Morocco - Cior Cement Project : Loan 1383 - Loan Agreement - Conformed

(7; 7. CONFORMED COPY LOAN NUMBER 1383 MOR LOAN AGREEMENT (CIOR Cement Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and CIMENTERIE DE L'ORIENTAL Dated April 29, 1977 LOAN AGREEMENT AGREEMENT, dated April 29, 1977, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and CIMENTERIE DE L'ORIENTAL (hereinafter called the Borrower), a soci4t4 anonyme organized and existing under the laws of the Kingdom of Morocco (hereinafter called the Guarantor). WHEREAS (A) The Guarantor and the Borrower have requested the Bank to assist in the financing of the foreign exchange cost of the Project, described in Schedule 2 to this Agreement, by making the Loan as hereinafter provided and the Bank has agreed to make such Loan to the Borrower on the basis inter alia of the following; (B) By a governmental guarantee agreement of even date here- with between the Guarantor and the Bank, the Guarantor has agreed to cause Part D of the Project to be carried out by all appropriate entities or administrative services and to guarantee certain obligations of the Borrower and Office pour le Dgveloppement Industriel (hereinafter called ODI), as the case may be, with re- spect to the Loan and to provide either one or both of them with funds and other support for the Project, as fully set forth in such agreement (hereinafter called the Guarantee Agreement); (C) The Guarantor has granted to the Borrower investment incertives for the Project, as set forth in the convention entered into between the same parties on February 28, 1977 (hereinafter called the Investment Convention); and -2- (D) By a shareholder's guarantee agreement of even date here- with between the Bank and ODI, ODI has agreed to guarantee certain obligations of the Borrower with respect to the Loan and provide the same party with funds and other support, as fully set forth in such agreement (hereinafter called the Shareholder's Guarantee Agreement); NOW THEREFORE the parties hereto hereby agree as follows: - 3 - 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 5 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 con- text 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 additional terms have the following meanings: (a) "ODI" means the Office pour le Dveloppement Industriel, an etablissement public organized and existing under the laws of the Guarantor; (b) "outside debt" means the Loan, or any other loan which the Borrower might contract for the purpose of the Project, other than advances or contributions made by the Guarantor or ODI, as the case may be; (c) "subsidiary" means any corporation, a majority of whose outstanding voting stock shall be owned, or which shall be effec- tively controlled, by the Borrower or by one or more subsidiaries -4- of the Borrower or by the Borrower and one or more of its subsid- iaries; (d) "Borrower's Statuts" means the Statuts of the Borrower of June 15, 1976, as the same may be amended from time to time; and (e) "dirham" or "DH" means the currency of the Guarantor. -5- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the tems and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to forty-five mil- lion dollars ($45,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in ccordance with the provisions of Sched- ule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for Parts A and B of the Project and to be financed out of the proceeds of the Loan, and in respect of interest and other charges on the Loan. (b) On each of the semi-annual interest payment dates specified in Section 2.07 of this Agreement, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amounts required to pay, on such date, interest and other charges on the Loan accrued and payable on or before the date set forth, and up to the amount allocated, in Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank. -6- Section 2.03. Except as the Bank shall otherwise agree, con- tracts for the purchase of goods or for civil voi,as required for the Project and to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1980 or such later date as the Bank shall establish. The Bank shall promptly notify the Guarantor, the Borrower and ODI 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 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 May 1 and November 1 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 3 to this Agreement. Section 2.09. The Borrower shall pay in dirhams to the Guarantor a guarantee fee at the rate of 1.5% per annum on the amount of the Loan withdrawn from the Loan Account for expenditures on Parts A and B of the Project and outstanding from time to time. Such fee shall accrue from the respective dates on which amounts shall be so withdrawn. - 8 - ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts A, B and C of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, accounting, engineering and industrial practices. (b) The Borrower shall enter into a transport contract with ONCF, as provided in Section 3.05 of the Guarantee Agreement. For the purposes of this Section, the term "ONCF" shall mean Office National des Chemins de Fer. Section 3.02. (a) In order to assist the Borrower in carrying out the study included in Part B (3) of the Project, the Borrower shall, on or before April 1, 1977 (unless the Bank and the Borrower shall otherwise agree) employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) Not later than July 1, 1977, (unless the Bank and the Borrower shall otherwise agree) the Borrower shall furnish such study to the Bank for its review and comments and, within a period of six weeks thereafter, the Bank shall furnish to the Borrower its final comments thereon. Within a period of six weeks after receipt of the Bank's final comments on said study, the Borrower shall, in agreement with the Guarantor, determine, on the basis of such study and comments, the location and type of distribution facilities to be constructed under Part A (2) of the Project and -9- cause, with the assistance of the Guarantor, such facilities to be designed, constructed and commissioned in accordance with such determination. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan allocated to Parts A and B of the Project against hazards incident to the acquisitlon, trans- portation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan allocated to Parts A and B of the Project to be used exclusively for Part A or Part B of the Project. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, re- ports, contract documents and construction and procurement sched- ules for Parts A and B of the Project, and any material modifica- tions thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to re- cord the progress of Parts A and B the Project (including the cost thereof) and to identify the goods, works and services financed out of the proceeds of the Loan, and to disclose the use thereof in Parts A and B of the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the - 10 - Bank's representatives to visit the facilities and construction sites included in Part A or Part B of the Project and to examine the goods financed out of the proceeds of the Loan allocated to Parts A and B of the Project and any relevant records and docuants; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning Part A or Part B of the Project, the expenditure of said proceeds of the Loan and the goods, works and services financed out of such proceeds. (c) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, prop- erty and equipment of the Borrower and any relevant records and documents. Section 3.05. The Borrower shall take all such action as shall be necessary to acquire as and when needed all such rights in respect of land as shall be required for the construction and operation of the facilities included in Parts A, B and C of the Project and shall furnish to the Bank, promptly after such acquisi- tion, evidence satisfactory to the Bank that such rights in respect of land are available for purposes related to Parts A, B and C of the Project. - 11 - ARTICLE IV Management and Operations of the Borrower Section 4.01. (a) The Borrower shall at all times conduct its operations under the supervision of qualified and experienced management assisted by qualified and experienced personnel in adequate numbers. (b) Without limitation on the foregoing and in order to as- sist the Borrower in the carrying out of Parts A and B of the Project and the operation of the plant included therein the Borrower: (i) shall make adequate and timely arrangements for the recruitment and training of all the Borrower's personnel required for its production, administration and distribution activities; (ii) shall, on or before June 30, 1977 (unless the Bank and the Borrower shall otherwise agree), employ accounting consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, for the purpose of defining and implementing a system of general accounting, cost accounting, cost control, budgeting and financial planning and administrative organization, such system to be operative as and when the Borrower commences its production; and (iii) shall, on or before September 30, 1977 (unless the Bank and the Borrower shall otherwise agree), propose to the Bank for its comments and review technical assistance arrangements adequate to ensure the efficient operation of the plant inch'ded in the Project and shall, promptly after having received tb- Bank's comments thereon, enter into such arrangements with persons or firms acceptable to the Bank, under terms and conditions satisfactory to the Bank. - 12 - Section 4.02. The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against suich risks and in such amounts as shall be consistent with appropriate practice. Section 4.03. (a) The Borrower shall at all times manage its affairs and maintain its financial position in accordance with appropriate industrial and financial practices and, in particular, shall adequately maintain all the equipment and fixed assets relevant or necessary to the carrying out of the Project and the operation of its facilities provided thereunder, and promptly as required make all necessary renewals and repairs thereof. (b) Except as the Bwnk and the Borrower shall otherwise agree, the Borrower shall take all steps necessary to acquire, maintain and renew all licenses, consents or other rights as may be necessary or useful in the conduct of its business. (c) Except as the Bank and the Borrower shall otherwise agree, the Borrower: (i) shall obtain title to all goods financed in whole or in part with the proceeds of the Loan allocated to Parts A and B of the Project free and clear of all encumbrances; and (ii) shall not sell, lease, transfer or otherwise dispose of any of its property and assets except in the ordinary course of business. - 13 - Section 4.04. (a) The Borrower shall not take any action to establish or to acquire any sub idiary if, as the result thereof, the carrying out of the Project or the financial position of the Borrower would be materially and adversely affected. (b) If the Borrower establishes or acquires any subsidiary, the Borrower shall cause such subsidiary to observe and perform the obligations of the Borrower hereunder to the extent to which such obligations shall or can be applicable thereto, as though such obligations were binding upon such subsidiary. Section 4.05. The Borrower shall take all reasonable measures to ensure that Parts A, B and C of the Project are carried out, and that the facilities provided thereunder are operated and maintained with due regard to health, ecological and environmental factors. To that end, the Borrower shall inter alia monitor pollution levels during the operation of said facilities. Section 4.06. The Borrower shall duly perform all its obliga- tions under the Investment Convention. Section 4.07. The Borrower shall cause the facilities pro- vided under Parts C (1) and C (4) of the Project to be at all times operated and maintained in accordance with appropriate financial, administrative, engineering and public utilities prac- tices. - 14. - ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate ac- counting practices its operations and financial condition. Section 5.02. The Borrower shall: (i) have its accounts and financial statements (balance sheets, statements of income and ex- penses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently ap- plied, by independent auditors acceptable to the Bank; (ii) fur- nish to the Bank as soon as available, 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 the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. - 15 - (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on 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 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 the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provi- sions 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 banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 5.04. The Borrower shall furnish to the Bank not later than 45 days after the end of each quarter: (i) quarterly consolidated financial statements of the Borrower (balance sheets, statements of income and expenses and statements of sources and application of funds); and (ii) realistic forecasts on a pro forma basis of its closing balance sheets, statements of income and expenses and statements of sources and application of funds for the current fiscal year and the next following fiscal year, and any revision thereof. - 16 - Section 5.05. (a) Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur any debt if, after the incurring of such debt, the consolidated debt of the Borrower and all its subsidiaries then incurred and outstanding would be greater than 1.5 times the consolidated capital and surplus of the Borrower and all its subsidiaries. (b) The Borrower shall take all action within its powers to ensure that, at all times, its net revenues in any oie fiscal year shall not be less than 1.5 times the amount required to service its debt in each fiscal year. (c) For the purposes of this Section: (i) The term "debt" means any debt incurred by the Borrower or any subsidiary maturing by its terms more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by the Borrower or by a subsidiary. (ii) Wherever reference is made in this Section to the incurring of debt, such reference shall include any modification of the terms of payment of such debt. Debt shall be deemed to be incurred (A) under a loan contract or agreement on the date and to the extent it is drawn down pursuant to such loan contract or agreement and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into. - 17 - (iii) Whenever in connection with this Section it shall be necessary to value in terms of dirhams debt payable in another currency, such valuation shall be made at the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt. (iv) The term "consolidated debt of the Borrower and all its subsidiaries" means the total amount of debt of the Borrower and all its subsidiaries, excluding any debt owed by the Borrower to any subsidiary or by any subsidiary to the Borrower or to any other subsidiary. (v) The term "consolidated capital and surplus of the Borrower and all its subsidiaries" means the aggre- gate of the total unimpaired capital, surplus and free reserves of the Borrower and of all its sub- sidiaries after excluding such items of capital, surplus and free reserves as shall represent equity interests of the Borrower in any subsidiary or of such subsidiary in the Borrower or in any other subsidiary. (vi) The term "net revenues" means gross revenues from all sources less operating and administrative ex- penses including taxes and other levies, if any, but before provision for depreciation and interest and other charges on debt. - 18 - Section 5.06. Except as the Bank shall otherwise agree, the Borrower shall take all action required on its part to request and c7atain promptly as needed such funds as the Guarantor or ODI, as the case may be, has undertaken to provide or cause to be provided under the Guarantee Agreement or the Shareholder's Guarantee Agreement, as the case may be. Section 5.07. The Borrower shall inform the Bank prior to undertaking or executing any new investment, other than an invest- ment included in the Project or the replacement of an existing asset, and shall not, in any fiscal year and until the completion of the Project, undertake or execute for its own account or for the account of any third party or parties any investments whose aggregate estimated cost exceeds $5,000,000 equivalent, unless the Bank and the Borrower otherwise agree. For the purpose of this Section, "project completion" means the completion of a period of 3 months during which: (i) the Borrower's aggregate production and sales under the Project amount to at least 250,000 metric tons of ordinary Portland cement; and (ii) the Borrower has maintained the ratio specified in Section 5.08 (a) of this Agreement. Section 5.08. (a) Except as the Bank shall otherwise agree, the Borrower shall take such steps as shall be necessary to main- tain at all times a ratio of consolidated current assets to con- solidated current liabilities of not less than 1.3 to 1. (b) The Borrower shall not pay any dividend or make any other distribution with respect to its capital shares except out of its accumulated net earnings and unless immediately following - 19 - such payment or distribution the current assets of the Borrower are at least 1.5 -61mes its current liabilities. (c) For the purposes of this Section "current assets" mean cash, securities readily convertible into cash, accounts receiv- able realizable within one year and inventory, and "current liabili- ties" mean liabilities due and payable, and all other liabilities which will be due and payable, or could be called for payment, within one year, including the portion of long-term debt falling due within one year. Section 5.09. Except as the Bank shall otherwise agree: (a) The Borrower shall not repay in advance of maturity any part of its indebtedness other than under its outside debt. (b) If the Borrower shall repay in advance of maturity any part of its outside debt other than the Loan, the Borrower shall simultaneously prepay in the same proportion an amount of the Loan then outstanding, and all the provisions of the General Conditions relating to repayment in advance of maturity shall be applicable to any repayment by the Borrower to the Bank pursuant to this Section. Section 5.10. In the event of liquidation, termination or dissolution or winding up of the Borrower, the principal and other amounts payable on the outside debt of the Borrower shall first be paid before any payment is made on account of the funds provided under Section 2.04 of the Shareholder's Guarantee Agreement or under Section 2.02 of the Guarantee Agreement. - 20 - ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) ODI shall have failed to perform any of its obligations under the Shareholder's Guarantee Agreement; (b) The Borrower's Statuts or any provision thereof shall have been amended, suspended, abrogated, repealed or waived so as to materially and adversely affect the ability of the Borrower to perform any of its obligations under this Agreement; (c) The Statuts of ODI or any provision thereof shall have been amended, suspended, abrogated, repealed or waived so as to materially and adversely affect the ability of ODI to prform any of its obligations under the Shareholder's Guarante;- Agreement; (d) A representation made by ODI in or pursuant to the Shareholder's Guarantee Agreement, or any statement furnished in connection therewith, and intended to be relied upon by the Bank in making the Loan, shall have been incorrect in any material respect; and (e) Any provision of the Investment Convention, or the incidence thereof, shall have been modified or affected, as the case may be, so as to materially and adversely affect the ability - 21 - of the Borrower to perform any of its obligations under this Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the event specified in paragraph (a) of Section 6.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, the Guarantor and ODI; and (b) any of the events specified in paragraphs (b), (c), (d) or (e) of Section 6.01 of this Agreement shall occur. - 22 - ARTICLE VII Effective Date; Termination Section 7.01. 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 execution of the Shareholder's Guarantee Agreement on behalf of ODI has been duly authorized or ratified by all necessary corporate action. Section 7.02. The following are specified as additional mat- ters, within the meaning of Section 12.02(c) of the General Condi- tions, to be included in the opinion or opinions to be furnished to the Bank, namely, that the Shareholder's Guarantee Agreement has been duly authorized or ratified by all necessary corporate action on behalf of ODI and is legally binding on ODI in accord- ance with its terms. Section 7.03. The date July 28, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 23 - ARTICLE VIII Addresses Section 8.01. 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 Borrower: CIMENTERIE DE L'ORIENTAL 10, rue Ghandi Rabat, Morocco Telex: 31 677 - 24 - 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/ Munir P. Benjenk Regional Vice President Europe, Middle East and North Africa CIMENTERIE DE L'ORIENTAL By /s/ Abdelhadi Boutaleb Authorized Representative - 25 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expen- ditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 16,000,000 47% (2) Supply of Mechanical 5,000,000 100% of foreign Equipment for Cement expenditures Plant (3) Erection, Commission- 5,700,000 100% of foreign ing, Spares of and expenditures Training on Mechanical Equipment for Cement Plant (4) Supply and Erection 10,200,000 100% of foreign of Electrical, Pro- expenditures and cess and Auxiliary 100% of local Equipment expenditures with respect to the ex-factory cost of locally manu- factured goods (5) Supply and Erection 2,000,000 100% of foreign of Equipment for expenditures Distribution Facilities - 26 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Consultants' 300,000 100% of foreign Services expenditures (7) Interest and other 2,800,000 Amounts due Charges on the Loan accrued on or before October 31, 1978 (8) Unallocated 3,000,000 TOTAL 45,000,000 - 27 - 2. For the purposes of this Schedule: (a) "foreign expenditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor; and (b) "local expenditures" means expenditures in the currency of the Guarantor and for goods or services supplied from the terri- tories of the Guarantor. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of expenditures made prior to the date of this Agreement except that withdrawals, in an aggre- gate amount not exceeding the equivalent of $5,000,000, may be made on account of payments made for such expenditures before that date but after April 1, 1976. - 28 - 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above. if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Cate- gory, to the extent required to meet the estimated shortfall, pro- ceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other ex- penditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then ap- plicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the pro- curement of any item in any Category is inconsistent with the pro- cedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 29 - SCHEDULE 2 Description of the Project The Project consists of the design, construction and commis- sioning of a cement production plant near Oujda with a production capacity of 1,200,000 tons of cement per year and of distribution facilities required for the distribution of this production throughout Morocco, and includes the following Parts: Part A (1) The design, construction and commissioning of the before-mentioned plant, including the acquisition and installation of raw material, clinker production, clinker handling, processing and storage equipment and facilities; cement production, cement handling, cement storage and shipping equipment and facilities; and construction of on-site infrastructure for the above plant; and (2) design, construction and commissioning of the distribution facilities and ancillary infrastructure required for the distribution of the products of said plant. Part B (1) Training of personnel to operate the above plant; - 30 - (2) setting up an accounting, cost control, budgeting, financial planning system and administrative organization; and (3) a distribution study of the Borrower's production. Part C Design and construction of off-site infrastructure, including: (1) water supply facilities; (2) connection lines between Morocco's national elec- tricity network and such plant; (3) a rail link between Morocco's national railway network and such plant; and (4) housing and social facilities for the Borrower's personnel. Part D (1) Detailed studies of distribution and pricing of cement within the territory of the Guarantor; and 31 - (2) provision by ONCF of railway wagons required for the transport of the portion of the Borrower's produc- tion not marketed within the Oriental Region of Morocco. Thc Project is expected to be completed by December 31, 1979. - 32 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each May 1 and November 1 beginning November 1, 1980 through November 1, 1990 2,045,000 On May 1, 1991 2,055,000 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. - 33 - Premiums on Prepayment The following percentages are specified as the premiums pay- able 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 six years before maturity 3.65% More than six years but not more than ten years before maturity 6.10% More than ten years but not more than twelve years before maturity 7.30% More than twelve years before maturity 8.50% -34 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. The goods and works shall be procured under contracts to be awarded in accordance with procedures consistent with thr)se set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines) including the applicable provisions of the General Introduction thereto, on the basis of international competitive bidding. 2. Bidders for the works included in the Project shall be pre- qualified as described in paragraph 1.3 of Part A of the Guidelines. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other ex- penditures incidental to the delivery of goods to the place of their use or installation shall be included. - 35 - 2. Goods manufactured in Morocco may be granted a margin of pre- ference in accordance with, and subject to, the following provi- sions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- lowed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Morocco if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Morocco equal to at least 20% of the ex- factory bid price of such goods. (2) Grou2 B: all other bids offering goods manu- factured in Morocco. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evalu- ated bid of each group. Such lowest evaluated bids shall then be - 36 - compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. C. Review of Procurement Decisions by Bank 1. Review of prequalification. The Borrower shall, before quali- fication is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifi- cations and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reason- ably request. - 37 - 2. Review of invitation to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $250,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's con- currence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for itr review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reason- ably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such deter- mination. (c) The terms and conditions of the contract shall not, with- out the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. - 38 - (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 3. With respect to each contract to be financed out of the pro- ceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other infor- mation as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 39 - SCHEDULE 5 Modifications of General Conditions For the purpose of this Agreement, the provisions of the Gen- eral Conditions are modified as follows: (1) By adding to Section 2.01 the following new paragraphs: "19. The term Shareholder's Guarantee Agreement means the agreement between the Bank and ODI providing for certain obligations regarding the guarantee of the Loan." "20. The term ODI means Office pour le Dgveloppement Industriel." (2) By adding in Sections 4.07 (a), 6.03, 6.06, 6.07, 8.01 (a), 9.01 (a) and (b), 10.01, 10.02, 10.03, 11.01, 11.02, 11.03, 11.04, 12.03 (a), 12.04 and 12.05 after the words "Guarantor" and "Guarantee Agreement", respectively, the words "and ODI" and "and the Shareholder's Guarantee Agreement," and, wbenever the context shall require, by making in such Sections all such grammatical changes as shall be consequential upon the aforesaid additions. (3) By the deletion of Section 10.04 and the substitution therefor of the following new Section 10.04: - 40 - "Section 10.04. Arbitration. (a) Any controversy between the parties to the Loan Agreement or the parties to the Guar- antee Agreement or the parties to the Shareholder's Guarantee Agreement, and any claim by any such party against any other such party arising under the Loan Agreement or the Guar- antee Agreement or the Shareholder's Guarantee Agreement which shall not be settled by agreement of the parties shall be submitted to arbitrauion by an Arbitral Tribunal as hereinafter provided. (b) The parties to such arbitration shall be the Bank on the one side and the Borrower, the Guarantor and ODI on the other side. (c) The Arbitral Tribunal shall consist of three arbi- trators appointed as follows: one arbitrator shall be ap- pointed by the Bank; a second arbitrator shall be appointed by the Guarantor, the Borrower and ODI or, if they shall not agree, by the Guarantor; and the third arbitrator (hereinafter sometimes called the Umpire) shall be appointed by agreement of the parties or, if they shall not agree, by the President of the International Court of Justice or, failing appointment by him, by the Secretary-General of the United Nations; provided that if the Guarantor, the Borrower and ODI shall not agree on the appointment of a common arbitrator, one arbitrator shall be appointed by the Guarantor only and a second one by the Borrower and ODI and provided further that, if the Borrower and ODI shall not agree on such common arbi- trator, such common arbitrator shall be appointed by the Borrower only. In the event that the Guarantor, the Borrower - 41 - and ODI shall so appoint two separate arbitrators, the Bank, on its part, shall appoint two arbitrators, and the four arbitrators so appointed shall, together with the Umpire appointed as provided above, henceforth constitute the Arbitral Tribunal. If any party or group of parties shall fail to appoint an arbitrator in accordance with the provisions of this Section, such arbitrator shall be appointed by the Umpire. In case any arbitrator appointed in accordance with this Section shall resign, die or become unable to act, a successor arbitrator shall be appointed in the same manner as herein prescribed for the appointment of the original arbitrator and such successor shall have all the powers and duties of such original arbitrator. (d) An arbitration proceeding may be instituted under this Section upon notice by the party instituting such pro- ceeding to the other party. Such notice shall contain a statement setting forth the nature of the controversy or claim to be submitted to arbitration and the nature of the relief sought and the name of the arbitrator appointed by the party instituting such proceeding. Within thirty days after such notice, the other party shall notify to the prty instituting the proceeding the name of the arbitrator appointed by such other party. (e) If within sixty days after the notice instituting the arbitration proceeding the parties shall not have agreed upon an Umpire, any party may request the appointment of an Umpire as provided in paragraph (c) of this Section.. (f) The Arbitral Tribunal shall convene at such time and place as shall be fixed by the Umpire. Thereafter, the Arbitral Tribunal shall determine where and when it shall sit. (g) The Arbitral Tribunal shall decide all questions relating to its competence and shall, subject to the provi- sions of this Section and except as the parties shall other- wise agree, determine its procedure. All decisions of the Arbitral Tribunal shall be by majority vote. (h) The Arbitral Tribunal shall afford to all parties a fair hearing and shall render its award in writing. Such award may be rendered by default. An award signed by a majority of the Arbitral Tribunal shall constitute the award of such Tribunal. A signed counterpart of the award shall be transmitted to each party. Any such award rendered in accordance with the provisions of this Section shall be final and binding upon the parties to the Loan Agreement and the Guarantee Agreements. Each party shall abide by and comply with any such award rendered by the Arbitral Tribunal in accordance with the provisions of this Section. (i) The parties shall fix the amount of the remuner- ation of the arbitrators and such other persons as shall be required for the conduct of the arbitration proceedings. If the parties shall not agree on such amount before the Arbitral Tribunal shall convene, the Arbitral Tribunal shall fix such amount as shall be reasonable under the circumstances. - J43 - The Bank, the Borrower, the Guarantor and ODI shall each defray its own expenses in the arbitration proceedings. The cost of the Arbitral Tribunal shall be divided between and borne equally by the Bank on the one side and the Borrower, the Guarantor and ODI on the other. Any question concerning the division of the costs of the Arbitral Tribunal or the procedure for payment of such costs shall be determined by the Arbitral Tribunal. (J) The provisions for arbitration set forth in this Section shall be in lieu of any other procedure for the settlement of controversies between the parties to the Loan Agreement, the Guarantee Agreement and the Shareholder's Guarantee Agreement or any claim by any such party against any other such party arising thereunder. (k) If within thirty days after counterparts of the award shall be delivered to the parties the award shall not be complied with, any party may enter judgment upon, or institute a proceeding to enforce, the award in any court of competent jurisdiction against any other party, may enforce such judgment by execution or may pursue any other appropriate remedy against such other party for the enforcement of the award and the provisions of the Loan Agreement or the Guarantee Agreement or the Shareholder's Guarantee Agreement. Notwithstanding the foregoing, this Section shall not authorize any entry of judgment or enforcement of the award against any party that is a member of the BLnk except as such procedure may be available otherwise than by reason of the provisions of this Section. - 144 - (1) Service of any notice or process in connection with any proceeding under this Section or in connection with any proceeding to enforce any award rendered pursuant to this Section may be made in the manner provided in Sec- tion 11.01. The parties to the Loan Agreement, the Guarantee Agreement and the Shareholder's Guarantee Agreement waive any and all other requirements for the service of any such notice or process."