Turkey - Private Sector Textiles Project : Loan 1755 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1755 TU Loan Agreement (Private Sector Textiles Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and SINAI YATIRIM VE KREDI BANKASI A.O. Dated September 17, 1979 LOAN NUMBER 1755 TU LOAN AGREEMENT AGREEMENT, dated September 17, 1979, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and SINAI YATIRIM VE KREDI BANKASI A.O. (hereinafter called the Borrower), a company established and operating under the laws of the Republic of Turkey. ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set foith herein, subject, however, to the modifications thereof set forth in Schedule 2 to this Agreement (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth, and the following additional terms have the following meanings: (a) "Sub-loan" means a loan or a credit made or proposed to be made by the Borrower out of the proceeds of the Loan to an Investment Enterprise for an investment Project and "free-limit sub-loan" means a sub-loan, as so defined, which qualifies as a free-limit sub-loan pursuant to the provisions of Section 2.02 (b) of this Agreement. (b) "Investment" means an investment other than a sub-loan made or proposed to be made by the Borrower out of the proceeds of the Loan in an Investment Enterprise for an Investment Project. (c) "Investment Enterprise" means an enterprise to which the Borrower proposes to make or has made a sub-loan or in which it proposes to make or has made an investment. (d) "Investment Project" means a specific development project to be carried out by an Investment Enterprise utilizing the proceeds of a sub-loan or investment. -2- (e) "Liras" and "TL" mean the currency of the Guarantor. (f) "Foreign currency" means any currency other than the currency of the Guarantor. (g) "Subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by the Borrower or by any one or more subsidiaries of the Borrower or by the Borrower and one or more of its subsidiaries. (h) "Statutes" means the statutes of the Borrower dated March 16, 1963, as amended to the time of this Agreement. (i) "Export-Oriented Project" means an Investment Project in the private textile sector in Turkey of which it is estimated that, in case of expansions or improvements of Investment Enter- prises' facilities the equivalent of not less than 40%, and in all other cases not less than 30%, of the output of the facilities to be provided or improved under the Investment Project will be exported in each year after the Project is expected to have reached full capacity. (j) "TSKB" means Turkiye Sinai Kalkinma Bankasi A.S., governed by applicable laws of the Guarantor, as amended from time to time. (k) "TSKB Loan Agreement" means the Agreement of even date herewith between TSKB and the Bank. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to fifteen million dollars ($15,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account: (i) for amounts expended by the Borrower for an Investment Project or, if the Bank shall so agree, for amounts to be expended by the Borrower for an Investment Project, to finance the reasonable foreign-currency cost of goods and services required under a sub-loan or investment for the Invest- ment Project in respect of which the withdrawal is requested; -3- provided, however, that no withdrawal shall be made in respect of a sub-loan or investment unless: (A) the sub-loan or invest- ment shall have been approved by the Bank, or (B) the sub-loan shall be a free-limit sub-loan for which the Bank shall have authorized withdrawals from the Loan Account; and (ii) on account of expenditures made (or, if the Bank shall so agree, to be made) to finance the reasonable foreign exchange cost of a training program in exports emphasizing textiles pursuant to Section 3.01 (a) (ii) of this Agreement up to the equivalent of $100,000; provided, however, that no withdrawal shall be made prior to the Bank's approval to such program pursuant to Section 3.08 (a) of this Agreement. (b) A free-limit sub-loan shall be a sub-loan for an Invest- ment Project in an amount to be financed out of the proceeds of the Loan which shall not exceed the sum of $750,000 equiva- lent, when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the Loan for such Investment Project, this amount being subject to change from time to time as determined by the Bank. (c) Except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made on account of expenditures made by an Investment Enterprise in respect of a sub-loan subject to the Bank's approval or authorization, or in respect of an investment, if such expenditures shall have been made before the date of this Agreement or more than ninety days prior to the date on which the Bank shall have received in respect of such sub-loan or investment the application and information required by Section 2.03 (a) of this Agreement or, under a free-limit sub-loan, more than ninety days prior to the date on which the Bank shall have received in respect of such free-limit sub-loan the request and information required by Section 2.03 (b). Section 2.03. (a) When presenting a sub-loan (other than a free-limit sub-loan) or an investment to the Bank for approval, the Borrower shall furnish to the Bank an application, in form satisfactory to the Bank, together with: (i) a description of the Investment Enterprise and an appraisal of the Investment Project, both in the English language, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the proposed terms and conditions of the sub-loan or investment, including the schedule of amortization of the sub-loan or of repayment to the Bank of the amount of the Loan to be used for the investment; (iii) an evaluation of the eligibility -4- of the Investment Project on the basis of the criteria specified in Schedule 3 to this Agreement; (iv) a detailed analysis of the export potential of an Investment Enterprise in case of Export- Oriented Projects; and (v) such other information as the Bank shall reasonably request. (b) Each request by the Borrower for authorization to make withdrawals from the Loan Account in respect of a free-limit sub-loan shall contain: (i) a summary description of the Invest- ment Enterprise and the Investment Project, including a descrip- tion of the expenditures proposed to be financed out of the proceeds of the Loan and an evaluation and, if applicable, an analysis pursuant to paragraphs (a) (iii) and (iv) above, respec- tively; and (ii) the terms and conditions of such free-limit sub-loan, including the schedule of amortization therefor. (c) Except as the Bank and the Borrower shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (a) and (b) of this Section shall be presented to the Bank on or before December 31, 1982. Section 2.04. The Closing Date shall be December 31, 1984, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.05. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%). per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of seven and nine-tenths per cent (7.90%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on May 15 and November 15 in each year. Section 2.08. (a) The Borrower shall repay the principal amount of the Loan withdrawn pursuant to Section 2.02 (a) (i) hereof in accordance with the amortization schedule set forth in Column 1 of Schedule 1 to this Agreement as such Schedule shall be amended from time to time by the Bank to the extent required to: -5- (i) conform in relevant part substantially to the aggregate of the amortization schedules applicable to sub-loans and the schedules of repayment to the Bank in respect of investments, which have been approved or authorized for withdrawals from the Loan Account under Section 2.02 of this Agreement; and (ii) take into account any cancellation pursuant to Article VI of the General Conditions and any repayments made by the Borrower under Section 2.10 of this Agreement; provided that repayments due hereunder shall be made on May 15 and November 15 in each year. Such amendments of the said Column 1 of Schedule 1 shall include amendments to the table of premiums on prepayment, if necessary. (b) The amortization schedule applicable to each sub-loan and the schedule of repayment to the Bank in respect of each investment shall provide for an appropriate period of grace, and, unless the Bank and the Borrower shall otherwise agree: (i) shall not extend beyond fifteen years from the date of this Agreement; and (ii) shall provide for approximately equal semi- annual, or more frequent, aggregate payments of principal and interest or approximately equal semiannual, or more frequent, payments of principal. (c) The Borrower shall transmit to the Bank, for its prior approval, any substantial changes proposed to be made by the Borrower in respect of the repayment provisions of any sub- loan. Section 2.09. The Borrower shall repay the principal amount of the Loan withdrawn pursuant to Section 2.02 (ii) hereof in accordance with the amortization schedule set forth in Column 2 of Schedule 1 to this Agreement. Section 2.10. Unless the Bank and the Borrower shall other- wise agree: (a) If a sub-loan or any part thereof shall be repaid to the Borrower in advance of maturity or if a sub-loan or an investment or any part thereof shall be sold, transferred, assigned or otherwise disposed of for value by the Borrower, the Borrower shall promptly notify the Bank and shall repay to the Bank on the next following interest payment date, together with the premiums specified in Column 1 of Schedule 1 to this Agreement or in any amendment thereof under Section 2.08 (a) of this Agree- ment, the amount withdrawn from the Loan Account in respect of such sub-loan or investment or part thereof and not theretofore repaid to the Bank. (b) Any amount so repaid by the Borrower shall be applied by the Bank as follows: (i) in the case of a sub-loan, to the maturity or maturities of the Loan in amounts corresponding to the outstanding amounts of the maturity or maturities of the sub-loan so repaid or disposed of; and (ii) in the case of an investment, pro rata to the maturity or maturities of the Loan reflecting amounts to be repaid on account of such investment. (c) Paragraph (b) of Section 3.05 of the General Conditions shall not apply to any repayment made under paragraph (a) of this Section. ARTICLE III The Project; Management and Operations of the Borrower Section 3.01. (a) The purpose of the Project is to assist the Borrower in financing such productive facilities and resources in the Republic of Turkey as will contribute to the development, modernization, increase in productivity and export capacity of the private textiles sector of the country. The Project consists: (i) in the financing of specific development projects including without limitation a reasonable number of Export-Oriented Pro- jects, through loans to, and investments in, private enterprises in the textile sector of the Republic of Turkey, in furtherance of the ccrporate purposes of the Borrower; and (ii) in the carrying out of a training program in exports emphasizing textiles for the Borrower's staff. (b) The Borrower shall carry out the Project and conduct its operations and affairs in accordance with sound financial standards and practices, with qualified management and personnel, and in accordance with the Statutes and, once approved, the Statement of Policy. Section 3.02. (a) The Borrower undertakes that, unless the Bank shall otherwise agree, any sub-loan or investment will be made on terms whereby the Borrower shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Bank and the Borrower, including, in the case of any sub-loan and to the extent that it shall be appropriate in the case of any investment, the right of the Borrower to: (i) require the Invest- ment Enterprise to carry out and operate the Investment Project -7- with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) require that: (A) the goods and services to be financed out of the proceeds of the Loan shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them, and (B) such goods and services shall be used exclusively in the carrying out of the Investment Project; (iii) examine, by itself or jointly with representatives of the Bank if the Bank shall so request, such goods and site, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) require that: (A) the Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice, and (B) without any limitation upon the foregoing, such insurance shall cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Loan to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) in the case of Export-Oriented Projects, require that the Investment Enterprise shall meet export targets referred to in Section 1.02 (i) of this Agreement, except as the meeting of such targets by exporting at or above cost is not possible or prevented by factors which are beyond the Investment Enterprise's control; (vi) in the case of Projects in the dyeing, printing and finishing sub-sector, require that the Investment Enterprise provide data on its current and projected effluent discharge and, if necessary, prepare and carry out a plan to reduce the effluent discharge to reasonable limits and values; (vii) require Investment Enterprises with existing textile facilities, if possible, to improve the efficiency of their operations to reasonable degree and in accordance with a timetable and obtain, if necessary, technical assistance for this purpose; (viii) obtain such information as the Bank or the Borrower shall reasonably request relating to the foregoing and to the administration, operations and financial condi- tion of the Investment Enterprise; and (ix) suspend or termi- nate the right of the Investment Enterprise to the use of the proceeds of the Loan upon failure by such Investment Enter- prise to perform its obligations under its contract with the Borrower. (b) The Borrower sha.l exercise its rights in relation to aach Investment Project in such manner as to: (i) protect the interests of the Bank and the Borrower; (ii) comply with its obligations under this Agreement; and (iii) achieve the purposes of the Project. Section 3.03. The Borrower shall furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the Investment Enterprises, the Investment Projects, and the sub-loans and investments. Section 3.04. The Borrower shall duly perform all its obligations under the Government Loan Agreement and other agree- ments under which funds have been lent or otherwise put at the disposal of the Borrower by the Guarantor or its agencies or others, for relending, investment or management. The Borrower shall promptly inform the Bank of any action which would have the effect of assigning, amending, abrogating or waiving any material provision of, any such agreement. Section 3.05. If the Borrower establishes or acquires any subsidiary, the Borrower shall cause such subsidiary to observe and perform the obligations of the Borrower hereunder to the extent to which such obligations shall or can be applicable thereto, as though such obligations were binding upon such subsidiary. Section 3.06. Except as the Bank and the Borrower shall otherwise agree, when making loans or investments for projects the value of whose fixed assets shall exceed the equivalent of $750,000, the Borrower shall ensure that such loans or invest- ments shall produce an economic rate of return, which in the opinion of the Bank shall normally be above at least 15%. The economic rate of return shall be calculated in accordance with the "Guidelines for Calculations of Economic Rates of Return of DFC Sub-Projects" dated June 4, 1974, prepared by the Bank's Cental Projects staff. Section 3.07. Except as the Bank may otherwise agree, the Borrower shall use its best efforts to: (a) approve foreign exchange financing for projects, whether or not financed out of the proceeds of this Loan, in 1980 through 1982 of at least: (i) 30% of its total financing in the textile sector for projects meeting the requirements specified in Section 1.02 (i) of this Agreement; (ii) 80% of its financing in the garments/making-up -9- sub-sector for projects meeting the requirements specified in Section 1.02 (i) of this Agreement; and (b) allocate out of the proceeds of this Loan at least the equivalent of the following amounts to the sub-sectors hereinafter specified: (i) $3,000,000 for garments/making-up and knitting; (ii) $1,500,000 for spinning; (iii) $4,000,000 for weaving; (iv) $2,500,000 for dyeing, printing and finishing; and (v) $1,000,000 for accessories. Section 3.08. (a) The Borrower shall carry out the training program with respect to exports emph6sizing textiles specified in Section 3.01 (a) (ii) under terms satisfactory to the Bank, including provision for procuring the services of any experts as necessary for on-the-job training, seminars and ad hoc consultan- cies, and operational travel by the Borrower's staff; and furnish to the Bank for its approval, prior to requesting withdrawals from the Loan Account on account of such program: (i) the detailed description of the program; (ii) any technical assistance agree- ments between the Borrower and organizations experienced in export promotion; and (iii) the curricula vitae and terms of reference and employment of any individual experts to be hired by the Borrower for on-the-job training. (b) The Borrower shall furnish to the Bank such other information, all in English, pertaining to the training program and the study referred to in Section 3.01 (a) (ii), of suci. scope and in such detail, as the Bank shall have reasonably requested. Section 3.09. Except as the Borrower and the Bank shall otherwise agree, the Borrower shall: (a) only commit itself during the years 1980 through 1982 to finance any investment project in the Turkish textile sector out of proceeds other than this Loan if the project meets the export targets and the eligibility criteria specified in Section 1.02 (i) and Schedule 3 of this Agreement, respectively; and (b) appraise any enterprise with existing textile facilities with respect to the efficiency of its operations, require the enterprise, if possible, to improve efficiency to a reasonable degree and in accordance with a timetable and obtain, if neces- sary, technical assistance for that purpose. Section 3.10. The Borrower and TSKB shall conclude a protocol satisfactory to the Borrower, TSKB, the Guarantor and the Bank to - 10 - ensure close cooperation of the Borrower and TSKB in their acti- vities in the Turkish textile sector, and such protocol may be changed or amended only after consulting with the Guarantor and the Bank. Section 3.11. Not later than two years after this Agreement has become effective, the Borrower, TSKB, the Guarantor and the Bank shall review the execution and initial operation of the program in respect of Section 3.01 (a) (iii) of the TSKB Loan Agreement, its cost and the benefits derived from it, agree, if necessary, upon steps to improve said program and financial, institutional and other arrangements for the administration of said program after three years from the effectiveness of this Agreement. Section 3.12. Not later than December 31, 1979, the Borrower shall furnish to the Bank for its approval a copy of a draft Statement of Policy in English and promptly adopt such Statement of Policy after the Bank's approval. ARTICLE IV Financial Covenants Section 4.01. The Borrower shall maintain records adequate to record the progress of the Project and of each Investment Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower. Section 4.02. The Borrower shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank, as soon as available but in any case not later than five months after the end of each such year: (A) certified copies of its financial statements for such year as so audited, and (B) the report of such audit by said auditors in English, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank in English such other information concerning the accounts and financial statements of the Borrower and the audit thereof as' the Bank shall from time to time reason- ably request. - 11 - Section 4.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt, except as otherwise currently reported or disclosed in writing by the Borrower to the Bank. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if any lien shall be created on any assets of the Borrower or any subsidiary as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on the Loan and that in the crea- tion of any such lien express provision will be made to that effect at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower or of any subsi- diary as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such pro- perty; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 4.04. Except as the Bank shall ocherwise agree, the Borrower shall: (i) conduct its operations and affairs in such manner as shall be necessary to maintain, at all times, its debt/equity ratio within the limit referred to in Section 4.06 of this Agreement; and (ii) if such ratio shall, for reasons beyond the Borrower's control, be temporarily exceeded, promptly take all such reasonable action as shall be necessary or advisable to bring such ratio within such limit. Section 4.05. The Borrower shall notify the Bank prior to making any repayment in advance of maturity in respect of bor- rowings from the Guarantor or its agencies for medium and long- rm relending, or from any foreign and local source and shall not make any such repayment which in the judgment of the Bank would materially affect the Borrower's ability to meet its financial obligations. Section 4.06. Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall not incur or permit any subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of the Borrower and all its - 12 - subsidiaries then incurred and outstanding would be greater than seven times the consolidated capital and surplus of the Borrower and all its subsidiaries. For the purposes of -this Section: (a) "debt" means any debt incurred by the Borrower or any subsidiary maturing more than one year after the date on which it is originally incurred; (b) debt shall be deemed to be incurred and outstanding: (i) under a loan contract or agreement (including the Loan Agreement) on the date and to the extent the amount of the loan is drawn down and outstanding pursuant to such loan contract or agreement; and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent that the guaranteed debt is outstanding; (c) whenever in connection with this Section it shall be necessary to value in terms of liras debt payable in foreign currency, such valuation shall be made at the prevailing lawful rate of exchange at which such foreign currency is, at the time of such valuation, obtainable by the Borrower for the purposes of servicing such debt or in the absence of such rate of exchange, at a rate of exchange acceptable to the Bank; (d) "consolidated debt of the Borrower and all its subsid- iaries" means the total amount of debt of the Borrower and its subsidiaries, including any debt owed by the Borrower to its shareholders, but excluding any debt owed by the Borrower to any subsidiary or by any subsidiary to the Borrower or to any other subsidiary; and (e) "consolidated capital and surplus of the Borrower and its subsidiaries" means the aggregate of the unimpaired paid-up capital, surplus and free reserves of the Borrower and its subsidiaries after excluding therefrom such amounts as shall represent equity interests of the Borrower in any subsidiary or of any subsidiary in the Borrower or any other subsidiary. Section 4.07. The Borrower shall take such steps satisfactory to the Bank as shall be necessary to protect itself against risk of loss resulting from charges in the rates of exchange between the currencies (including liras) used in its operations. Section 4.08. The Bank and the Borrower shall from time to time, at the request of either party, exchange views through their - 13 - representatives with regard to the administration, operations and financial condition of the Borrower and its subsidiaries, and the Borrower shall furnish to the Bank all such information as the Bank shall reasonably request concerning the administration, operations and financial condition of the Borrcwer and its sub- sidiaries, and the progress of the Project. Section 4.09. The Borrower shall enable the Bank's repre- sentatives to inspect the records referred to in Section 4.01 of this Agreement and any relevant documents. Section 4.10. Except as the Guarantor, the Bank and the Borrower shall otherwise agree, the Borrower undertakes that it will pay to the Guarantor, until such time as the entire principal amount of the Loan and the interest and other charges thereon shall have been paid, including any premium on prepay- ment, a fee equal to the amount by which any payment of interest on a sub-loan made by the Borrower exceeds, as and when each such payment becomes due, a positive spread of 2-1/2%. Section 4.11. The Borrower shall: (a) increase its paid-in capital by not less than TL300,000,000 not later than January 1, 1980; and (b) retain at least 5% of its annual net income up to a maximum of 2% of its loan and equity portfolio as a reserve to protect itself against losses from bad debts. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified: (a) any part of the principal amount of any loan to the Borrower having an original maturity of one year or more shall, in accordance with its terms, have become due and payable in advance of maturity as provided in the relative contractual instruments, or any security for any such loan shall have become enforceable; (b) a change shall have been made in the Statutes and, once approved, the Statement of Policy without the Bank's consent; (c) a resolution shall have been passed for the dissolution or liquidation of the Borrower; and -14- (d) a subsidiary or any other entity shall have been created or acquired or taken over by the Borrower, if such creation, acquisition or taking over would adversely affect the conduct of the Borrower's business or the Borrower's financial condition or the efficiency of the Borrower's management and personnel or the carrying out of the Project. Section 5.02. For the purposes of Section 7.01 of the General Conditions the fillowing additional events are specified: (a) the event specified in paragraph (a) or paragraph (b) or paragraph (c) of Section 5.01 shall occur; and (b) the event specified in paragraph (d) of Section 5.01 shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Con- ditions, namely, that the TSKB Loan Agreement has been duly executed and delivered on behalf of TSKB and the Bank and all conditions precedent to effectiveness of the TSKB Loan Agreement have been met. Section 6.02. The date of December 17, 1979, is hereby specified for the purposes of Section 12.04 of the General Condi- tions. Section 6.03. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 15 - Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Borrower: Sinai Yatirim ve Kredi Bankasi A.O. Barborus Bulvari 41 Be§ikta§ Istanbul Turkey Cable address: Telex: YATIRIMBANK SYKB .26263 TR Istanbul IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Munir P. Benjenk Regional Vice President Europe, Middle East and North Africa SINAI YATIRIM VE KREDI BANKASI A.O. By /s/ Alaeddin T. YbrUk Authorized Representative - 16 - SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due Column 1 Column 2 (expressed in dollars)* May 15, 1983 24,200 12,500 36,700 November 15, 1983 112,100 12,500 124,600 May 15, 1984 420,600 12,500 433,100 November 15, 1984 591,900 12,500 604,400 May 15, 1985 773,700 12,500 786,200 November 15, 1985 922,700 12,500 935,200 May 15, 1986 960,000 12,500 972,500 November 15, 1986 960,000 12,500 972,500 May 15, 1987 960,000 960,000 November 15, 1987 960,000 960,000 May 15, 1988 960,000 960,000 November 15, 1988 960,000 960,000 May 15, 1989 960,000 960,000 November 15, 1989 960,000 960,000 May 15, 1990 948,000 948,000 November 15, 1990 860,100 860,100 May 15, 1991 727,500 727,500 November 15, 1991 545,700 545,700 May 15, 1992 362,500 362,500 November 15, 1992 215,000 215,000 May 15, 1993 179,200 179,200 November 15, 1993 179,200 179,200 May 15, 1994 179,200 179,200 November 15, 1994 178,400 178,400 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures *in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 17 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions or to Section 2.09 of the Loan Agree- ment: Time of Prepayment Premium Not more than three years 1.60% before maturity More than three years but 3.15% not more than six years before maturity More than six years but 5.80% not more than eleven years before maturity More than eleven years but 6.85% not more than thirteen years before maturity More than thirteen years 7.90% before maturity - 18 - SCHEDULE 2 Modifications of the General Conditions For the purposes of the Loan Agreement, the provisions of the General Conditions are modified as follows: (1) The following subparagraph (d) is added to Section 3.05: "(d) The Bank and the Borrower may from time to time agree upon arrangements for prepayment ot the Loan and the application of such prepayment in addition to, or in substitution for, those set forth in paragraph (b) of Section 3.05." (2) Section 6.03 is deleted and replaced by the following new Section: "Section 6.03. Cancellation by the Bank. If: (a) the right of the Borrower to make withdrawals from the Loan Account shall have been suspended with respect to any amount of the Loan for a continuous period of thirty days, or (b) by the date specified in paragraph (c) of Section 2.03 of the Loan Agreement no applications or requests permitted under paragraph (a) or paragraph (b) of such Section shall have been received by the Bank in respect of any portion of the Loan, or having been so received, shall have been denied, or (c) after the Closing Date an amount of the Loan shall remain unwithdrawn from the Loan Account, or (d) the Bank shall have received notice from the Guarantor pursuant to Section 6.07 with respect to an amount of the Loan, the Bank may by notice to the Borrower terminate the right of the Borrower to submit such applications or requests or to make withdrawals from the Loan Account, as the case may be, with respect to such amount or portion of the Loan. Upon the giving of such notice such amount or portion of the Loan shall be cancelled." - 19 - SCHEDULE 3 Eligibility Criteria for Investment Projects Except as the Borrower and the Bank shall otherwise agree, Investment Projects shall meet the following criteria: I. General New plants shall meet the daily maximum effluent limitations specified in the Annex to this Schedule. II. Individual Sub-Sectors In addition, Investment Projects in the individual sub- sectors shall meet the following criteria: (1) Garments, making-up and knitting Any viable Investment Project shall be eligible with priority to those expected to export any part of their production. (2) Spinning Investment Projects shall meet at least one of the following criteria: (a) the Investment Project, through quality improvement of production or upgrading of product lines, can be expected to enable Investment Enterprises to meet export targets specified in Section 1.02 (i) of this Agreement; (b) facilities to be provided under the Investment Project are required for the production of threads and other key input in garment exports; or (c) the Investment Enterprise substantially modernizes the facilities of an Investment Enterprise pro- ducing woolen or worsted yarns or removes bottle- necks of the Investment Enterprise's manufacturing process. - 20 - (3) Weaving Investment Projects shall meet at least one of the following criteria: (a) Investment Projects shall meet the export targets specified in Section 1.02 (1) of this Agreement; (b) the Investment Project constitutes the forward integration of a spinning mill with underutilized capacity and this is expected to lead to sub- stantial overall improvement of efficiency; (c) the Investment Project substantially modernizes the Investment Enterprise's facilities or removes bottlenecks of its manufacturing process; or (d) facilities to be provided under the Investment Project produce linings of export standard or other key input in garment exports. (4) Dyeing, printing and finishing Investment Projects of existing Investment Enterprises shall not worsen the environmental impact of their opera- tions. In addition, all Investment Projects shall meet at least one of the following criteria: (a) Investment Projects shall meet the export targets specified in Section 1.02 (i) of this Agreement; (b) the Investment Project constitutes the forward integration of a weaving plant with underutilized capacity and this is expected to lead to sub- stantial overall improvement of efficiency; (c) the Investment Project substantially modernizes the Investment Enterprise's facilities or removes bottlenecks of its manufacturing process; (d) commission finishing facilities for knitting are to be provided under the Investment Project to an Investment Enterprise or such facilities are to be provided to an Investment Enterprise located in an area with a finishing shortage; or - 21 - (e) facilities provided under the. Investment Project produce linings of export standard or other key input in export garments. (5) Accessories Any Investment Project under which facilities are to be provided for the production of input into garment manufac- turing and making-up for which local supply or quality is inadequate shall be eligible. - 22 - ANNEX TO SCHEDULE 3 Daily Maximum Efflu 7,itmitations Total Process* BOD5 TSS COD Chromium Phenol Sulfide kg/metri ton final product Wool Scouring** * 10 32 138 -- 0.10 0.20 Wool Finishing 22 35 163 0.14 0.14 0.28 Dry Processing**** 1.4 1.4 2.80 - -- -- Woven Fabric Finishing 6.6 18 60 0.10 0.10 0.20 Knit Fabric Finishing 5.02 22 60 0.10 0.10 0.20 Carpet Mills***** 7.8 11 70 0.04 0.04 0.08 Stock & Yard Dyeing- Finishing 6.8 17 85 0.12 0.12 0.24 * For plants identified as Commission Finishing, multiply effluent limitation by 2. ** Limitations expressed as kg/m ton raw wool. Oil and grease limitation is 7.2 kg/m ton raw wool. Fecal coliform MPN limitations = 400 per 100 ml for all processes. Limitations expressed as kg/m ton primary backed carpet. Note: pH limitation for all effluent is 6 to 9.