Jordan - Industrial Development Bank Project : Credit 0646 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 646 Jo DEVELOPMENT CREDIT AGREEMENT (Industrial Development Bank Project) between THE HASHEMITE KINGDOM OF JORDAN and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated July 19, 1976 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 19, 1976, between THE HASHEMITE KING- DOM OF JORDAN (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 described in the Schedule to this Agreement by extending the Credit as hereinafter provided; (B) Part C of the Project will be carried out by the Borrower and the Industrial Development Bank of Jordan (hereinafter called IDB); (C) Parts A and B of the Project will be carried out by IDB with the Borrower's assistance and, as part of such assistance, the Borrower will make available to IDB the parts of the proceeds of the Credit as hereinafter provided; and (D) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a Proj- ect Agreement of even date herewith between the Association and IDB; 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 following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the Gen- eral Conditions): (a) the following subparagraph is added to Section 2.01: "13. The term 'Project Agreement' has the meaning set forth in paragraph (c) of Section 1.02 of the Development Credit Agreement." (b) 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) (i) with respect to Part C of the Project, at any time the Association determines, after consultation with the Borrower, that an amount of the Credit will not be required to finance -3- the Project's costs to be financed out of the proceeds of the Credit, and (ii) with respect to Parts A and B of the Project, by the date specified in Section 2.03 (e) and Section 2.05 (c) of the Project Agreement no applications for approval or re- quests for authorization to withdraw from the Credit Account in respect of any portion of the Credit shall have been re- ceived by the Association, 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 to request such approvals and authorization 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." (c) the words "and the Project Agreement" are added after the words "the Development Credit Agreement" in Section 6.06; and (d) the words "or the Project Agreement" are added after the words "the Development Credit Agreement" in Section 10.02. Section 1.02. Wherever used in this Agreement, unless the con- text 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) "Law" means the Borrower's Industrial Development Bank Law No. 5 of 1972 as published in the Borrower's Official Gazette dated March 16, 1972 as amended from time to time; -4 (b) "IDB" means the Industrial Development Bank of Jordan as established by the Law; (c) "Project Agreement" means the agreement between the Association and IDB of even date herewith as the same may be amended from time to time; (d) "sub-loan" means a loan made or proposed to be made within the scope of Part A of the Project by IDB out of the pro- ceeds of the Credit 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(c) of this Agreement; (e) "investment" means an investment other than a sub-loan, made or proposed to be made within the scope of Part A of the Project by IDB out of the proceeds of the Credit in an Investment Enterprise for an Investment Project; (f) "Investment Enterprise" means an enterprise to which IDB 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 proj- ect to be carried out by an Investment Enterprise utilizing the proceeds of a sub-loan or an investment; (h) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and IDB pursuant to Section -5- 3.02(a) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (i) "sub-credit" means a credit made or proposed to be made within the scope of Part B of the Project by IDB out of the pro- ceeds of the Credit to a small-scale enterprise in accordance with Section 2.02 (a)(ii) of this Agreement; (j) "small-scale enterprise" means a private industrial or handicraft enterprise employing not more than 5 people and using manual production methods or simple machines or as such term may be amended from time to time and notified to the Association; (k) "Jordanian dinars" and "JD" mean the currency of the Borrower; (1) "foreign currency" means any currency other than the currency of the Borrower; (m) "Statement of Policy" means the statement of lending and investment policy approved by tUe Directors of IDB on October 11, 1965, as amended to the date of this Agreement; (n) "subsidiary", in relation to IDB, means any company of which a majority of the outstanding voting stock is owned or ef- fectively controlled by IDB or by any one or more subsidiaries of IDB or by IDB and one or more of its subsidiaries; -6 (o) "Small Scale Industry and Handicraft Program" means the program designed to promote the development of small-scale private industrial and handicraft enterprises as approved by the Directors of IDB on January 30, 1975 as such may be amended from time to time and notified to the Association; and (p) "Project Completion Report" means the report to be sub- mitted by IDB to the Association attthe time the Credit is sub- stantially disbursed but not later than the Closing Date as de- scribed in Section 2.04 of this Agreement, containing such information related to the Project and the use of the proceeds of the Credit as the Association shall reasonably request. 7 ARTICLE II 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 equiva- lent to four million dollars ($41000,000). Section 2.02. (a) Except as the Association shall otherwise agree, the amount of the Credit may be withdrawn from the Credit Account (i) in respect of Part A of the Project up to the equiva- lent of three million six hundred seventy-five thousand dollars ($3,675,000) for amounts expended by IDB for an Investment Proj- ect or, if the Association shall so agree, for expenditures to be made by IDB for an Investment Project, to finance the rea- sonable foreign exchange cost of goods and .ervices required under a sub-loan or investment for the Investment Project in respect of which the withdrawal is requested; (ii) in respect of Part B of the Project up to the equivalent of three hundred thousand dollars ($300,000) for 20% of such amounts as shall have been disbursed by IDB to finance the reasonable cost of goods required under sub-credits to small-scale enterprises; and (iii) in respect of Part C of the Project up to the equivalent of twenty-five thousand dollars ($25,000) for amounts expended for consultants' services required for said Part C of the Project. (b) Withdrawals from the Credit Account pursuant to para- graph (a) (i) of this Section may be made in respect of such amounts as shall have been expended (or, if the Association -8- shall so agree, shall be required to meet expenditures to be made) in a currency other than the currency of the Borrower for goods procured, or services supplied from, outside the territories of the Borrower, provided, however, that no withdrawal shall be made in respect of a sub-loan or investment unless (i) the sub-loan or investment shall have been approved by the Association, or (ii) the sub-loan shall be a free-limit sub-loan for which the Associa- tion shall have authorized withdrawals from the Credit Account. (c) 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 Credit which shall not exceed the sum of Ci) $150,000 equivalent, when added to any other outstanding amounts financed or proposed to be financed out of the p roceeds of the Credit for such Invest- ment Project or (ii) $1,800,000 equivalent, when added to all other free-limit sub-loans financed or proposed to be financed out of the proceeds of the Credit, the foregoing amounts being subject to change from time to time as determined by the Association. (d) Except as the Association and the Borrower shall other- wise agree, no withdrawals shall be made: (i) in respect of pay- ments made for expenditures prior to this Agreement, (ii) in re- spect of a sub-loan or investment which shall exceed the equivalent of five hundred thousand dollars ($500,000), and (iii) 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 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 2.03(b) of the Project Agree- ment or, under a free-limit sub-loan, more than ninety days prior 9 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 2.03(c) of the Project Agreement. Section 2.03. IDB is designated as representative of the Bor- rower for the purpose of taking any action required or permitted to be taken under the provisions of: (a) Section 2.02 (a)(i) of this Agreement and Article V of the General Conditions with respect to expenditures of IDB under sub-loans or investments under Part A of the Project; and (b) Section 2.02 (a)(ii) of this Agreement and Article V of the General Conditions with respect to expenditures of IDB under sub-credits under Part B of the Project. Section 2.04. The Closing Date shall be June 30, 1981 or such later date as the Association shall establish. The Asso- ciation 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 (311 of 1%) per annum on the principal amount of the Credit withdralm and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 1 - 10 - and December 1 commencing June 1, 1986 and ending December 1, 2025, each installment to and including the installment payable on Decem- ber 1, 1995 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 Gen- eral Conditions. - 11 - ARTICLE III Execution of the Project; Use of the Proceeds of the Credit Section 3.01. The Borrower shall carry out and cause IDB to carry out Part C of the Project, and cause IDB to carry out Parts A and B of the Project, with due diligence and efficiency and in conformity with appropriate administrative, financial, industrial and scientific practices, and shall provide, or cause to be pro- vided, promptly as needed, the funds, facilities, services and other resources required for that purpose. Section 3.02. (a) The Borrower shall relend to IDB, under a Subsidiary Loan Agreement to be entered into between the Borrower and IDB under terms and conditions satisfactory to the Association, the equivalent of such portion of the proceeds of the Credit as shall be disbursed by the Association for Part A of this Project. (b) The Borrower shall exercise its rights under the Sub- sidiary 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, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.03. (a) The Borrower shall make available as a grant to IDB, the equivalent of such portion of the proceeds of the Credit as shall be disbursed by the Association for Part B of the Project, under an agreement satisfactory to the Associa- tion, to be entered into between the Borrower and IDB. - 12 - (b) The Borrower shall exercise its rights under the agree- ment referred to hereinabove in such a 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, nor amend nor waive said agreement nor any provision thereof. Section 3.04. In order to assist the Borrower and IDB in carrying out Part C of the Project, the Borrower shall in con- sultation with IDB employ consultants whose qualifications, ex- perience, and terms and conditions of employment shall be satis- factory to the Association. Section 3.05. Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause IDB to perform in accordance with the provisions of the Project Agreement, the Subsidiary Loan Agreement and the agreement referred to in Section 3.03 of this Agreement, all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable IDB to perform such bligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. - 13 - ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) IDB shall have failed to perform any of its obligations under the Project Agreement; (b) the Borrower or IDB shall have failed to perform any of their respective obligations under the Subsidiary Loan Agreement; (c) any part of the principal amount of any loan to IDB 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; (d) a change shall have been made in the Law or in the State- ment of Policy, which will materially and adversely affect the carrying out of Parts A and B of the Project or the operations or financial condition of IDB; (e) legislation shall have been enacted for the dissolution or liquidation of IDB; (f) a subsidiary or any other entity shall have been created or acquired or taken over by IDB, if such creation, acquisition or -14- taking over would adversely affect the conduct of IDB's business or IDB's financial position or the efficiency of IDB's management and personnel or the carrying out of Parts A and B of the Project; and (g) an extraordinary situation shall have arisen which shall make it improbable that IDB will be able to perform its obligations under the Project Agreement. 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) the events specified in paragraphs (a), (b), (f) or (g) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower and IDB; and (b) the events specified in paragraphs (c), (d) or (e) of Section 4.01 of this Agreement shall occur. - 15 - 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 and delivery of the Project Agreement on behalf of IDB have been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution and delivery of the Subsidiary Loan Agree- ment on behalf of the Borrower and IDB, respectively, have been duly authorized or ratified by all necessary corporate and govern- mental action; and (c) the execution and delivery of the agreement referred to in Section 3.03 of this Agreement on behalf of the Borrower and IDB, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. Section 5.02. The following are snecified as additional mat- ters, within the meaning of Section 12.02(b) of the General Condi- tions, 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, and executed and delivered on behalf of, IDB, and is legally binding upon IDB in accordance with its terms; - 16 - (b) That the Subsidiary Loan Agreement has been duly autho- rized or ratified by, and executed and delivered on behalf of, the Borrower and IDB, and is legally binding upon the Borrower and IDB in accordance with its terms; and (c) that the agreement referred to in Section 3.03 of this Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and IDB, and is legally binding upon the Borrower and IDB in accordance with its terms. Section 5.03. The date October 18, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Articles III and IV of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. - 17 - ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The President of the National Planning Council 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: National Planning Council P.O. Box 555 Anman Hashemite Kingdom of Jordan Cable address: Telex: NPC NPC Aman JO-1319 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 6145 (wUI) - 18 - IN WITNESS WHEREOF, the paries hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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. THE HASHEMITE KINGDOM OF JORDAN By /s/ Abdullah Salah Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Maurice P. Bart Acting Regional Vice President Europe, Middle East and North Africa - 19 - SCHEDULE Description of the Project The purpose of the Credit is to assist the Borrower in finan- cing such industrial development in Jordan as will contribute to the economic and social development of the country. The Project consists of the following Parts: Part A. The financing by IDB of industrial development through loans and investments for productive purposes to private enter- prises in Jordan other than those included in Part B hereunder for specific economic development projects, in furtherance of the corporate purposes of IDB. Part B. The provision of loans by IDB to small-scale private industrial and handicraft enterprises in Jordan under IDB's Small Scale Industry and Handicraft Program. Part C. The carrying out by the Borrower and IDB of a study of the small-scale industry and handicraft sub-sector in Jordan.