Tunisia - Industrial Finance Project Pilot SSE Scheme : Loan 1505 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1505 TUN Loan Agreement (Industrial Finance Project - Pilot SSE Scheme) between REPUBLIC OF TUNISIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated January 25, 1978 LOAN NUMBER 1505 TUN LOAN AGREEMENT AGREEMENT, dated January 25, 1978, between REPUBLIC OF TUNISIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Section 3.01 (a) of this Agreement under the FOPRODI Scheme, as set forth in Schedule 2 to this Agreement; and (B) by a loan agreement of even date herewith (hereinafter called the BDET Loan Agreement) between the Bank and Banque de Developpement Economique de Tunisie (BDET), the Bank has granted to BDET a loan, a portion of which (hereinafter called Portion B of BDET Loan) is to assist in the financing of the expansion of established small-scale industrial enterprises in Tunisia (in order to complement the activities of the FOPRODI Scheme); and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: 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 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 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 and in the Preamble to this Agreement have the respective meanings therein set forth, and the following addi- tional terms have the following meanings: - 2 - (a) "SSE" means a small-scale industrial enterprise estab- lished after the date of this Agreement to which 4ny of the Participating Banks on behalf of the Borrower proposes to make a SSE sub-loan. (b) "SSE sub-loan" means a loan made or proposed to be made by any of the Participating Banks on behalf of the Borrower through the FOPRODI Scheme out of the proceeds of the Loan to a SSE for a SSE Investment Project. (c) "SSE Project" means a specific development project in the small-scale industry sector to be carried out by a SSE util- izing the proceeds of a SSE sub-loan. (d) "Dinars" and "D" mean the currency of Tunisia. (e) "Foreign currency" means any currency other than the currency of Tunisia. (f) "FOPRODI" means the Fonds e Promotion et de D6centrali- sation Industrielle, a fund financed out of the Borrower's budget established and operated under the Borrower's Law No. 73-82 dated December 31, 1973 and Decree No. 74-793 dated August 16, 1974, as amended by Decree No. 77-855 dated October 20, 1977. (g) "FOPRODI Agreement" means the agreement respectively entered or to be entered into between the Borrower's Ministre des Finances and the Participating Banks, for the management of FOPRODI, and to be amended pursuant to Section 3.01 (b) (ii) of this Agreement. (h) "Participating Banks" mean th4 following banking insti- tutions established and operating under the laws of the Republic of Tunisia: Soci6tf Tunisienne de Banque (STB), Union Interna- tionale de Banque (UIB), Banque Nationale de Tunisie (BNT), Banque du Sud (BS) and BDET, and any other financial institution which would accede to the FOPRODI Agreement. (i) "FOPRODI Scheme" means the on-lending and administrative rrangements for the Project, set forth in Schedule 2 to this Agreement. -3- (j) "API" means Agence de Promotion des Investissements, a Borrower's agency within the Ministry of National Economy of the Borrower. (k) "Project Account" means the account to be opened by the Borrower with the Central Bank of Tunisia as provided in Section 3.01 (b) (iii) of this Agreement for purpose of making available the proceeds of the Loan to the Participating Banks for SSE sub-loans. ARTICLE II The Loar 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 five million dollars ($5,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Sched- ule 2 to this Agreement (and, if applicable, with the provisions of Section 3.06 of this Agreement), as such Schedule (and said Section) may be amended from time to time, for amounts disbursed under a sub-loan or investment for the reasonable cost of goods and services for a SSE Project for which the Bank shall have authorized withdrawals from the Loan Account; provided, however, that for each SSE Project, withdrawals from the Loan Account shall not exceed fifty per cent (50%) of the estimated total cost of the SSE Project. (b) Except as the Borrower and the Bank shall otherwise agree, no withdrawals shall be made on account of (i) expenditures before the date of this Agreement or (ii) expenditures by an SSE in respect of a sub-loan if such expenditures shall have been made more than ninety days prior to the date on which the Bank shall have received in respect of such sub-loan the request and information required by Section 2.03 (a) of this Agreement. Section 2.03. (a) Each request by BDET on behalf of the Borrower for authorization to make withdrawals from the Loan Account in respect of a SSE sub-loan shall contain the information described in paragraph 4 of Schedule 2 to this Agreement and such other information as the Bank shall reasonably request. -4- (b) Except as the Borrower and the Bank shall otherwise agree, requests made pursuant to the provisions of paragraph (a) of this Section shall be presented to the Bank on or before December 31, 1979. Section 2.04. The Closing Date shall be December 31, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower 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. Section 2.06. The Borrower shall pay interest at the rate of seven and nine-tenths per cent (7.90%) per annum on the prin- cipal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III The Project Section 3.01. (a) The purpose of the Project is to assist the Borrower in the financing of a prograra designed to promote and expand such productive facilities and resources in Tunisia, as will contribute to the development of small-scale enterprises in the country. The Project consists of the financing of specific development projects through loans to private enterprises in Tunisia under the FOPRODI Scheme. (b) The Borrower shall undertake and cause the Participating Banks to carry out the Project with due diligence and effi- ciency, in conformity with appropriate banking, administrative and financial policies and in accordance with the provisions of Schedule 2 to this Agreement, .d to that end, the Borrower shall: - 5 - (i) enter into a FOPRODI Agreement with BDET to include it as a Participating Bank; (ii) amend the FOPRODI Agreements with each of the Participating Banks, respectively, in order that these agreements conform with the provisions of Schedule 2 to this Agreement; and (iii) open an account with Banque Centrale de Tunisie for the purpose of making available the proceeds of the Loan to the Participating Banks for SSE sub- loans. Section 3.02. (a) The Borrower undertakes that, unless the Bank shall otherwise agree, any SSE sub-loan by any of the Participating Banks will be made on financial terms and conditions consistent with the provisions of Schedule 2 to this Agreement and on additional terms whereby the Participating Bank shall obtain, by written contract with the SSE or by other appropriate legal means, rights adequate to protect the interests of the Bank, the Borrower and the Participating Bank, including the right of the Borrower and the Participating Bank to: (i) require the SSE to carry out and operate the SSE Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records and for those purposes, the Borrower and the Participating Bank may require the SSE to use the assistance of API; (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 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 (2) such goods and services shall be used exclusively in the carrying out of the SSE 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 SSE Project, the operation thereof, and any relevant records and documents; (iv) require that: (1) the SSE 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 (2) 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 -6- installation, any indemnity thereunder to be made payable in a currency freely usable by the SSE to replace or repair such goods; (v) obtain all such information as the Bank or the Borrower or any of the Participating Banks shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the SSE and to the benefits to be derived from the SSE Project; and (vi) suspend or terminate the right of the SSE to the use of the proceeds of the Loan upon failure by such SSE to perform its obligations under its contract with the Parti- cipating Bank. (b) The Borrower shall exercise its rights, directly or through the Participating Bank, in relation to each SSE Project in such manner as to (i) protect the interests of the Borrower, the Bank and the Participating Banks, (ii) comply with its obligations under this Agreement, and (iii) achieve the purposes of the Project. Section 3.03. The Borrower shall arrange for BDET: (i) to maintain separate records adequate to record the progress of the Project and of each SSE Project (including the cost thereof, the amount of financing provided by the Borrower through FOPRODI and by any of the Participating Banks, disbursements, repayments, interest and other charges on such financing, including the SSE sub-loan therefor); and (ii) to furnish to the Bank semi- annual reports thereon, in such detail as the Bank shall reason- ably request. Section 3.04. (a) The Borrower shall furnish or cause to be furnished to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the SSE Projects, the SSE sub-loans, technical assistance services provided to small-scale enterprises by API and the Borrower's various agencies and, where appropriate, the benefits to be derived from the foregoing. (b) Within six months following the last withdrawal from the Loan Account in respect of the SSE sub-loans or by such later date at the Bank shall request, the Borrower shall prepare and furnish or cause to be prepared and furnished to the Bank a report, of such scope and in such detail as the Bank shall reasonably re- quest, on the execution and initial operations of the SSE Proj- ects, their costs and the benefits derived and to be derived from them, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accom- plishment of the purposes of the loan. - 7 - Section 3.05. The Borrower shall duly perform all its obliga- tions in agreements under which funds, within the framework of a SSE Project, have been lent or put at the disposal of the Partici- pating Banks by the Borrower for relending, investment or manage- ment. The Borrower shall promptly inform the Bank of any action which would have the effect Lf assigning, or of amending, abro- gating or waiving any material provision of, any such agreement. Section 3.06. Unless the Borrower and the Bank shall other- wise agree: (a) The Borrower shall make necessary arrangements for the financing on or before July 1, 1978 of the local and foreign currency costs of the scheme for the provision of techrical assistance services to SSEs to be carried out by API in accordance with the plan of action and the timetable relating therefor which have been presented to the Bank and are outlined in paragraph 13 of Schedule 2 to this Agreement; provided, however, that, should the foreign currency financing of said scheme not be obtained in full or in part by July 1, 1978, (i) an amount equivalent to three hundred thousand dollars ($300,000) from the Loan proceeds is allocated to the foreign currency cost of said scheme; (ii) withdrawals of such amount may be made from the Loan proceeds on account of the foreign currency cost of technical assistance services rendered under said program; and (iii) in such case, the Borrower shall employ experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) The Borrower shall take all necessary steps to put into effect the plan of action referred in above paragr.ph (a) of this Section and shall review its contents, as often as needed, in consultation with the Bank. (c) For the purposes of paragraph () (i) of this Section, "allocated", in relation to proceeds of the Loan, means that the proceeds so allocated may be withdrawn only for the purposes for which they are allocated unless the Borrower and the Bank shall otherwiqe agree. ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, specific security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agi.ee, ipso facto, and at no cost to Ihe Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or adminis- trative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Scction, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision., including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall maintain or cause to be maintained procedures and records adequate to monitor and record the progress of the Project and of each SSE Project (including its cost and the benefits to be derived from it). Section 4.03. The Borrower and the Bank shall from time to time, at the request of either party, exchange views and information through their representatives with regard to the -9- administration, operations and financial condition of FOPRODI and the Project Account. Section 4.04. The Borrower shall, directly or indirectly enable the Bank's representatives to iaspect the records referred to in Section 4.02 of this Agreement and any relevant documents. 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) a change shall have been made in the FOPRODI Agreements, as amended pursuant to Section 3.01 (b) (ii) of this Agreement, which would materially and adversely affect the carrying out of the Project; (b) a resolution shall have been passed for the dissolution or liquidation of FOPRODI; (c) a resolution shall have been passed for the dissolution or liquidation of any of the Participating Banks, which would as a consequence materially and adversely affect the carrying out of the Project; (d) an extraordinary situation shall have arisen which shall make it improbable that the Participating Banks will be able to perform their obligations under the FOPRODI Agreements; (e) any of the Participating Banks shall have failed to perform any covenant, agreement or obligation of said Partici- pating Bank under any of the FOPRODI Agreements to which said Participating Bank is a party, and such failure would materially and adversely affect the carrying out of the Project; (f) a default shall occur under the BDET Loan Agreement, other than in respect of the payment of principal, or interest, charges or any other charge required thereunder. Section 5.02. For the purposes of Section 7.01 of the General Conditions the following additional events are specified: (a) the event specified in paragraph (b) of Section 5.01 shall occur; and - 10 - (b) the event specified in paragraph (a) or paragraph (c) or paragraph (d) or paragraph (e) or paragraph (f) 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 events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the FOPRODI Agreement between the Borrower and BDET, respectively, has been duly authorized and ratified by all neces- sary corporate and governmental action; (b) the FOPRODI Agreements between the Borrower and each of the Participating Banks, respectively, have been amended pursuant to Section 3.01 (b) (ii) of this Agreement; (c) the account with Banque Centrale de Tunisie referred to in Section 3.01 (b) (iii) of this Agreement has been opened; and (d) all conditions precedent to the effectiveness of the BDET Loan Agreement have been fulfilled subject only to the effectiveness of this Agreement. Section U.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the FOPRODI Agreements, as amended, have been duly authorized or ratified by the Borrower and each of the Participating Banks, respectively, and are legally binding upon the Borrower and the Participating Banks in accordance with their terms; and (b) that the action described in paragraph (c) of the preceding Section 6.01 has been taken in accordance with the laws of the Borrower. - 11 - Section 6.03. The date April 25, 1978, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministre Dflgguf aupras du Premier Ministre Charg6 du Plan of Tunisia, is designated as representative of Tunisia for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For Tunisia: MinistZre du Plan 1, rue de B6ja Tunis, Tunisia Cable address: Telex: MINISTERE DU PLAN MIPLAN 12117 Tunis TN 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) - 12 - 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. REPUBLIC OF TUNISIA By Is/ Ali Hedda Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Maurice P. Bart Acting Regional Vice President Europe, Middle East and North Africa - 13 - SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 15 and September 15 beginning September 15, 1982 through September 15, 1990 280,000 On March 15, 1991 240,000 * 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. - 14 - 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: Time of Prepayment Premium Not more than three years before maturity 1.80% More than three years but not more than five years before maturity 3.05% More than five years but not more than nine years before maturity 5.45% More than nine years but not more than eleven years before maturity 6.70% More than eleven years before maturity 7.90% oo - 15 - SCHEDULE 2 FOPRODI Scheme The main objective of the Project is to contribute to the strengthening and coordination of activities aiming at the estab- lishment of small-scale enterprises in the industrial sector by providing financial and technical assistance according to the following statement of operations and policies. Establishment of a new FOPRODI credit facility 1. Decree No. 74-793 of August 16, 1974, as amended by Decree No. 77-855 dated October 20, 1977, concerning the organization and the functioning of FOPRODI, has established two concessionary credit facilities to be financed out of the FOPRODI in favor of Tunisian entrepreneurs with the required qualifications but with limited means and willing to assume personally and full-time the responsibility of the project, as follows: (a) a credit facility aimed at the promotion of entrepren- eurship in the form of a loan to a promoter to enable him to acquire a majority ownership in the capital of a small-scale enterprise to be created. Said loan may be extended only in the case of new projects costing up to D500,000, including working capital. Said loan is extended to a promoter pursuant to the following scheme: (i) For projects costing less than D250,000, including working capital, the amount of the loan cannot exceed 70% of equity, the promoter's personal contribution being not less than 10%; and (ii) For projects costing between D250,000 and D500,000, including working capital, the amount of the loan cannot exceed 45% of equity, the promoter's per- sonal contribution being not less than 20%. (b) a credit facility aimed at supporting small-scale enterprise development, in the form of a medium- or long-term loan to a small-scale enterprise. This facility is only for new projects for small-scale enterprises costing up to D75,000, including working capital, or expansion projects for small-scale enterprises costing up to D45,000, excluding working capital, and cannot exceed 70% of total project cost. - 16 - 2. Pursuant to Article 3 of the abovementioned Decree as amended, the administration of the above-described FOPRODI credit facilities has been entrusted to the Participating Banks under procedures detailed in the FOPRODI Agreements. Eligibility criteria 3. In addition to meeting the eligibility criteria for the FOPRODI credit facility under paragraph 1 (a) above, the following criteria shall be used in making SSE sub-loans: (a) the total investment cost of the new SSE Project, including working capital, shall not exceed D200,000 in 1976 prices; (b) except as the Bank shall otherwise agree, the investment cost per job created or maintained shall not exceed D4,600 in 1976 prices; and (c) the promoter has agreed to make use of the available technical assistance deemed necessary by the Participating Bank sponsoring the SSE Project or by API. Operational arrangements 4. Identification, initial screening and appraisal of eligible SSE Projects shall be the responsibility of the Participating Banks with the assistance of API as provided in paragraph 13 of this Schedule. Sub-loan applications shall be prepared in several copies so that the Ministry of Finance (FOPRODI) and API shall be informed at the same time. The Participating Banks shall prepare an appraisal report for each SSE Project under a simplified procedure acceptable to the Borrower and the Bank. Such appraisal report shall specify, inter alia: (a) the name of the SSE, the industrial sub-sector to which the SSE Project belongs, its location, as well as appropriate information concerning the promoter; (b) the number of jobs to be created; (c) the total estimated cost of the SSE Project, including working capital requirements; - 17 - (d) a summary list of goods and services to be procured for the SSE Project including in particular expenditures proposed to be financed out of the proceeds of the Loan; (e) the amount, terms and conditions (including the amorti- zation schedule) of the SSE sub-loan and of the other sources of financing; and (f) the technical assistance needs, if any, of the SSE Project and the most appropriate ways to meet them. 5. The financing plan for a SSE Project shall follow the fol- lowing proportions in percentage of estimated total invest- ment cost, including working capital: (a) equity (part of which may be financed out of the FOPRODI credit facility under paragraph 1 (a) of this Schedule) shall not be less than 30%; (b) the SSE sub-loan shall not exceed 50%; and (c) the remaining balance shall be financed by a term loan extended by the Participating Bank sponsoring the SSE Project out of its own resources. 6. The appraisal report referred to in paragraph 4 of this Schedule shall be sent by the Participating Bank sponsoring the SSE Project to API for its review. Once API has approved the SSE Project and the Participating Bank has specified its intent to participate in the financing of said Project, the appraisal report shall be sent to BDET which shall perform the following functions: (a) verify on behalf of the Bank that the SSE Project complies with the eligibility criteria detLled in paragraph 3 above; (b) forward to the Bank, on behalf of the Borrower, (i) requests for authorization to make withdrawals from the Loan Account in respect of a SSE sub-loan and (ii) disbursement appli- cations from the Loan Account accompanied by a statement certi- fying that BDET has verified, on the basis of documentation sent to it by the Participating Bank, that the expenditures against which withdrawal of Bank funds is sought, have been actually incurred by the SSE; and - 18 - (c) maintain the necessary documentation, particularly as regards disbursements, available for inspection by Bank super- vision missions. 7. Disbursements in respect ef SSE sub-loans for which authori- zation to make withdrawals has been given shall be made by the Participating Banks from the Project Account. Such Account shall be credited, from time to time, with proceeds from the Loan Account, pursuant to withdrawals made by BDET. Conditions of SSE sub-loans 8. SSE sub-loans shall carry interest on the principal outstand- ing from time to time at an annual rate equal to the average interest rate charged by Tunisian commercial banks on medium-term loans to industrial enterprises at the time of sub-loan signing. 9. The amortization schedule for each SSE sub-loan shall provide for an appropriate grace period and shall be set forth such as to take into account the economic life of the investment as well as the projected capacity of the SSE to reimburse the SSE sub-loan. Repayment and risk-sharing arrangements 10. The SSE repayment obligations for the SSE sub-loans shall be toward the Borrower but the responsibility of loan collection shall remain with the Participating Bank sponsoring the SSE Project. Participating Banks shall ensure that SSE sub-loan repayments are made upon maturity and shall immediately thereafter forward such repayments to the Project Account. 11. Losses on both SSE sub-loan, and term loan made by the Participating Bank sponsoring a SSE Project out of its own re- sources shall be shared evenly between the Borrower and the Participating Bank. Remuneration of the Participating Banks 12. The Borrower shall remunerate the Participating Banks for their services in managing the new FOPRODI credit facility fi- nanced out of the Loan proceeds with a commission or commissions providing an incentive to use the funds of the new FOPRODI credit facility and related inter alia to the amounts of the SSE sub- loans which have been disbursed and the amounts recovered each year in respect of the principal and interests of said sub-loans. - 19 - The incentive resulting from this commission or these commissions shall not be less than the one resulting from the arrangements for the remuneration of the Participating Banks under the existing FOPRODI credit facilities. Technical Assistance 13. As provided in Section 3.06 of this Agreement, the Borrower shall put into effect the plan of action, in accordance with the timetable agreed with the Bank, for the establishment of a scheme to provide technical assistance to small-scale enterprises in general, including small-scale enterprises not receiving SSE sub-loans. To the extent possible such scheme shall be decen- tralized. In addition to a central core of experts in small-scale enterprises at API's headquarters in Tunis, it shall make use of API's existing network of regional branches, which is expected to be expanded according to the aforementioned timetable. Ini- tially, API's technical assistance staff shall concentrate on assisting the Participating Banks in identifying SSE projects eligible for Bank-financed sub-loans, and on assisting sponsors in preparing their projects, obtaining the financing, and properly implementing the projects. Later such staff shall also provide follow-up assistance, especially in the areas of financial manage- ment, marketing and improvement of productivity. - 20 - 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) 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 of 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) The words "SSE 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 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 (b) of Section 2.03 of the Loan Agreement requests permitted under paragraph (a) 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, the Bank may by notice to the Borrower terminate the right of the Borrower to submit such 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 can- celled."