Yugoslavia - Second Industrial Credit Project : Loan 1277 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1277 YU LOAN AGREEMENT (Second Industrial Credit Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and PRIVREDNA BANKA SARAJEVO STOPANSKA BANKA SKOPJE INVESTICIONA BANKA TITOGRAD KOSOVSKA BANKA PRITINA Dated June 14, 1976 S LOAN AGREE4ENT AGREEMENT, dated June 14, 1976, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, party of the first part (such party of the first part hereinafter called the Bank) and PRIVREDNA BANKA SARAJEVO (hereinafter sometimes called PBS), STOPANSKA BANKA SKOPJE (hereinafter sometimes called SBS), INVESTICIONA BANKA TITOGRAD (hereinafter sometimes called IBT), and KOSOVSKA BANKA V PRISTINA (hereinafter sometimes called KBP), parties of the second part (any of such parties of the second part hereinafter sometimes individually called a Borrower and all such parties of the second part hereinafter sometimes collectively called the Borrowers). -2- 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 Guar- antee Agreements of the Bank 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 3 to this Agreement (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being herein- after called the General Conditions). Section 1.02. Wherever used in the Loan 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) "Individual Portion of the Loan", used with respect to any of the Borrowers, means such portion of the Loan as shall have been allocated or deemed allocated to such Borroweo for the pur- pose of assisting in the financing of the Project, all in accor- dance with the provisions of this Agreement and Schedule 1 to this Agreement. (b) (i) "Bosnia and Herzegovina", (ii) "Montenegro" and (iii) "Macedonia" means the respective Socialist Republic of such name. (c) "Kosovo" means the Socialist Autonomous Province of such name. I -3- (d) "Unit" means the unit to be established jointly by, and in agreement between the Borrowers in accordance with Section 3.01 (b) of this Agreement. (e) "Sub-Unit" means the sub-unit to be established by each of the Borrowers, respectively, in accordance with Section 3.01 (b) of this Agreement. (f) "Sub-loan" means a loan or credit made or proposed to be made by any of the Borrowers 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. (g) "Investment Enterprise" means an industrial enterprise to which a Borrower proposes to make or has made a sub-loan. (h) "Investment Project" means a specific development proj- ect to be carried out by an Investment Enterprise utilizing the proceeds of a sub-loan. (i) "Self-Management Agreement of the Borrowers" means, res- pectively, (i) the Self-Management Agreement of PBS dated March 4, 1974, as may be amended from time to time; (ii) the Self-Management Agreement of SBS dated December 14, 1973, as may be amended from time to time; (iii) ,the Self-Management Agreement of IBT dated April 12, 1974, as may be amended from time to time; and (iv) the Self-Management Agreemeat of KBP dated May 28, 1973, as may be amended from time to time. -4- (j) "Borrowers' Statutes" means, respectively, (i) the Stat- utes of PBS dated March 4, 1974 as may be amended from time to time; (ii) the Statutes of SBS dated December 14, 1973 as may be amended from time to time; (iii) the Statutes of IBT dated April 12, 1974 as may be amended from time to time; and (iv) the Statutes of KBP dated May 28, 1973 as may be amended from time to time. (k) "Statement of Operations and Policies for the Project" means the statement of lending and investment operations and poli- cies for the Project set forth in Part C of Schedule 5 to this Agreement, as such statement may be amended from time to time with the prior approval of the Bank. (1) "Special Account" means the account referred to in para- graph 2 (a) of Schedule 4 to this Agreement. (i) "Social Accounting Service" means the Sluzba Drustvenog Knjigovodstva referred to in Article 77 and in paragraph (5) of Article 281 of the Constitution of the Guarantor. (n) "Prior Loan Agreement" means Loan Agreement number 1012-YU between the Bank and SBS, Subsidiary Loan Agreement entered into by SBS and KBP in accordance with Loan number 1012-YU, Loan Agree- ment number 1013-YU between the Bank and PBS and Subsidiary Loan Agreement entered into by PBS and IBT in accordance with Loan number 1013-YU and "Prior Loan" means any loan provided for therein. -5- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrowers, on the terms and conditions in the Loan Agreement set forth or re- ferred to, an amount in various currencies equivalent to fifty million dollars ($50,000,000). Section 2.02. (a) The amount of the Individual Portions of the Loan allocated to each Borrower in accordance with Schedule 1 to this Agreement may be withdrawn from the Loan Account for amounts expended (or, if the Bank shall so agree, for expenditures required to be made) by each such Borrower for an Investment Project, to finance the reasonable foreign-currency cost of goods and services required under a sub-loan for the Investment Project in respect of which the withdrawal is requested; provided, however, that no with- drawal shall be made in respect of a sub-loan unless (i) the sub- loan shall have been approved by the Bank, or (ii) the sub-loan shall be a free-limit sub-loan for which the Bank shall have au- thorized withdrawals from the Loan Account. (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: (i) $500,000 equiva- lent, when added to any other outstanding amounts financed or pro- posed to be financed out of the proceeds of the Loan or of any Prior Loan for any other project directly and materially related to such Investment Project, or (ii) either (1) in the case of a sub-loan by PBS $6,400,000 equivalent, respectively, when added -6- to all other free-limit sub-loans financed or proposed to be fi- nanced by PBS, respectively, out of the proceeds of the Loan, or (2) in the case of a sub-loan by SBS $4,600,000 equivalent, when added to all other free-limit sub-loans financed or proposed to be financed by SBS out of the proceeds of the Loan, or (3) in the case of a sub-loan by IBT $2,400,000 equivalent, when added to all other free-limit sub-loans financed or proposed to be fi- nanced by IBT out of the proceeds of the Loan, or (4) in the case of a sub-loan by KBP $6,600,000 equivalent, when added to all other free-limit sub-loans financed or proposed to be fi- nanced by KBP out of the proceeds of the Loan. (c) The amounts specified in paragraph (b) above are subject to change from time to time as determined by the Bank. (d) Except as the Bank and the Borrowers 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 more than ninety days prior to the date on which the Bank shall have received in respect of such sub-loan 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) to the Bank for approval, a Borrower shall furnish to the Bank an application, in form satisfactory to the Bank, together with a description of the Investment Enterprise, an appraisal of the Investment Project (including the financial plan -7- fcr the Investment Project and a description of the expenditures proposed to be financed out of the proceeds of the Loan), the rec- ommendations of its Sub-Unit, and the proposed terms and conditions of the sub-loan, including the schedule of amortization of the sub- loan, and such other information as the Bank shall reasonably re- quest. (b) Each request by a Borrover for authorization to make withdrawals from the Loan Account in respect of a free-limit sub- loan shall contain a summary description of the Investment Enter- prise and the Investment Project (including the financial plan for the Investment Project and a description of the expenditures pro- posed to be financed out of the proceeds of the Loan), the recom- mendations of its Sub-Unit, and the terms and conditions of such free-limit sub-loan, including the schedule of amortization there- for. (c) Except as the Bank and the Borrowers 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, 1978. Section 2.04. The Closing Date shall be December 31, 1980 or such other date as shall be determined by the Bank. Section 2.05. Subject to the provisions of Section 2.10 of this Agreement, the Borrowers shall pay to the Bank a commitment 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. - 8 - Section 2.06. Subject to the provisions of Section 2.10 of this Agreement, the Borrowers shall pay interest at the rate of eight and one-half per cent (8-1/2%) 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 semi-annually on June 15 and December 15 in each year. Section 2.08. (a) Subject to the provisions of Section 2.10 of this Agreement, the Borrowers shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 2 to this Agreement as such Schedule shall be amended from time to time by the Bank to the extent required to: (i) con- form in relevant part substantially to the aggregate of the amor- tization schedules applicable to sub-loans, which have been approve or authorized for withdrawals from the Loan Account, and (ii) take into account any cancellation pursuant to Article VI of the General Conditions and any repayments made by the Borrowers under Section 2.09 of this Agreement; provided that repayments due hereunder shall be made on June 15 and December 15 in each year. Such amendments of said Schedule 2 shall include amendments to the table of premiums on prepayment, if necessary. (b) The amortization schedule applicable to each sub-loan shall provide for an appropriate period of grace, and, unless the Bank and a Borrower shall otherwise agree, shall (i) not extend beyond fifteen years from the date of approval by the Bank of such sub-loan, or in the case of a free-limit sub-loan, of authorization by the Bank to make withdrawals from the Loan Account in respect -9- thereof, and (ii) provide for approximately equal semi-annual, or more frequent, aggregate payments of principal and interest or ap- proximately equal semi-annual, or more frequent, payments of prin- cipal. (c) The Borrowers shall transmit to the Bank, for its prior approval, any substantial changes proposed to be made by such Bor- rower, in respect of the repayment provisions of any sub-loan. Section 2.09. Unless the Bank and the Borrower concerned shall otherwise agree: (a) If a sub-loan or any part thereof shall be repaid to such Borrower in advance of maturity or if a sub-loan or any part thereof shall be sold, transferred, assigned or otherwise disposed of for value by such Borrower, such Borrower shall promptly notify the Bank and, subject to the provisions of Section 2.10 of this Agreement, shall repay to the Bank on the next following interest payment date, together with the premiums specified in Schedule 2 to this Agreement or in any amendment thereof under Section 2.08 (a) of this Agreement, the amount withdrawn from the Loan Account in respect of such sub-loan or part thereof and not theretofore repaid to the Bank. (b) Subject to the provisions of Section 2.10 of this Agree- ment, any amount so repaid by such Borrower shall be applied by the Bank to the maturity or maturities of the Loan in amounts cor- responding to the outstanding amounts of the maturity or maturities of the sub-loan so repaid or disposed of. - 10 - (c) Paragraph (b) of Section 3.05 of the General Conditions shall not apply to any repayment made under paragraph (a) of this Section. Section 2.10. (a) Of the amounts in the currencies specified in Article IV of the General Conditions to be paid to the Bank by the Borrowers on each payment date pursuant to the foregoing Sec- tions 2.05 through 2.09 of this Agreement, each of the Borrowers shall only be liable for, and shall only pay a share equivalent to: (i) the commitment charge accrued on the principal amount of its Individual Portion of the Loan not withdrawn or cancelled and the additional commitment charge accrued on special commitments entered into by the Bank at the request of such Borrower; (ii) the interest accrued on the principal amount of its Individual Portion of the Loan withdrawn and out- standing; and (iii) a portion of the amount of each maturity of the Loan proportionate to the principal amount of its Individual Portion of the Loan, provided that such portion shall not have been repaid by such Borrower in advance of maturity as provided in paragraph (b) below or Section 2.09 (b) of this Agreement. (b) Each of the Borrowers shall have the right, upon payment of all accrued interest and payment of the premium specified in Schedule 2 to this Agreement, and upon not less than 45 days' no- tice to the Bank, to repay in advance of maturity: - 11 - (i) all of the principal amount of its Individual Por- tion of the Loan at the time withdrawn and outstand- ing; or (ii) all of the principal amount of the Loan to be re- paid by such Borrower on one or more maturity dates in accordance with paragraph (a) above, provided that on the date of such prepayment there shall not be outstanding any portion of the Loan to be repaid by such Borrower and maturing after such maturity dates. (c) It is the policy of the Bank to encourage the repayment prior to maturity of portions of its Loans retained by the Bank in its own account. Accordingly the Bank will sympathetically con- sider, in the light of all circumstances then existing, any request by a Borrower that the Bank waive the payment of any premium pay- able under paragraph (b) of this Section on prepayment of any por- tion of the Loan which the Bank has not sold or agreed to sell. (d) Each of the Borrowers may by notice to the Bank cancel any amount of its Individual Portion of the Loan which such Bor- rower shall not have withdrawn prior to the giving of such notice, except that none of the Borrowers may so cancel any amount of its Individual Portion of the Loan in respect of which the Bank shall have entered into a special commitment pursuant to Section 5.02 of the General Conditions. Section 2.11. Each of the Borrowers shall designate or cause SBS to be designated as its representative for the purposes of - 12 - taking any action required or permitted to be taken under the provisions set forth or referred to in Sections 2.05, 2.06, 2.07, 2.08, 2.09 and 2.10 of this Agreement, and Articles III and IV and Section 6.05 of the General Conditions, and for such purpose, SBS and the Borrowers shall take such actions as are set forth in Schedule 4 to this Agreement. Section 2.12. All obligations of the Borrowers under the Loan Agreement, unless such obligations shall have been expressly under- taken by each of the Borrowers separately, shall be joint and sev- eral and the obligation of any of them to comply with any provision of the Loan Agreement is not subject to any prior notice to, de- mand upon or action against any other of them. No extension of time or forbearance given to any of the Borrowers in respect of the performance of any of its obligations under the Loan Agreement, and no failure of the Bank to give any notice or to make any demand or protest whatsoever to any of the Borrovers, or strictly to as- sert any right or pursue any remedy against any of them in respect of the Loan Agreement, and no failure by any of the Borrowers to comply with any requirement of any law, regulation or order, shall in any way affect or impair any obligation of the other Borrowers under the Loan Agreement. - 13 - ARTICLE III The Project; Management and Operations of the Borrower Section 3.01. (a) The purpose of the Project is to assist the Borrowers in financing the development of productive facilities and resources in Bosnia and Herzegovina, Macedonia, Montenegro and Kosovo. The Project consists in the financing by PBS, SBS, IBT and KBP of specific development projects through loans to industrial enterprises in Bosnia and Herzegovina, Macedonia, Montenegro and Kosovo, respectively. (b) Each of the Borrowers shall carry out the Project with due diligence and efficiency and in accordance with the Statement of Operations an(1, Policies for the Project and, to that end, the Borrowers shall, under arrangements satisfactory to the Bank, main- tain the Unit and the Sub-Units, with the composition and functions set forth in Schedule 5 to this Agreement, and the Sub-Units shall review all proposed Investment Projects and sub-loans therefor and make appropriate recommendations thereon to each of the Borrowers, respectively, prior to the approval by each of the Borrowers of any application or request to the Bank for approval or withdrawals in respect of such sub-loans. Section 3.02. (a) Each of the Borrowers undertakes that, unless the Bank shall otherwise agree, any sub-loan will be made on terms and conditions consistent with the Statement of Operations and Policies for the Project and on additional terms and conditions whereby each of the Borrowers shall obtain, by written contract - 14f with the Investment Enterprise or by other appropriate legal mears, rights adequate to protect the interests of the Bank and each of the Borrowers, including, in the case of any sub-loan, the right of each of the Borrowers to: (i) require the Investment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with appropriate technical, fi- nancial and managerial standards and to maintain adequate records; (ii) require that: (1) 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 avail- ability 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 (2) such goods and services shall be used exclusively in the carrying out of the Investment Project; (iii) inspect, by itself or jointly with representatives of the Bank if the Bank shall so request, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) require that: (1) 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 busi- ness practice, and (2) without any limitation upon the foregoing, such insurance shall cover marine, transit and other,hazards inci- dent to the acquisition, transportation and delivery of goods fi- nanced out of the proceeds of the Loan to the place of use or installation, any indemnity thereunder to be made payable in a cur- rency freely usable by the Investment Enterprise to replace or re- pair such goods; (v) obtain all such information as the Bank or each of the Borrowers shall reasonably request relating to the foregoing - 15 - and to the administration, operations and financial condition of the Investment Enterprise; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Loan upon failure by such Investment Enterprise to perform its obliga- tions under its contract with a Borrower. (b) Each of the Borrowers shall exercise its rights in rela- tion to each Investment Project in such manner as to: (i) protect the interests of the Bank and each of the Borrowers, (ii) comply with its obligations under this Agreement, and (iii) achieve the purposes of the Project. Section 3.03. Each of the Borrowers shall maintain records adequate to record the progress of the Project and of each Invest- ment Project (including the cost thereof, the amount of financing provided by each of the Borrowers, disbursements, repayments, in- terest and other charges on such financing, including the sub-loan therefor) and furnish to the Bank such information concerning such records as the Bank shall from time to time reasonably request. Section 3.04. Each of the Borrowers shall furnish to the Bank all such information as the Bank shall reasonably request concern- ing the expenditure of the proceeds of the Loan, the Project, the Unit and Sub-Units, their procedures, operations and records, the Investment Enterprises, the Investment Projects, and the sub-loans. Section 3.05. Each of the Borrovers shall at all times con- tinue to conduct its operations and affairs, including the Project, in accordance with appropriate financial and investment standards and practices, with qualified and experienced management and staff, - 16 - and in accordance with its Self-Management Agreement and its Statutes. Section 3.06. Each of the Borrowers shall take or cause to be taken all necessary measures to ensure that all complementary financing shall be available to any Investment Enterprise in the region of each of the Borrowers as and when required to enable the Investment Enterprise to carry out its Investment Project in a timely manner. - 17 - ARTICLE IV Financial Covenants Section 4.01. Each of the Borrowers shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. Each of the Borrowers shall: (i) have its ac- counts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited in accordance with appropriate auditing principles con- sistently applied, by the Social Accounting Service or another competent and experienced independent auditing organization ac- ceptable to the Bank; (ii) furnish to the Bank, as soon as avail- able but in any case not later than six 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, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning its accounts and financial statements and the audit thereof as the Bank shall from time to time reason- ably request. Section 4.03. (a) Each of the Borrowers represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) Each of the Borrowers undertakes that, except as the Bank shall otherwise agree: (i) if any lien shall be created on - 18 - any of its assets 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 creation 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 such Borrower as security for any debt, such Borrower shall grant, at no cost to the Bank, an equivalent lien satisfac- tory 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 property; or (B) any lien arising in the ordinary course of bank- ing transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 4.04. A Borrower shall not make any repayment in ad- vance of maturity in respect of any of its outstanding debt which, in the judgment of the Bank, would materially affect the ability of such Borrower to meet its financial obligations. Section 4.05. The Bank and the Borrowers shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, their staff and pro- cedures of the Unit and Sub-Units, the administration, operations and financial condition of each of the Borrowers, and to any other matters relating to the purposes of the Loan. - 19 - Section 4.06. Each of the Borrowers shall furnish to the Bank all such information as the Bank shall from time to time reasonably request concerning its administration, operations and financial condition, the progress of the Project and the general status of the Loan. Section 4.07. Each of the Borrowers shall comply with any reasonable request of the Bank for the Bank's representatives to inspect the records referred to in Section 3.03 or Section 4.01 of this Agreement and any relevant documents. - 20 - 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 any of the Borrowers 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 Self-Management Agreement or in the Statutes of any of the Borrowers which will materially and adversely affect the financial condition or opera- tions of any of the Borrowers or the carrying out of the Project; and (c) the Guarantor or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of any of the Borrowers or for the suspension of the operations of any of the Borrowers. Section 5.02. For the purposes of Section 7.01 of the Gene- ral Conditions the following additional events are specified, namely, that the events specified in paragraph (a), paragraph (b) or paragraph (c) of Section 5.01 of this Agreement shall occur. 0 - 21 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, that, the four Sub-Units and the Unit shall have been established by the Borrowers and their members shall have been appointed by the Borrowers under arrangements satisfactory to the Bank. Section 6.02. The date of October 29, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. - 22 - ARTICLE VII Addresses Section 7.01. 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 Cable address: Telex: INTBAFRAD 440098 (ITT), Washington, D.C. 248423 (RCA) or 64145 (wUI) For the Borrovers: Privredna Banka Sarajevo Djure Djakovica, 71000 Sarajevo Yugoslavia Cable address: Telex: PRIVRED BANK 41-280 Sarajevo YUPBS Yugoslavia Stopanska Banka Skopje Ul. 11 Oktmbri Br. 7 91000 Skopje, Yugoslavia - 23 - Cable address: Telex: STOPANSKA BANKA SKOPJE 51140 Skopje YUSBANK Yugoslavia Investiciona Banka Titograd Bulevar Revolucije 1 81000 Titograd Yugoslavia Cable address: Telex: IBANKA 61-118 Titograd IBANKA Yugoslavia Kosovska Banka Pristina Ul. Goles'ka 3 Pristina Yugoslavia Cable address: Telex: BANKKOS 18-149 Prigtina DAMKKOS Yugoslavia IN WITNESS WHEREOF, the parties 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Willi A. Wapenhans Regional Vice President Europe, Middle East and North Africa PRIVREDNA BANKA SARAJEVO STOPANSKA BANKA SKOPJE INVESTICIONA BANKA TITOGRAD KOSOVSKA BANKA PRISTINA By /s/ Naum Ackovski Authorized Representative -25- SCHEDULE 1 Individual Portions of the Loan The table below sets forth the allocation of the amounts of the Loan to each respective Borrower. Individual Portion of the Loan Borrower (Expressed in Dollar Equivalent) (1) PBS 16,000,000 (2) SBS 11,4oo,ooo (3) IBT 6,ooo,ooo (4) KBP 16,600,000 TOTAL 50,000,000 - 26 - SCHEDULE 2 Amortization Schedule* Payment of Principal Date Payment Due (expressed in dollars)** June 15, 1978 1,245,000 December 15, 1978 1,310,000 June 15, 1979 1,365,000 December 15, 1979 1,420,000 June 15, 1980 1,485,000 December 15, 1980 1,540,000 June 15, 1981 2,415,000 December 15, 1981 2,520,000 June 15, 1982 2,625,000 December 15, 1982 2,740,000 June 15, 1983 2,855,000 December 15, 1983 2,980,000 June 15, 1984 2,555,000 December 15, 1984 2,675,000 June 15, 1985 2,785,000 December 15, 1985 2,900,000 June 15, 1986 3,030,000 December 15, 1986 3,155,000 June 15, 1987 3,285,000 December 15, 1987 3,140,000 June 15, 1988 250,000 December 15, 1988 260,000 June 15, 1989 270,000 December 15, 1989 285,000 June 15, 1990 295,000 December 15, 1990 315,000 * The Amortization Schedule is subject to amendment pursuant to the provisions of Section 2.08 of the Loan Agreement. ** 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 equivalents determined as for purposes of withdrawal. -27 - 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(a) of the Loan Agreement: Time of Prepayment Premium Not more than three years before maturity 1-1/2% More than three years but not more than six years before maturity 2-3/4% More than six years but not more than eleven years before maturity 5-3/4% More than eleven years but not more than thirteen years before maturity 7% More than thirteen years before maturity 8-1/2% - 28- SCHEDULE 3 Modifications of the General Conditions For the purposes of the Loan Agreement, the provisions of the General Conditions are modified as follows: (1) Paragraph 4 of Section 2.01 is amended to read as follows: "4. The term 'Loan' means the loan provided for in the Loan Agreement and the term 'Individual Portion of the Loan' means the portion of the Loan allocated to a particular Borrower in accordance with the Loan Agreement." (2) Paragraph 6 of Section 2.01 is amended to read as follows: "6. The term 'Borrower' means all the parties to the Loan Agreement to which the Loan is made, except that in Section 5.02, Section 5.03, Section 5.07, paragraphs (a), (b), (c), (d), (e), (h) and (i) of Section 6.02, Section 6.03 (as replaced hereunder in paragraph (6) of this Schedule), paragraphs (c), (e), (f) and (g) of Section 7.01 and Section 10.02, such term means one or more such parties." (3) The following subparagraph Cd) is added to Section 3.05: "(d) The Bank and the Borrower may from time to time agree upon arrangements for prepayment of the Loan and the application of such prepayment in addition to, or in substi- tution for, those set forth in paragraph (b) of Section 3.05." - 29 - (4) The words "Investment Projects" are substituted for the words "the Project"' at the end of Section 5.03. (5) Section 6.01 is deleted. (6) 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 Borrover 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 Borrover 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." - 30 - SCHEDULE 4 Actions to be taken by each of the Borrowers and by SBS in accordance with the provisions set forth or referred to in Sec- tion 2.11 of the Loan Agreement: 1. (a) Upon any Borrower's respective written request SBS shall promptly take the following action with respect to such Borrower's Individual Portion of the Loan: (i) give the Bank notice of any repayment in advance of maturity in accordance with the provisions of paragraph (a) of Section 2.09 and paragraph (b) of Section 2.10 of the Loan Agreement; (ii) request the Bank to purchase any currency needed by such Borrower for payment of principal, interest and other charges, as provided by Section 4.05 of the General Conditions; (iii) give the Bank any notice of cancellation in accor- dance with the provisions of paragraph (d) of Sec- tion 2.10 of the Loan Agreement; and (iv) in general, take any action required or permitted to be taken by such Borrower in accordance with the provisions of the General Conditions and the Loan Agreement referred to in Section 2.11 of the Loan Agreement. - 31 - (b) Any request submitted to SBS in accordance with the provisions of paragraph (a) above shall be in such form, and in- clude such supporting documentation as SBS shall determine in accordance with the provisions of the Loan Agreement. 2. All payments to be made to the Bank by any of the Borrowers shall be made through SBS, and for such purpose: (a) SBS shall open an account with a Yugoslav bank to be used exclusively for making such payments (hereinafter called the Special Account), the necessary details about such Special Account to be communicated to all Borrowers; (b) each of the Borrowers shall make any such payment into the Special Account in such currency or currencies, and not later than five working days before such date, as such payments have to be made to the Bank in accordance with the provisions of the Loan Agreement; (c) not later than 15 working days before any payment is to be made into the Special Account in accordance with the pro- visions of paragraph (b) above, SBS shall advise the respective Borrowers of the currency or currencies of payment and of the payment due date; and (d) using the fuads paid by such Borrower into the Special Account, SBS shall promptly make to the Bank the payments to be made by such Borrower. - 32 - 3. SBS shall assign qualified and experienced staff in suffi- cient numbers for the carrying out of the actions to be carried out by it on behalf of the Borrowers in accordance with this Schedule 4. - 33 - SCHEDULE 5 The Unit and Sub-Units; Statement of Operations and Policies for the Project A. Composition 1. The Unit shall consist of four Sub-Units, one each from PBS, SBS, IBT and KBP. Each Sub-Unit shall consist of three members respectively appointed by each of the Borrowers within its staff and acceptable to the Bank, one of these members being designated by each of the Borrowers as head of the Sub-Unit. The four heads of the Sub-Units shall select one of them to serve as Chairman of the Unit for a minimum period of six months. 2. The Unit and Sub-Units shall meet as and when necessary. 3. The Borrowers shall provide the required supporting staff for the Unit and their respective Sub-Unit. B. Functions 4. The Unit: (a) shall, on a uniform basis for all the Borrowers, coor- dinate the preparation of appropriate reports concerning informa- tion referred to in Section 3.04 and Section 4.06 of this Agreement, and forward to the Bank such reports, in such detail as the Bank shall request, and all such other information as the Bank shall from time to time reasonably request; -314 - (b) shall, in consultation with the Bank, propose to the Borrowers through the Sub-Units appropriate time schedules and pro- cedures for supervision and evaluation of Investment Projects and shall assist the Borrowers through the Sub-Units in carrying out such supervision and evaluation; and (c) shall maintain on behalf of the Borrowers close relations with the Bank and assist the Bank's representatives in any inspec- tion of Investment Projects and in exchange of views with the Borrowers on matters relating to the Loan and the Project. 5. The Sub-Unit of each Borrower: (a) shall review each proposed Investment Project and re- lated application or request for a sub-loan on the basis of a detailed appraisal of the Investment Project prepared by such Bor- rover, in accordance with the Statement of Operations and Policies for the Project; (b) shall, after its review, make recommendations to such Borrower on each Investment Project and related sub-loan as to its conformity to the Statement of Operations and Policies for the Project and suggest any modifications required to achieve such con- formity; (c) shall assist such Borrower in establishing and maintaining appropriate records as provided for in Section 3.03 of the Loan Agreement, in such detail as the Bank shall request; - 35 - (d) shall provide the Unit with such information concern- ing such Borrower referred to in Section 3.04 and Section 4.06 of the Loan Agreement; and (e) shall, in coordination with the Unit, assist such Bor- rower in carrying out supervision and evaluation of Investment Projects. C. Statement of Operations and Policies for the Project 6. Investment Projects, and sub-loans for Investment Projects, shall conform to the following: (a) Investment Projects will be limited to development projects in manufacturing, processing and small basic industries (excluding agro-industrial projects). (b) Investment Projects will be limited to small-sized and medium-sized projects, normally, not exceeding the equivalent of $6,000,000 in total costs and when appropriately co-financed with other foreign exchange resources not exceeding the equivalent of $10,000,000 in total costs; and sub-loans for each Investment Project will normally not exceed $2,500,000 equivalent. (c) Investment Projects should provide satisfactory finan- cial and economic rates of return, on the basis of detailed and realistic estimates of costs and benefits, in addition to meeting normal criteria of technical feasibility of the Investment Proj- ect, marketability of its production and creditworthiness and managerial competence of the Investment Enterprise. Normally, 36 Investment Projects with an internal financial rate of return of less than 11% will be excluded. If the economic rate of return is calculated to be less than 11%, a particular justification will be required. (d) The Investment Enterprise shall have a satisfactory fi- nancial structure. Normally, its long-term debt-to-equity ratio shall not exceed three to one unless, if higher, the appraisal of the Investment Project should indicate that such ratio shall be reduced below the above limit within a reasonable period of time. (e) Sub-loans for Investment Projects will be made for a term consistent wi-h the requirements of thn Loan Agreement and related to the useful life of the assets financed by the sub- loan, or for a shorter term if consistent with the debt servic- ing capacity of the Investment Enterprise, will be repayable in the same currenznies as the corresponding principal amount of the Loan used for the purpose and will carry interest, payable in the same currencies as the principal, at an annual rate of not less than 11% of the principal amount outstanding. For the pur- pose of Section 2.08 (b), a period of grace of up to six years for Investment Projects appropriately co-financed with other for- eign exchange resources and up to three years for other Invest- ment Projects may be deemed appropriate. (f) Each Investment Project will be subject to close super- vision by the appropriate Borrower in accordance with the proce- dures proposed by the Unit.