Cameroon - Second Socapalm Project : Loan 1391 - Project Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1391 T-CM LOAN NUMBER 1392 CM Project Agreement (Second SOCAPALM Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and SOCIETE CAMEROUNAISE DE PALMERAIES Dated August 25, 1977 PROJECT AGREEMENT AGREEMENT, dated August 25, 1977, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and SOCIETE CAMEROUNAISE DE PALMERAIES (hereinafter called SOCAPALM), a Soci6tf de Dfveloppement established pursuant to Law No. 68/LF/9 dated June 11, 1968, of the United Republic of Cameroon. WHEREAS (A) by an agreement (hereinafter called the First Loan Agreement), of even date herewith between the United Republic of Cameroon (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount (hereinafter called the First Loan) in various currencies equivalent to eighteen million dollars ($18,000,000), on the terms and conditions set forth in the said First Loan Agreement, but only on condition that SOCAPALM agree to undertake such obligations toward the Bank as hereinafter set forth; (B) by a second agreement (hereinafter called the Intermediate Term Loan Agreement) of even date herewith between the Borrower and the Bank, the Bank has agreed to make available to the Borrower under the Interest Subsidy Fund for the Third Window established by Resolution No. 75-111 of the Executive Directors of the Bank an amount equivalent to seven million dollars ($7,000,000) (hereinafter called the Intermediate Term -2- Loan), on the terms and conditions set forth in the said Intermediate Term Loan Agreement, but only on condition that SOCAPALM agree to undertake such obligations towards the Bank as hereinafter set forth; (C) pursuant to a loan agreement and a supplemental loan agreement dated April 15, 1969, and April 9, 1973, respectively (hereinafter called the 1969 Loan Agreement and the 1973 Loan Agreement, respectively), the Bank has made available to SOCAPALM two loans (Nos. 593 CM and 886 CM, respectively) for the purpose of assisting SOCAPALM in financing a first oil palm project; (D) by a financing agreement between the Borrower and SOCAPALM, part of the proceeds of the Loans provided for under the First and the Intermediate Term Loan Agreements will be made available to SOCAPALM on the terms and conditions therein set forth; (E) Part C of the Project will be carried out jointly by SOCAPALM and the Fonds Natica.il de Dfveloppement Rural (hereinafter called FONADER) pursuant to arrangements hereinafter set forth; and WHEREAS SOCAPALM, in consideration of the Bank's entering into the First and the Intermediate Term Loan Agreements with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -3- ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the First Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth and the following additional terms have the following meanings: (a) the term "Loans" means both the First Loan and the Intermediate Term Loan; and (b) the term "subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by SOCAPALM or by any one or more subsidiaries of SOCAPALM or by SOCAPALM and one or more of its subsidiaries. S 4- ARTICLE II Execution of the Project Section 2.01. SOCAPALM shall carry out Parts A and B and, jointly with FONADER, Part C of the Project with due diligence and efficiency and in conformity with appropriate agricultural, commercial, financial and engineering practices. Section 2.02. (a) In order to carry out, jointly with FONADER, Part C of the Project, SOCAPALM shall: (i) enter into a credit administration agreement with FONADER on te'rms and conditions satisfactory to the Bank; and (ii) as agent of FONADER, provide financial assistance, in cash and in kind, to smallholders in accordance with the provisions of the Credit Administration Agreement. (b) SOCAPALM shall: (i) prepare, not later than December 31 of each year, a proposed work program for the smallholder development to be carried out under Part C of the Project during the following year; (ii) promptly furnish such proposed work program to FONADER and the Bank, for their review and comments; and -5- (iii) thereafter establish, in agreement with FONADER, the final work program for smallholder development under Part C of the Project to be carried out during such year in accordance with the provisions of the Credit Administration Agreement. (c) SOCAPALM shall duly perform all its obligations under the Credit Administration Agreement. Except as the Bank shall otherwise agree, SOCAPALM shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Credit Administration Agreement or any provision thereof. Section 2.03. Except as the Bank shall etherwise agree, contracts for the purchase of goods or for civil works for Parts A, B and C of the Project to be financed out of the.proceeds of the Loans, shall be procured in accordance with the provisions of Schedule 4 to the First Loan Agreement. Section 2.04. (a) SOCAPALM undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out.of the proceeds of the Loans made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by SOCAPALM to replace or repair such goods. 6- (b) Except as the Bank may otherwise agree, SOCAPALM shall cause all goods and services financed out of the proceeds of the Loans made available to it by the Borrower to be used exclusively for Parts A, B and C of the Project. Section 2.05. (a) SOCAPALM shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for Parts A, B and C of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) SOCAPALM: (i) shall maintain records adequate to record the progress of Parts A, B and C of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loans made available to it by the Borrower, and to disclose the use thereof in said Parts of the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Bank's representatives to visit the facilities and construction sites included in said Parts of the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning said Parts of the Project, the expenditure of the proceeds of the Loans so made available to it and the goods and services financed out of such proceeds. - 7 - (c) SOCAPALM shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of SOCAPALM and any relevant records and documents. Section 2.06. SOCAPALM shall duly perform all its obligations under the SOCAPALM Financing Agreement. Except as the Bank shall otherwise agree, SOCAPALM shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the SOCAPALM Financing Agreement or any provision thereof. Section 2.07. (a) SOCAPALM shall, at the request of the Bank, exchange views with the Bank with regard to the progress of Parts A, B and C of the Project, the performance of its obligations under this Agreement, under the SOCAPALM Financing Agreement and under the Credit Administration Agreement, and other matters relating to the purposes of the Loans. (b) SOCAPALM shall promptly inform the Bank of any condition which interferes or threatens to interfere with, the progress of Parts A, B and C of the Project, the accomplishment of the purposes of the Loans, or the performance by SOCAPALM of its obligations under this Agreement, under the SOCAPALM Financing Agreement or under the Credit Administration Agreement. -8- Section 2.08. SOCAPALM shall take all such action as shall be necessary to acquire as and when needed all such land or rights in respect of land as shall be required for carrying out Parts A and B of the Project and the operation of the facilities included therein, and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available to SOCAPALM for the purposes of said Parts of the Project. -9- ARTICLE III Management and Operations of SOCAPALM Section 3.01. (a) SOCAPALM shall at all times carry on its operations, manage its affairs, plan the future development of its business, and maintain its financial position, all in accordance with appropriate agricultural, commercial, financial and administrative practices, and under an experienced and qualified management assisted-.y competent staff in adequate numbers. (b) Without limitation to the generality of paragraph (a) of this Section, SOCAPALM shall: (i) during the period of ten years from the date of this Agreement employ persons whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank in the positions of Director General, Deputy Director General, Executive Controller, Field Manager, Financial Manager, Chief Accountant, Manager of the Smallholder Development Program and Estate Managers for the Kienk6, M'Bongo and Eseka Estates; and (ii) appoint the Executive Controller referred to in the preceding sub-paragraph (i), and take all action necessary to ensure that he takes up his duties, not later than February 28, 1978. (c) SOCAPALM shall operate and maintain its plantations, equipment, properties and facilities and make all necessary renewals and repairs thereof, all in accordance with appropriate agricultural and management practices. -10- (d) Without limitation to the generality of paragraphs (a) and (c) of this Section, SOCAPALM shall progressLvely replace. its oil palm plantings when their yields decrease to uneconomic levels because of over-age; for this purpose, SOCAPALM shall: (i) replant, in 1989 and each year thereafter, about 4% of its total oil palm plantings, or such other proportion thereof as shall be agreed between the Bank and SOCAPALM, with either oil palms or another crop satisfactory to the Bank; and (ii) provide in its annual budgets the funds required for said purpose. Section 3.02. SOCAPALM shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. SecC.ion 3.03. Except as the Bank may otherwise agree, SOCAPALM shall not sell, lease, transfer or otherwise dispose of any of its property and assets except in the ordinary course of business. Section 3.04. SOCAPALM shall at all times take all steps necessary to maintain its corporate existence and right to carry on its operations, including the Project, and shall, except as the Bank shall otherwise agree, take all steps necessary to acquire and to retain such land, interests in land and properties, and to - 11 - acquire, maintain and renew such licenses, consents, franchises or other rights, as may be necessary or useful for the execution and operation of the Project and the conduct of its business. Section 3.05. SOCAPALM shall employ the Institut de Recherches pour les Huiles et Olagineux, or any other entity with qualifications and experience satisfactory to the Bank, as technical consultants on oil palm cultivation under terms and conditions satisfactory to the Bank. - 12 - ARTICLE IV Financial Covenants Section 4.01. (a) SOCAPALM shall maintain records adequate to reflect, in accordance with consistently maintained appropriate accounting practices, its operations and financial condition, including, without limitation: (i) separate accounts for each of its estates and for the smallholder development program to be established under Part C of the Project; and (ii) separate accounts recording the expenditures on account of which withdrawals are requested from the Loan Account and the Intermediate Term Loan Account under Categories (2), (3), (4) and (5) of the table in paragraph 1 of Schedule 1 to the First Loan Agreement. (b) SOCAPALM shall, until one year after the Closing Date, retain the separate accounts referred to in paragraph (a) (ii) of this Section and all such documents (orders, invoices, bills, receipts and other documents) evidencing the expenditures referred to in said paragraph, and shall enable the Bank's accredited representatives to inspect such accounts and documents. Section 4.02. SOCAPALM shall: (a) have its accounts and financial statement (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate - 13 - auditing principles consistently applied, by independent auditors acceptable to the Bank; (b) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year: (i) certified copies of its financial statements for such year as so audited; and (ii) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested, including, without limitation to the foregoing, separate opinions by said auditors on the separate accounts referred to in sub-paragraphs (i) and (ii), respectively, of Section 4.01 (a) of this Agreement; and (c) furnish to the Bank all such other information concerning the accounts (including the documents referred to in Section 4.01 (b) of this Agreement) and financial statements of SOCAPALM and tne audit thereof as the Bank shall from time to time reasonably request. Section 4.03. Except as the Bank shall otherwise agree, SOCAPALM shall not incur or permit any subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of SOCAPALM and all its subsidiaries then incurred and outstanding would be greater than two times the consolidated capital and surplus of SOCAPALM and all its subsidiaries. For the purposes of this Section: - 14 - (a) The term "debt" means any debt incurred by SOCAPALM or any subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by SOCAPALM or any subsidiary. (b) Whenever 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 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 SOCAPALM for the purposes of servicing such debt. (d) The term "consolidated debt of SOCAPALM and all its subsidiaries" means the total amount of debt of SOCAPALM and its subsidiaries, excluding any debt owed by SOCAPALM to any subsidiary or by any subsidiary to SOCAPALM or to any other subsidiary. - 15 - (e) The term "consolidated capital and surplus of SOCAPALM and all its subsidiaries" means the aggregate of the unimpaired paid-in capital, surplus and free reserves of SOCAPALM and its subsidiaries, after excluding therefrom such amounts as shall represent equity interests of SOCAPALM in any subsidiary, or of any such subsidiary in SOCAPALM or in any other subsidiary. Section 4.04. (a) Except as the Bank shall otherwise agree, SOCAPALM shall at all times maintain its liquid assets at a level equivalent to its cash expenditures during the three preceding months or four hundred fifty million francs CFA (CFAF 450,000,000), whichever is more, or such other level as shall be established from time to time by agreement between the Bank and SOCAPALM. (b) For the purposes of this Section, the term "liquid assets" means cash and bank balances, assets readily convertible into cash and undrawn bank overdraft facilities, and the term "cash expenditures" means all cash expenditures, including, without limitation, payments of principal, interest and other charges due on account of debt, but excluding expenditures for the purchase or renewal of fixed assets (such as vehicles and other equipment and expenditures for new plantation development). Section 4.05. SOCAPALM covenants that before it shall undertake or execute, for its own account or for the account of any third party or parties, any major new project or development - 16 - other than the Project, or make any major new investment not related to the Project (other than investment of idle-funds-in securities readily convertible into cash), it shall first have satisfied the Bank that such action would not materially and adversely affect the operations and financial position of SOCAPALM. For the purposes of this Section, the terms "major new project or development" and "major new investment" means any project, development or investment involving an investment of more than the equivalent of $1,000,000 or such other amount as shall be agreed from time to time between the Bank and SOCAPALM. Section 4.06. (a) Before SOCAPALM shall take any action to establish or acquire any subsidiary, SOCAPALM shall first satisfy the Bank that such action would not materially and adversely affect the operations and financial position of SOCAPALM. (b) If SOCAPALM establishes or acquires any subsidiary, SOCAPALM shall cause such subsidiary to observe and perform the obligations of SOCAPALM under this Agreement to the extent to which such obligations shall or can be applicable thereto, as though such obligations were binding upon such subsidiary. Section 4.07. Except as the Bank shall otherwise agree, SOCAPALM shall not, prior to December 31, 1980, declare any dividends to its shareholders. - 17 - 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 First Loan Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Bank and of SOCAPALM thereunder shall terminate on the earlier of the following two dates: (i) the date on which the First Loan Agreement shall terminate in accordance with its terms; or (ii) a date twenty years after the date of this Agreement. (b) If the First Loan Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Bank shall promptly notify SOCAPALM of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the First Loan Agreement or the Intermediate Term Loan Agreement. -18- ARTICLE VI Amendments to the 1969 Loan - Agreement and the 1973 Loan Agreement Section 6.01. Sections 5.01 (b), 5.08 (a), and 5.08 (c) of the 1969 Loan Agreement are amended by substituting therefor Sections 3.01 (b), 3.01 (a) and (c), and 3.04, respectively, of this Agreement; provided, however, that for the purposes of the 1969 Loan Agreement, all references to "SOCAPALM" in said Sections of this Agreement shall be deemed to be references to "the Borrower". Section 6.02. The 1973 Loan Agreement is amended as follows: (a) Section 4.02 is deleted. (b) In Section 4.01, the words ", as the same may be amended from time to time," are added after the words "Prior Loan Agreement". (c) Sections 5.04, 5.05 and 5.06 are deleted and Sections 4.03, 4.04 and 4.05, respectively, of this Agreement are substituted therefor; provided, however, that for the purposes of the 1973 Loan Agreement all references to "SOCAPALM" in said Sections of this Agreement shall be deemed to be references to "the Borrower". - 19 - ARTICLE VII Miscellaneous Provisions Section 7.01. 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 bL 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 Bank: International Bank fir Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United State of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For SOCAPALM: Socift6 Camerounaise de Palmeraies B.P. 691 Douala United Republic of Cameroon Cable address: SOCAPALM Douala - 20 - Section 7.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of SOCAPALM may be taken or executed by the Pr6sident du Conseil d'Administration of SOCAPALM or such other person or persons as the Prfsident du Conseil d'Administration shall designate in writing. Section 7.03. SOCAPALM shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of SOCAPALM, take any action or execute any documents required or permitted to be taken or executed by SOCAPALM pursuant to any of the provisions of this Agreement. Section 7.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. - 21 - 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 State of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is/ Roger Chaufournier Regional Vice President Western Africa SOCIETE CAMEROUNAISE DE PALMERAIES By /s/ Benoit Bindzi Authorized Representative