Rwanda - BRD Project : Credit 0655 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 655 RW PROJECT AGREEMENT (BRD Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANQUE RWANDAISE DE DEVELOPPEMENT Dated August 20, 1976 PROJECT AGREEMENT AGREEMENT, dated August 20, 1976, between INTERNATIONAL DEVEL- OPMENT ASSOCIATION (hereinafter called the Association) and BANQUE RWANDAISE DE DEVELOPPEMENT (hereinafter called BRD). WHEREAS by the Development Credit Agreement of even date here- with between the Republic of Rwanda (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to four million dollars ($4,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BRD agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into be- tween the Borrower and BRD, the proceeds of the credit provided for under the Development Credit Agreement will be made available to BRD on the terms and conditions therein set forth; and WHEREAS BRD, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- 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. 0 -3- ARTICLE II Execution of the Project; Management and Operations of BRD Section 2.01. BRD shall carry out the Project described in Section 3.01 of the Development Credit Agreement, and conduct its operations and affairs with due diligence and efficiency and in conformity with appropriate economic, financial and investment stan- dards and practices, with qualified and experienced management and personnel, and in accordance with its Statutes and Statement of Policy. Section 2.02. (a) In accordance with and subject to the pro- visions of the Development Credit Agreement, BRD shall submit In- vestment Projects to the Association for approval or for authori- zation of withdrawals from the Credit Account. (b) When submitting a sub-loan (other than a free-limit sub- loan) or an investment to the Association for approval, BRD shall furnish to the Association an application, in form satisfactory to the Association, together with a description of the Investment Enterprise and an appraisal of the Investment Project to be financed under such sub-loan or investment (including a description of the expenditures for such Investment Project proposed to be financed out of the proceeds of the Credit relent to BRD under the Subsid- iary Loan Agreement, and, in the case of import substitution Invest- ment Projects, an evaluation of the economic rate of return of such Investment Project established in accordance with guidelines satis- factory to the Association) and the proposed terms and conditions 49 of the sub-loan or investment, including the schedule of amortiza- tion of the sub-loan, or of repayment to the Borrover of the amount to be used for the investment, and such other information as the Association shall reasonably request. (c) Each request by BRD for authorization to make withdrawals from the Credit Account in respect of a free-limit sub-loan shall contain a summary description of the Investment Enterprise and the Investment Project to be financed under such free-limit sub-loan (including a description of the expenditures for such Investment Project proposed to be financed out of the proceeds of the Credit relent to BRD under the Subsidiary Loan Agreement) and the terms and conditions of such free-limit sub-loan, including the schedule of amortization therefor. (d) The amortization schedule or schedule of repayment appli- cable to each Investment Project shall provide for an appropriate period of grace, and, unless the Association and BRD shall other- vise agree (i) shall not extend (A) in the case rf sub-loans or investments for tourism Investment Projects, beyond twenty years, and (B) in the case of any other sub-loans or investments, beyond fifteen years from the date of approval by the Association of such Investment Project or, in the case of a free-limit sub-loan, of authorization by the Association to make withdrawals from the Credit Account in respect of such Investment Project, and (ii) shall provide for approximately equal semi-annual, or more frequent, aggregate payments of principal and interest or approximately equal semi-annual, or more frequent, payments of principal. -5- (e) Except as the Association and BRD shall otherwise agree, applications and requests pursuant to the provisions of paragraphs (b) and (c) of this Section shall be submitted to the Association on or before December 31, 1978. Section 2.03. (a) BRD undertakes that, unless the Association shall otherwise agree, any sub-loan will be made on terms which shall provide, inter alia, that interest and other charges to be paid by the Investment Enterprise shall, in the aggregate, be not less than: (i) seven per cent (T%) per annum on the outstanding balance of the sub-loan in the case of sub-loans to Small-scale Investment Enterprises; and (ii) nine per cent (9%) per annum on the outstanding balance of the sub-loan in the case of all other sub-loans. (b) BRD undertakes that, unless the Association shall other- wise agree, any sub-loan or investment will be made on terms whereby BRD shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Association and BRD, including, in the case of any sub-loan and to the extent that it shall be appro- priate in the case of any investment, the right of BRD to: -6- (i) require the Investment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) require that: (1) the goods and services to be financed out of the proceeds of the Credit shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of ser- vices, of their quality and the competence of the parties rendering them; and (2) such goods and ser- vices shall be used exclusively in the carrying out of the Investment Project; (iii) inspect, by itself or jointly with representatives of the Association if the Association shall so re- quest, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) require that: (1) the Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; -7- and (2) without any limitation upon the foregoing, such insurance shall cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Credit to the place of use or installation, any indemnity there- under to be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) obtain all such information as the Association or BRD shall reasonably request relating to the fore- going and to the administration, operations and financial condition of the Investment Enterprise; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the sub- loan or investment upon failure by such Investment Enterprise to perform its obligations under its contract with BRD. Section 2.04. BRD shall exercise its rights in relation to each Investment Project in such manner as to: (i) protect the in- terests of the Association and BRD; (ii) comply with its obligations under this Agreement and the Subsidiary Loan Agreement; and (iii) achieve the purposes of the Project. Section 2.05. BRD shall submit to the Association, for its prior approval, any substantial changes proposed to be made by BRD in respect of the repayment provisions of any sub-loan. Section 2.06. BRD shall duly perform all its obligations under agreements under which funds have been lent or otherwise put at the disposal of BRD by the Borrower or its agencies or others for relending, investment or management. BRD shall promptly inform the Association of any s"tion which would have the effect of assigning, or of amending, abrogating or waiving any material provision of any such agreement. Section 2.07. BRD shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BRD shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.08. (a) BRD shall furnish to the Association all such information as the Association shall reasonably request con- cerning the expenditure of the proceeds of the Credit, the Project, the Investment Enterprises, the Investment Projects, and the sub- loans and investments. (b) BRD shall, at the request of the Association, exchange views with the Association with regard to the progress of the Proj- ect, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (c) BRD shall promptly inform the Association of any condi- tion which interferes or threatens to interfere with, the progress -9- of the Project, the accomplishment of the purposes of the Credit, or the performance by BRD of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.09. Except as the Association shall otherwise agree, BRD: (i) shall not sell, lease, transfer, encumber or otherwise dispose of any of its property or assets, except in the ordinary course of business; and (ii) shall take all action necessary to maintain its corporate existence and right to carry on operations and to acquire, maintain and renew all rights, powers, privileges and franchises necessary or useful in the conduct of its business. Section 2.10. Any substantial amendment to the Statement of Policy shall only be made in mutual agreement between the Asso- ciation and BRD, and BRD shall consult with the Association on any proposal to modify its Statutes. Section 2.11. Under a technical assistance program to be agreed upon from time to time between the Association and BRD, BRD shall provide management assistance and technical advisory services to enterprises to be selected in accordance with guide- lines satisfactory to the Association. 0I - 10- ARTICLE III Financial Covenants Section 3.01. BRD shall maintain records adequate to record the progress of the Project and of each Investment Project (includ- ing the cost thereof) and to reflect in accordance with consistently maintained appropriate accounting practices its operations and fi- nancial condition. Section 3.02. BRD shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by indepen- dent 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; and (iii) furnish to the Association such other information concerning the accounts and financial statements of BRD and the audit thereof as the Association shall from time to time reasonably request. Section 3.03. Except as the Association and BRD shall other- wise agree, BRD shall not make any repayment in advance of maturity in respect of any of its borrowings having an original term exceed- ing one year. 0 -11 - Section 3.04. Except as the Association and BRD shall other- wise agree, BRD shall not incur or permit any subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BRD and all its subsidiaries then incurred and outstand- ing would be greater than three times the consolidated capital and reserves of BRD and all its subsidiaries. For the purposes of this Section: (a) The term "debt" means any debt incurred by BRD or any subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by BRD or by a subsidiary. (b) Wherever reference is made in this Section to the incur- ring 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 ex- tent the loan is drawn down pursuant to such loan contract or agree- ment and (ii) under a guarantee agreement, on the date the agree- ment 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 nec- essary to value in terms of Rwandese Francs debt payable in for- eign currency, such valuation shall be made at the prevailing lawful rate of exchange at which such foreign currency is, at the time of such valuation, obtainable in Kigali for the purposes of servicing such debt. 01 -12- (d) The term "consolidated debt of BRD and all its subsidi- aries" means the aggregate of the total amount of debt of BRD and of a proportion of the debt of each of its subsidiaries equal to the ratio of the participation of BRD in the share capital of such subsidiary, excluding any debt owed by BRD to any subsidiary or by any subsidiary to BRD or to any other subsidiary. (e) The term "consolidated capital and reserves of BRD and all its subsidiaries" means the aggregate of the total unimpaired paid-in capital and free reserves of BRD and of a proportion of the unimpaired paid-in capital and free reserves of each of its subsidiaries equal to the ratio of BRD's participation in the share capital of such subsidiary, after excluding therefrom such amounts as shall represent equity interests of BRD in any subsidiary, or of any such subsidiary in BRD or in any other subsidiary. Section 3.05. BRD shall not carry the risk resulting from changes in the rates of exchange between the currencies (including Rwandese Francs) used in its operations. -13 - ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of BRD thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 25 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accor- dance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BRD of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. -14- ARTICLE V Miscellaneous Provisions Section 5.01. 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 desig- nated 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: INDEVAS Washington, D.C. For BRD: Banque Rwandaise de Developpement Bolte Postale 1341 Kigali Republique Rwandaise Cable address: BANQUE RWANDAISE DE DEVELOPPEMENT Kigali 0 - 15 - Section 5.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of BRD may be taken or executed by the Director General of BRD or such other person or persons as the Director General shall designate in writing. Section 5.03. BRD shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of BRD, take any action or execute any documents required or permitted to be taken or executed by BRD pursuant to any of the provisions of this Agreement. Section 5.04. This Agreement may be executed in several counter- parts, each of which shall be an original, and all collectively but one instrument. - 16 - 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 /s/ Stanley Please Acting Regional Vice President Eastern Africa BANQUE RWANDAISE DE DEVELOPPEMENT By /s/ Tharcisse Gatwa Authorized Representative