Upper Volta - Artisan Small And Medium Scale Enterprise Project : Credit 0759 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 759 UV Project Agreement (Artisan, Small and Medium-Scale Enterprise Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANQUE NATIONALE DE DEVELOPPEMENT and OFFICE DE PROMOTION DE L'ENTREPRISE VOLTAIQUE and CENTRE NATIONAL DE PERFECTIONNEMENT DES ARTISANS RURAUX Dated January 12, 1978 CREDIT NUMBER 759 UV PROJECT AGREEMENT AGREEMENT, dated January 12, 1978, between the INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the AssniAtion) BANQUE NATIONALE DE DEVELOPPEMENT (hereinafter called BND), OFFICE DE PROMOTION DE L'ENTREPRISE VOLTAIQUE (hereinafter called OPEV) and CENTRE NATIONAL DE PERFECTIONNEMENT DES ARTISANS RURAX (hereinafter called CNPAR): WHEREAS by the Development Credit Agreement of even date herewith between Republic of Upper Volta(hnreinafter called the Borrower) and the Association, the Association has agreed to lend to the Borrower an amount in various currencies equivalent to four million dollars ($4,000,000), on the terms and conditions set forth in the Development Credit Agreement, but on]y on condition that BND, OPEV and CNPAR agree to undertake such obligations toward the Association as are hereintafter set forth; and WHEREAS BND, OPEV and CNPAR, in consideration of the Accoci- ation's entering into the Develupuent Credit Agreement with the Borrower, have each agreed to undertake th- nhligations herein- after set forth; NOW THEREFORE the parLie hit-tt hereby -gree 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 CiediL Agreement and in the General Conditions (as so defined) have the respe-rivep meanings therein set forth. ARTICLE II Execu-tion of the Project; Mafiagemen! a!id Opcrtius of BNID, OPEV and CNPAR Section 2.01. BND, OPEV and CNPAR shall each carry out its part of the Project de4sctibsd in Section 3O1 of the Development Credit Agreement, and coIduet 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 aciordance with its respective Statute and Statement of Poliy. - 2 - Section 2.02. (a) In accordance with and subject to the provisions of the Development Credit Agreement, BND shall submit Investment Projects to the Association for approval or for author- ization for withdrawals to be made from the Credit Account. (b) (i) When submitting a Sub-loan (other than a free-limit Sub-loan) or an Investment to the Association for approval, BND shall furnish to the Association an application, in form satisfac- tory to the Association, together with a description of the Beneficiary and of the Investment Project to be financed there- under (including a description of the expenditures for such Investment Project proposed to be financed by BND), and an ap- praisal of the Investment Project, the proposed terms and condi- tions of the Sub-loan or Investment, including the schedule of amortization of the Sub-loan, or of repayment to BND of the amount to be used for the Investment, 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) Each request by BND 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 Beneficiary and the Investment Project (including a description of the expen- ditures proposed to be financed out of the proceeds of the Credit) and the terms and conditions of such free-limit Sub-loan, includ- ing the schedule of amortization therefor. (d) The amortization schedule applicable to each Investment Project financed by BND shall provide for an appropriate period of grace, and, unless the Association and the Borrower shall otherwise agree, (i) shall not extend beyond fifteen years from the date of this Agreement, and (ii) shall provide for approx- imately 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 BND shall otherwise agree, BND 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 30, 1980. - 3 - (f) In the case of Beneficiaries which are medium-scale enterprises, BND shall require such Beneficiaries to finance at least 10% of the Investment Project cost out of their own resources. Section 2.03. CNPAR shall: (a) Open and maintain a separate account and deposit into it: (i) such funds as the Borrower shall make available to CNPAR pursuant to Section 3.03 (a) (i) of the Development Credit Agreement for purposes of financing Sub-loans made by CNPAR; (ii) any other funds made available to CNPAR for purposes of the Project; and (iii) any funds accruing to CNPAR from the carrying out of the Project. (b) Use the funds referred to in paragraphs (a) (i) and (ii) hereof exclusively to make Sub-loans to Beneficiaries on the following terms and conditions: (i) payment of the outstanding principal amount over a period of: - not more than one year (including ; orce period of not more than six months) i the case of Sub-loans to finance raw material, - not more than four years (including a grace period of not more than one year) in the case of Sub-loans to finance equipment; and - not more than ten years (including a grace period of not more than three years) in the case of Sub-loans to finance building con- struction. (ii) interest at a rate of 8-1/2% per annum on the outstanding principal amount. (c) Use the funds referred to in paragraph (a) (iii) hereof to make loans on the terms and conditions set forth in paragraph (b) above. (d) Furnish to the Association, for its review and promptly upon approval, the first ten Sub-loans approved by CNPAR. (e) Prepare, and furnish to the Association, semi-annual forecasts of CNPAR's credit operations satisfactory to the Asso- ciation. Section 2.04. (a) BND and CNPAR each undertakes that, unless the Association shall otherwise agree, any Sub-loan or, in the case of BND, any Investment will be made on terms whereby BND or CNPAR, as the case may be, shall obtain, by written agreement or other appropriate legal means, rights adequate to protect the interests of the Association and of BND or CNPAR, 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 Beneficiary 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 main- tain 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 In- vestment Project; (iii) the right of the Association and of BND or CNPAR 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 Beneficiary 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 or Investment to the place of use or installation, and that any indemnity thereunder be payable in a currency freely usable by the Beneficiary to replace or repair such goods; (v) the right to obtain all such information as the Association or BND or CNPAR, as the case may be, shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Beneficiary and (vi) the right of BND or CNPAR, as the case may be, to suspend or terminate the right of the Beneficiary to the use of the proceeds of the Sub-loan upon failure by such Beneficiary to perform its obli- gations under its agreement with BND or CNPAR. - 5 - (b) BND and CNPAR shall each exercise its rights in relation to each Investment Project in such manner as to (i) protect the interests of the Association and of BND or CNPAR, (ii) comply with its obligations under this Agreement and, in the case of BND, the Subsidiary Loan Agreement and (iii) achieve the purposes of the Project. Section 2.05. BND, OPEV and CNPAR, as the case may be, shall 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, the Project, the Beneficiaries, the Investment Projects, the Sub-loans and the Investments. Section 2.06. BND shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BND 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 BND or OPEV or CNPAR, as the case may be, shall otherwise agree, BND, OPEV and CNPAR: (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. BND shall cause each of its Subsidiaries (if any) to observe and perform their respective obligations under this Agreement to the extent to which the same may be made appli- cable thereto as though such obligations were binding upon each of such Subsidiaries. Section 2.09. BND and OPEV shall not amend its respective Statement of Policy except in agreement with the Association, and shall exchange views with the Association on any proposal to modify their Statement of Policy. Section 2.10. BND, OPEV and CNPAR shall not later than January 1, 1978, jointly establish and maintain, in a form and with powers, responsibilities and membership satisfactory to the Association, a committee to ensure coordination of their respecrtiv action in the carrying out of the Project. - 6 - Section 2.11. BND and OPEV shall no later than January 1, 1978 enter into an agreement satisfactory to the Association which shall, inter alia, provide for the establishment by BND and OPEV of common criteria for appraising projects, and of specific programs of cooperation by BND and OPEV in project identification and financing and in providing technical support to small and medium-scale enterprises. Section 2.12. (a) In order to assist BND, OPEV and CNPAR in carrying out their respective parts of the Projects, BND, OPEV and CNPAR shall each employ consultants (including a training advisor, an accounting expert and a systems expert for BND and a training coordinator for OPEV) whose qualifications, experience an4, terms and conditions of employment shall be satisfactory to the Association. (b) BND shall employ said training advisor, accounting expert and systems expert and OPEV shall employ said training coordinator not later than March 31, 1978. (c) BND shall, not later than June 30, 1978, assign a local counterpart each to said training advisor, accounting expert and systems expert. (d) OPEV shall, not later than June 30, 1978, assign two local counterparts Lo said training coordinator. ARTICLE III Financial Covenants Section 3.01z BND, OPEV and CNPAR shall each maintain records adequate to record the progress of the Project and, in the case of BND and CNPAR, of each Investment Project (including the cost thereof) and to reflect in accordance with consistently maintained appropriate accounting practices the respective operations and financial condition of BND, OPEV and CNPAR and shall each enablc the Association's representatives to examine such records. Section 3.02. (a) BND 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 availphle, hut in any -7- 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 its accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. (b) OPEV and CNPAR shall furnish to the Association such information concerning their accounts and financial statements as the Association shall from time to time reasonably request. Section 3.03. Except as the Association and BND shall other- wise agree, BND shall not incur or permit any Subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BND and all its Subsidiaries then incurred and outstanding would exceed in the case of long-term debt five times, and in the case of all debt twelve times, the consolidated capital and surplus of BND and all its Subsidiaries. For the purpose of this Section: (a) The term "long-term debt" means any debt incurred by BND or any Subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaran- teed by BND or by a Subsidiary, and not guaranteed by the Borrower nor rediscounted or otherwise financed by the Borrower. (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 such loan contract or agreement is entered into 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 guaran- teed debt is outstanding. (c) Whenever in connection with this Section it shall be necessary to value in terms of FCFA 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 Upper Volta for the purposes of servicing such debt. (d) The term "consolidated debt of BND and all its Sub- sidiaries" means the total amount of debt of BND and all its -8- Subsidiaries excluding (i) debt owed by BND to any Subsidiary or by any Subsidiary to BND or to any other Subsidiary and (ii) debt referred to in paragraph (e) (ii) of this Section. (e) The term "consolidated capital and surplus of BND and all its Subsidiaries" means the aggregate of (i) the total unim- paired paid-in capital, surplus and free reserves of BND and of all its Subsidiarics after excluding therefrom such amounts as shall represent equity interests of BND in any Subsidiary, or of any such Subsidiary in BND or in any other Subsidiary, and (ii) such amount of any loan which the Association may determine to be included in the consolidated capital and surplus of the Borrower. Section 3.04. BND shall not make any repayment in advance of maturity in respect of any outstanding debt of BND which, in the judgment of the Association would materially affect BND's ability to meet its financial obligations. Section 3.05. BND and CNPAR shall each 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 FCFA) used in its respective borrowing and lending operations. ARTICLE IV Consultation, Information and Inspection Section 4.01. (a) The Association, BND, OPEV and CNPAR shall cooperate fully to assure that the purposes of the Credit will be accomplishod- To that end, the Association,BND, OPEV and 'NPAR shall from time to time, at the request of any party, exchange views through their representatives with regard to the progress of the Project, the performance by BND, OPEV and CNPAR of their respective obligations under this Agreement and, in the case of BND, under the Subsidiary Loan Agreement, the administra- tion, operations and financial condition of BND, OPEV and CNPAR and other matters relating to the purpose of the Credit. (b) BND, OPEV and CNPAR shall each furnish to the Associ- ation all such information as the Association shall reasonably request concerning its respective administration, operations and financial condition (including in the case of BND information concerning the administrative, operations and financial condition of its Subsidiaries). - 9 - Sect.ion 4.02. BND, OPEV and CNPAR shall each promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof or the performance by BND, OPEV or CNPAR of its respective obligations under this Agreement or, in the case of BND, under the Subsidiary Loan Agreement. Section 4.03. BND, OPEV and CNPAR shall each enable the Association's representatives 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, BND, OPEV and CNPAR thereunder shall tcrminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate; or (ii) a date 15 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 BND, OPEV and CNPAR this event, and upon the giving of such notice, this Agreement and all obliga- tions 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 Gcneral 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. - 10 - 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 Associati3n: 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. 24423 (RCA) or 89658 (WUI) For BND: B.P. 148 Ouagadougou Upper Volta Cable address: Telex: BANADEV 5225 UV Ouagadougou For OPEV: B.P. 94 Ouagadougou Upper Volta Cable address: OPEV Ouagadougou For CNPAR: B.P. 367 Ouagadougou Upper Volta - 11 - 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 2.03 of the Development Credit Agreement on behalf of or by BND,OPEV or CNPAR may be takcn or executed in the case of BND by its Director General, in the case of OPEV by its Director General and in the case of CNPAR by its Director General or by such other person or persons as BND, OPEV or CNPAR, as the case may be, shall designate in writing, and BND, OPEV and CNPAR shall each furnish to the Association suffi- cient evidence of the authority and the authenticated GpecmLn signature of each such person. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 Is/ Roger Chaufournier Regional Vice President Western Africa BANQUE NATIONALE DE DEVELOPPEMENT By /s/ Telesphore Yaguibou Authorized Representative OFFICE DE PROMOTION DE L'ENTREPRISE VOLTAIQUE By Is/ Telesphore Yaguibou Authorized Representative CENTRE NATIONAL DE PERFECTIONNEMENT DES ARTISANS RURAUX By Is/ Telesphore Yaguibou Authorized Representative