Conformed Copy - L3067 - Second Small and Medium Scale Industry Project - Amendment 1

Page 1 July 9, 1990 Mr. Falih Selekler Economic and Commercial Counselor Embassy of the Republic of Turkey 2523 Massachusetts Avenue, N.W. Washington, D.C. 20008 Re: Loan No. 3067 TU (Second Small and Medium Scale Industry Project) Amendments Dear Mr. Selekler: We refer to Mr. Kilic's letter of May 29, 1990 wherein he has requested that a special account be established for each of the financial institutions participating in the above Project. I am pleased to inform you that we agree to his request, and therefore propose to you the following amendments to the Loan Agreement dated June 28, 1989: (1) Paragraph (j) of Section 1.02 is amended to read as follows: "(j) 'SYKB Special Account, TVB Special Account, THB Special Account and EB Special Account' mean the accounts referred to in Section 2.02 (d) of this Agreement, and 'Special Accounts' means the SYKB Special Account, the TVB Special Account, the THB Special Account and the EB Special Account". (2) Paragraph (d) of Section 2.02 is amended to read as follows: (d) The Borrower shall, for the purposes of Part A of the Project, cause to be opened and maintained in dollars special deposit accounts in a commercial bank or banks for SYKB, TVB, THB and EB to be designated, respectively, as the SYKB Special Account, the TVB Special Account, the THB Special Account and the EB Special Account, on terms and conditions satisfactory to the Bank, including appropriate protection against set off, seizure or attachment. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 7 to this Agreement". (3) Schedule 7 to the Loan Agreement is amended to read as set forth in the Attachment to this Letter. Please indicate your agreement to the foregoing amendments by signing and dating the attached copy of this Letter and by returning said copy to us. Sincerely yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT /s/ Michael H. Wiehen Director Country Department I Europe, Middle East and North Africa Regional Office CONFIRMED: by REPUBLIC OF TURKEY on 11/29/90 Attachment SCHEDULE 7 Special Accounts Page 2 1. For the purposes of this Schedule: (a) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Investment Projects under Part A of the Project and to be financed out of the proceeds of the Loan in accordance with the provisions of Section 2.02 (a) of this Agreement, provided, however, that notwithstanding the provisions of paragraph 5 (b) of Schedule 5 to this Agreement, payments for expenditures to be financed out of the proceeds of free-limit Sub-loans may be made out of the Special Accounts before the Bank shall have authorized withdrawals from the Loan Account in respect thereof. Such expenditures, however, shall qualify as eligible expenditures only if the Bank shall subsequently authorize such withdrawals; and (b) the term "Authorized Allocation" means, in respect of each of SYKB, THB, TVB and EB, an amount equivalent to $3,000,000 to be withdrawn from the Loan Account and deposited into each of SYKB Special Account, the THB Special Account, the TVB Special Account and the EB Special Account, all pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Accounts shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that a Special Account has been duly opened, withdrawals of the relevant Authorized Allocation and subsequent withdrawals to replenish such Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, SYKB, THB, TVB or EB, as the case may be, shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of SYKB, THB, TVB or EB, as the case may be, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as SYKB, THB, TVB or EB, as the case may be, shall have requested. (b) (i) For replenishment of the Special Account, SYKB, THB, TVB or EB, as the case may be, shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, SYKB, THB, TVB or EB, as the case may be, shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of SYKB, THB, TVB or EB, as the case may be, withdraw from the Loan Account and deposit into the Special Account such amount as SYKB, THB, TVB or EB, as the case may be, shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account in the respective equivalent amounts as shall have been justified by said documents and other evidence. 4. For each payment made by SYKB, THB, TVB or EB, as the case may be, out of a Special Account, SYKB, THB, TVB or EB, as the case may be, shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. Page 3 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into a Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by SYKB, THB, TVB or EB, as the case may be, directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Loan allocated to the Investment Projects for which SYKB, THB, TVB or EB, as the case may be, is responsible under Part A of the Project, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to such Investment Projects, shall equal the equivalent of twice the amount of the relevant Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to such Investment Projects shall follow such procedures as the Bank shall specify by notice to SYKB, THB, TVB or EB, as the case may be. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in such Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of a Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, SYKB, THB, TVB or EB, as the case may be, shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until SYKB, THB, TVB or EB, as the case may be, has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that any amount outstanding in a Special Account will not be required to cover further payments for eligible expenditures, SYKB, THB, TVB or EB, as the case may be, shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) SYKB, THB, TVB or EB, as the case may be, may upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in any Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.