Cameroon - Second Semry Rice Project : Credit 0763 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 763 CM Project Agreement (Second SEMRY Rice Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and SOCIETE D'EXPANSION ET DE MODERNISATION DE LA RIZICULTURE DE YAGOUA Dated February 1, 1978 CREDIT NUMBER 763 CM PROJECT AGREEMENT AGREEMENT, dated February 1, 1978, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and SOCIETE D'EXPANSION ET DE MODERNISATION DE LA RIZICULTURE DE YAGOUA (hereinafter called SEMRY). WHEREAS (A) by the Development Credit Agreement of even date herewith between the United Republic of Cameroon (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to fourteen million five hundred thousand dollars ($14,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that SEMRY agree to undertake such obligations toward the Association as hereinafter set forth; (B) by the Loan Agreement of even date herewith between the Borrower and the International Bank for Reconstruction and Development (hereinafter called the Bank), the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to fourteen million five hundred thousand dollars ($14,500,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that SEMRY agree to undertake such obligations toward the Association as hereinafter set forth; (C) by a financing agreement to be entered into between the Borrower and SEMRY, part of the proceeds of the credit provided for under the Development Credit Agreement and of the loan pro- vided for under the Loan Agreement will be made available to SEMRY on the terms and conditions therein set forth; (D) Part E (iii) of the Project will be carried out jointly by SEMRY and the Fonds National de DOveloppement Rural (herein- after called FONADER) pursuant to arrangements hereinafter set forth; (E) the Association has previously entered into a project agreement, dated April 26, 1972, with SEMRY (hereinafter called the Prior Project Agreement) for the purpose of assisting SEMRY in carrying out a prior rice development project; and WHEREAS SEMRY, in consideration of the Association's entering into the Development Credit Agreement with the Borrower and the - 2 - Bank's entering into the Loan 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) have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by SEMRY or by any one or more subsidiaries of SEMRY or by SEMRY and one or more of its subsidi- aries; (b) "Cahier des charges" means the Cahier des charges relatif a l'utilisation des parcelles defining the rights and obligations of farmers cultivating the land of SEMRY, as set forth in Annex II to the Borrower's Decree No. 71/DF/74, dated February 24, 1971, and as such Cahier des charges may be amended from time to time; and (c) "CFA francs" and the letters "CFAF" mean the currency of the Borrower. ARTICLE II Execution of the Project Section 2.01. SEMRY shall carry out Parts A through E (ii) and F and, jointly with FONADER, Part E (iii) of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, agricultural, economic, financial and engineering practices. Section 2.02. (a) In order to secure assistance in the super- vision of the civil works to be carried out under the Project, SEMRY shall employ engineering consultants whose qualifications, -3- experience and terms and conditions of employment shall be satis- factory to the Association. (b) In order to secure assistance in carrying out Parts D (v) and (vi), E (i), and F (ii) and (iii) of the Project, SEMRY shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association; such consultants shall include a training specialist responsible for preparing a detailed program to carry out Part D (v) of the Project, to be employed not later than September 30, 1978. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit and of the Loan, shall be governed by the provisions of Schedule 3 to the Development Credit Agree- ment. Section 2.04. In order to secure assistance in carrying out Part D (vi) of the Project, SEMRY shall enter into a contract with the Borrower's Office National de la Recherche Scientifique et Technique providing for the supervision of the food crop research programs to be carried out by SEMRY in each year until completion of the Project. SEMRY shall furnish said contract to the Associa- tion and annually consult with the Association on the proposed research programs to be carried out pursuant thereto. Section 2.05. (a) SEMRY shall carry out Part E of the Project in accordance with the provisions of the Cahier des charges. (b) In order to carry out, jointly with FONADER, Part E (iii) of the Project, SEMRY shall: (i) not later than June 30, 1978, enter into a credit administration agreement with FONADER on terms and conditions satisfactory to the Association; and (ii) as agent of FONADER, provide agricultural inputs on credit to SEMRY farmers in accordance with the provisions of the Credit Administration Agreement. Section 2.06. Not later than June 30, 1978, SEMRY shall pre- pare, in-cooperation with the health services of the Borrower, and furnish to the Association for its concurrence, a detailed program for the carrying out of Part F of the Project and a plan for the -4- execution of such program, and thereafter carry out said Part of the Project in accordance with such program and plan. Section 2.07. (a) SEMRY undertakes to insure, or make ade- quate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit and of the Loan 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 SEMRY to replace or repair such goods. (b) Except as the Association may otherwise agree, SEMRY shall cause all goods and services financed out of the proceeds of the Credit and of the Loan made available to it by the Borrower to be used exclusively for the Project. Section 2.08. (a) SEMRY shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction, work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) SEMRY shall: (i) maintain records and procedures ade- quate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit and of the Loan made available to it by the Borrower, and to disclose their use in the Project; (ii) without limitation upon the provi- sions of paragraph (d) of this Section, enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such informa- tion as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and of the Loan so made available to it and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Associa- tion and SEMRY, SEMRY shall prepare and furnish to the Association -5- a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Association and SEMRY of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit and the Loan. (d) SEMRY shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of SEMRY and any relevant records and documents. Section 2.09. SEMRY shall duly perform all its obligations under the SEMRY Financing Agreement and the Credit Administration Agreement. Except as the Association shall otherwise agree, SEMRY shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the SEMRY Financing Agreement, the Credit Administration Agreement or any provision of either of said Agreements. Section 2.10. (a) SEMRY shall, at the request of the Associa- tion, exchange views with the Association with regard to the pro- gress of the Project, the performance of its obligations under this Agreement, under the SEMRY Financing Agreement and under the Credit Administration Agreement, and other matters relating to the purposes of the Credit and the Loan. (b) SEMRY shall promptly inform the Association of any condition which interferes, or threatens to interfere, with the progress of the Project, the accomplishment of the purposes of the Credit and the Loan, or the performance by SEMRY of its obliga- tions under this Agreement, under the SEMRY Financing Agreement or under the Credit Administration Agreement. ARTICLE III Management and Operations of SEMRY Section 3.01. (a) SEMRY shall at all times carry on its operations, manage its affairs, plan the future development of its business and maintain its financial position in accordance with appropriate agricultural, commercial, economic, financial and administrative practices, and under an experienced and qualified management assisted by competent staff in adequate numbers. - 6 - (b) Without limitation to the generality of paragraph (a) of this Section, SEMRY shall; (i) operate and maintain its equipment, properties and facilities as well as the irrigation facilities made available to it by the Borrower and make all necessary renewals and repairs thereof, all in accordance with appropriate agricultural and management practices; (ii) during a period of not less than ten years from the date of this Agreement, provide technical and extension services to farmers in the Project Area at a level satisfactory to the Association; and (iii) ensure that the technical, financial and adminis- trative qualifications and professional experience of its general manager, deputy general manager, and director in charge of the unit responsible for the administration of the works included under Parts A through E (ii) of the Project be at all times adequate for the satisfactory discharge of these tasks. Section 3.02. SEMRY shall, for a period of ten years from the date of this Agreement, annually exchange views with the Borrower and the Association on the progress in the replacement of expatriate SEMRY staff by Cameroonians. Section 3.03. SEMRY shall take out and maintain with respon- sible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.04. Except as the Association may otherwise agree, SEMRY shall not sell, lease, transfer or otherwise dispose of any of its property and assets except in the ordinary course of business. Section 3.05. SEMRY 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 take all steps necessary to acquire and to retain such land, interests in land and properties, and to 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. - 7 - Section 3.06. (a) Before SEMRY shall take any action to establish or acquire any subsidiary, SEMRY shall first satisfy the Association that such action would not affect materially and adversely the operations and financial position of SEMRY. (b) If SEMRY establishes or acquires any subsidiary, SEMRY shall cause such subsidiary to observe and perform the obliga- tions of SEMRY 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 3.07. Before SEMRY shall undertake or execute, for its own account or for the account of any third party or parties, any new major project or development other than the Project, it shall first satisfy the Association that the carrying out of such project or development would not interfere with its obligations under this Agreement. For the purpose of this Section, the term "major project or development" means any project or development involving an investment of more than the equivalent of one million dollars ($1,000,000) or such other amount as shall be agreed from time to time between the Association and SEMRY. Section 3.08. (a) To ensure the recovery of the investment and maintenance costs of the works carried out under Parts B and E (ii) of the Project, of not less than 50% of the maintenance costs of the works carried out under Part A of the Project and of SEMRY's operating costs for services provided to SEMRY farmers, SEMRY shall collect charges from such farmers in accordance with the provisions of the Cahier des charges. (b) SEMRY shall annually exchange views with the Borrower and the Association regarding the level of the charges referred to in paragraph (a) of this Section as well as the prices for paddy purchases from farmers and rice sales by SEIMRY. Section 3.09. SEMRY shall not take any action aiming at an amendment, suspension, abrogation, termination or waiver of the Cahier des charges without the prior approval of the Association. ARTICLE IV Financial Covenants Section 4.01. (a) SEMRY shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition, -8- including, without limitation, separate accounts for the Project and for the operation of the agricultural developments and facili- ties established under the prior project carried out pursuant to the Prior Project Agreement. (b) SEMRY shall, until one year after the Closing Date, retain all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which with- drawals are requested from the Credit Account and the Loan Account on the basis of certificates of expenditures, and shall enable the Association's accredited representatives to inspect such records. Section 4.02. SEMRY shall: (i) have its accounts and finan- cial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accor- dance with appropriate 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 six 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, including, without limitation to the fore- going, a separate opinion by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, showing whether the proceeds of the Credit and of the Loan made available to SEMRY and withdrawn from the Credit Account and the Loan Account on the basis of certificates of expenditures have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning the accounts and financial statements of SEMRY and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. (a) Except as the Association shall otherwise agree, SEMRY shall at all times maintain its liquid assets at a level equivalent to its cash expenditures during the three preced- ing months or three hundred million CFA francs (CFAF 300,000,000), whichever is more, or such other level as shall be established from time to time by agreement between the Association and SEMRY. (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, -9- 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 developments). 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 and of SEMRY thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement or the Loan Agreement shall terminate in accordance with its terms, whichever shall be later; or (ii) a date twenty years after the date of this Agree- ment. (b) If both the Development Credit Agreement and the Loan Agreement terminate in accordance with their terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify SEMRY of this event. ARTICLE VI Amendments to the Prior Project Agreement Section 6.01. The Prior Project Agreement is amended as follows: (a) Sections 3.02 (a), 3.03 and 4.02 of the Prior Project Agreement are deleted and Sections 3.01 (a), 3.07 and 4.02, respectively, of this Agreement are substituted therefor. (b) Sections 3.04 and 4.03 of the Prior Project Agreement are deleted. - 10 - 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 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 des- ignated 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 SEMRY: Socift6 d'Expansion et de Modernisation de la Riziculture de Yagoua B.P. 46 Yagoua United Republic of Cameroon Cable address: SEMRY Yagoua Section 7.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of SEMRY may be taken or executed by the - 11 - Directeur G6n6ral of SEMRY or such other person or persons as the Directeur G6n6ral of SEMRY shall designate in writing. Section 7.03. SEMRY shall furnish to the Association suffi- cient evidence of the authority and the authenticated specimen signature of any person who will, on behalf of SEMRY, take any action or execute any documents required or permitted to be taken or executed by SEMRY pursuant to any of the provisions of this Agreement. Section 7.04. This Agreement may be executed in several coun- terparts, 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 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 SOCIETE D'EXPANSION ET DE MODERNISATION DE LA RIZICULTURE DE YAGOUA By Is/ Benoit Bindzi Authorized Representative