Rwanda - Second BRD Project : Credit 0896 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 896 RW Project Agreement (Second BRD Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANQUE RWANDAISE DE DEVELOPPEMENT Dated July 13, 1979 CREDIT NUMBER 896 RW PROJECT AGREEMENT AGREEMENT, dated July 13, 1979, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and BANQUE RWANDAISE DE DEVELOPPEMENT (1-ereinafter called the BRD), established by law of August 5, 1967, as amended by Decree-Law of October 8, 1974, of Republic of Rwanda (hereinafter called the Borrower). WHEREAS by the Development Credit Agreement of even date herewith between the Borrower and the Association, the Association has agreed, inter alia, to lend to the Borrower, for relending to BRD, an amount in various currencies equivalent to five million dollars ($5,000,000), on the terms and conditions sct forth in the Development Credit Agreement, but only on condition that BRD agrees to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS BRD, 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 and the following additional terms have the following meanings: (a) "medium-term Sub-loan" means a Sub-loan maturing not more than five years after the date on which it is originally authorized; and (b) "long-term Sub-loan" means a Sub-loan maturing more than five years after the date on which it is originally authorized. ARTICLE II Execution of Part A of the Project; Management and Operations of BRD Section 2.01. BRD shall carry out Part A of the Project, described in Schedule 1 to the Development Credit Agreement, -2- and conduct its operations and affairs, with due diligence and efficiency and in conformity with appropriate economic, financial and investment standards and practices, with qualified and experienced management and in accordance with the Statutes and Statement of Policy. Section 2.02. (a) BRD undertakes that, unless the Association shall otherwise agree, any Sub-loan will be made on terms which shall provide, inter alia, that interest and other charges to be paid by the Investment Enterprise shall, in the aggregate, be not less than: (i) eight and one-half per cent (8-1/2%) per annum on the outstanding balance of the Sub-loan in the case of medium-term Sub-loans to Small-scale Investment Enterprises; (ii) nine per cent (9%) per annum on the outstanding balance of the Sub-loan in the case of medium- term Sub-loans to other than Small-scale Investment Enterprises; (iii) ten per cent (10%) per annum on the outstanding balance of the Sub-loan in the case of long-term Sub-loans to Small-scale Investment Enterprises; and (iv) eleven per cent (11%) per annum on the outstanding balance of the Sub-loan in the case of long-term Sub-loans to other than Small-scale Investment Enterprises. (b) BRD shall charge each enterprise receiving a loan and each Investment Enterprise receiving a Sub-loan, as and from the date of the signing of the agreement providing therefor, a commitment fee at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the loan or Sub-loan not withdrawn from time to time. Section 2.03. (a) In accordance with and subject to the provisions of the Development Credit Agreement, BRD shall submit Investment Projects to the Association for approval and for autho- rization for withdrawals to be made from t,e Credit Account. (b) (i) When submitting a Sub-loan (other than a free-limit Sub-loan) or an Investment to the Association for approval, -3- BRD shall furnish to the Association an application, in form satisfactory to the Association, together with a description of the Investment Enterprise and of the Investment Project to be financed thereunder (including a description of the expendi- tures for such Investment Project proposed to be financed by BRD and an appraisal of the Investment Project) and the proposed terms and conditions of the Sub-loan or Investment, including the schedule of amortization of the Sub-loan, or of repayment to the Borrower of the amount to be used for the Investment, and such other information as the Association shall reasonably request; and (ii) such appraisals shall include a calculation of the internal financial rate of return and, in cases of import substitution, an evaluation of the economic rate of return, established in accor- dance with guidelines satisfactory to the Association. (c) Each request by BRD for authorization to make with- drawals from the Credit Account in respect of a free-limit Sub- loan shall contain a summary description of the Investment Enterprise and the Investment Project (including a descrip- tion of the expenditures proposed to be financed out of the proceeds of the Credit) and the terms and conditions of such free-limit Sub-loan, including the schedule of amortization therefor. (d) The amortization schedule applicable to each Investment Project shall provide for an appropriate period of grace, and, unless the Association and the Borrower shall otherwise agree: (i) shall not extend (A) in the case of Sub-loans or Investments for tourism Investment Projects, beyond twenty years, and (B) in the case of any other Sub-loan or Investment, beyond fifteen years from the date of approval by the Association of such Investment Project or of authorization by the Association to make withdrawals from the Credit Account in respect of such Investment Project; and (ii) shall provide for approximately equal semi-annual, or more frequent, aggregate payments of principal and interest or approxi- mately equal semiannual, or more frequent, payments of principal. (e) Except as the Association and BRD shall otherwise agree, BRD shall submit applications for approval of Investment Projects pursuant to the provisions of paragragh (b) of this Section and requests for authorizations to withdraw from the Credit Account pursuant to the provisions of paragraph (c) of this Section on or before December 31, 1982. Section 2.04. (a) BRD undertakes that unless the Association shall otherwise agree, any Sub-loan or Investment will be made on terms whereby BRD shall obtain, by written agreement or other appropriate legal means, rights adequate to protect the interests of the Association and of BRD, including, in the case of any such Sub-loan and to the extent that it shall be appropriate in the case of any such Investment: (i) the right to require the Invest- ment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) the right to require that the goods and services to be financed out of the proceeds of the Sub-loan or Investment be used exclusively in the carrying out of the Invest- ment Project; (iii) the right of the Association and of BRD to inspect such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) the right to require that the Investment Enterprise take out and maintain such insurance, against su('h risks and in such amounts, as shall be consistent with sound business practice and that, without any limitation upon the foregoing, such insurance cover hazards incident to the acquisition, transportation and delivery of the goods financed out of the proceeds of the Sub-loan or Investment to the place of use or installation, and that any indemnity thereunder be payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) the right to obtain all such information as the Association or BRD shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise; and (vi) the right of BRD to suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Sub-loan upon failure by such Investment Enterprise to perform its obligations under its agree- ment with BRD. (b) Prior to providing financial assistance for an Invest- ment Project which exceeds 20% of BRD's net worth, BRD shall obtain adequate guarantee for the repayment of that portion of such assistance which exceeds such 20%. (c) BRD shall exercise its rights in relation to each Investment Project in such manner as: (i) to protect the interests of the Association and of BRD; (ii) to comply with its obligations under this Agreement and the Subsidiary Loan Agreement; and (iii) to achieve the purposes of Part A of the Project. Section 2.05. (a) BRD shall: (i) maintain records and proce- dures adequate to record and monitor the progress of Part A of the -5- Project and of each Investment Project (including the cost thereof and the benefits to be derived therefrom); and (ii) furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Sub-loans and Investments, Part A of the Project, its cost and, where appropriate, the benefits to be derived from it, the Investment Enterprises, the Investment Projects, the Sub-loans and the Investments. (b) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between BRD and the Association, BRD shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of Part A of the Project, its cost and the benefits derived and to be derived from it, the performance by BRD and the Association of their respective obligations under this Agreement and the accom- plishment of the purposes of the Credit. (c) BRD shall enable the Association's representatives to examine all buildings, property and equipment of BRD and any relevant records and documents. Section 2.06. BRD shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BRD shall not take or concur in any action which would have the effect of assigning, or amending, abrogating or waiving any provision of, the Subsidiary Loan Agreement. Section 2.07. Except as the Association and BRD shall other- wise agree, BRD: (i) shall not sell, lease, transfer or otherwise dispose of any of its property or assets, except in the ordinary course of business; and (ii) shall take all action necessary to maintain its corporate existence and right to carry on operations and to acquire, maintain and renew all rights, powers, privileges and franchises necessary or useful in the conduct of its business. Section 2.08. BRD shall cause each of its Subsidiaries (if any) to observe and perform the obligations of BRD under this Agreement to the extent to which the same may be made applicable thereto as though such obligations were binding upon each of such Subsidiaries. Section 2.09. BRD shall not amend its Statement of Policy except in agreement with the Association, and shall exchange views with the Association on any proposal to modify its Statutes. ~ft. 4 ARTICLE III Financial Covenants Section 3.01. BRD shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition and shall enable the Association's representatives to examine such records. Section 3.02. BRD 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 appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (.i) furnish to the Association 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 Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of BRD and the audit thereof as the Association shall from time to time reason- ably request. Section 3.03. Except as the Association and BRD shall other- wise agree, BRD shall not incur or permit any Subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BRD and all its Subsidiaries then incurred and outstanding would exceed three times the consolidated capital and surplus of BRD and all its Subsidiaries. For the purpose of this Section: (a) The term "debt" means any debt incurred by BRD or any Subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by BRD or by a Subsidiary. (b) 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: (i) under a loan contract or agreement on the date and to the extent. the loan is drawn down pursuant to such loan contract or agreement; and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent the guaranteed debt is outstanding.  7 - (c) Whenever in connection with this Section it shall be necessary to value in terms of Rwandese Francs debt payable in foreign currency, such valuation shall be made at the prevailing lawful rate of exchange at which such foreign currency is, at the time of such valuation, obtainable in Kigali for the purposes of servicing such debt. (d) The term "consolidated debt of BRD and all its Subsid- iaries" means the aggregate of the total amount of debt of BRD and of a proportion of the debt of each of its Subsidiaries equal to the ratio of the participation of BRD in the share capital of such Subsidiary, excluding any debt owed by BRD to any Subsidiary or by any Subsidiary to BRD or to any other Subsidiary. (e) The term "consolidated capital and surplus of BRD and all its Subsidiaries" means the aggregate of the total unim- paired paid-in capital and free reserves of BRD and of a pro- portion of the unimpaired paid-in capital and free reserves of each of its Subsidiaries equal to the ratio of BRD's participation in the share capital of such Subsidiary, after excluding therefrom such amounts as shall represent equity interests of BRD in any Subsidiary, or of any such Subsidiary in BRD or in any other Subsidiary. Section 3.04. Except as the Association and BRD shall other- wise agree, BRD shall not make any repayment in advance of matu- rity in respect of any of itc borrowings (other than deposits) having an original term exceeding one year. ARTICLE IV Consultation and Information Section 4.01. (a) The Association and BRD shall cooperate fully to assure that the purposes of the Credit will be accom- plished. To that end, the Association and BRD shall, from time to time, at the request of either party, exchange views through thei, representatives with regard to the progress of the Project, the performance by BRD of its obligations under this Agreement and the Subsidiary Loan Agreement, the administration, operations and financial condition of BRD and other matters relating to the purpose of the Credit. (b) BRD shall furnish to the Association all such informa- tion as the Association shall reasonably request concerning Ilk, -8- the administration, operations and financial condition of BRD and its Subsidiaries, if any. Section 4.02. BRD shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, thle accomplishment of the purposes of the Credit, the maintenance of the service thereof or the performance by BRD of its obligations under this Agreement or the Subsidiary Loan Agreement. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of BRD thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate; or (ii) a date twenty-five years after the date of this Agreement. (b) If the Development Credit Agreement terminates before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BRD of this event, and upon the giving of such notice, this Agreement and all obligations of the parties thereunder shall forthwith terminate. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension u;nder Article VI of the General Conditions. ARTICLE VI MLiscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between -9- the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed 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 herein- after 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 BRD: Banque Rwandaise de Developpement Botte Postale 1341 Kigali Republique Rwandaise Cable address: BANQUE RWANDAISE DE DEVELOPPEMENT Kigali Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement or under Section 2.09 of the Development Credit Agreement on behalf of or by BRD may be taken or executed by its Director General, or by such other person or persons as such Director General shall designate in writing, and BRD shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. - 10 - 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Andre R. Gue Acting Regional Vice President Eastern Africa BANQUE RWANDAISE DE DEVELOPPEMENT By /s/ Bonaventure Ubalijoro Authorized Representative