Conformed Copy - L4231 - Second Municipal Finance Project - Supplemental Letter 1

Page 1 COMMUNAL INFRASTRUCTURE FUND October 7, 1997 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, DC 20433 U. S. A Re: Loan No. 4231-MOR (Second Municipal Finance Project) Representation Dear Sirs and Mesdames: In connection with the Loan Agreement of even date herewith between the International Bank for Reconstruction and Development (the Bank) and the Communal Infrastructure Fund (the Borrower) for the above-captioned project, the Borrower hereby undertakes and warrants to the Bank that: 1. The financial statements dated December 1996, copies of which have been furnished to the Bank, correctly set forth the financial and operating condition of the Borrower as of that date, and since that date there have been no material adverse changes in the financial and operating conditions of the Borrower. 2. The Borrower is not engaged in litigation as plaintiff or defendant, the outcome of which might materially and adversely affect its financial condition. 3. The Borrower has no outstanding agreements or liabilities, contingent or otherwise (including taxes), that might materially and adversely affect its financial condition. 4. No debt of the Borrower is secured by any mortgage, pledge, charge, priority or other lien, and no contract or arrangement exists for the creation of any such mortgage, pledge, charge, priority or other lien. 5. There are no existing defaults in the payment of the principal of, interest or other charges on, any of the debts of the Borrower. 6. The Borrower is not in violation of, and execution and delivery of the Loan Agreement and the compliance with all its terms do not and will not result in any violation of , any provision of any existing agreement, franchise, concession, license or permit, or of any statute, law, decree-law, regulation or any other legal rule of a similar nature presently in effect and applicable to the Borrower. 7. The Borrower is a duly existing Financial Intermediation Institution under the laws of the Kingdom of Morocco, with full authority to carry out its present business, to carry out the Project and to execute and deliver the Loan Agreement and has furnished to the Bank true copies of Dahirs No. 1-92-5 dated August 5, 1992 promulgating Law 1-90, the implementing Decree No. 2-90-351 dated December 14, 1992, Dahir No. 1-96-100 dated August 2, 1996, and of all other legislation presently in force and effect and governing or applicable to the operations of the Borrower, as well as articles of incorporation and by-laws presently in effect and governing the Borrower. It is our understanding that, in making the Loan and entering into the Loan Agreement wit the Borrower, the Bank may rely on the representations contained herein. Very truly yours, Page 2 COMMUNAL INFRASTRUCTURE FUND By /s/ El Mostafa Sahel Authorized Representative