Conformed Copy - L3067 - Second Small and Medium Scale Industry Project - Amendment 2

Page 1 September 20, 1991 The Undersecretary of the Treasury and Foreign Trade Basbakanlik Hazine Ve Dis Ticaret Mustesarligi Bakanliklar Ankara, Republic of Turkey Re: Loan No. 3067 TU (Second Small and Medium Scale Industry Project) Amendment of the Loan Agreement Dear Sir: We refer to the Loan Agreement (Second Small and Medium Scale Industry Project) between the Republic of Turkey (the Borrower) and the International Bank for Reconstruction and Development (the Bank), dated June 28, 1989, as amended. We also refer to the Treasury's request contained in a letter from the Deputy Director, World Bank Projects, to the Bank dated May 28, 1991, for approval of a separate Special Account for the purposes of the technical assistance component financed under the Project. We are pleased to inform you that the Bank, after due consideration, has acceded to the above request. Accordingly, the Loan Agreement is hereby amended as follows: 1. In Section 1.02, paragraph (j) is amended to read as follows: "(j) "SYKB Special Account", "THB Special Account", "TVB Special Account", "EB Special Account" and "Technical Assistance Special Account" mean the Special Accounts which SYKB, THB, TVB, EB and the Borrower, respectively, shall open and maintain pursuant to Section 2.02 (d) of this Agreement; "Special Accounts" mean the SYKB Special Account, the THB Special Account, the TVB Special Account, the EB Special Account and the Technical Assistance Special Account collectively, and "Special Account' means each and any such account;" 2. In Section 2.02, paragraph (d) is amended to read as follows: "(d) The Borrower shall, for the purposes of their respective activities under Part A of the Project, cause SYKB, THB, TVB and EB to open and maintain, and for the purposes of Part B of the Project, open and maintain, all in dollars, special deposit accounts in a commercial bank or banks or in the Central Bank of Turkey on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 7 to this Agreement." 3. Schedule 7 to the Loan Agreement is amended as set forth in the Attachment to this letter. All the terms and conditions of the Loan Agreement, as amended hereby, shall remain in full force and effect. Please confirm your agreement with the foregoing amendments by signing and dating the confirmation on the enclosed copy of this letter and returning it to us. Sincerely, Page 2 /s/ Michael H. Wiehen Director, Country Department I Europe, Middle East and North Africa Region CONFIRMED: by REPUBLIC OF TURKEY on 11/06/91 SCHEDULE 7 Special Accounts 1. For the purposes of this Schedule: (a) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan in accordance with the provisions of Section 2.02 (a) and (b) of this Agreement, provided, however, that notwithstanding the provisions of paragraph 5 (b) of Schedule 5 to this Agreement, payments for expenditures to be financed out of the proceeds of free-limit Sub- loans may be made out of the relevant Special Accounts before the Bank shall have authorized withdrawals from the Loan Account in respect thereof. Such expenditures, however, shall qualify as eligible expenditures only if the Bank shall subsequently authorize such withdrawals; and (b) the term "Authorized Allocation" means, in respect of each of SYKB, THB, TVB and EB, an amount equivalent to $3,000,000 to be withdrawn from the Loan Account and deposited into each of the SYKB Special Account, the THB Special Account, the TVB Special Account and the EB Special Account; and in respect of the Borrower, an amount equivalent to $700,000 to be withdrawn from the Loan Account and deposited into the Technical Assistance Special Account, all pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Accounts shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that a Special Account has been duly opened, withdrawals of the relevant Authorized Allocation and subsequent withdrawals to replenish such Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, SYKB, THB, TVB, EB or the Borrower as the case may be, shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the relevant Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of SYKB, THB, TVB, EB or the Borrower, as the case may be, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as SYKB, THB, TVB, EB or the Borrower, as the case may be, shall have requested. (b) (i) For replenishment of the Special Account, SYKB, THB, TVB, EB or the Borrower, as the case may be, shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, SYKB, THB, TVB, EB or the Borrower, as the case may be, shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of SYKB, THB, TVB, EB or the Borrower, as the case may be, withdraw from the Loan Account and deposit into the Special Account such amount as SYKB, THB, TVB, EB or the Borrower, as the case may be, shall have requested and as shall have been shown by said documents and other Page 3 evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account in the respective equivalent amounts as shall have been justified by said documents and other evidence. 4. For each payment made by SYKB, THB, TVB, EB or the Borrower, as the case may be, out of a Special Account, SYKB, THB, TVB, EB or the Borrower, as the case may be, shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into a Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by SYKB, THB,'TVB, EB or the Borrower, as the case may be, directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraphs (a) and (b) of Section 2.02 of this Agreement; or (b) in the case of each of SYKB, THB, TVB and EB, once the total unwithdrawn amount of the Loan allocated to the Investment Projects for which SYKB, THB, TVB or EB, as the case may be, is responsible under Part A of the Project, less the amount of any outstanding special commitment entered into the Bank pursuant to Section 5.02 of the General Conditions with respect to such Investment Projects, shall equal the equivalent of twice the amount of relevant Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to such Investment Projects shall follow such procedures as the Bank shall specify by notice to SYKB, THB, TVB or EB, as the case may be. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the relevant Special Account as of the date of such notice will be utilized in making payments for eligible expenditures; or (c) in the case of the Borrower, once the total unwithdrawn amount of the Loan allocated for Part B of the Project for which TURK EXIMBANK, TSE and SIS are responsible, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to such Part of the Project, shall equal the equivalent of twice the amount of the relevant Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated for Part B of the Project for which TURK EXIMBANK, TSE and SIS are responsible, shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the relevant Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of a Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, SYKB, THB, TVB, EB or the Borrower, as the case may be, shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until SYKB, THB, TVB, EB or the Borrower, as the case may be, has provided such evidence or made such deposit or refund, as the case may be. Page 4 (b) If the Bank shall have determined at an time that any amount outstanding in a Special Account will not be required to cover further payments for eligible expenditures, SYKB, THB, TVB, EB or the Borrower, as the case may be, shall, promptly upon notice from the Bank, refund to the Bank such, outstanding amount. (c) SYKB, THB, TVB, EB or the Borrower, as the case may be, may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in a Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.