Nepal - NIDC Project : Credit 0705 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 705 NEP Development Credit Agreement (NIDC Project) between KINGDOM OF NEPAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated May 27, 1977 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated May 27, 1977, between KINGDOM OF NEPAL (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association.) WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project referred to in Section 3.01 of this Agreement by extending the Credit as hereinafter provided; (B) the Project will be carried out by the Nepal Industrial Development Corporation (hereinafter called NIDC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to NIDC the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and NIDC. NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Schedule 1 to this Agreement (said General Conditions Applicable to Development Credit Agreements of the Association, 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) "NIDC" means Nepal Industrial Development Corporation, a body corporate established by the Act (as hereinafter defined); (b) "Project Agreement" means the agreement between the Association and NIDC of even date herewith, as the same may be amended from time to time; (c) "Subsidiary Loan Agreement" means the Loan Agreement to be entered into between the Borrower and NIDC pursuant to Section 3.02 (a) of this Agreement, as the same may be amended from time to time; - 3 - (d) "Sub-loan" means a loan or credit made or proposed to be made by NIDC out of the proceeds of the Credit relent to NIDC under the Subsidiary Loan Agreement, 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 2.03 (b) of this Agreement; (e) "Investment" means an investment other than a sub-loan made or proposed to be made by NIDC out of the proceeds of the Credit relent to NIDC under the Subsidiary Loan Agreement in an Investment Enterprise for an Investment Project; (f) "Investment Enterprise" means an enterprise to which NIDC proposes to make or has made a sub-loan or in which it proposes to make or has made an investment; (g) "Investment Project" means a specific development project to be carried out by an Investment Enterprise stilizing the proceeds of a sub-loan or investment; (h) "Rupees" means the currency of the Borrower; (i) "Foreign currency" means any currency other than the currency of the Borrower; (j) "Act" means the Nepal Industrial Development Corporation Act 2016 (1959) of the Borrower, as amended by the NIDC (Amendment) Act 2019 (1962) and the NIDC (Amendment) Act 2021 (1964); -4- (k) "Statement of Policy" means the Statement of Investment and Operational Policies approved by the Board of Directors of NIDC on April 7, 1977; and (1) "Subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by NIDC or by any one or more subsidiaries of NIDC or by NIDC and one or more of its subsidiaries. - 5 - ARTICLE 11 The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to four million dollars ($4,000,000). Section 2.02. The Borrower designates NIDC as its representative for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.03 of this Agreement and Article V of the General Conditions. Section 2.03. (a) Pursuant to Section 2.02 of this Agreement, the amount of the Credit may be withdrawn from the Credit Account, by NIDC, on behalf of the Borrower, for amounts expended by NIDC for an Investment Project or, if the Association shall so agree, for amounts to be expended by NIDC for an Investment Project, to finance the reasonable foreign-currency cost of goods and services required under a sub-loan or investment for the Investment Project in respect of which the withdrawal is requested; provided, however, that: (i) no withdrawal shall be made in respect of a sub-loan or investment unless (A) the sub-loan or investment shall have been approved by the Association, or (B) the sub-loan shall be a free-limit sub-loan for which the Association shall have authorized withdrawals from the Credit Account; and (ii) except as - 6 - otherwise agreed between the Association and NIDC, the amount to be withdrawn in respect of any one Investment Project shall not exceed the equivalent of $1,000,000. (b) A free-limit sub-loan shall be a sub-loan for an Investment Project in an amount to be financed out of the proceeds of the Credit which shall not exceed the sum of $80,000 equivalent, when added to any other amount or amounts financed or proposed to be financed out of the proceeds of the Credit for such Investment Project, and not repaid, the foregoing amount being subject to change from time to ti.;e as determined by the Association in consultation with the Borrower. (c) Except as the Association and NIDC 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 Association's approval, 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 Association shall have received in respect of such sub-loan or investment the application and information required by Section 2.02 (b) of the Project Agreement or, under a free-limit sub-loan, more than ninety days prior to the date on which the Association shall have received in respect of such free-limit sub-loan the request and information required by Section 2.02 (c) of the Project Agreement. - 7 - Section 2.04. The Closing Date shall be December 31, 1981, or such later d--te as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 15 and September 15 commencing September 15, 1987, and ending March 15, 2027, each installment to and including the installment payable on March 15, 1997, to be one-half of one' per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. -8- ARTICLE III Description of the Project Use of Proceeds of the Credit Section 3.01. The purpL.., of the Credit is to assist NIDC in financing Guch productive facilities and resources in Nepal as will contribute to the economic and social development of the country. The Project consists in the financing of specific development projects through loans to and investments in private enterprises in Nepal, in furtherance of the corporate purposes of NIDC. Section 3.02 (a) The Borrower shall relend the proceeds of the Credit to NIDC uncer a subsidiary loan agreement to be entered into between the Borrower and NIDC under terms and conditions which shall be satisfactory to the Association. (b) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.03. The Borrower shall not take, or permit any of its agencies or instrumentalities to take, any action which would prevent or materially interfere with the performance by NIDC of any of its obligations under the Project Agreement or the - 9 - Subsidiary Loan Agreement, and shall take or cause to be taken all reasonable action which shall be required on its part in order to enable NIDC to perform such obligations. Section 3.04. Except as the Borrower and the Association shall otherwise agree, in connection with NIDC's obligations referred to in Section 3.06 of the Project Agreement, the Borrower shall take all such measures as are necessary to ensure that NIDC suffers no loss on account of fluctuations in the rates of exchange of the currencies used in NIDC's borrowing and lending operations. - 10 - ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditiona the following additional events are specified pursuant to paragraph (h) thereof: (a) NIDC shall have failed to perform any covenant, agreement or obligation of NIDC under the Project Agreement; (b) the Borrower or NIDC shall have failed to perform any of their respective obligations under the Subsidiary Loan Agreement; (c) an extraordinary situation shall have arisen which shall make it improbable that NIDC will be able to perform its obligations under the Project Agreement or that the Borrower or NIDC will be able to perform their respective obligations under the Subsidiary Loan Agreement; (d) any part of the principal amount of any loan to NIDC 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; (e) NIDC shall have been unable to pay its debts as they mature or any action or proceeding shall have been taken by NIDC or by others whereby any of the property of NIDC shall or may be distributed among its creditors; - 11 - (f) a change shall have been made in the Act which will materially ari adversely affect the financial condition or operations of NIDC; (g) a resolution shall have been passed for the dissolution or liquidation of NIDC, or for the suspension of its operations; and (h) a subsidiary or any other entity shall have been created or acquired or taken over by NIDC, if such creation, acquisition or taking over would adversely affect the conduct of NIDC's business or NIDC's financial situation or the efficiency of NIDC's management and personnel or the carrying out of the Project. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any of the events specified in paragraphs (d), (e), (f), (g) or (h) of Section 4.01 shall occur; and (b) any of the events specified in paragraphs (a), (b), (c) or (i) of Section 4.01 shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower. - 12 - ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution of the Project Agreement on behalf of NIDC has been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution of the Subsidiary Loan Agreement on behalf of the Borrower and NIDC, respectively, in form and substance satisfactory to the Association, has been duly authorized or ratified by all necessary corporate and governmental action; and (c) NIDC has appointed the advisors referred to in paragraphs (i) and (ii) of Section 2.10 of the Project Agreement in accordance with the provisions of that Section. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by NIDC, and is legally binding upon NIDC in accordance with its terms; and - 13 - (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and NIDC, respectively, and is legally binding upon the Borrower and NIDC in accordance with its terms. Section 5.03. The date September 27, 1977 is hereby specified for the purposes of Section 12.04 of the General Conditions. - 14 - ARTICLE VI Representative of the Borrower; Addrerses Section 6.01. Subject to the provisions of Section 2.02 of this Agreement the Secretary of the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secretary to His Majesty's Government Ministry of Finance Kathmandu, Nepal Cable address: ARTHA Kathmandu For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (-ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 15 - 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. KINGDOM OF NEPAL By /s/ P.B. Khatri Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Ernest Stern Regional Vice President South Asia - 16 - SCHEDULE Modifications of the General Conditicis For the purposes of the Development Credit Agreement, the provisions of the General Conditions are modified as follows: (1) The following subparagraph is added to Section 2.01: "13. The term 'Project Agreement' has the meaning set forth in paragraph (b) of Section 1.02 of the Development Credit Agreement." (2) The words "Investment Projects" are substituted for the words "the Project" at the end of Section 5.03. (3) Section 6.03 is deleted and replaced by the following new Section: "Section 6.03. Cancellation by the Association. If (a) the right of the Borrower to make withdrawals from the Credit Account shall have been suspended with respect to any amount of the Credit for a continuous period of thirty days, or (b) by the date specified in paragraph (f) of Section 2.02 of the Project Agreement no applications or requests permitted under paragraph (a) or paragraph (b) of such Section shall have been received by the Association in respect of any portion of the Credit, or having been so received, shall have been denied, or (c) after the Closing Date an amount of the Credit shall remain unwithdrawn from the Credit Account, the Association may by notice to the Borrower terminate the right - 17 - of the Borrower or its designated representative to submit such ap-lications or requests or to make withdrawals from the Credit Account, as the case may be, with respect to such amount or portion of the Credit. Upon the giving of such notice such amount or portion of the Credit shall be cancelled." (4) The words "and the Project Agreement" are added after the words "the Development Credit Agreement" in Section 6.06. (5) The words "or the Project Agreement" are added after the words "the Development Credit Agreement" in Section 10.02.