Morocco - Second Agricultural Credit Project : Credit 0338 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 338 MOR Project Agreement (Second Agricultural Credit Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND CAISSE NATIONALE DE CREDIT AGRICOLE DATED OCTOBER 10, 1972 CONFORMED COPY CREDIT NUMBER 338 MOR Project Agreement (Second Agricultural Credit Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND CAISSE NATIONALE DE CREDIT AGRICOLE DATED OCTOBER 10, 1972 PROJECT AGREEMENT AGREEMENT, dated October 10, 1972, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and CAISSE NATIONALE DE CREDIT AGRICOLE, an autonomous agency (etablissement publique autonome) of the Kingdom of Morocco established under Dahir No. 1-60-106 of 25 joumada I 1381 (December 4, 1961) (hereinafter called CNCA). WHEREAS by the Development Credit Agreement of even date herewith between the Kingdom of Morocco (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to ten million dollars ($10,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that CNCA agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS the proceeds of the credit provided for under the Development Credit Agreement will be made available to CNCA on the terms and conditions therein set forth; WHEREAS by the Loan Agreement of even date herewith between the Internationaal Bank for Reconstruction and Development (hereinafter called the Bank) and CNCA, the Bank has agreed to make a loan to CNCA in an amount in various currencies equivalent to twenty-four million dollars ($24,000,000), on the terms and conditions set forth in the Loan Agreement; and WHEREAS CNCA, 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 Agreemment, 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. 4 ARTICLE II Execution of the Project; Management and Operations of CNCA; Financial Covenants Section 2.01. CNCA shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with sound agricultural, banking and financial standards and practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 2.02. The provisions of Articles III, IV and V (except Section 5.03) of the Loan Agreement are hereby incorporated into this Agreement with the same force andd effect as if they were fully set forth herein; provided, however, that: (i) all references to the Guarantor in such Sections or in any of them shall be deemed to be references to the Borrower, (ii) all references to the Bank in such Sections or in any of them shall be deemed to be references to the Association, (iii) all references to the Borrower in such Sections or in any of them shall be deemed to be references to CNCA, and (iv) all references to the Loan in such Sections or in any of them shall be deemed to be references to the Credit. ARTICLE HI Consultation, Information and Inspection Section 3.01. The Association and CNCA shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and CNCA 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 CNCA and other matters relating to the purpose of the Credit. Section 3.02. The Association and CNCA shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the performance by either of them of its obligations under this Agreement. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. 5 Section 4.02. (a) This Agreement and all obligations of the Association and of CNCA 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) a date 15 years after the date of this Agreement. (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 so notify CNCA of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE V Miscellaneous Provisions Section 5.01. 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 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 CNCA: 6 Caisse Nationale de Cr6dit Agricole 2, Rue d'Alger Rabat, Morocco Cable address: Crediagricole Rabat Section 5.02. CNCA 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 CNCA, take any action or execute any documents required or permitted to be taken or executed by CNCA pursuant to any of the provisions of this Agreement and by CNCA on behalf of the Borrower pursuant to Section 2.08 of the Development Credit Agreement. Section 5.03. 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 / Munir P. Benjenk Vice President Europe, Middle East & North Africa CAISSE NATIONALE DE CREDIT AGRICOLE By /s/ M. Lahlou Authorized Representative 7 SCHEDULE Policies and Procedures to be Followed by CNCA in Making Sub-loans to be Financed out of the Loan and the Credit 1. Sub-loans under the Project shall be made only to finance development plans and CNCA shall require a contribution from the Beneficiary of at least 30% of the estimated total cost of any such plans. 2. CNCA shall not grant any Sub-loan requiring groundwater development in any area where danger of overpumping exists, except with the specific approval in writing of the governmental authority of the Borrower having jurisdiction under the applicable legislation of the Borrower over groundwater resources. 3. Whenever a development plan includes two or more of the purposes of the Project, as listed in paragraph 6 below, CNCA shall make a single Sub-loan for the financing of such plan. 4. For any Sub-loan under Part F of the Project that would exceed the equivalent of $110,000, CNCA shall, before making the Sub-loan, submit to the Bank and the Association for approval, the loan application and CNCA's technical and financial appraisal thereof. 5. The interest rates charged by CNCA on Sub-loans shall be not less than the applicable rates referred to in Section 5.07 of the Loan Agreement. 6. Grace and repayment periods for the repayment of principal of Sub-loans shall not, without the approval of the Bank and the Association, exceed the following: Grace Repayment Sub-loans for Investments in: Period Period Total (in years) Grain Farm Equipment - 5 5 Citrus Plantation Development 6 6 12 Winter Vegetable Production 1 3 4 8 Grace Repayment Sub-loans for Investments in: Period Period Total (in years) Dairy Farm Development 2 5 7 Beef Cattle and Sheep Fattening 1 4 5 Marketing Facilities According to the life of the project 7. Approval of Sub-loans shall be made after careful appraisal (including field inspection), based on farm development plans. Aside from security considerations, Sub-loan applications shall be evaluated in terms of incremental returns from the additional investment to be financed and in terms of the repayment capacity of the Beneficiary. 8. (a) Except as the Bank and the Association shall otherwise agree, Sub-loans to any Beneficiary shall not exceed either of the following, unless the excess is fully guaranteed by the Borrower or a responsible financial institution: (i) 25% of CNCA's net worth; or (ii) 15% of the sum of CNCA's net worth and the total principal amount outstanding of the Borrower's long-term advances to CNCA. (b) For purposes of paragraph (a): (i) CNCA's net worth shall mean its capital (dotation), general reserves (reserves globales) and surplus (benfice net apr's provisions); and (ii) long-term advances shall mean loans or advances having outstanding maturities of not less than five years. 9. CNCA shall obtain adequate security on Sub-loans. Aside from security considerations, CNCA shall not make any Sub-loans unless it is first satisfied with regard to the viability of the development plan to be financed therewith and the earnings potential of the enterprise. 9 10. CNCA shall, if necessary to carry out the development plan for which a Sub-loan is to be granted, finance the working capital requirements of the Beneficiary or assure that adequate financing is available for current expenditures. 11. (a) Sub-loans shall be made under written agreements with the Beneficiary which shall include, without limitation, provisions implementing the terms of paragraphs 5 and 6 above and obtaining the following rights: (i) the right to require the Beneficiary to carry out the development plan approved by CNCA, and to carry on its operations with due diligence and efficiency and in accordance with sound technical, agricultural, commercial and financial practices and standards, and to maintain adequate records as appropriate; (ii) the right of CNCA and the Bank and the Association to inspect the premises the improvement of which is financed by the Sub-loan, any equipment, materials or inputs financed by the Sub-loan, the operations of the Beneficiary, and any relevant records and documents as appropriate; (iii) the right to obtain all such information as CNCA, the Bank or the Association shall reasonably request relating to the foregoing and to the operations and financial condition of the Beneficiary; (iv) the right to require that the proceeds of the Sub-loan not be expended for goods produced in, or services supplied from, any country which is not a member of the Bank (other than Switzerland); (v) the right to require that the goods and services to be financed out of the proceeds of the Sub-loan shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability thereof, and availability of service and spare parts therefor; (vi) the right to require the Beneficiary to take out and maintain with responsible insurers insurance against such risks and in such amounts as shall be consistent with sound practice; and (vii) the right to suspend or terminate access by the Beneficiary to the use of the Sub-loan upon failure by him to perform his obligations and, in appropriate cases, to premature the Sub-loan. 10 (b) CNCA shall exercise its rights under the Sub-loan agreement referred to in sub-paragraph (a) above so as to protect the interests of CNCA and the Bank and the Association. (c) CNCA shall supervise Sub-loans made by it in accordance with sound banking and agricultural practices. Such supervision shall include periodic visits to farms or marketing facilities, as the case may be, to ensure that the proceeds of Sub-loans are being used properly and that satisfactory progress is being made in completing the investment.