France - Iron Ore Project : Loan 0249 - Loan Agreement - Conformed

LOAN NUMBER 249 FR Loan Agreement (Iron Ore Projec) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND SOCIETE ANONYME DES MINES DE FER DE MAURITANIE DATED MARCH 17, 1960 LOAN NUMBER 249 FR Loan Agreement (Iron Ore Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND SOCIETE ANONYME DES MINES DE FER DE MAURITANIE DATED MARCH 17, 1960 Loan Agreementl AGREEMENT, dated March 17, 1960, between INTERNA- TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank) and SOCIETE ANONYME DES MINES DE FER DE MAURITANIE, "Miferma" (hereinafter called the Borrower), a company organized and existing under the laws of the Islamic Republic of Mauritania. WHEREAS (A) The Borrower is engaged in the carrying out of a Project for the exploitation of iron ore deposits near Fort-Gouraud and the transportation of this ore to Port-Etienne and has requested the Bank to assist in the financing of such project; (B) The Board of Directors of the Borrower has been authorized by a resolution adopted on December 16, 1959, at a general meeting of the shareholders of the Borrower to increase the authorized capital of the Borrower to CFA francs 13.3 billion; (C) By Agreement dated February 25, 1960, Caisse Cen- trale de Cooperation Economique (hereinafter called Caisse Centrale) has agreed to make a loan (hereinafter called the Caisse Centrale Loan) to the Borrower in an amount up to Francs NF 50 million, such agreement being hereinafter called the Caisse Centrale Loan Agreement; (D) The Minister of Finance of Republic of France has, under the terms of letters to the Borrower, dated July 22 and October 5, 1959, agreed to make, or to guarantee, a loan (hereinafter called the Treasury Loan) to the Borrower in an amount of French francs 10.5 billion, such letters being hereinafter called the Treasury Loan Agreement; (E) By Agreement dated February 24, 1960, and a letter of interpretation of even date therewith, (hereinafter collectively called the Financial Agreement) between the Borrower and its shareholders, the latter have agreed to 4 make funds available to the Borrower, as and when re- quired, to complete the Project and to maintain the working capital of the Borrower at a level satisfactory to the Bank; (F) The Loan provided for in this Loan Agreement is to be guaranteed as to payment of principal, interest and other charges by Republic of France and Islamic Republic of Mauritania upon the terms of Guarantee Agreements of even date herewith between each of said Republics and the Bank; WHEREAS the Bank has agreed to make a Loan to the Borrower upon the terms and conditions hereinafter set forth; Now THEREFORE, it is hereby agreed as follows: ARTICLE I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loan Agreement ac- cept all the provisions of Loan Regulations No. 4 of the Bank dated June 15, 1956, subject, however, to the modifica- tions thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Except where the context otherwise re- quires, the following terms have the following meanings wherever used in this Agreement, or any Schedule to this Agreement: (a) The term "shareholders" shall mean collectively the shareholders of the Borrower and shall include any of their successors or assigns; (b) The term "guarantor-shareholders" shall mean the shareholders of the Borrower which are parties to the Fi- nancial Agreement, as well as any other shareholder of the 5 Borrower adhering to such Agreement, to the exclusion, however, of those guarantor-shareholders which shall have freed themselves of their obligations under such Agreement pursuant to the provisions of article 4 or 6 of said Agree- inent; (c) The term "founders shares" shall mean the founders shares (pairts beneficiaires) issued or to be issued by Miferma; and the term "holders of founders shares" shall mean the holders of any such shares and shall include any of their successors or assigns; (d) The term "Community" shall mean the Community set up by the French Constitution of October 4, 1958; (e) The term "Republic of Mauritania" shall mean the Islamic Republic of Mauritania, formerly known as the Territory of Mauritania; (f) The term "Declaration of Public Utility" shall mean the Ar1t6 dated December 5, 1957, issued by the President of the Council of Government of the Territory of Mauri- tania; (g) The term "Mining Concession" shall mean the con- cession dated October 20, 1958, granted to the Borrower by the Chief of the Territory of Mauritania; (h) The term "Tax Status" shall mean Law No. 59.060 and Law No. 59.061 dated July 10, 1959, of Republic of Mauritania granting to the Borrower a tax status of long duration, and shall include either one or both of such laws, as the context shall require; (i) The term "Establishment Convention" shall mean the establishment convention of long duration dated October 24, 1959, between Republic of Mauritania and the Borrower; (j) The term "Port Convention" shall mean the con- vention annexed to the Establishment Convention; (k) The term "Railway Convention" shall mean the con- vention annexed to the Establishment Convention; 6 (1) The term "Installation and Operating Convention" shall mean the convention annexed to the Establishment Convention relating to loading and unloading facilities at Port-Etienne and to water and power supply at Port- Etienne and Fort-Gouraud; (m) The term "Deposit Agreement" shall mean the agreement or agreements to be entered into by the Bank and a depository bank or banks providing for the deposit of funds to be paid pursuant to the Financial Agreement; (u) The term "Technical Assistance Agreement" shall mean the agreement to be entered into between Societe Minibre et Metallurgique de Penarroya (hereinafter Penar- roya) and the Borrower; (o) The term "Francs" and the letters "Frs" shall mean such coin or currency as before January 1, 1960, was legal tender for the payment of public or private debts in the territories of Republic of France; and the terms "Francs NF" and the letters "N Frs" shall mean such coin or currency as on or after January 1, 1960, is legal tender for the payment of public or private debts in the territories of said Republic; (p) The term "CFA Francs" and the letters "CFA Frs" shall mean francs in the currency of Republic of Mauri- tania; (q) The term "subsidiary" shall mean any corporation of which at least a majority of the outstanding voting stock shall be owned, or which shall be effectively con- trolled, by the Borrower or by one or more subsidiaries of the Borrower or by the Borrower and one or more of its subsidiaries; (r) The term "date of the first shipment" shall mean the date on which exports of ore by the Borrower shall aggregate one hundred thousand tons; (s) The term "Commercial Agreements" shall mean contracts for the sale of ore by the Borrower to share- 7 holders in a minimum aggregate amount of three million tons of ore annually; (t) The term "outside debt of the Borrower" shall mean the Loan, the Caisse Centrale Loan, the Treasury Loan or any other loan which the Borrower might thereafter con- tract with the consent of the Bank other than advances made under the Financial Agreement; (u) The term "tons" shall mean metric tons. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, oin the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to sixty-six million dollars ($66,000,000). SeCTio 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The Borrower shall be entitled, subject to the provisions of the Loan Regula- lions and of this Agreement, to withdraw from the Loan Account such amounts as shall have been expended for the reasonable cost of goods to be financed under this Agreement and, if the Bank shall so agree, such amounts as shall be required to meet the reasonable cost of such goods; provided, however, that, except as shall bc otherwise agreed between the Bank and the Borrower: (i) no with- drawal shall be made unless the Borrower shall furnish to the Bank in respect of each withdrawal evidence satisfac- tory to the Bank that the Borrower has received (a) by way of payments in cash on its outstanding shares of capi- tal stock, and (b) by means of drawings on the Treasury Loan, amounts in the aggregate at least equal to such with- drawal together with withdrawals theretofore made from the Loan Account; (ii) withdrawals from the Loan Account shall not exceed the equivalent of sixty five million dollars 8 ($65,000,000) until the Borrower shall have drawn the full amount of the Treasury Loan; and (iii) no withdrawals shall be made on account of (a) expenditures prior to the date of this Agreement, or (b) expenditures in the cur- rency of Republic of Mauritania or for goods produced in (including services supplied from) the territories of said Republic or (c) expenditures in the territories of any country (other than Switzerland) which is not a member of the Bank, or for goods produced in (including services supplied from) such territories. For the purposes of this Section, the term "withdrawal" shall mean actual disburse- ments from the Loan Account and undisbursed amounts committed by the Bank at the request of the Borrower to reimburse commercial banks for payments made under letters of credit. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge 0,t the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. Such commit- ment charge shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regu- lations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrower shall pay interest at the rate of six and one fourth per cent (61,4%) per annum on the principal amount of the Loan so withdrawn and out- standing from time to time. SECTION 2.05. Except as the Bank and the Borrower shall otherwise agree, the charge payable for special commit- ments entered into by the Bank at the request of the Bor- rower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent ( of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. 9 SECTION 2.06. Interest and other charges shall be pay- able semi-annually on January 1 and July 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan 6E'li 3.01. The Borrower shall apply the proceeds of tWe Loan exclusively to financing the cost of goods required Lo carry out the Project described in Schedule 2 to this \kgreenienl, The specific goods to be financed out of the proceeds of the Loan and the methods and procedures for procurement of such goods shall be determined by agree- ient between the Bank and the Borrower, subject to modi- licatiun by further agreement between them. SECTION 3.02. The Borrower shall cause all goods iiianed out of the proceeds of the Loan to be imported ilato the territories of Republic of Mauritania and there to be used exclusively in the carrying out of the Project. ARTICLE IV Bonds bEcuoN 4.01. The Borrower shall execute a-d deliver Hondb representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The President of the Borrower, or such person or persons as may be authorized for the purpose by the Board of Directors of the Borrower, are designated as authorized representatives of the Borrower for the pur- poses of Section 6.12 (a) of the Loan Regulationk. 10 ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall carry out the Project, or cause the Project to be carried out, with due diligence and efficiency and in conformity with sound busi- ness, technical and financial practices. (b) The Borrower shall furnish, or cause to be furnished, to the Bank, promptly upon their preparation, the plans, specifications and construction schedules for the Project and any material modifications subsequently made therein, in such detail as the Bank shall from time to time request. (c) The Borrower shall maintain records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such in- formation as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the goods, and the operations and financial condition of the Borrower. SECTION 5.02. (a) The Bank and the Borrower shall co- operate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. (b) The Bank and the Borrower shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of the occurrence of the event referred to in Article 6 (b) of the Financial Agreement 0 11 and of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the services thereof. SECTION 5,03. (a) The Borrower shall duly perform its obligations under the Technical Assistance Agreement, the Commercial Agreements, the Mining Concession, the Estab- lishment Convention, the Port Convention, the Railway Convention, the Installation and Operating Convention and the Tax Status. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not take or concur in any action which would have the effect of amending, abro- gating, assigning or waiving any provision of any one of such inst rimients. (b) If, as permitted by articles 5, 11 and 21 of the Instal- lation and Operating vention, the Borrower shall, be- fore the date of the first shipment, propose to substitute for itself any person or entity to carry out any portion of the Project, the Bank shall first have to be satisfied that such substitution would not be prejudicial to the carrying out of the Project. SECTIoN 5.04. Except as the Bank and the Borrower shall otherwise agree: (a) The Borrower shall not amend its statutes; (b) The Borrower shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving any provision of the Financial Agree- ment. SECTION 5.05. (a) The Borrower shall promptly call for the payment of unpaid portions of its outstanding shares of capital stock as and when funds are needed to carry out the Project. (b) If the completion of the Project or its successful operation is hindered or delayed, or is threatened with 12 hindrance or delay, because the funds available to the Bor- rower are inadequate to ensure its completion and the pro- vision of initial working capital satisfactory to the Bank, or if the net working capital falls below, or threatens to fall below, a level satisfactory to the Bank, the Borrower shall promptly request its guarantor-shareholders to pro- vide the Borrower, or cause the Borrower to be provided, promptly, by means of payments in cash for additional shares of capital stock issued by the Borrower, or of ad- vances, or of credits or guarantees, or otherwise, as con- templated in the Financial Agreement, with the necessary funds as and when required. SECTION 5.06. (a) If circumstances shall have arisen which shall require the guarantor-shareholders under Ar- ticli 6 (b) of the Financial Agreement to make the payments provided therein, the Borrower shall promptly call upon each of the guarantor-shareholders to make promptly the payments required to be paid under said Article 6 (b) cor- responding to their respective shares of the amounts due and payable by the Borrower pursuant to Section 6.02 here- of and shall instruct the guarantor-shareholders to make such payments into an account or accounts to be opened by and in the name of the Bank pursuant to the Deposit Agree- ment. (b) As soon as practicable, and to the extent necessary to obtain the currency or currencies due and pa-able under the Loan and the Bonds, the amounts credited to such account or accounts shall be converted into such currency or currencies and applied by the Bank as follows: (A) To the ratable payment of interest that may be due on the Loan and the Bonds and remains unpaid; (B) Thereafter to the ratable payment of, or on account of the unpaid principal (including premiums, if any) of the Loan and the Bonds. 13 Payments made under (A) and (B) above shall be made ratably as between the Bonds and the portion of the Loan not represented by Bonds. (c) Pending such application under (b) above the Bank may at its discretion invest or otherwise hold such funds for the purpose for which they were received in such man- ner as it shall determine. Any amounts received by the Bank in connection herewith shall be added to the account or accounts. After all amounts due and payable under the Loan and the Bonds shall have been so paid, the Bank shall pay any balance remaining in the account or accounts to the Borrower or to whosoever shall be entitled thereto. (d) The Bank shall not be liable to the Borrower or to any Bondholder for any action taken or omitted to be taken by it in good faith in its administration of the account or accounts. (e) The Borrower's obligations under the Loan or the Bons shall not be impaired or deemed to be satisfied by any payment made under the provisions of this Section, except to the extent and at the time that such payment shall result in the effective payment of the Loan and the Bonds in the currency or currencies payable thereunder. SECTIN 5.07. The Borrower, except insofar as shall be niecessary to make payments due in the ordinary course of buisiniess for the supply of goods and services, shall make no payment to aiv of its shareholders which would reduce or threaten to re(Iduce its net working capital below a level satisfactory to the Bank. SECTr1N 5.08. (a) The Borrower shall not make any pay- ment in any year to its shareholders or holders of founders shares if as a result of such payment funds available to the Borrower in that year, or expected to become available in that year, would be insufficient to meet expenditures re- quired in the same year to carry out the Project; provided, 14 however, that the foregoing shall not apply to payments due in the ordinary course of business for the supply of goods or services; (b) The Borrower shall not declare or pay any dividends, or make any distribution, on any shares of its capital stock or on any founders shares (other than a dividend payable solely in shares of its capital stock) before the date of the first shipment. Thereafter, the Borrower may declare or pay dividends, or make any cash distribution, on shares of its capital stock or on founders shares, but only to the extent that: (i) the aggregate amount expended or required for such purposes since that date shall not exceed the accumulated earned surplus of the Borrower; and (ii) the aggregate amount expended or required for such purposes since that date shall not exceed the aggregate amount which would be required to pay a dividend in each fiscal year of 10% of the aggregate amount paid up of its shares of its capital stock outstanding at the end of the preceding fiscal year, provided, however, that the Borrower may declare or pay dividends, or make a cash distribution, on shares of its capital stock or on founders shares in excess of this limit if the Borrower makes simultaneously provision for the prepayment of an amount, at least. equivalent to such excess, of the Loan and the Bonds; (c) Before the date of the first shipment, the Borrower shall pay no interest on advances made under the Financial Agreement. Thereafter, such interest shall be payable in any year out of the amount which would constitute net earnings in that year before taxes if no such interest were due or paid; (d) The Borrower shall not repay advances made under the Financial Agreement to provide the Borrower with funds necessary for the completion of the Project and the provision of initial working capital satisfactory to the Bank, as contemplated in Section 5.05 (b) hereof, so long as any part of the Loan or the Bonds shall remain outstan4ing and unpaid; 15 (e) The Borrower may repay advances made under the Financial Agreement after the completion of the Project and the provision of initial working capital satisfactory to the Bank to provide the Borrower with funds necessary to maintain the net working capital of the Borrower at a level satisfactory to the Bank, as contemplated in section 5.05 (b) hereof; (f) For the purposes of this Section and of Sections 5.05 and 5.07 hereof: (i) the term "net working capital" shall mean the excess of current assets over current liabilities; (ii) the term "current assets" shall mean cash and assets readily convertible into cash and all other assets which would in the ordinary course of the Borrower's husiness be converted within one year into cash or assets readily con- vertible into cash; (iii) the term "current liabilities" shall nean liabilities due and payable and all other liabilities which would become payable or could be called for payment within onle year, but not including provision for meeting fUtuIre S01n% i( Of hIe Loan an 1d Ie Caisse Centrale Loan; (iv) the term '"accumulated earned surplus" shall mean the accumulated not earnings of the Borrower accruing from and after the (late of the first shipment, down to the end of the preceding fiscal year; and (v) the term "net earnings" shall mean not earnings of the Borrower as deternined in ac erdince with generally accepted sound ncconntirig practices, after paying or making provision for: (1) operating expenses; (2) depreciation. The depreciation charge for any item of equipment, fixed plant and other installations shall be calculated on the basis either of its economic life or of the life of the ore deposits whichever shall be the shorter. For the purposes of this subparagraph, and except as the Bank shall otherwise agree, the life of the ore deposits shall be based on 94 million tons of ore; 16 (3) interest on the outside debt of the Borrower, and on any other debt of the Borrower maturing by its terms within one year after the date on which it is originally incurred; (4) taxes, if any. (g) So long as any part of the Loan or the Bond shall remain outstanding and unpaid, any advances under the Financial Agreement shall be subordinated and subject in right of payment to the prior payment in full of the prin- cipal and other amounts payable on the Loan, or the Bonds, upon any dissolution, winding-up, liquidation, any bank- ruptcy proceedings or upon any other marshalling of the assets and liabilities of the Borrower. SECTION 5.09. Except as the Bank shall otherwise agree, the Borrower shall riot incur, guarantee or assume any in- debtedness and shall not permit any subsidiary to incur, guarantee or assume any indebtedness, (other than ad- vances made under the Financial Agreement) maturing by its terms more than one year after the date on which it is originally incurred. SECTION 5.10. The Borrower undertakes that, except as the Bank shall otherwise agree: (a) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; and (b) if any lien shall be created on any assets of the Borrower, other than under (a) above, as security for any debt, the Borrower shall grant to the Bank an equivalent lien satis- factory to the Bank; provided, however, that the foregoing provisions of this Sect..n shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such 17 property; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. SECTION 5.11. Subject to such exemption as shall be con- ferred by the provisions of Section 3.03 and Section 3.04 of the Guarantee Agreements, the Borrower shall pay or cause to be paid all taxes or fees, if any, imposed under the laws of the Guarantors or laws in effect in the respective territories of the Guarantors on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreements or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, payments under any Bond to a holder thereof other than the Bank, when such bond is beneficially owned by an individual or corporate resident of either of the Guarantors. SECTION 5.12. The Borrower shall pay or cause to be paid all taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries on or in connection with the exe- cution, issue, delivery or registration of this Agreement, the Guarantee Agreements or the Bonds. SECTION 5.13. Except as shall be otherwise agreed be- tween the Bank and the Borrower: (a) The Borrower shall insure or cause t. be insured with responsible insurers all goods financed with the pro- ceeds of the Loan. Such insurance shall cover such marine, transit and other hazards incident to purchase and impor- 18 tation of the goods into the territories of Republic of Mauritania and to delivery thereof to the site of the Project, and shall be for such amounts as shall be consistent with sound commercial practice. Such insurance shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable. (b) The Borrower shall, in addition to the insurance pro- vided for in subparagraph (a) of this Section, take out or cause to be taken out and maintain or cause to be main- tained, with responsible insurers, insurance against such risks and in such amounts as shall be consistent with sound industrial and business practices. SECTION 5.14. Except as the Bank shall otherwise agree, the Borrower shall not sell, lease, transfer or otherwise dispose of its property and assets or of the property in- cluded in the Project or any plant included therein, except in the ordinary course of business; provided, however, that for the purposes of this Section any transfer of assets by the Borrower to Republic of Mauritania or to such person or persons, entity or entities, as Republic of Mauritania may designate pursuant to Articles 9, 16 and 25 of the Installation and Operating Convention shall not be con- sidered as a transfer of assets occurring in the ordinary course of business. SECTION 5.15. Except as the Bank shall otherrwise agree, before the Borrower shall undertake or execute, for its own account or for the account of any of its shareholders or of any third party or parties, any major project or develop- ment other than the Project, or make any investment not related to the Project, it shall first have satisfied the Bank that such action would not prejudice the interests of the Bank under this Agreement, the Guarantee Agreements or the Bonds; provided, however, that the Borrower may in- vest idle funds in securities readily convertible into cash. SECTION 5.16. (a) The Borrower shall at all times take all steps necessary to maintain its corporate existence and 19 right to carry on operations and shct,, except as the Bank may otherwise agree, take all steps necessary to acquire, or to make effective arrangements satisfactory to the Bank to acquire, and to retain such land, interests in land and properties and to acquire, or to make effective arrange- ments satisfactory to the Bank to acquire, and to maintain and to renew such licenses, consents, or other rights, as may be necessary or proper for the construction and operation of the Project and the conduct of its business. (b) The Borrower shall operate its undertaking and con- duct its affairs in accordance with sound business and finan- cial practices and shall operate, maintain, renew and repair its plants, machinery, equipment and property as required in accordance with sound engineering, railway and mining practices. SECTION 5.17. (a) Except as the Bank shall otherwise agree, before the Borrower shall take any action to create any subsidiary, the Borrower shall first have satisfied the Bank that such action would not prejudice the interest of the Bank under this Agreement, the Guarantee Agreements or the Bonds. (b) The obligations of the Borrower expressed in this Article shall be applicable to any subsidiary of the Bor- rower as though such obligations were binding on any such subsidiary, and the Borrower shall cause any such subsidi- ary to carry out such obligations. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a), paragraph (b), paragraph (e), paragraph (f), para- graph (g), paragraph (j), paragraph (k), paragraph (1) or paragraph (m) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 20 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subse- quent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immedi- ately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. SECTION 6.02. If circumstances shall have arisen which shall require the guarantor-shareholders under Article 6 (b) of the Financial Agreement to make the payments provided therein, the Bank shall declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon such declaration such principal to- gether with interest accrued and unpaid thereon and such additional amounts (by way of charges and premiums, if any) that would have been due and payable if the Borrower had elected to repay the Loan and the Bonds in advance of maturity, shall become due and payable immediately, any- thing in this Agreement or in the Bonds to the contrary notwithstanding. ARTICLE VII Effective Date; Termination SECTION 7.01. The following events are specified as addi- tional conditions of effectiveness of this Agreement within the meaning of Section 9.01 (a) (ii) and Section 9.01 (b) (ii) of the Loan Regulations, namely: (a) That all such action, governmental, corporate or other, shall have been taken and all such governmental con- sents shall have been obtained as may be required to enable the Borrower to acquire such lands, interests in land and properties and such franchises or other rights needed at Fort-Gouraud and Port-Etienne for starting construction on the Project; 21 (b) That the increase of the authorized capital of the Borrower up to CFA francs 13.3 billion shall have been fully subscribed by the shareholders of the Borrower; (c) That the Financial Agreement shall have become effective in accordance with its terms; (d) That the Technical Assistance Agreement shall have become effective in accordance with its terms; (e) That the Caisse Centrale Loan Agreement shall have become effective in accordance with its terms. SECTION 7.02. The following are specified as additional matters within the meaning of Section 9.02 (e) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: (a) That the Borrower is duly organized and existing under the laws of Republic of Mauritania and has full power to own the properties and to carry on the business which it owns and carries on and proposes to own and carry on for the purpose of the Project; (b) That the increase of the authorized capital of the Borrower referred to in Section 7.01 (b) hereof has been duly authorized or ratified by all corporate or other action and that such increase of capital has been validly and effec- tively subscribed in full by the shareholders of the Bor- rower; (c) That the governmental, corporate or other actions and consents referred to in Section 7.01 hereof or necessary to make the Mining Concession, the Establishment Conven- tion, the Port Convention, the Railway Convention, the Installation and Operating Convention and the Tax Status, valid and enforceable in accordance with their respective terms, have been validly taken or given, as the case may be, and that they have been duly authorized or ratified by the Borrower and by the appropriate authority or authori- ties and constitute valid and binding obligations of the 22 Borrower and of such authority or authorities in accordance with their respective terms; (d) That the Financial Agreement has been duly author- ized or ratified by, and executed and delivered on behalf of, the Borrower and each of the guarantor-shareholders respectively and that the Financial Agreement constitutes a valid and binding obligation of each of the parties thereto in accordance with its terms, and that all governmental consents regarding payments to be made thereunder have been duly obtained; (e) That each of the Commercial Agreements has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and each of the shareholders party thereto and that each of the Commercial Agreements constitutes a valid and binding obligation of each of the parties thereto in accordance with its terms; (f) That the Technical Assistance Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and Penarroya respectively and that the Technical Assistance Agreement constitutes a valid and binding obligation of each of the parties thereto in accordance with its terms; (g) That the Caisse Centrale Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Caisse Centrale and the Borrower and consti- tutes a valid and binding obligation of each of the parties thereto in accordance with its terms; (h) That the Treasury Loan Agreement constitutes a valid and binding obligation of the Minister of Finance of Republic of France in accordance with its terms. SECTION 7.03. A date 60 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. 23 ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be November 15, 1964. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Societe Anonyme des Mines de Fer de Mauritanie 11 Boulevard Lannes Paris (16e), France Alternative address for cablegrams and radiograms: Mifermasa Paris For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective 24 names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT by J. BURKE KNAPP Vice President SOCIETE ANONYME DES MINES DE PPR DE MAURITANIE by PAUL LEROY-BEAULIEU Authorized Representative 25 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (Expressed in dollars)* January 1, 1966 $1,212,000 July 1, 1966 1,250,000 January 1, 1967 1,289,000 July 1, 1967 2,830,000 January 1, 1968 2,919,000 July 1, 1968 3,010,000 January 1, 1969 3,104,000 July 1, 1969 3,201,000 January 1, 1970 3,301,000 July 1, 1970 3,404,000 January 1, 1971 3,511,000 July 1, 1971 3,620,000 January 1, 1972 3,734,000 July 1, 1972 3,850,000 January 1, 1973 3,971,000 July 1, 1973 4,095,000 January 1, 1974 4,222,000 July 1, 1974 4,355,000 January 1, 1975 4,491,000 July 1, 1975 4,631,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in this column represent dollar equivalents determined as for 1 urposes of withdrawal. 26 Premiums or Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 3 years before maturity.... 1/2% More than 3 years but not more than 6 years before maturity ............... 21/4% More than 6 years but not more than 11 years before maturity . 33/4% More than 11 years but not more than 13 years before maturity. .. 5% More than 13 years before maturity ...... 61/4% 27 SCHEDULE 2 Description of Project The Project consists of the opening, equipping and oper- ation by the Borrower of new mines near Fort-Gouraud in the Republic of Mauritania with a minimum capacity of 6,000,000 tons of iron ore annually including a railway to transport the ore to Port-Etienne where stocking and loading facilities are to be provided. The capacity of the mine and related installations and services should allow shipments at the rate of 4.0 million tons of ore annually early in 1964 and at the rate of 6.0 million tons of ore annually early in 1968. The latter rate shall in any event be attained by October 24, 1969. The Project includes the following works and installa- tions: 1) The Mines The mines near Fort-Gouraud will be developed and equipped for open pit mining for the extraction of sufficient crude ore to insure minimum annual shipments of 6,000,000 tons iron ore with an Fe content of about 63%. Crushing plants, conveyor systems and stockpiling,and loading facili- ties will be provided as required. 2) The Railway A railway will be constructed through Mauritanian terri- tory to connect the mines with an ore port near Port- Etienne. The track will be standard gauge designed for axle loadings of at least 25 tons. Marshalling yards, sidings and other facilities as required for efficient operation will be provided. Sufficient rolling stock and locomotives will be provided to move the minimum specified tonnages of ore plus all operating supplies. 3) The Port The Borrower will construct near Port-Etienne a mineral quay capable of accommodating modern ore carriers and 28 equipped with a ship loader with a capacity of at least 3,000 tons of ore per hour. Stockpiling facilities for at least 650,000 tons of ore, including a stocking and destocking conveyor system, and necessary harbor installations will be provided. 4) General Services Necessary roads, housing and community facilities, water supply, power generation, repair shops and other facilities will be provided as and when required at the mines, along the route of the railway and at the port. 29 SCHEDULE 3 Modifications of Loan Regulations No. 4 For the purposes of this Agreement the provisions of Loan Regulations No. 4 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: (a) By the deletion (except in Schedules 1 and 2) of: (i) the words "Guarantor" and "Guarantee Agreement" wherever the same shall occur and the substitution therefor respectively of the words "Guarantors" and "Guarantee Agreements." Whenever the context shall require there shall be made all such grammatical changes as shall be consequential upon the aforesaid deletions and substitu- tions; and (ii) paragraph 5 of Section 10.01 and the substi- tution therefor of the following new paragraph, namely: "5. The term "Republic of France Guarantee Agreement" means the agreement between Republic of France and the Bank providing for the guarantee of the Loan. The term "Republic of Mauritania Guarantee Agree- ment" means the agreement between Republic of Mauri- tania and the Bank providing for the guarantee of the Loan. 0 The term "Guarantee Agreements" means the Republic of France Guarantee Agreement and the Republic of Mauri- tania Guarantee Agreement and includes either one or both of such agreements, as the context may require, and includes all agreements supplemental, and all schedulei, thereto, respectively. The term "Guarantors" means Republic of France and Republic of Mauritania and includes either one or both of them, as the context may require." (b) By the deletion of Sections 2.02 and 4.01. (c) By the deletion of subparagraphs (b), (c), (d), (e), (f), (g), (h), (i) and (j) of Section 5.02 and the substitution therefor and the addition thereto of the following new sub- paragraphs, namely: 30 "(b) A default shall have occurred in the payment of principal or interest or any other payment required under any other loan agreement between the Bank and the Borrower or under any loan agreement or under any guarantee agreement between the Bank and, respectively, Republic of France or Republic of Mauritania; (c) A default shall have occurred in the performance of any other covenant or agreement on the part of the Borrower or of either of the Guarantors under the Loan Agreement, the Guarantee Agreements or the Bonds; (d) An extraordinary situation shall have arisen which shall make it improbable that the Borrower or either of the Guarantors will be able to perform their re- spective obligations under the Loan Agreement or the Guarantee Agreements; (e) The Borrower shall have taken or permitted to be taken any action or proceeding whereby any of its property shall or may be assigned or in any manner transferred or delivered to any receiver, assignee, liquidator or other person, whether appointed by the Borrower or by a court or by Republic of Mauri- tania or by authority of any law, whereby such property shall or may be distributed among the creditors of the Borrower; (f) Republic of Mauritania shall have taken any action for the dissolution or disestablishment of the Bor- rower or for the suspension of its operations, or a substantial part thereof ; (g) Republic of Mauritania shall have, during the oper- ation of the Project and in pursuance of the Instal- lation and Operating Convention, granted one or several concessions to persons or entities other than the Borrower (or any other persons or entities sub- stituted for the Borrower in accordance with the 31 provisions of Article V, Section 5.03 (b) of the Loan Agreement) and the grantee of any such concession or concessions shall not be satisfactory to the Bank; (h) Republic of France shall have been suspended from membership in or ceased to be a member of the Bank; (i) Republic of France shall have ceased to be a mem- ber of the International Monetary Fund or shall have become ineligible to use the resources of said Fund under Section 6 of Article IV of the Articles of Agreement of said Fund or shall have been de- clared ineligible to use said resources under Section 5 of Article V, Section 1 of Article VI or Section 2 (a) of Article XV of the Articles of Agreement of said Fund; (j) The Community shall have taken any action which would prevent, or materially interfere with, the successful construction or operation of the Project or with the performance by the Borrower of its obligations contained in the Loan Agreement or with the performance by either of the Guarantors of their respective obligations under the Guarantee Agreements; (k) Any creditor shall demand payment from the Bor- rower of moneys lent to the Borrower prior to the agreed maturity, and in accordance with the terms of, any loan having an original maturity of one year or more; (1) A default shall have occurred in any payment re- quired under Article 2 of the Financial Agreement on the part of any guarantor-shareholder and such default shall have not been cured within thirty days, or the guarantor-shareholders shall have been re- lieved from their obligations under the Financial Agreement as contemplated in Article 5 of said Agreement; 32 (m) Any action for the amendment, suspension or termi- nation of the Mining Concession, the Tax Status, the Establishment Convention, the Port Convention, the Railway Convention, the Installation and Oper- ating Convention, the Technical Assistance Agree- ment, the Commercial Agreements and the Finan- cial Agreement, shall have been taken by one of the parties thereto; (n) After the date of the Loan Agreement and prior to the Effective Date any action shall have been taken which would have constituted a violation of any covenant contained in the Loan Agreement or Guarantee Agreements if the Loan Agreement and Guarantee Agreements had been effective on the date such action was taken." (d) By the deletion of Section 6.01 and the substitution therefor of the following new Section, namely: "Section 6.01. Delivery of Bonds. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan and each of the Guarantors shall en- dorse its guarantee thereon, all as hereinafter in this Article provided." (e) By the deletion of the fifth sentence of Section 6.07 and the substitution therefor of the following new sentence, namely: "All Bonds shall have the separate guarantee of each of the Guarantors endorsed thereon substantially in the form set forth in Schedule 3 to the Loan Regulations." (f) By the deletion of Section 6.12 (b) and the substi- tution therefor of the following new subsection, namely: "(b) The guarantees on the Bonds shall be signed in the name and on behalf of Republic of France and of Republic of Mauritania by their respective author- ized representative or representatives designated in the Guarantee Agreements for the purposes of this Section. The signature of any such representa- tive may be a facsimile signature if such guarantees 33 are also countersigned manually by an authorized representative of Republic of France or of Republic of Mauritania (as the case may be). If any author- ized representative of Republic of France or of Republic of Mauritania whose manual or facsimile signature shall be affixed to any such guarantee shall cease to be such authorized representative, the Bond on which such guarantee is endorsed may nevertheless be delivered under the Loan Agreement and such guarantee shall be valid and binding on Republic of France or Republic of Mauritania (as the case may be), as though the person whose man- ual or facsimile signature shall have been affixed to such guarantee had not ceased to be such authorized representative." (g) By the deletion of Section 7.02 and the substitution therefor of the following new Section, namely: "Section 7.02. Obligations of Guarantors. The obliga- tions of Republic of France under the Republic of France Guarantee Agreement and of Republic of Mauritania under the Republic of Mauritania Guarantee Agreement shall be independent of one another and shall not be discharged except by performance and then only to the extent of such performance. The obligations of each of the Guarantors shall not be subject to any prior notice to, demand upon or action against the Borrower or the other of them or to any prior notice to or denand upon either of the Guarantors with regard to any default by the other of them or by the Borrower, and shall not be impaired by any of the following: any extension of time, forbearance or concession given to the other of them or to the Borrower; any assertion of, or failure to assert, any right or remedy against the other of them or the Borrower or in respect of any security for the Loan; any modification or amplification of the provisions of the Loan Agreement or either of the Guarantee Agreements 34 contemplated by the terms thereof respectively; any fail- ure of the Borrower to comply with any requirement of any law, regulation or order of Republic of France or of Republic of Mauritania or of any political subdivision or agency of either of them." (h) By the deletion of subparagraph (c) of Section 7.04 and the substitution therefor of the following new sub- paragraph, namely: "(c) The Arbitral Tribunal shall consist of three arbitra- tors appointed as follows: one arbitrator shall be appointed by the Bank; a second arbitrator shall be appointed by the Borrower and the Guarantors or, if they shall not agree, by the President of the Court of Arbitration of the Community; and the third arbitrator (hereinafter sometimes called the Umpire) shall be appointed by agreement of the parties or, if they shall not agree, by the President of the International Court of Justice or, failing ap- appointment by him, by the Secretary-General of the United Nations. If either side shall fail to appoint an arbitrator, such arbitrator shall be appointed by the Umpire. In case any arbitrator appointed in accordance with this Section shall resign, die or become unable to act, a successor arbitrator shall be appointed in the same manner as herein pre- scribed for the appointment of the original arbitra- tor and such successor shall have all the powers and duties of such original arbitrator." (i) By the deletion of Section 8.03 and the substitution therefor of the following new Section, namely: "Section 8.03. Action on Behalf of Guarantors. (a) Any action required or permitted to be taken, and any docu- ments required or permitted to be executed, under the Republic of France Guarantee Agreement on behalf of Republic of France may be taken or executed by the representative of Republic of France designated in the 35 Republic of France Guarantee Agreement for the pur- poses of this Section or any person thereunto authorized in writing by him. Any modification or amplification of the provisions of the Republic of France Guarantee Agreement may be agreed to on behalf of Republic of France by written instrument executed on behalf of Republic of France by the representative so designated or any person thereunto authorized in writing by him; provided that, in the opinion of such representative, such modification or amplification is reasonable in the circum- stances and will not substantially increase the obligations of Republic of France under the Republic of France Guarantee Agreement. The Bank may accept the execu- tion by such representative or other person of any such instrument as conclusive evidence that in the opinion of such representative any modification or amplification of the provisions of the Republic of France Guarantee Agreement effected by such instrument is reasonable in the circumstances and will not substantially increase the obligations of Republic of France thereunder. (b) Any action required or permitted to be taken, and any documents required or permitted to be executed, under the Republic of Mauritania Guarantee Agreement on behalf of Republic of Mauritania may be taken or executed by the representative of Republic of Mauritania designated in the Republic of Mauritania Guarantee Agreement for the purposes of this Section or any person thereunto authorized in writing by him. Any modifica- tion or amplification of the provisions of the Republic of Mauritania Guarantee Agreement may be agreed to on behalf of Republic of Mauritania by written instrument executed on behalf of Republic of Mauritania by the rep- resentative so designated or any person thereunto author- ized in writing by him; provided that, in the opinion of such representative, such modification or amplification is reasonable in the circumstances and will not substan- tially increase the obligations of Republic of Mauritania under the Republic of Mauritania Guarantee Agreement. 36 The Bank may accept the execution by such representa- tive or other person of any such instrument as conclusive evidence that in the opinion of such representative any modification or amplification of the provisions of the Republic of Mauritania Guarantee Agreement effected by such instrument is reasonable in the circumstances and will not substantially increase the obligations of Republic of Mauritania thereunder." (j) By the deletion of Section 9.03 and the substitution therefor of the following new Section, namely: "Section 9.03. Effective Date. Notwithstanding the pro- visions of Section 8.01, except as shall be otherwise agreed by the Bank and the Borrower, the Loan Agree- ment and Guarantee Agreements shall come into force and effect on the date when the Bank shall have dis- patched to the Borrower and the Guarantors notice of its acceptance of the evidence required by Section 9.01.' (k) By the deletion of the second part of paragraph 6, starting after the semi-colon, and the second sentence of paragraph 8 of Section 10.01. (1) By the deletion in paragraph 13 of Section 10.01 of the word "Guarantor" and the substitution therefor of the words "Republic of Mauritania." (m) By the deletion of paragraph 14 of Section 10.01 and the substitution therefor of the following new para- graph, namely: "14. The term "external debt", as applied to debts of each Guarantor respectively, means any debt payable in any medium other than currency of that Guarantor, whether such debt is or may become payable absolutely or at the option of the creditor in such other medium, including currency of the other Guarantor." (n) By the deletion of the first sentence of the second paragraph of Schedule 1 and of Schedule 2 and the substi- tution therefor in each case of the following new sentence, namely: 37 "This Bond is one of an authorized issue of bonds in various currencies equivalent to an aggregate principal amount of $ , known as the Guaranteed Serial Bonds of [the Borrower] (hereinafter called the Bonds), issued or to be issued under a Loan Agreement dated between International Bank for Recon- struction and Development (hereinafter called the Bank) and [the Borrower], and guaranteed by Republic of France in accordance with the terms of a Guarantee Agreement dated between Republic of France and the Bank and by Republic of Mauritania in accordance with the terms of a Guarantee Agreement dated between Republic of Mauri- tania and the Bank." (o) By the insirtion in Schedule 1 after the seventh paragraph of that Schedule of the following paragraphs, namely: "There shall be kept at said office or agency of [the Bor- rower] in the Borough of Manhattan, a register for the registration of ownership and transfer of Bonds. This Bond is transferable by the registered holder hereof, or by his attorney duly authorized in writing, at said office or agency of the Borrower] in the Borough of Manhat- tan, upon payment, if Ithe Borrower] shall so require, of a charge calculated to reimburse [the Borrower] for the cost of the transfer and upon surrender of this Bond for cancellation, duly endorsed or accompanied oy a proper instrument or instruments of assignment and transfer. Upon any such transfer a new fully registered Bond or Bonds without coupons, of authorized denominations, of the same maturity and in the same aggregate principal amount and having the guarantee of each of the Guar- aniors endorsed thereon will be issued to the transferee in exchange for this Bond. [The Borrower] and the Bank may deem and treat the person in whose name the Bond is registered on the books of [the Borrower] as the absolute owner hereof for all purposes whatsoever. 38 notwithstanding any notice to the contrary, and any pay- ment of moneys to or on the order of such person shall discharge the liability of [the Borrower] or the Bank to the extent of the payment so made. Any notice given by [the Borrower] or by the Bank to any holder of Bonds shall be given to such holder at his address registered on the books of [the Borrower] or at such other address as such holder shall designate in writing to [the Borrower]. The giving of notice to the holder of Bonds whose addresses are of record with [the Borrower] as herein provided shall fully discharge the Bank and [the Borrower] from any obligation on their part to give such notice to anyone." (p) By the deletion of the eighth paragraph of Sched- ule 1 and of the seventh paragraph of Schedule 2 and the substitution therefor of the following new paragraph, namely: "The principal of the Bonds, the interest accruing there- on and the premium, if any, on the redemption thereof shall be paid without deduction for and free from any taxes, imposts, levies or duties of any nature or any W restrictions now or at any time hereafter imposed under the laws of Republic of France, or of Republic of Mauri- tania, or laws in effect in the respective territories of said Republics; provided, however, that the provisions of this paragraph shall not apply to the taxation of payments made under the provisions of any Bond to a holder there- of other than the Bank when such Bond is beneficially owned by an individual or corporate resident of Republic of France or Republic of Mauritania, respectivly." (q) By the deletion of Schedule 3 and the substitution therefor of the following new Schedule, namely: "SCHEDULE 3 Form of Guarantee [NAME OF GUARANTOR], for value received, as a primary obligor and not as surety merely, hereby absolutely and 39 unconditionally guarantees, and pledges its full faith and credit for, the due and punctual payment of the principal and redemption price of the within Bond and the interest thereon, free from taxes and restrictions as therein provided, prior notice to, demand upon or action against the obligor on said Bond or the other Guarantor or the undersigned being waived. [NAME OF GUARANTOR] by Dated Authorized Representative