Cameroon - Small And Medium-Scale Enterprise Project : Credit 0575 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 575 CM Project Agreement (Small and Medium-Scale Enterprise Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BANQUE CAMEROUNAISE DE DEVELOPPEMENT DATED JULY 30, 1975 PROJECT AGREEMENT AGREEMENT, dated July 30, 1975, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and BANQUE CAMEROUNAISE DE DEVELOPPEMENT (hereinafter called BCD), a development finance institution established and operating tinder the laws of the United Republic of Cameroon (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 three million dollars ($3,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BCD agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a financing agreement of even date herewith between the Borrower and BCD, the proceeds of the credit provided for under the Development Credit Agreement will be made available to BCD on the terms and conditions therein set forth; and WHEREAS BCD, 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 a. 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 BCD Section 2.01. BCD shall carry out Part A of the Project described in Section 3.01 of the Development Credit Agreement and conduct its operations and affairs 4 in accordance with sound financial standards and practices, with qualified management and personnel, and in accordance with the Statutes and Statement of Policy. Section 2.02. In order to assist BCD in the appraisal of Investment Projects, BCD shall employ two financial analysts and an engineer whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 2.03. BCD shall cause the proceeds of the Credit relent to it to be applied exclusively to expenditures on Investment Projects in respect of which amounts have been withdrawn from the Credit Account in accordance with the provisions of this Agreement, the Development Credit Agreement and the Financing Agreement. Section 2.04. (a) In accordance with, and subject to, the provisions of the Development Credit Agreement, BCD 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) oi an investment to the Association for approval, BCD 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 relent to BCD under the Financing 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 BCD of the amount of the Credit, relent to BCD under the Financing Agreement, to be used for the investment, and such other information as the Association shall reasonably request. (c) Each request by BCD 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 relent to BCD under the Financing 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 sub-loan and the schedule of repayment to the Borrower in respect of each investment shall provide for an appropriate period of grace, and, unless the Association and the Borrower shall 5 otherwise agree (i) shall not extend beyond fifteen years from the date of approval by the Association of such sub-loan or investment, or in the case of a free-limit sub-loan, of authorization by the Association to make withdrawals from the Credit Account in respect thereof, 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 BCD shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (b) and (c) of this Section shall be submitted to the Association on or before December 31, 1978. Section 2.05. (a) BCD undertakes that, unless the Association shall otherwise agree, any sub-loan or investment will be made on terms whereby BCD shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Association and BCD, inclUding, in the case of any sub-loan and to the extent that it shall be appropriate in the case of any investment, the right of BCD 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 Credit 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: (1) 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 (2) 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 Credit to the place of use or installation, any indemnity thereunder to be made 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 BCD 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 Credit upon failure by such Investment Enterprise to perform its obligations under its contract with BCD. 6 (b) BCD shall exercise its rights in relation to each Investment Project in such manner as to: (i) protect the interests of the Association and BCD, (ii) comply with its obligations under this Agreement and the Financing Agreement, and (iii) achieve the purposes of the Project. (c) BCD shall submit to the Association, for its prior approval, any substantial changes proposed to be made by BCD in respect of the repayment provisions of any sub-loan. Section 2.06. BCD shall furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Credit relent to BCD under the Financing Agreement, the Project, the Investment Enterprises, the Investment Projects, and the sub-loans and investments. Section 2.07. BCD shall duly perform all its obligations under agreements under which funds have been lent or otherwise put at the disposal of BCD by the Borrower or its agencies or others for relending, investment or management. BCD shall promptly inform the Association of any action which would have the effect of assigning, or of amending, abrogating or waiving any material provision of, any such agreement. Section 2.08. If BCD establishes or acquires any subsidiary, BCD shall cause such subsidiary to observe and perform the obligations of BCD hereunder to the extent to which such obligations shall or can be applicable thereto, as though such obligations were binding upon such subsidiary. Section 2.09. BCD shall duly perform all its obligations tinder the Financing Agreement. Except as the Association shall otherwise agree, BCD shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Financing Agreement or any provision thereof. Section 2.10. Except as the Association and BCD shall otherwise agree, BCD: (i) shall not sell, lease, transfer or otherwise dispose of any of its 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 2.11. BCD shall not amend its Statement of Policy except in agreement with the Association. 7 ARTICLE III Financial Covenants Section 3.01. BCD shall maintain records adequate to record the progress of Part A of the Project and of each Investment Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of BCD. Section 3.02. BCD 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 sound 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 four 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 BCD and the audit thereof as the Association shall from time to time reasonably request. Section 3.03. Except as the Association shall otherwise agree, BCD shall: (i) conduct its operations and affairs in such manner as shall be necessary to maintain, at all times, its debt/equity ratio within the limit provided in Section 3.05 of this Agreement; and (ii) if such ratio shall, for reasons beyond BCD's control, be exceeded, promptly take all such reasonable action as shall be necessary or advisable to bring such ratio within such limit. Section 3.04. BCD shall not make any repayment in advance of maturity in respect of any outstanding debt of BCD which, in the judgment of the Association, would materially affect BCD's ability to meet its financial obligations. Section 3.05. Except as shall be otherwise agreed between the Association and BCD, BCD shall not incur or permit any subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BCD and all its subsidiaries then incurred and outstanding would be greater than four times the consolidated capital and surplus of BCD and all its subsidiaries. For the purposes of this Section: (a) "debt" means any debt incurred by BCD or any subsidiary maturing more than one year after the date on which it is originally incurred. (b) Debt shall be deemed to be incurred: (i) under a loan contract or agreement (including the Financing Agreement) on the date and to the extent the 8 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 Francs CFA, 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 by BCD for the purposes of servicing such debt. (d) "consolidated debt of BCD and all its subsidiaries" means the total amount of debt of BCD and subsidiaries, excluding any debt owed by BCD to any subsidiary or by any subsidiary to BCD or to any other subsidiary. (e) "consolidated capital and surplus of BCD and subsidiaries" means the aggregate of the unimpaired paid-up capital, surplus and free reserves of BCD and subsidiaries after excluding therefrom such amounts as shall represent equity interests of BCD in any subsidiary or of any subsidiary in BCD or any other subsidiary. Section 3.06. BCD 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 currencies (including Francs CFA) used in its lending and borrowing operations. Section 3.07. The Association and BCD shall from time to time, at the request of either party, exchange views through their representatives with regard to the administration, operations and financial condition of BCD and its subsidiaries, and BCD shall furnish to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial condition of BCD and subsidiaries, and the progress of the Project. Section 3.08. BCD shall enable the Association's representatives to inspect the records referred to in Section 3.01 of this Agreement and any relevant documents. 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. 9 Section 4.02. (a) This Agreement and all obligations of the Association and of BCD 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 twenty 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 notify BCD 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: Telex: INDEVAS 440098 (ITT), Washington, D.C. 248423 (RCA) or 64145 (WUI) For BCD: Banque Camerounaise de D6veloppement B.P. 55 Yaound6, Cameroon 10 Cable address: Telex: BANCAD 8225 KN Yaound6, Cameroon Section 5.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of BCD may be taken or executed by its Directeur General or such other person or persons as he shall designate in writing. Section 5.03. BCD 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 BCD, take any action or execute any documents required or permitted to be taken or executed by BCD pursuant to any of the provisions of this Agreement. Section 5.04. 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 in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ R. Chaufournier Regional Vice President Western Africa BANQUE CAMEROUNAISE DE DEVELOPPEMENT By /s / F. X. Tchoungui Authorized Representative