Afghanistan - Idba Project : Credit 0380 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 380 AF Project Agreement (IDBA Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND INDUSTRIAL DEVELOPMENT BANK OF AFGHANISTAN DATED MAY 15, 1973 CONFORMED COPY CREDIT NUMBER 380 AF Project Agreement (IDBA Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND INDUSTRIAL DEVELOPMENT BANK OF AFGHANISTAN DATED MAY 15, 1973 PROJECT AGREEMENT AGREEMENT, dated May 15, 1973, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and INDUSTRIAL DEVELOPMENT BANK OF AFGHANISTAN (hereinafter called IDBA), a Joint Stock Company established under the Laws of the Kingdom of Afghanistan (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 lend to the Borrower, for use by IDBA, an amount in various currencies equivalent to two million dollars ($2,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that IDBA agrees to undertake certain obligations towards the Association as hereinafter provided; and WHEREAS IDBA, 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) shall have the respective meanings therein set forth. ARTICLE II Particular Covenants Section 2.01. IDBA shall carry out the Project, described in Section 3.01 of the Development Credit Agreement, with due diligence and efficiency and in conformity with sound administrative, economic, financial and investment standards and practices, with qualified and experienced management and staff, and in accordance with the IDBA Law, Regulations and its Statement of Policy. 4 Section 2.02. (a) In accordance with, and subject to, the provisions of the Development Credit Agreement, IDBA shall submit Investment Projects to the Association for approval or for authorization to make withdrawals from the Credit Account. (b) When submitting a sub-loan (other than a free-limit sub-loan) or an investment to the Association for approval, IDBA shall furnish to the Association an application, in form satisfactory to the Association, together with a description of the Investment Enterprise and an appraisal of the Investment Project (including a description of the expenditures proposed to be financed out of the proceeds of the Credit made available to IDBA under the Subsidiary Loan Agreement) and the proposed terms and conditions of the sub-loan or investment, including the schedule of amortization of the sub-loan, or of repayment by IDBA of the amount of the proceeds of the Credit made available to IDBA under the Subsidiary Loan Agreement to be used for the investment, and such other information as the Association shall reasonably request. (c) Each request by IDBA for authorization to make withdrawals 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 description of the expenditures proposed to be financed out of the proceeds of the Credit made available to IDBA under the Subsidiary Loan Agreement) 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 IDBA shall otherwise agree: (i) shall not extend 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 approximately equal semi-annual, or more frequent, payments of principal. (e) Except as the Association and IDBA shall otherwise agree, applications and requests permitted under paragraphs (b) and (c) of this Section shall be submitted to the Association on or before September 30, 1975. Section 2.03. (a) IDBA shall furnish to the Association all such information as the Association shall reasonably request concerning (i) the expenditure of the proceeds of the Credit made available to IDBA under the Subsidiary Loan 5 Agreement; (ii) the Project; (iii) the Investment Enterprises; (iv) the Investment Projects; and (v) the sub-loans and investments. (b) IDBA shall maintain records adequate to record the progress of the Project and of each Investment Project (includ-ng the cost thereof) and to reflect in accordance with consistently maintained ,ound accounting practices the operations and financial condition of IDBA and shall enable the Association's representatives to examine such records. Section 2.04. IDBA shall: (a) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) C each fiscal year audited, by independent auditors acceptable to the Assoc; itin, in accordance with sound auditing principles consistently applied; (b) furiKd to the Association, as soon as available but, in any case, not later than four months after the end of each such year, certified copies of its audited financial statements for such year, and an audit report by the said auditors of such scope and in such detail as the Association shall have reasonably requested; and, (c) furnish to the Association such other information concerning the accounts and financial statements of 1DBA and the audit thereof as the Association shall from time to time reasonably request. Section 2.05. (a) The Association and IDBA shall cooperate fully to ensure that the purposes of the Credit will be accomplished. To that end, the Association and IDBA 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 IDBA of its obligations under this Agreement and the Subsidiary Loan Agreement, any change in appointment to the positions of its President and the General Manager, the administration, operations and financial condition of IDBA and any other matters relating to the purposes of the Credit. (b) IDBA shall furnish to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial condition of IDBA and its subsidiaries. (c) IDBA and the Association 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 IDBA of its obligations under this Agreement or the Subsidiary Loan Agreement. Section 2.06. (a) IDBA shall exercise its rights in relation to each Investment Project financed under a sub-loan or with an investment in such manner as to 6 protect the interests of the Association and of IDBA, to comply with its obligations under this Agreement and the Subsidiary Loan Agreement and to achieve the purposes of the Project. (b) Pursuant to paragraph (a) of this Section, IDBA undertakes that, unless the Association shall otherwise agree, any sub-loan or investment will be made on terms whereby IDBA shall obtain under a form of IDBA Agreement, acceptable to the Association, or by other appropriate legal means, rights adequate to protect the interests of the Association and of IDBA, which shall include, in the case of any such sub-loan and to the extent that it shall be appropriate in the case of any such investment the right of IDBA to: (i) 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) require that (1) the goods and services to be financed out of the proceeds of the sub-loan or investment shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them and (2) such goods and services shall be used exclusively in the carrying out of the Investment Project, (iii) inspect, by itself or jointly with representatives of the Association if the Association shall so request, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) require that the Investment Enterprise shall take out and maintain with responsible insurers 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 shall cover marine, transit and other hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the sub-loan or investment to the place of use or installation, and that any indemnity thereunder shall be payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) obtain all such information as the Association or IDBA shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the sub-loan or investment upon failure by such Investment Enterprise to perform its obligations towards IDBA. Section 2.07. IDBA shall take such steps satisfactory to the Association as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the various currencies (including Afghanis) used in its borrowing and lending operations. 7 Section 2.08. Except as the Association and IDBA shall otherwise agree, IDBA shall not incur or permit any subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of IDBA and all its subsidiaries then incurred and outstanding would be greater than three times the consolidated capital and surplus of IDBA and all its subsidiaries. For the purposes of this Section: (a) "Debt" means any debt incurred by IDBA or any subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by IDBA or by a subsidiary. (b) Debt shall be deemed to be incurred (i) under a loan contract or agreement on the date and to the extent the amount of the loan is drawn down and outstanding pursuant to such loan 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 that the guaranteed debt is outstanding. (c) Whenever in connection with this Section it shall be necessary to value in terms of Afghanis debt payable in foreign currency, such valuation shall be made at the prevailing rate of exchange at which such foreign currency is, at tile time of such valuation, obtainable by IDBA for the purposes of servicing such debt. (d) "Consolidated debt of IDBA and all its subsidiaries" means the total amount of debt of IDBA and all its subsidiaries, excluding any debt owed by IDBA to any subsidiary or by any subsidiary to IDBA or to any other subsidiary. (e) "Consolidated capital and surplus of IDBA and all its subsidiaries" means the aggregate of the total unimpaired paid-in capital, surplus and free reserves of IDBA and of all its subsidiaries after excluding therefrom such amouIts as shall represent equity interests of IDBA in any subsidiary, or of any suChl subsidiary in IDBA or in any other subsidiary. Section 2.09. IDBA shall not make anv repayment in advance of maturity in respect of any outstanding debt of IDBA which, in the judgment of tile Association, would materially affect IDBA's ability to meet its financial obligations. Section 2. 10. IDBA shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Borrower and the Association shall otherwise agree, IDBA 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. 8 Section 2.11. Except as the Association and IDBA shall otherwise agree, IDBA: (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 2.12. IDBA shall cause each of its subsidiaries (if any) to observe and perform the obligations of IDBA under this Agreement to the extent to which the same may be applicable thereto as though such obligations were binding upon each of such subsidiaries. Section 2.13. IDBA shall not amend its Statement of Policy except in agreement with the Association. ARTICLE III Effective Date; Termination Section 3.01. This Agreement shall come into force and effect on the Effective Date. If the Development Credit Agreement terminates pursuant to Section 10.04 of the General Conditicns, this Agreement and all obligations of the parties hereunder shall terminate. Section 3.02. This Agreement and all obligations of IDBA and of the Association hereunder shall terminate on the date when the Subsidiary Loan Agreement shall terminate in accordance with its terms or on March 21, 1993, whichever shall be the later. ARTICLE IV Miscellaneous Provisions Section 4.01. No delay in exercising, or omission to exercise, any right, power or remedy accruing to either party under this Agreement upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof or an acquiescence in such default; nor shall the action of such party in respect of any default, or any acquiescence in any default, affect or impair any right, power, or remedy of such party in respect of any other or subsequent default. Section 4.02. Any notice or request required or permitted to be given or made under this Agreement, and any agreement between the parties contemplated 9 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, radiogram or telex to the party to which it is required or permitted to be given or made at its 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 IDBA: Industrial Development Bank of Afghanistan Jade Maiwand Kabul Afghanistan Cable address: IDBAKABUL Kabul Section 4.03. (a) Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement or under Section 2.02 of the Development Credit Agreement on behalf of or by IDBA, may be taken or executed jointly by its President and the General Manager, or by such person or persons as the President and the General Manager shall jointly designate in writing. (b) IDBA shall furnish to the Association sufficient evidence of the authority of each person who will act under paragraph (a) of this Section, together with the authenticated specimen signature of each such person. 10 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed in their respective names by their representatives thereunto duly authorized and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ M. Benjenk Regional Vice President Europe, Middle East and North Africa INDUSTRIAL DEVELOPMENT BANK OF AFGHANISTAN By /s/ Nour Ali Authorized Representative