Morocco - Third Agricultural Credit Project : Loan 1361 - Loan Agreement - Conformed

077 r CONFORMED COPY LOAN NUMBER 1361 MOR LOAN AGREEMENT for a World Bank Loan pertaining to a Third Agricultural Credit Project in the Kingdom of Morocco and for amending certain agreements entered into among the parties hereto with respect to Loan No. 861 and Credit No. 338 among INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and INTERNATIONAL DEVELOPMENT ASSOCIATION and CAISSE NATIONALE DE CREDIT AGRICOLE Dated February 7, 1977 LOAN AGREEMENT AGREEMENT, dated February 7, 1977, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank), INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and CAISSE NATIONALE DE CREDIT AGRICOLE (here- inafter sometimes called the Borrower or CNCA). WHEREAS (i) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to thirty-five million dollars (t35,000,000), on the terms and conditions set forth hereinafter, and (ii) the Bank, the Association and the Bor- rower have agreed to amend certain agreements entered into among the parties hereto with respect to Loan No. 861 and Credit No. 338; NOW THEREFORE the parties hereto hereby agree as follows: 2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Guarantor" means the Kingdom of Morocco. (b) "dirham" means the currency of the Kingdom of Morocco. (c) "Agricultural Credit Dahir and D*cret" means the King- dom of Morocco's Dahir No. 1-60-106 and the Kingdom of Morocco's Decret No. 2-61-607 both of 25 Joumada II 1381 (December 4, 1961), as amended to the date hereof. (d) "Recovery Dahir" means the Kingdom of Morocco's Dahir No. 1192 of 20 Joumada I 1354 (August 21, 1935) as amended to the date hereof. -3- (e) "CRCA(s)" means Caisse(s) Regionale(s) de Cr'dit Agri- cole established, or which may hereafter be established, pursuant to the Agricultural Credit Dahir and D4cret and which operate(s) as (a) regional branch(es) of the Borrower. (f) "CLCA(s)" means Caisse(s) Locale(s) de Cr4dit Agricole established, or which may hereafter be established, under the laws of the Kingdom of Morocco and which operate(s) as (a) local branch(es) of the Borrower. (g) "MARA" means the Kingdom of Morocco's ministry responsible for Agriculture et Reforme Agraire. (h) "ORMVA(s)" means Office(s) R gional(aux) de Mise en Valeur Agricole, agency(ies) for land development established, or which may be established hcreafter, within the framework of MARA. (i) "ORMVASM" means the ORMVA established for the Souss Massa Region of the Kingdom of Morocco. (j) "Coopgrative(s) Agricole(s)" means the agrarian coopera- tive(s) established, or which may hereafter be established, pursuant to the Kingdom of Morocco's Dgcret royal portant loi No. 267-66 of 15 Rebia I 1386 (July 4, 1966) and Dahir No. 1-72-277 of 22 Kaada 1392 (December 29, 1972). (k) "farmers' association" means any groupement constitug en vue de l'utilisation en commun du mat4riel agricole. 0 (1) "1965 Loan Agreement" and "1965 Guarantee Agreement" mean respectively the Loan Agreement between the Bank and the Borrower and the Guarantee Agreement between the Kingdom of Morocco and the Bank, both dated November 8, 1965. (m) "l1972 Loan Agreement", "1972 Guarantee Agreement", "1972 Credit Agreement" and "1972 Project Agreement" mean respectively the Loan Agreement between the Bank and the Borrower, the Guaran- tee Agreement between the Kingdom of Morocco and the Bank, the Development Credit Agreement between the Kingdom of Morocco and the Association and the Project Agreement between the Association and the Borrower, all dated October 10, 1972. (n) "Sub-borrower" mesns any individual farmer, Cooperative Agricole, farmers' associaion or other person, entity or group eligible to recei-.e- a Sub-loan under the Project. (o) "Sub-loan" means a medium- or long-term loan made or proposed to be made by the Borrower to a sub-borrower for on-farm investments and to be financed under the Project. -5- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to herein, an amount in various currencies equivalent to thirty-five million dollars ($35,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for amounts disbursed under Sub-loans and for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for Parts F and H of the Project described in Schedule 2 to this Agreement and to be fi- nanced out of the proceeds of the Loan. Section 2.03. The Closing Date shall be June 30, 1980 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. -6- Section 2.05. The Borrower shall pay interest at the rate of eight and seventy-hundredths per cent (8.70%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.06. Interest and other charges shall be payable semi-annually on February 15 and August 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -7- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts A through G of the Project with due diligence and efficiency and in conformity with appropriate agricultural, banking and financial standards and practices. (b) The Borrcwer shall make available to ORMVASM, as and when needed, the proceeds of the Loan required for the carrying out of Part H of the Project, under terms and conditions satisfactory to the Bank, including, inter alia, the obligation of ORMVASM to carry * out Part H of the Project and undertakings of ORMVASM related thereto. Section 3.02. Except as the Bank and the Borrower shall other- wise agree, the Boirower, in carrying out Parts A through E of the Project, shall make Sub-loans to Sub-borrowers, with the assistance of the Guarantor, in accordance with its current lending and oper- ating policies, including those set forth in Schedule 4 hereto; it being understood that the policy with respect to financial charges, as set out in Section I (A) and (B) of such Schedule, and the poli- cies and procedures, as set out in Section II (B) thereof, shall have come into full force and effect not later than September 1, 1977. Section 3.03. Except as the Bank and the Borrower shall other- wise agree, the Borrower shall cause all goods and services financed out of the proceeds of any Sub-loan to be used exclusively for the purposes for which the Sub-loan was granted. -8- Section 3.04. The Borrower shall: (a) maintain records adequate to record the expenditure of the proceeds of the Loan, to identify the Sub-loans made under the Project and to reflect in accordance with appropriate account-, ing practices all financial transactions of the Borrower with re- spect to such Sub-loans; (b) enable the Bank's representatives to inspect the farms individually )r collectively owned for which Sub-loans under the Project are made, the goods financed out of the proceeds of such Sub-loans and any records and documents pertaining theret;; and (c) furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan, and the Sub-loans made under the Project. Section 3.05. Unless the Bank and the Borrower shall other- wise agree, the Borrower shall make a Sub-loan for the purchase of 75 or more imported heifers to be financed out of the proceeds of the Loan, only if the contract for the supply of such heifers has been procured, with the assistance of the Guarantor, in ac- cordance with the pertinent provisions of paragraphs 3.3 through 3.10 of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 and after soliciting of bids from suppliers from at least three countries other than the Kingdom of Morocco. (N* -9- ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall at all times manage its af- fairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with appropriate agricultural, banking and financial standards and practices and under the supervision of qualified, experienced and well-trained management and staff. In particular, the Borrower shall, for the purpose of all its operations, continue to maintain in full force and effect at all times, with the assistance of the Guarantor, its current lending and operating policies (including those set forth in Schedule 4 hereto) and shall review them, in consultation with the Bank, as and when required for the Project and/or for carrying on all its other operations, in accordance with such standards and practices. Section 4.02. The Borrower shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. Section 4.03. The Borrower shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound practice. Section 4.04. The Borrower shall, with the assistance of the Guarantor, maintain, in full force and effect, a compensation and incentive system for the benefit of its personnel equivalent to the system applicable in other comparable institutions. - 10- Section 4.05. Not later than August 31, 1977, unless the Bank and the Borrower shall otherwise agree, the Borrower shall set up and, thereafter, maintain in operation, a monitoring and evaluation system to measure, in a selective fashion and on the basis of an appropriate sample, the effects and impact of its lending operations, under terms and conditions satisfactory to the Bank. To that end the Borrower may, if needed, employ a qualified and experienced monitor- ing consultant under terms and conditions satisfactory to the Bank. - 11 - ARTICLE V Financial Covenants Section 5.01. (a) The Borrower shall maintain records adequate to reflect in accordance with consistently maintained sound account- ing practices its operations and financial condition. (b) Unless the Bank and the Borrower shall otherwise agree, the Borrower shall maintain accounts and prepare financial state- ments reflecting separately the resources, use of resources and -perating results of the CLCA(s) and of the operations, if any, administered by the Borrower on behalf of the Guarantor. Section 5.02. The Borrower shall: (i) have its accounts and financial statements (balance sheets, statements of income and ex- penses and related statements) and those referred to in Section 5.01 (b) hereof for each fiscal year audited, in accordance with sound auditing principles consistently applied, by an independent auditor acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than five months after the end of each such year, (A) certified copies of those finan- cial 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning those accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request. - 12- Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. (b) The Borrower undertakes What, except as the Bank and the Borrower shall otherwise agree: (i) 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 in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the prin- cipal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to, (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the pur- chase price of such property, or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 5.04. The Borrower shall not make any repayment in advance of maturity in respect of any outstanding debt of the Bor- rover which, in the judgment of the Bank, would materially and ad- versely affect the Borrower's ability to meet its financial obli- gations. - 13 - Section 5.05. Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall not incur any debt if, after the incurring of such debt, the total debt of the Borrower then incurred and outstanding would be greater than four times the capital (dotations), general reserves (reserves globales) and surplus (benefice net r8s provisions) of the Borrower.* For the purposes of this Section: (a) The term "debt" means any debt incurred by the Borrower maturing more than one year after the date on which it is original- ly incurred (including deposits whose maturity is more than one year). (b) Debt shall be deemed to be incurred: (i) under a loan contract or agreement on the date and to the extent the amount of the loan is drawn down pursuant to such loan contract or agreement; (ii) under a guarantee agreement, on the date the agreement provid- ing for such guarantee has been entered into but only to the extent that the guaranteed debt is outstanding; and (iii) in the case of deposits, on the date the deposit is made. (c) Whenever in connection with this Section it shall be necessary to value in terms of dirhams debt payable in another currency, such valuation shall be made at the prevailing rate of exchange at which such 6ther currency is, at the time of such valuation, obtainable by the Borrower for the purposes of servi.c- ing such debt. * See Section 2.01 (17) of General Conditions for definition of "incurring of debt". Section 5.06. The Borrower 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 used in its operations. Section 5.07. (a) The Borrower shall at all times charge in- terest rates and/or fees on all of its loans such as to enable it: Ci) to cover all its operating expenditures and charges, including taxes (if any) and interest payments on borrowings less any Guarantor's subsidy (if any) for the CLCAs' operations; (ii) to make adequate provision for bad or doubtful loans; and (iii) to accumulate adequate general reserves. (b) Without any limitation upon the generality of the fore- going, and unless the Bank shall otherwise ugree, the Borrower shall implement, with the assistance of the Guarantor, the policy, with respect to financial charges for certain categories of loans, set forth in Schedule 4 hereto. Section 5.08. Except as the Bank and the Borrower shall other- wise agree, the Borrower shall take all necessary steps to set and maintain, within the framework of the applicable laws and regula- tions, interest rates payable on its time and savings deposits which shall at all times be competitive with those paid by institu- tions of the banking system for deposits of comparable maturities. -15- Section 5.09. Except as the Bank and the Borrower shall other- wise agree, the Borrower shall maintain a ratio of current assets to current liabilities of not less than 120%. For the purpose of this Section: (a) "current assets" shall include cash, pre-paid expenses, short-term loans and all other assets which could, in the ordinary course of business, be converted within twelve months into cash; and (b) "current liabilities" shall include customer deposits, advances granted by the Guarantor, the Banque du Maroc or any other similar institution controlled or owned by the Guarantor, debt ser- vice obligations, income taxes, dividends, bonuses and all other liabilities (including long-term debt) which will be due and pay- able or could be called for payment, within twelve months. Section 5.10. The Borrower shall utilize all funds repaid by Sub-borrowers under Sub-loans financed out of the proceeds of the Loan and which are not needed immediately to make payments of principal, interest and other charges under the Loan Agreement for making Sub-loans to Sub-borrowers, as and when requested, in accordance with the provisions of this Agreement. Section 5.11. The Borrower shall, as from September 1, 1977, cause (i) the amount of the financial charges specified in Section I (A) of Schedule 4 hereto to be credited directly to its income account (compte produits) and (ii) provisions for the CLCAs' guar- antee fund to be set aside, on an annual basis, from the income of the CLCA(s) in an amount as may be required for the purpose of covering the bad or doubtful loans granted by the CLCA(s). - 16 - ARTICLE VI Amendments to Prior Agreements or Inconsistency Therewith Section 6.01. The 1972 Loan Agreement and the 1972 Project Agreement are hereby amended, as from the Effective Date hereof, by: (a) the deletion of all provisions included in, or all ref- erences to, Sections 5.07 and 5.10 of the 1972 Loan Agreement; (b) (i) the deletion of all provisions included in, or all references to, Sections 5.01, 5.02, 5.05, 5.08 and 5.09 of the 1972 Loan Agreement and the Schedule to the 1972 Project Agreement and (ii) the substitution therefor, and the consequential incor- poration into said Agreements of, respectively, Sections 5.01, 5.02, 5.05, 5.07 (a) and 5.08 of, and of Schedule 4 to, this Agreement, with the same force and effect as if they were fully set forth therein; and (c) the incorporation into said Agreements of the provisions of Section 5.09 hereof, with the saee force and effect as if they were fully set forth therein; provided, that, in the 1972 Project Agreement the terms Guarantor, Borrower and Bank in the new Schedule shall be modified to read Borrower, CNCA and Association, respectively. -17 - Section 6.02. If any provision included in the 1965 Loan Agreement, the 1972 Loan Agreement or the 1972 Project Agreement is inconsistent with any provision hereof, the pertinent provision included herein shall govern. -18- ARTICLE VII Remedies of the Bank Section 7.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) The Agricultural Credit Dahir or D6cret or the Recovery Dahir, or any provision thereof, shall have been amended, suspended, abrogated, repealed or waived so as to materially and adversely affect the ability of the Borrower to carry out any of its cove- nants, agreements and obligations set forth in the 1965 Loan Agree- ment, the 1972 Loan Agreement, the 1972 Project Agreement or this Agreement. (b) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any loan under which foreign ex- change is made available for the Project and which is made to the Guarantor or the Bor- rower, as the case may be, shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and pay- able prior to the agreed maturity thereof. - 19 - (ii) Subparagraph (i) of this paragraph shall not apply if the Guarantor or the Borrower, as the case may be, establishes to the satisfaction of the Bank that adequate funds for the foreign exchange cost of the Project are available to the Guarantor or the Borrower, as the case may be, from other sources on terms and conditions satisfactory to the Bank. Section 7.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to para- graph (h) thereof, namely that any event specified in paragraphs (a) or (b)(i) B of Section 7.01 hereof shall occur. - 20 - ARTICLE VIII Effective Date; Termination Section 8.01. The following are specified as additional mat- ters, within the meaning of Section 12.02 (c) of the General Con- ditions, to be included in the opinion to be furnished to the Bank by the Borrower, namely, that the policy with respect to fi- nancial charges, as set out in Section I (A) and (B) of Schedule 4 hereto, and the policies and procedures, as set out in Section II (B) of such Schedule, have been duly ratified by the Borrower and will legally be binding upon the Borrower, not later than September 1, 1977. Section 8.02. The date May 10, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 21 - ARTICLE IX Addresses Section 9.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) of 64145 (wUI) - 22 - For the Borrower: Caisse Nationale de Cr4dit Agricole 2 rue d'Alger Rabat, Morocco Cable address: Telex: CREDIAGRICOLE CREDAGRI Rabat, Morocco 31.657.M - 23 - 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Maurice P. Bart Acting Regional Vice President Europe, Middle East and North Africa INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Maurice P. Bart Acting Regional Vice President Europe, Mi'lle East and North Africa CAISSE NATIONALE DE EDIT AGRICOLE By /s/ Abdelhadi Boutaleb Authorized Representative -(24 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of ex- penditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Sub-loans for on- 26,000,000 ) farm investments ) under Part A of ) the Project ) (2) Sub-loans for on- 5,000,000 ) 27.5% of dis- farm investments ) bursements ac- under Part D of ) tually made by the Project ) CNCA (3) Sub-loans for agri- 500,000 ) cultural machinery ) under Part E of the ) Project ) (4) Technical Assistance 50,000 lo% under Part F of the Project (5) Research Program un- 300,000 100% of foreign der Part H of the expenditures Project -25 - Amunt of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Unallocated 3,150,000 TOTAL 35,000,000 - 26 - 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the ter- ritory of any country other than the Guarantor. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above: (i) no withdrawals shall be made in respect of payments made for expenditures prior to the date hereof, ex- cept that withdrawals, in an aggregate amount not exceeding the equivalent of $100,000, may be made in respect of Category 5 on account of payments made for such expenditures before that date but after November 22, 1976; and - 27 - (ii) no withdrawals shall be made in respect of dis- bursements made for Sub-loans under Categories 1, 2 and 3 prior to the date at which the policy with respect to financial charges, as set out in Section I (A) and (B) of Schedule 4 hereto and the policies and procedures, as set out in Section II (B) thereof, shall have come into full force and effect (as provided in Section 3.02 hereof), except that withdrawals, in an aggregate amount not exceeding the equivalent of $5,600,000 may be made in respect of said Categories on account of dis- bursements under such Sub-loans granted before that date but after the date hereof; it being understood that such policies and procedures shall not be appli- cable to such Sub-loans. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then appli- cable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. - 28 - SCHEDULE 2 Description of the Project The Project is part of a lending program to finance agricul- tural development in the Kingdom of Morocco over a period of about three years commencing in 1977, and consists of the following parts: Part A: The provision of Sub-loans to individual small/medium- sized farmers borrowing through the CLCA(s) for on-farm investments; Part B: The provision of Sub-loans to individual medium/large- sized farmers borrowing through CNCA headquarters and the CRCA(s) for on-farm investments; Part C: The provision of Sub-loans to ORMVA(s) and provincial offices of MARA for investments undertaken by farmers under their supervision for comprehensive crop programs; Part D: The provision of Sub-loans to Cooperatives Agricoles for their own on-farm investments and those of their members; Part E: The provision of Sub-loans to farmers' associations for agricultural machinery; - 29 - Part F: Technical assistance to CNCA for establishing a monitor- ing and evaluation system; Part G: Consultants' services to CNCA for studies on banking development and personnel training and provision of audio-visual equipment for such training; Part H: A research program in vegetable cultivation by ORMVASM. * * * * The Project is expected to be completed by December 31, 1979. - 30 0 SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each February 15 and August 15 beginning August 15, 1980 through February 15, 1990 1,750,000 To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. -31 - Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 2.00% More than three years but not more than five years before maturity 3.35% More than five years but not more than nine years before maturity 6.00% More than nine years but not more than eleven years before maturity 7.35% More than eleven years before maturity 8.70% -32 0 SCHEDULE 4 Lending and Operating Policies Section I. Policy to be implemented for certain categories of loans (including Sub-loans under the Project) with respect to financial charges applicable thereto (A) Loans granted by CLCA(s): The following policy will be implemented with respect to financial charges pertaining to all CLCAs' loans: (i) the financial charges on medium-term loans will be set at such levels as to result in a notional interest rate to be identical for all such loans irrespective of their respective maturities; (ii) the financial charges on short-term loans will be set at such levels as to result in a notional interest rate not less than the interest rate referred to in (i) above; (iii) the notional interest rate referred to in (i) above will be set, not later than September 1, 1977, at a level equivalent to the average interest rate applied to CNCA's credit operations (exclud- ing those of the CLCA(s)); it being specified that such rate will be weighted on the basis of the annual average amount of such operations outstand- ing during the CNCA's fiscal year ending on August 31, -33- 1976. (This average interest rate will be computed taking into account the conventional interest rate, the penalty interest rate applicable to late pay- ments and the fee rate charged for the appraisal of a farm); and (iv) the above notional interest rates will be reviewed, as and when needed. (B) Medium- and long-term loans granted by CNCA to Coopgra- tives Agricoles and farmers' associations. Age of coopgrative or association 1 year 2 years 3 years 4 years 5-years 6 years or more Annual interest rate of not less than 7% T% 7% 7% 8% 8.5% (C) Medium- and long-term loans granted by CNCA to ORMVA(s) and provincial offices of MARA and loans granted by such entities. Interest rate: not less than 8% per annum (D) Other loans granted by CNCA. Interest rate for medium- and long-term loans to indivi- dual farmers: not less than 8.5% per annum. - 34~ Section II. Policies and Procedures to be followed by CNCA in making loans (including Sub-loans under the Project) (A) For medium-term loans to Cooperatives Agricoles the appraisal, decision process and supervision of said loans shall continue to be entrusted to the CNCA or CRCA personnel, as the case may be. (B) The financing ratio of the Coop4ratives Agricoles shall be as follows: Age of the Cooperative Agricole 1 year 2 years 3 years 4 years 5 years 6 years or more Percentage financing of: - short-term inputs 100% 80% norm norm norm norm - new invest- ments 100% 100% 100% 100% 100% 100% - investments for renewal norm norm norm norm norm norm For the purpose hereof the "norm" shall mean the financing norm that would be applied to an individual farmer in the same location for the same activity or investment, in accordance with the Borrower's usual lending and operating policies. (C) Approval of medium- and lodg-term loans shall be made after careful appraisal, based on development plans of the beneficiaries. Aside from security considera- tions, medium- and long-term loan applications shall -35- be evaluated in terms of incremental returns from the additional investment to be financed and in terms of the repayment capacity of the beneficiary. (D) (a) Except as the Bank and the Borrower shall otherwise agree, no loan to any beneficiary shall exceed the fol- lowing, unless the excess is fully guaranteed by the Guarantor or a responsible financial institution: 20% of the sum of CNCA's net worth and the total principal amount outstanding (if any) of the Guarantor's long-term advances to CNCA. (b) For purposes of paragraph (a): (i) CNCA's net worth shall mean its capital (dotations), general reserves (reserves globales), liquidation account (compte de liquidation) and surplus (benefice net aprs provisions); and (ii) long-term advances shall mean loans or advances having outstanding maturities of not less than five years. (E) CNCA shall obtain adequate security on loans. Aside from security considerations, CNCA shall not make any loans unless it is first satisfied with regard to the viability of the development plan or operations to be financed therewith and the earnings potential of the enterprise. - 36 - (F) CNCA shall, if necessary to carry out the development plan for which a Sub-loan is to be granted, finance the working capital requirements of the Sub-borrower or assure that adequate financing is available for current expenditures and inputs. (G) (a) Sub-loans shall be made under written agreements with the Sub-Borrower which shall include, without limitation, provisions implementing the pertinent terms set out above and obtaining the following rights: (i) the right to require the Sub-borrower to carry out the development plan approved by CNCA, and to carry on its operations with due diligence and efficiency and in accordance with sound technical, agricultural, commercial and financial practices and standards, and to maintain adequate records as appropriate; (ii) the right of CNCA and the Bank to inspect the premises the improvement of which is financed by the Sub-loan, any equipment, materials or inputs financed by the Sub-loan, the operations of the Sub-borrower, and any relevant records and documents as appropriate; (iii) the right to obtain all such information as CNCA'or the Bank shall reasonably request relating to the foregoing and to the operations and financial condition of the Sub-borrower; - 37 - (iv) the right to require that the proceeds of the Sub-loan financed out of the Loan not be expended for goods produced in, or services supplied from, any country which is not a member of the Bank (other than Switzerland); (v) the right to require that the goods and services to be financed out of the proceeds of the Sub- loan shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability thereof, and availability of service and spare parts therefor; (vi) the right to require the Sub-borrower to take out and maintain with responsible insurers insurance against such risks and in such amounts as shall be consistent with sound practice; and (vii) the right to suspend or terminate access by the Sub-borrower to the use of the Sub-loan upon failure by him to perform his obligations and, in appropriate cases, to premature the Sub-loan. (b) CNCA shall exercise its rights under the Sub-loan agreement referred to in sub-paragraph (a) above so as to protect the interests of CNCA and the Bank. - 38 - (c) CNCA shall supervise and monitor Sub-loans made by it in accordance with sound banking and agri- cultural practices. Such supervision and monitor- ing shall include periodic visits to farms or marketing facilities, as the case may be, to en- sure that the proceeds of Sub-loans are being used properly and that satisfactory progress is being made in completing the investment and in reaping its benefits.