Burundi - Ende Project : Credit 0731 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 731-BU Project Agreement (BNDE Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANQUE NATIONALE DE DEVELOPMENT ECONOMIQUE Dated September 30, 1977 CREDIT NUMBER 731-BU PROJECT AGREEMENT AGREEMENT, dated September 30, 1977 between the INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the BANQUE NATIONALE DE DEVELOPMENT ECONOMIQUE (hereinafter called BNDE), a limited liability company (s.a.r.l.) established and operating under the laws of the Republic of Burundi (hereinafter called the Borrower). WHEREAS by the Development Credit Agreement of even date herewith between the Borrower and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to three million four hundred thousand dollars ($3,400,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BNDE agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and BNDE, the equivalent of $3,000,000 out of the proceeds of the credit provided for under the Development Credit Agreement will be made available to BNDE on the terms and conditions therein set forth; and WHEREAS BNDE, 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: 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. ARTICLE J2 Execution of the Project Management and Operations of BNDE Section 2.01. BNDE shall carry out the Project described in Section 3.01 of the Development Credit Agreement, and conduct its -2- operations and affairs, with due diligence and efficiency and in conformity with appropriate economic, financial and investment standards 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, BNDE shall submit Investment Projects to the Association for approval or for authorization 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, BNDE shall furnish to the Association an application, in form satis- factory to the Association, together with (i) a description of the Investment Enterprise and (ii) an appraisal of the Investment Project to be financed under such Sub-loan or Investment. Said appraisal shall include a description of the expenditures for such Investment Project proposed to be financed out of the proceeds of the Credit; the calculation, in accordance with methods satis- factory to the Association, of the internal financial rate of return of the Investment Project and, in the case of import sub- stitution Investment Projects, of its economic rate of return; the proposed terms and conditions of the Sub-loan or Investment, including the schedule of amortization of the Sub-loan or of repayment to the Borrower of the amount to be used for the Invest- ment; and such other information as the Association shall request. (c) Each request by BNDE for authorization to make with- drawals 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) 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 applicable to each Investment Project shall provide for an appropriate period of grace, and, unless the Association and BNDE shall otherwise agree, shall not extend 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, from the date of authorization by the Association to make withdrawals from the Credit Account in respect of such Investment Project, and shall -3- 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. (e) Except as the Association and BNDE 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 September 30, 1979. Section 2.03. (a) BNDE undertakes that, unless the Associa- tion shall otherwise agree, any Sub-loan will be made on terms which shall include interest at a rate of not less than nine per cent (9%) per annum on the outstanding balance of the sub-loan, and a commission at the rate of one per cent per annum payable to the Borrower through BNDE, on account of the exchange risk to be borne by the Borrower on the proceeds of the Credit utilized to finance such Sub-loan. (b) BNDE undertakes that, unless the Association shall otherwise agree, any Sub-loan or Investment will be made on terms whereby BNDE 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 BNDE, including, in the case of any Sub-loan and to the extent that it shall be appropriate in the case of any Investment, the right of BNDE to: (i) require the Investment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound tech- nical, 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 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 services, of their quality and the competence of the parties rendering them; and (2) such goods and services 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 request, 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 take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (2) without any limitation upon the foregoing, such insurance covers 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 thereunder 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 BNDE shall reasonably request relating to the foregoing 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 BNDE. Section 2.04. BNDE shall exercise its rights in relation to each Investment Project in such manner as to: (i) protect the interests of the Association and BNDE; (ii) comply with its obligations under this Agreement and the Subsidiary Loan Agree- ment; and (iii) achieve the purposes of the Project. Section 2.05. BNDE shall submit to the Association, for its prior approval, any substantial changes proposed to be made by BNDE in respect of the repayment provisions of any Sub-loan. Section 2.06. BNDE shall duly perform all its obligations under agreements under which funds have been lent or otherwise put at the disposal of BNDE by the Borrower or its agencies or others for relending, investment or management. BNDE shall promptly inform the Association of any action which would have - 5 - the effect of assigning, amending, abrogating or waiving any material provision of any such agreement. Section 2.07. BNDE shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BNDE 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) BNDE shall furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Credit, the Project, the Investment Enterprises, the Investment Projects, the Sub-loans and the Investments. (b) BNDE shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, 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) BNDE 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, or the performance by BNDE of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.09. Except as the Association shall otherwise agree, BNDE (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 its 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. (a) BNDE shall adopt a Statement of Policy satisfactory to the Association. (b) Any subtantial amendment to the Statutes or the State- ment of Policy shall be made only by prior agreement between the Association and BNDE. Section 2.11. (a) BNDE shall establish and maintain a special unit responsible for promoting, appraising and following up - 6 - industrial projects and shall assign qualified staff in adequate numbers to such unit. (b) BNDE shall employ for three years two experts to fulfill the functions of engineer, industrial economist and financial analyst, with qualifications, experience and under terms and conditions of employment satisfactory to the Association, to assist BNDE in setting up, and to work in, the unit referred to in paragraph (a) above, and in training local staff. ARTICLE III Financial Covenants Section 3.01. BNDE shall maintain records adequate to reflect the progress of the Project and of each Investment Project (including the cost thereof) and to reflect in accordance with consistently maintained appropriate accounting practices its operation and financial condition. Section 3.02. BNDE 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 ccnsistently 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 BNDE and the audit thereof as the Association shall from time to time reason- ably request. Section 3.03. Except as the Association and BNDE shall otherwise agree, BNDE shall not make any repayment in advance of maturity in respect of any of its borrowings having an original term exceeding one year. Section 3.04. Except as the Association and BNDE shall otherwise agree, BNDE shall not incur or permit any subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BNDE and all its subsidiaries then incurred -7- and outstanding would at any time after June 30, 1978 be greater than four times the consolidated capital and reserves of BNDE and all its subsidiaries. For the purposes of this Section: (a) The term "debt" means any debt incurred by BNDE or any subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by BNDE or by a subsidiary but excluding the debt guaranteed by the Borrower pursuant to Ordonnance Ministfrielle No. 540/46 of March 24, 1975 as supplemented by Ordonnance Minist6rielle No. 540/105 of May 20, 1977 and any other debt covered by similar guarantees. (b) Wherever reference is made in this Section-to the incurring of debt, such reference shall include any modification of the terms of payment of such debt. Debt shall be deemed to be incurred (i) under a loan contract or agreement, on the date and to the extent the loan is drawn down pursuant to such loan contract or agreement and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent the guaranteed debt is outstanding. (c) Whenever in connection with this Section it shall be necessary to value in terms of Burundi Francs debt payable in foreign currency, such valuation shall be made at the prevailing lawful rate of exchange at which such foreign currency is, at the time of such valuation, obtainable in Burundi for the purposes of servicing such debt. (d) The term "consolidated debt of BNDE and all its sub- sidiaries" means the aggregate of the total amount of debt of BNDE and of a proportion of the debt of each of its subsidiaries equal to the ratio of the participation of BNDE in the share capital of such subsidiary, excluding any debt owed by BNDE to any susidiary or by any subsidiary to BNDE or to any other subsidiary. (e) The term "consolidated capital and reserves of BNDE and all its subsidiaries" means the aggregate of the total unimpaired paid-in capital and free reserves of BNDE and of a proportion of the unimpaired paid-in capital and free reserves of each of its subsidiaries equal to the ratio of BNDE's participation in the share capital of such subsidiary, after excluding therefrom such amounts as shall represent equity interest of BNDE in any subsidiary, or of any such subsidiary in BNDE or in any other subsidiary. -8- Section 3.05. BNDE shall take such steps satisfactory to the Bank as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the currencies (including Burundi Francs) used in its operations. Section 3.06. When the debt-equity ratio of BNDE defined in Section 3.04 of this Agreement reaches 3.5:1, BNDE shall take all action required on its part to increase its authorized and paid-in capital by such amounts as shall be necessary to maintain such ratio within the limit specified in Section 3.04. 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 BNP7 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 18 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 BNDE 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 General Conditions. 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. -9- 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 raquired or permitted to be given or made at such party's address here- inafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United. States of America Cable address: INDEVAS Washington, D.C. For BNDE: Banque Nationale de Ddveloppement Economique Botte Postale 1620 Bujumbura R6publique du Burundi Cable address: DEVBANK Bujumbura Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of BNDE may be taken or executed by the President of BNDE or such other person or persons as he shall designate in writing. Section 5.03. BNDE shall furnish to the Association suffi- cient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of BNDE, take any action or execute any document required or permitted to be taken or executed by BNDE pursuant to any of the provisions of this Agreement or of the Development Credit Agreement. - 10 - Section 5.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. Wapenhans Regional Vice President Eastern Africa BANQUE NATIONALE DE DEVELOPMENT ECONOMIQUE By Is/ B. Kamwenubusa Authorized Representative