow analysis. (a) Grantee Criteria: Private sector financial institutions majority owned and operated by Iraqi citizens in Iraq in good standing that engage in lending, including private sector banks and NGOs engaged in microfinance, will be eligible to receive Grants. Grants in the aggregate to an individual Grantee may not comprise more than 50% (giving effect to the Grants) of the total loan portfolio of the Grantee. (b) Loan Characteristics: Funding: Each loan made with Grant funds (“Small Business Loan”) must be comprised 50% of Grant funds and 50% of funds from the Grantee’s own resources. Size: Each Small Business Loan must be between $25,000 and $500,000. Each Grant with respect to a Small Business Loan will therefore be in the range of $12,500 to $250,000. Term: Small Business Loans will have a final maturity within the range of two to five years. Level amortization payments shall begin no earlier than the 12-month anniversary of the loan. Small Business Loans must carry an interest rate that conforms to Iraq financial market standards current at the time of the making of the loan. Borrowers under this Program must be majority owned and operated by Iraqi citizens. State-owned enterprises are not eligible for loans, but a joint venture which includes one or more state-owned enterprises is eligible so long as the joint venture is majority owned and operated by the Iraqi private sector. Borrowers must utilize the funds for legitimate business purposes which exclude, but are not limited to, the Excluded Transactions provided later in this solicitation package. Note that borrowers do not need to be “small businesses”. Grantees may apply their own credit risk standards in making decisions whether or not to extend Small Business Loans. As part of its due diligence and credit analysis process, each Grantee must produce a business plan for each Small Business Loan it intends to make including the following information on the borrower: use of proceeds business description competitive analysis historical financial statements projected future financial statements (giving effect to the loan) projected cash flow debt service coverage ratios description of management description of shareholders (c) Excluded Transactions: Activities related to tobacco Activities related to the production of alcoholic beverages Drug products not certified by applicable health authorities Activities related to gambling Activities related to military - Any loan the purpose of weapons destruction, mine clearing, explosive detection, and related activities is permitted. Any loan the purpose of which is to fund activity substantially related to developing, procuring, servicing or providing training for weapons, weapons platforms, or ammunition is prohibited. (d) Administrator Responsibilities The Administrator and the PCO (the “Grantor”) shall establish a segregated bank account in a reputable bank for the Grant funds (the “Grant Pool”). The Grantor will have signature authority over the account which it may revocably delegate to the Administrator in whole or in part at its discretion. The Grantor at its discretion may transfer all or a portion of available funds at any time into the Grant Pool for onward distribution to Grantees. The Administrator may only transfer funds from the Grant Pool in order to fund Small Business Loans and for no other purpose. For example, the Administrator shall not transfer funds from the Grant Pool to pay any expense or fee or procurement on behalf of the Administrator or any third party. The Administrator shall receive applications for Grants from potential Grantees. Prior to forwarding an application to Administrator, the Grantee will review the application and perform a credit investigation on the prospective borrower. If the Grantee approves the loan, then the Grantee may forward it to Administrator to apply for matching funds. Each such application will include documentary evidence to demonstrate conformance with all items under “Grantee Criteria”, “Loan Characteristics” and “Excluded Transactions” but the Administrator shall not impose onerous or unreasonably burdensome requirements on the Grantee relative to compiling the application. The Administrator will use reasonable judgment in viewing the evidence provided but will not be required to confirm the accuracy or completeness of the evidence and will not be liable for any mistakes or omissions in the evidence Upon successful review and approval of an application, the Administrator shall instruct the Grantee to disburse within 3 working days the amount of the Grantee’s own matching funds (50% of the amount of the proposed Small Business Loan) to the borrower. Within 2 working days of timely receipt of evidence of such disbursement, the Administrator shall transfer the Grant portion of the Small Business Loan from the Grant Pool directly into the account of the borrower. Payment of principal and interest on the entire Small Business Loan will be due and payable to the Grantee, and the Administrator shall have no responsibility for ensuring the borrower’s performance under the loan agreement with the Grantee. The Administrator shall require periodic reports (no less than quarterly) from the Grantee on the performance of the Small Business Loans made with Grant funds. The Administrator shall be empowered (subject to the Grantor’s discretion) to preclude from further participation in the Program any Grantee whose Small Business Loan portfolio performance is materially worse than the aggregate Small Business Loan portfolio, excluding the Grantee in consideration. The Administrator shall not give preference in allocating Grants to particular Grantees. Applications for Grants shall be processed in the order received. In order to allow all Grantees access to the Grant Pool, no Grantee may submit more than two applications per week. The Administrator shall consult periodically with the Grantor on the progress and performance of the Program; shall prepare and provide Quarterly Utilization Reports to the Grantor no later than 15 calendar days after the close of a quarter; and shall provide other information whether in the form of reports or otherwise as requested by the Grantor to fulfill the Grantor’s statutory, regulatory and management responsibilities and objectives. The Grantor in its sole discretion shall have the power to exclude any actual or potential Grantee from the Program or limit participation in the Program. If the Administrator believes that any actual or potential Grantee should be excluded or limited on the basis of financial, legal, moral or other valid reason, it shall promptly consult with the Grantor and carry out the instructions of the Grantor. The Administrator shall not accept applications for Grants from any Grantee under common control or ownership with the Administrator. (e) Start-Up, Implementation, Duration and Termination The Administrator should be prepared to begin administration of the Program within one week of signing the Grant agreement. The Administrator shall promote at its own expense the existence of the Program with potential Grantees in all areas of the country with the intent of achieving a reasonable geographic dispersion of Grant funds. The Program will terminate at the end of one year from the date the Grant document is signed. Any Grant funds not expended by that time will be returned to the Grantor. The Grantor may terminate the Administrator at any time, with or without cause. If so terminated, the Administrator will be eligible to receive fees, in accordance with the Grant document, proportionate to its level of activity prior to termination date. (f) Reporting Requirements Quarterly Utilization Reports of the amount of Grant funds used in the preceding period are required of the Administrator per information noted above using the chart shown below: Date of Loan Amount of Loan Final Maturity Industry Borrower 2. Grantees may be subject to an audit during the 12 months duration of this Program plus the first 12 months after the termination or expiration of this Program. This audit would be limited to review of the loans made under this Program and their general administration and would be paid for by the Grantor using funds from the Grant Pool or otherwise at the Grantor’s discretion. (g) Oversight. The Administrator will be accountable to Grantor for achieving tasks set forth in the Grant document. All tasks under the Grant document are to be carried out subject to the supervision, direction, and any necessary redirection by the Grantor. Section 2.03. It is understood and accepted that the Grantee shall have legal title to any and all equipment purchased under this Grant. Section 2.04. The Grantee warrants that no governmental official will receive or will be offered by the Grantee any direct or indirect benefit in connection with the implementation of this Grant. Section 2.05. The Grantee shall comply with all applicable laws, rules, and regulations applicable to its performance under this Grant. ARTICLE III Records; Accounts; and Reports Section 3.01. The Grantee shall: Maintain records, separate accounts and procedures adequate to duly reflect, in accordance with sound accounting practices acceptable to the Government the disposition and use of the proceeds of this Grant; and Promptly furnish reports to the Government containing all such information as the Government shall reasonably request concerning the use of the proceeds of this Grant. Section 3.02. Records acceptable to the Government shall include, but not be limited to, invoices and receipts which record all sums expended pursuant to this Grant including, the identity of all individuals receiving payments to effectuate the purposes of this Grant; the dates and amounts of any payments to such personnel together with signed acknowledgements of receipt, and the date, amount, and serial number of any equipment purchased pursuant to this Grant. Section 3.03. For all reports, the Grantee shall submit to the Government an original report electronically and in hard copy at least quarterly, unless a more frequent schedule is agreed upon between the Government and the Grantee. The reports shall be submitted to the Government in a format as specified by the Government. The Grantee shall submit the report to the Government within forty-five (45) calendar days following the end of each reporting period. Section 3.04. The Grantee shall submit a final report directly to the Government within sixty (60) calendar days after the sooner of the full disbursement of the corpus of this Grant or the end of the effective period. The final report shall be in the format determined by the Government, and it shall contain the following information: An executive summary of the Grantee’s accomplishments; An overall description of the Project’s activities and accomplishments; An assessment of the Grantee’s and Government’s performance in accomplishing the objectives of the Project; Appropriate findings, comments and recommendations; and A narrative report that describes how the proceeds of this Grant were used. . ARTICLE IV Site Visits The Government, through authorized representatives, has the right, at all reasonable times, to make site visits to review Project accomplishments and management control systems and to provide such assistance as may be required. If any site visit is made by Government on the premises of the Grantee, the Grantee shall provide and shall require its contractors to provide all reasonable facilities and assistance for the safety and convenience of the Government representatives in the performance of their duties. All site visits and evaluations shall be performed in such a manner that will not unduly delay the work. ARTICLE V Amendments; Non-Assignment Section 5.01. Changes in terms and conditions of this Grant may be made only by mutual agreement of the Parties, and must be confirmed in an official writing by the Government. Section 5.02. The Grantee shall not assign, transfer, or make any other disposition of this Grant, or any part thereof, without the prior written consent of the Government. ARTICLE VI Suspension or Termination Section 6.01. This Grant may be suspended or terminated in whole or in part only as follows: (a) By the Government, if the Grantee materially fails to comply with the terms and conditions of this Grant, in which case all unexpended funds granted hereunder shall be returned without delay to the Government; (b) By the Government with the consent of the Grantee, in which case the Parties shall agree upon the suspension or termination conditions, including the effective date and, in the case of partial suspension or termination, the portion to be suspended or terminated; or (c) By the Grantee upon sending to the Government written notification setting forth the reasons for such suspension or termination, the effective date, and, in the case of partial suspension or termination, the portion to be suspended or terminated. The Grantee must provide such notice at least thirty (30) calendar days prior to the effective date of the suspension or termination. However, if the Government determines in the case of partial termination that the reduced or modified portion of this Grant will not accomplish the purposes for which the award was made, it may terminate this Grant in its entirety. Section 6.02. Normally, action by the Government to suspend or terminate this Grant will be taken only after the Grantee has been informed by the Government of any deficiency on its part and given an opportunity to correct it; but the Government may immediately suspend or terminate the award without notice when it believes such action is reasonable to protect the interests of the Government. Section 6.03. No costs incurred during a suspension period or after the effective date of a termination will be allowable, except those costs which, in the opinion of the Government, the Grantee could not reasonably avoid or eliminate, or which were otherwise authorized by the suspension or termination notice, provided such costs would otherwise be allowable under the terms of this Grant. Section 6.04 Within thirty (30) days of the termination date, the Grantee will furnish a summary of progress under this Grant and an itemized accounting of costs incurred prior to the termination date or pursuant to Section 6.03 above. Final allowable costs under a termination settlement shall be in accordance with the terms of this Grant, including this article, giving due consideration to the progress under this Grant. In no event will the total of Government payments under a terminated Grant exceed the Grant amount. ARTICLE VII Effective Period Section 7.01. The effective date of this Grant is _______ 2004, provided however that this Grant shall have been duly signed by the Parties. Section 7.02. The Grantee understands that all sums provided under this Grant shall be disbursed in accordance with the terms herein by _______ 200__ or they shall be remitted back to the Government. ARTICLE VIII Controlling Document Section 8.01. The English language version of this Grant at all times shall govern the application, interpretation and enforcement of this Grant. IN WITNESS WHEREOF the parties hereto, acting through their duly authorized representatives, have caused this Grant to be signed in their respective names in Baghdad, Iraq, as of the day and year first above written. UNITED STATES GOVERNMENT ____[Grantee]____ Authorized Representative Authorized Representative Name: Name: Title: Title: Date: Date: RFA No. W914NS-04-R-0157 PAGE Page PAGE 1 of NUMPAGES 21