Mauritania - Urban And Rural Development Project : Credit 0888 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 888 MAU Project Agreement (Urban and Rural Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANQUE MAURITANIENNE FOUR LE DEVELOPPEMENT ET LE COMMERCE Dated April 11, 1979 CREDIT NUMBER 888 MAU PROJECT AGREEMENT AGREEMENT, dated April 11, 1979, between the INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the BANQUE MAURITANIENNE POUR LE DEVELOPPEMENT ET LE COMMERCE (hereinafter called BMDC), established pursuant to Law No. 61-030 dated January 26, 1961. of the ISLAMIC REPUBLIC OF MAURITANIA (hereinafter called the Borrower). WHEREAS by the Development Credit Agreement of even date herewith between the Borrower and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to eight million dollars ($8,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BMDC agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by a Subsidiary Loan Agreement to be entered into between the Borrower and BMDC, part of the proceeds of the credit provided for under the Development Credit Agreement will be made available to BMDC on the terms and conditions therein set forth; and WHEREAS BMDC, 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; Management and Operations of BMDC Section 2.01. BMDC shall carry out Part A of the Project, described in Schedule 2 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 experi- enced management and in accordance with its Statutes and Statement of Policy. Section 2.02. (a) In accordance with and subject to the provisions of the Development Credit Agreement, BMDC shall submit Sub-loans for Investment Projects to the Association for approval or for authorization for withdrawals to be made from the Credit Account. (b) (i) When submitting a Sub-loan to the Association for approval, BMDC shall furnish to the Association an application, in form satisfactory to the Association, together with a descrip- tion 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 BMDC Lad an appraisal of the Investment Project) and the proposed terms and conditions of the Sub-loan including the schedule of amortization of the Sub-loan and such other information as the Association shall reasonably request; and (ii) such appraisals will 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 accordance with guidelines satisfactory to the Association. (c) The amortization schedule applicable to each Sub-loan shall provide for an appropriate period of grace, and, unless the Association and the Borrower shall otherwise agree: (i) shall not extend beyond 15 years from the date of approval by the Associa- tion of such Sub-loan or of authorization by the Association to make withdrawals from the Credit Account in respect of such Sub-loan; and (ii) shall provide for approximately equal semi- annual, or more frequent, aggregate payments of principal and interest or approximately equal semi-annual, or more frequent, payments of principal. (d) Except as the Association and BMDC shall otherwise agree, BMDC shall submit applications for approval of Sub-loans pursuant to the provisions of paragragh (b) of this Section on or before December 31, 1982. Section 2.03. (a) BMDC undertakes that unless the Association shall otherwise agree, any Sub-loan will be made on terms whereby BMDC shall obtain, by written agreement or other appropriate legal -3- means, rights adequate to protect the interests of the Association and of BMDC, including, in the case of any such Sub-loan: (i) the right to require the Investment 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 pro- ceeds of the Sub-loan be used exclusively in the carrying out of the Investment Project; (iii) the right of the Association and of BMDC 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 such 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 to the place of use or installation, and that any indemnity thereunder be made available 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 BMDC shall reasonably request relating to the foregoing and to the administration, operacions and financial condition of the Investment Enterprise; and (vi) the right of BMDC 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 agreement with BMDC. (b) BMDC shall exercise its rights in relation to each Investment Project in such manner as to (i) protect the interests of the Association and of BMDC, (ii) comply with its obligations under this Agreement and the Subsidiary Loan Agreement, and (iii) achieve the purposes of the Project. Section 2.04. BMDC shall furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Sub-loans, the Project, the Investment Enterprises, the Investment Projects, and the Sub-loans. Section 2.05. BMDC shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BMDC shall not take or concur in any action which would have the effect of assigning, amending, abrogating or waiving any provision of, the Subsidiary Loan Agreement. Section 2.06. Except as the Association and BMDC shall otherwise agree, BMDC: (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 2.07. BMDC shall cause each of its Subsidiaries (if any) to observe and perform the obligations of BMDC 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 2.08. BMDC shall not further 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. Section 2.09. In order to assist BMDC in carrying out Part A.2 of the Project, BMDC shall employ consultants whose qualifi- cations, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Associatioa. ARTICLE III Financial Covenants Section 3.01. BMDC shall maintain records adequate to record: (i) the progress of Part A of the Project and of each Investment Project (including the cost thereof); and (ii) the operations carried out in the accounts referred in paragraph (g) of Section 3.01 of the Credit Agreement, and to reflect in accordance with consistently maintained appropriate accounting practices the operations and financial condition of BMDC and shall enable the Association's representatives to examine such records. Section 3.02. BMDC 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; (ii) furnish to the Association as soon as available, but in any case not later than nine months after the end of each such year, (A) certified -5- 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 BMDC and the audit thereof as the Association shall from time to time reason- ably request. Section 3.03. Except as the Association and BMDC shall otherwise agree, BMDC shall not incur or permit any Subsidiary to incur any debt if, after the incurring of such debt, the consoli- dated debt of BMDC and all its Subsidiaries then incurred and outstanding would exceed 4 times the consolidated capital and free reserves of BMDC and all its Subsidiaries. For the purpose of this Section: (a) The term "debt" means any debt incurred by BMDC or any Subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by BMDC 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. (c) Whenever in connection with this Section it shall be necessary to value in terms of Ouguiya 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 Ouguiya for the purposes of servicing such debt. (d) The term "consolidated debt of BMDC and all its Subsid- iaries" means the total amount of debt of BMDC and all its Sub- sidiaries excluding debt owed by BMDC to any Subsidiary or by any Subsidiary to BMDC or to any other Subsidiary. (e) The term "consolidated capital and surplus of BMDC and all its Subsidiaries" means the aggregate of the total unim- paired paid-in capital, surplus and free reserves of BMDC and of -6- all its Subsidiaries after excluding therefrom such amounts as shall represent equity interests of BMDC in any Subsidiary, or of any such Subsidiary in BMDC or in any other Subsidiary. Section 3.04. Except as the Association and BMDC shall otherwise agree, BMDC shall not make any repayment in advance of maturity in respect of any of its borrowings (other than deposits) having an original term exceeding one year. Sestion 3.05. (a) BMDC shall take such steps satisfactory to the Association, including, without limitation, special pro- visions in its Statement of Policy, as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the various currencies (including Ouguiya) used in its borrowing and lending operations. (b) BMDC shall levy on its industrial borrowers a special charge of 1% per annum on the outstanding amount of any Sub-loan and pay the amount of such charge to the Borrower in order to reimburse the Borrower for the risk of loss resulting from the changes in rates of exchange referred to in paragraph (a) of this Section. ARTICLE IV Consultation, Information and Inspection Section 4.01. (a) The Association and BMDC shall cooperate fully to assure that the purposes of the Credit will be accom- plished. To that end, the Association and BMDC shall from time to time, at the request of either party, exchange views through their representatives with regard to the progress of the Project, the performance by BMDC of its obligations under this Agreement and the Subsidiary Loan Agreement, the administration, operations and financial condition of BMDC and other matters relating to the purpose of the Credit. (b) BMDC shall furnish to the Association all such informa- tion as the Association shall reasonably request concerning the administration, operations and financial condition of BMDC and its Subsidiaries, if any. Section 4.02. BMDC shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the - 7 - maintenance of the service thereof or the performance by BMDC of its obligations under this Agreement or the Subsidiary Loan Agreement. Section 4.03. BMDC shall enable the Association's represen- tatives to inspect the records referred to in Section 3.01 of this Agreement and any relevant documents. 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 BMDC 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 25 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 BMDC 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 under Article VI of the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. 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 to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radlogram to the party to which it is required or -8- 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: Telex: INDEVAS 440098 (ITT), Washington, D.C. 248423 (RCA) or 64145 (WUI) For BMDC: Banque Mauritanienne pour le Developpement et le Commerce B. P. 219 Nouakchott Islamic Republic of Mauritania Cable address: Telex: BADEC 564 BADEC MTN Nouakchott 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 Agree- ment on behalf of or by BMDC may be taken or executed by its Director General, or by such other person or persons as BMDC shall designate in writing, and BMDC shall furnish to the Association sufficient evidence of the authority and the authenticated speci- men signature of each such person. 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 - 9 - District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By Is/ Xavier de la Renaudiere BANQUE MAURITANIENNE POUR LE DEVELOPPEMENT ET LE COMMERCE By Is! Kane Amadou Tidjane Authorized Representative