Dahomey - Zou-Borgou Cotton Project : Credit 0307 - Project Agreement - 2 - Conformed

CONFORMED COPY CREDIT NUMBER 307 DA Project Agreement (Zou-Borgou Cotton Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND SOCIETE NATIONALE AGRICOLE POUR LE COTON DATED MAY 24, 1972 CONFORMED COPY CREDIT NUMBER 307 DA Project Agreement (Zou-Borgou Cotton Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND SOCIETE NATIONALE AGRICOLE POUR LE COTON DATED MAY 24, 1972 PROJECT AGREEMENT AGREEMENT, dated May 24, 1972, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and SOCIETE NATIONALE AGRICOLE POUR LE COTON (hereinafter called SONACO). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Dahomey (hereinafter called the Borrower) and the Association (hereinafter referred to as the Development Credit Agreement), the Association has agreed to make available to the Borrower an amount in various currencies equivalent to six million and one hundred thousand dollars ($6,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that SONACO agree to undertake such obligations toward the Association and hereinafter set forth; and WHEREAS SONACO, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. SONACO shall (i) perform all its obligations under this Agreement and the SONACO Contract with due diligence and efficiency and in conformity with sound administrative, financial and agricultural practices and (ii) conduct its operations and affairs under capable and efficient management mutually satisfactory, at all times, to the Association and SONACO. 4 Section 2.02. SONACO shall comply with the agricultural lending procedures set forth in Schedule 3 to the Development Credit Agreement. Section 2.03. SONACO shall, in consultation with PWD, annually propose to the Association, a portion of the feeder roads included in Part D of the project described in Schedule 2 to the Development Credit Agreement to be carried out by the Borrower pursuant to paragraph (d) of Section 3.13 thereof. Section 2.04. SONACO shall have the Agricultural Credit Fund audited in accordance with the principles set forth in Section 4.02 of this Agreement. Section 2.05. SONACO shall open an account with a banking institution satisfactory to the Association. ARTICLE III Management and Operations of SONACO Section 3.01. SONACO shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for insurance against such risks and in such amounts as shall be consistent with sound practice. Section 3.02. SONACO (i) shall at all times employ in the positions of Directeur General, Directeur General Adjoint and Directeur Financier persons with experience and qualifications satisfactory to the Association and (ii) shall employ CFDT, on terms and conditions satisfactory to the Association, to assist it in setting up its accounting system. Section 3.03. Before SONACO shall undertake or execute, for its own account or for the account of any third party or parties, any new major project or development other than the Project, it shall first have satisfied the Association that such action would not interfere with its obligations under this Agreement. For the purpose of this Section, the term "major project or development" means any project or development involving an investment of more than the equivalent of 25 million CFAF or such other amount as shall be agreed from time to time between the Association and SONACO. Section 3.04. SONACO shall not, without the consent of the Association, contract any debt maturing more than one year after the date on which it is incurred. Section 3.05. (a) SONACO shall, except as the Association shall otherwise agree, take all steps necessary to acquire, maintain and renew all rights, powers 5 and franchises which are necessary or useful for the purpose of carrying out its obligations under this Agreement and the SONACO Contract. (b) Except as the Association shall otherwise agree, SONACO shall not create or acquire any subsidiary. (c) SONACO shall not take any action for amending, suspending, abrogating, terminating, waiving or assigning the SONACO Contract without the prior approval of the Association. ARTICLE IV Financial Covenants Section 4.01. SONACO shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition. Section 4.02. SONACO shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four 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 Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of SONACO and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Consultation, Information and Inspection Section 5.01. The Association and SONACO shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and SONACO 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, the administration, operations and financial condition of SONACO and other matters relating to the purpose of the Credit. 6 Section 5.02. The Association and SONACO shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit. Section 5.03. SONACO shall enable the Association's representatives to inspect all offices, properties and equipment of SONACO and any relevant records and documents. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 6.02. (a) This Agreement and all obligations of the Association and of SONACO thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date on which the SONACO Contract shall terminate in accordance with its terms. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify SONACO of this event and, upon the giving of such notice, this Agreement and all obligations of the parties thereunder shall forthwith terminate. Section 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions Section 7.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed 7 to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. For SONACO: Soci6t6 Nationale Agricole pour le Coton B.P. 50 Parakou Dahomey Cable address: SONACO B.P. 50 Parakou-Dahomey Section 7.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of SONACO may be taken or executed by its Directeur GdMral for such other person or persons as SONACO shall designate in writing. Section 7.03. SONACO shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of SONACO, take any action or execute any documents required or permitted to be taken or executed by SONACO pursuant to any of the provisions of this Agreement. 8 Section 7.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ S. Aldewereld Vice President SOCIETE NATIONALE AGRICOLE POUR LE COTON By /s/ Saturnin Soglo Authorized Representative