Barbados - Industrial Development And Export Promotion Project : Loan 1813 - BDB Project Agreement - Conformed

DMUMENTS OAN NUMBER 1813 BAR BDB Project Agreement (Industrial Development and Export Promotion Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BARBADOS DEVELOPMENT BANK Dated , 1980 LOAN NUMBER 1813 BAR BDB PROJECT AGREEMENT AGREEMENT, dated a7 .29 , 1980, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and the BARBADOS DEVELOPMENT BANK (hereinafter called BDB), a statutory corporation established pursuant to the Barbados Development Bank Act (Cap. 323). WHEREAS (A) by the Loan Agreement of even date herewith between Barbados (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to ten million dollars ($10,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that BDB agrees to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary loan agreement to be entered into by the Borrower and BDB, the equivalent of three million two hundred thousand dollars ($3,200,000) out of the proceeds of the loan provided for under the Loan Agreement will be made available to BDB on the terms and conditions therein set forth; and WHEREAS BDB, in consideration of the Bank's entering into the Loan 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 Agreemert, unless the context shall otherwise require, the several terms defined in the Loan Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Management and Operations of BDB Section 2.01. (a) BDB shall carry out Part B of the Project described in Schedule 2 to the Loan Agreement, and conduct its operations and affairs with due diligence and efficiency and in -2- conformity with appropriate economic, financ! and banking standards and practices, with qualified and experienced management and in accordance with its Statutes and Statement of Policies and Procedures. (b) BDB shall prepare and send to the Bank not later than June 30, 1980 the plan mentioned in Section 4.03 of the Loan Agreement for increasing BDB's staff and for restructuring the salary scale of such staff. (c) BDB shall employ persons with qualifications and experi- ence satisfactory to the Bank to fill the positions of Financial Comptroller and Manager of Operations of BDB and shall afford the Bank a reasonable opportunity to comment on any changes affecting senior managerial positions of BDB. Section 2.02. (a) In accordance with and subject to the provisions of the Loan Agreement, BDB shall submit industrial projects to the Bank for approval or for authorization for with- drawals to be made from the Loan Account. (b) (i) When submitting a sub-loan (other than a free-limit sub-loan) to the Bank for approval, BDB shall furnish to the Bank an application, in form satisfactory to the Bank, together with a description of the industrial enterprise and of the industrial project to be financed thereunder (including a description of the expenditures for such industrial project proposed to be financed by BDB and an appraisal of the industrial project) and the pro- posed terms and conditions of the sub-loan, including the schedule of amortization of the sub-loan, and such other information as the Bank shall reasonably request; and (ii) such appraisals will include a calculation of the internal financial rate of return and, in cases of a sub-loan exceeding the sum of one hundred fifty thousand dollars ($150,000), an evaluation of the economic rate of return, established in accordance with guidelines satisfactory to the Bank. (c) Each request by BDB for authorization to make with- drawals from the Loan Account in respect of a free-limit sub-loan shall contain a summary description of the industrial enterprise and the industrial project (including a description of the expen- ditures proposed to be financed out of the proceeds of the Loan) and the terms and conditions of such free-limit sub-loan, includ- ing the schedule of amortization therefor. -3- (d) The amortization schedule applicable to each industrial project shall provide for an appropriate period of grace, and, unless the Bank and BDB shall otherwise agree, (i) shall not extei.d beyond fifteen (15) years from the date of the Loan Agree- ment 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. (e) Except as the Bank and BDB shall otherwise agree, BDB shall send applications for approval of industrial projects pursuant to paragraph (b) above and requests for authorizations to withdraw from the Loan Account pursuant to paragraph (c) above on or before March 31, 1983. Section 2.03. (a) BDB undertakes that unless the Bank shall otherwise agree, any sub-loan will be made on terms whereby BDB shall obtain, by written agreement or other appropriate legal means, rights adequate to protect the interests of the Bank and of BDB, including, in the case of any such sub-loan: (i) the right to require the industrial enterprise to carry out and operate the industrial project with due diligence and efficiency and in accordance with sound technical, financial and managerial stan- dards and to maintain adequate records; (ii) the right to require that the goods and services to be financed out of the proceeds of the sub-loan be used exclusively in the carrying out of the industrial project; (iii) the right of the Bank and of BDB to inspect such goods and the sites, works, vlants and construction included in the industrial project, the operation thereof, and any relevant records and documents; (iv) the right to require that the industrial enterprise take out and maintain such insurance, against such risks and in such amounts, as shall be consistent with sound business practice and that, without any limitation upon the foregoing, such insurance cover hazards incident to the acquisition, transportation and delivery of the goods financed out of the proceeds of the sub-loan to the place of use or installa- tion, and that any indemnity thereunder be payable in a currency freely usable by the industrial enterprise to replace or repair such goods; (v) the right to obtain all such information as the Bank or BDB shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the industrial enterprise; and (vi) the right of BDB to suspend or terminate the right of the industrial enterprise to the use of the proceeds of the sub-loan upon failure by such industrial enter- prise to perform its obligations under its agreement with BDB. -4- (b) BDB shall include in its lending terms for sub-loans interest of not less than eleven per cent (11%) per annum, a flat service fee of one per cent (1%) and a commitment fee of one per cent (1%) on undisbursed amounts and up to 3 years of grace. The interest rate and fees prescribed by BDB shall be reviewed by BDB and the Bank. The first review shall take place not later than October 31, 1980 and subsequent reviews at such times as BDB and the Bank shall determine but not less frequently than once a year. The reviews shall be carried out, and any interest rate or fees for sub-loans established by agreement between BDB and the Bank, in accordance with criteria consistent with the Borrower's interest rate policies and the Statement of Policies and Proce- dures. (c) BDB shall exercise its rights in relation to each industrial project in such manner as to (i) protect the interests of the Bank and of BDB, (ii) comply with its obligations under this Agreement and the BDB Subsidiary Loan Agreement and (iii) achieve the purposes of the Project. Section 2.04. BDB shall furnish to the Bank all such inform- ation as the Bank shall reasonably request concerning the expendi- ture of the proceeds of the sub-loans, Part B of the Project, the industrial enterprise, the industrial projects and the sub-loans. Section 2.05. BDB shall duly perform all its obligations under the BDB Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, BDB shall not take or concur in any action which would have the effect of assigning, amending, abrogating or waiving any provision of the BDB Subsidiary Loan Agreement. Section 2.06. Except as the Bank and BDB shall otherwise agree, BDB: (i) shall not sell, lease, transfer 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 acquire, maintain and renew all rights, powers, privileges and franchises necessary or useful in the conduct of its business. Section 2.07. BDB shall cause each of its Subsidiaries (if any) to observe and perform the obligations of BDB under this Agreement to the extent to which the same may be made applicable thereto as though such obligations were binding upon each of such Subsidiaries. - 5 - Section 2.08. BDB shall not amend its Statement of Policies and Procedures except in agreement with the Bank, and shall exchange views with the Bank on any proposal to modify its Statutes. Section 2.09. BDB shall prepare and send to the Bank not later than September 30, 1980 a staff training program satisfac- tory to the Bank. Section 2.10. In order to carry out Part B of the Project, BDB shall employ consultants whose qualifications and experience and terms and conditions of employment (including terms of reference) shall be satisfactory to the Bank. ARTICLE III Financial Covenants Section 3.01. (a) BDB shall maintain records adequate to record the progress of Part B of the Project and of each industrial project (including the cost thereof) and to reflect in accordance with consistently maintained appropriate accounting practices the operations and financial condition of BDB and shall enable the Bank's representatives to examine such records. (b) BDB shall cause its financial statements to be so prepared, and its books of account to be so kept, that housing funds channelled through BDB are shown on such statements and books separately and identifiably from BDB's assets and liabi- lities. Section 3.02. BDB 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 appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any cas- 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of BDB and the audit thereof as the Bank shall from time to time reasonably request, -6- Section 3.03. Except as the Bank and BDB shall otherwise agree, BDB shall not incur or permit any Subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BDB and all its Subsidiaries then incurred and outstanding would exceed five times the consolidated capital and surplus of BDB and all its Subsidiaries. For the purpose of this Section: (a) The term "debt" means any debt incurred by BDB or any Subsidiary maturing more .than one year after the date on which it is originally incurred, including debt assumed or guaranteed by BDB or by a Subsidiary. (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 Barbados Dollars 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 Barbados for the purposes of servicing such debt. (d) The term "consolidated debt of BDB and all its Subsi- diaries" means the total amount of debt of BDB and all its Sub- sidiaries excluding (i) debt owed by BDB to any Subsidiary or by any Subsidiary to BDB or to any other Subsidiary and (ii) debt referred to in paragraph (e) (ii) of this Section. (e) The term "consolidated capital and surplus of BDB and all its Subsidiaries" means the aggregate of: (i) the total unimpaired paid-in capital, surplus and free reserves of BDB and of all its Subsidiaries after excluding therefrom such amounts as shall represent equity interests of BDB in any Subsidiary, or of any such Subsidiary in BDB or in any other Subsidiary; and (ii) such amount of any other loan which the Bank may determine to be included in the consolidated capital and surplus of BDB. - 7 - Section 3.04. Except as the Bank and BDB shall otherwise agree, BDB shall not make any repayment in advance of maturity in respect of any of its borrowings (other than deposits) having an original term exceeding one year. Section 3.05. BDB 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 various currencies (including Barbados Dollars) used in its borrowing and lending operations. Section 3.06. BDB shall prepare and send to the Bank not later than September 30, 1980 a plan and timetable, satisfactory to the Bank, for collecting arrears on outstanding loans made by BDB. The said plan shall, among other things, provide for the enforcement of guarantees on such loans and for the writing off of bad debts. ARTICLE IV Consultation, Information and Inspection Section 4.01. (a) The Bank and BDB shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, the Bank and BDB shall from time to time, at the request of either party, exchange views through their representatives with regard to the progress of Part B of the Project, the performance by BDB of its obligations under this Agreement and the BDB Subsi- diary Loan Agreement, the administration, operations and financial condition of BDB and other matters relating to the purpose of the Loan. (b) BDB shall furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the expenditures of the proceeds of the Loan, Part B of the Project, the industrial enterprises, the industrial projects, the sub-loans and, where appropriate, the benefits to be derived from the foregoing. (c) Within six months following the last withdrawals from the Loan Account for Part B of the Project, BDB shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the industrial projects, their costs and the benefits derived and to be derived from them, the performance by BDB and the Bank of their respective obligations under this Agreement and the accomplishment of the purposes of the Loan. -8- Section 4.02. BDB shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan, the maintenance of the service thereof or the performance by BDB of its obligations under this Agreement or the BDB Subsidiary Loan Agreement. Section 4.03. BDB shall enable the Bank's representatives to inspect the records referred to in Section 3.01 of this Agreement and any relevant documents. ARTICLE V 1Ef'ctive Date; Termination Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effec- tive. Section 5.02. This Agreement and all obligations of the Bank and of BDB thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly so notify BDB thereof. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. 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 designated by notice to the party giving such notice or making such request. The addresses so specified are: -9- 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: INTBFRAD 440098 (ITT), Washington, D.C. 24423 (RCA) or 89658 (WUI) For BDB: General Manager Barbados Development Bank Garrison, St. Michael, Barbados Cable address: Telex: BARDEBAN WB 222 Barbados Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement or under Section 2.09 of the Loan Agreement on behalf of BDB may be taken or executed by BDB's General Manager or by such other person or persons as BDB shall designate in writing, and BDB shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. 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 - 10 - District of Columbia, United States of America, as of the day and year first above written. IMTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT B y Regional Vice President Latin America and the Caribbean BARBADOS DEVELOPMENT BANK ByAutorze Rprsetaiv Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this 4 J day of L, 198 0 FOR SECRETARY