Conformed Copy - L4010 - Second Sewerage and Water Re-use Project - Supplemental Letter 1

Page 1 THE WATER AND ELECTRICITY DISTRIBUTION AUTHORITY OF FES May 30, 1996 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 4010 MOR (Second Sewerage and Water Re-use Project) Representations Dear Sirs: In connection with the Loan Agreement of even date herewith between the International Bank for Reconstruction and Development (the Bank) and the Water and Electricity Distribution Authority of Fes (the Borrower), the Borrower hereby undertakes and warrants to the Bank that: 1. The financial statements of the Borrower dated December 31, 1994, copies of which have been furnished to the Bank, correctly set forth the financial and operating condition of the Borrower as of such date and that since such date there have been no material adverse changes in the financial and operating condition of the Borrower. 2. The Borrower is not engaged in litigation as plaintiff or defendant, the outcome of which might materially and adversely affect its financial condition. 3. The Borrower has no outstanding agreements or liabilities, contingent or otherwise (including taxes) which might materially and adversely affect its financial condition. 4. No debt of the Borrower is secured by any mortgage, pledge, charge, priority or other lien, and no contract or arrangement exists for the creation of any such mortgage, pledge, charge, priority or other lien. 5. There are no existing defaults in the payment of principal of, or interest or other charges on, any of the Borrower's debts. 6. The Borrower is not in violation of, and execution and delivery of the Loan Agreement and the compliance with all its terms do not and will not result in any violation of, any provisions of any existing agreement, franchise, concession, license or permit, or of any statute, law, decree-law, executive decree, regulation or any other legal rule of a similar nature presently in effect and applicable to the Borrower. 7. The Borrower is a duly existing legal entity under the laws of the Kingdom of Morocco, with full authority to carry out its present business, to carry out the Project and to execute and deliver the Loan Agreement. It is our understanding that, in making the Loan, and entering into the Loan Agreement, the Bank may rely on the representations contained herein. Very truly yours, Page 2 THE WATER AND ELECTRICITY DISTRIBUTION AUTHORITY OF FES By /s/ Abdellatif Berrada Authorized Representative