Public Disclosure Authorized CONFORMED COPY CREDIT NUMBER 809 NIR Public Disclosure Authorized Project Agreement (Employment Creation Project) Public Disclosure Authorized between INTERNATIONAL DEVELOPMENT ASSOCIATION and DEVELOPMENT BANK OF THE REPUBLIC OF NIGER Public Disclosure Authorized Dated June 7, 1978
CREDIT NO. 809 NIR PROJECT AGREEMENT AGREEMENT, dated June 7, 1978, between the INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the DEVELOPMENT BANK OF THE REPUBLIC OF NIGER (hereinafter called BDRN), a company established and operating under the laws of the Republic of Niger (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 lend to the Borrower, for relending in part to BDRN, an amount in various currencies equivalent to five million dollars ($5,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BDRN agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS BDRN, 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 II Execution of the Project; Management and Operations of BDRN Section 2.01. (a) BDRN shall carry out Part A of the Project, described in Schedule 2 to the Development Credit Agreement, and conduct its operations and affairs, with due diligence and efficiency and in conformity with appropriate economic, financial and
-2- investment standards and practices, with qualified and experienced management and in accordance with its Statutes and By-laws and with the lending policies and procedures set forth in the Schedule to this Agreement. (b) BDRN shall provide, promptly as needed, all funds, facilities and resources necessary to carry out Part A.2 of the Project. Section 2.02. (a) In accordance with and subject to the provisions of the Development Credit Agreement, BDRN shall furnish to the Association proposals for Investment Projects for approval or for authorization for withdrawals to be made from the Credit Account. (b) (i) When submitting a Sub-loan (other than a free-limit Sub-loan) or an Investment to the Association for approval, BDRN shall furnish to the Association an application, in form satisfactory to the Association, together with a description of the Investment Enterprise and of the Investment Project to be financed thereunder (including a description of the expenditures for such Investment Project proposed to be financed by BDRN and an appraisal of the Investment Project) and the proposed terms and conditions of the Sub-loan or Investment, including the schedule of amortization of the Sub-loan, or of repaylent to the Borrower of the amount to be used for the Investment, and such other information as the Association shall reasonably request; and (ii) such appraisals will include a calculation of the fixed investment per job created, economic benefits and the internal financial rate of return and, in cases of import substitution, an evaluation of the economic rate of return, established in accordance with guidelines satisfactory to the Association. (c) Each request by BDRN for authorization to make withdrawals from the Credit Account in respect of a free-limit Subloan shall contain a summary description of the Investment Enterprise and the Investment Project (including a description of the expenditures 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 applicable to each Investment Project shall provide for an appropriate period of grace, and, unless the Association and the Borrower shall otherwise agree, (i) shall not extend beyond fifteen years from the date of approval
-3- by the Association of such Investment Project or 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 semiannual, or more frequent, payments of principal. (e) Except as the Association and BDRN shall otherwise agree, BDRN shall submit applications for approval of Investment Projects purs,;).t to the provisions of paragragh (b) of this Section and req s for authorizations to withdraw from the Credit Account pursuant to the provisions of paragraph (c) of this Section on or before June 30, 1981. Section 2.03. (a) BDRN undertakes that unless the Association shall otherwise agree, any Sub-loan or Investment will be rade on terms whereby BDRN shall obtain, by written agreement or other appropriate legal means, rights adequate to protect the interests of the Association and of BDRN, including, in the case of any such Sub-loan and to the extent that it shall be appropriate in the case of any such Investment: (i) the right to 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) the right to require that the goods and services to be financed out of the proceeds of the Sub-loan or Investment be used exclusively in the carrying out of the Investment Project; (iii) the right of the Association and of BDRN to inspect such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) the right to require that the Invebtment 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 or Investment to the place of use or installation, and that any indemnity thereunder be payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) the right to obtain all such information as the Association or BDRN shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise and (vi) the right of BDRN to suspend or terminate the right of the Investment Enterprise to the use of the proceeds of
-4- the Sub-loan upon failure by such Investment Enterprise to perform its obligations under its agreement with BDRN. (b) BDRN shall exercise its rights in relation to each Investment Project in such manner as to (i) protect the interests of the Association and of BDRN, (ii) comply with its obligations under this Agreement and the Subsidiary Loan Agreement and (iii) achieve the purposes of the Project. Section 2.04. BDRN shall furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Sub-loans and Investments, the Project, the Investment Enterprises, the Investment Projects, the Sub-loans and the Investments. Section 2.05. BDRN shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BDRN shall not take or concur in any action which would have the effect of assigning, or amending, abrogating or waiving any provision of, the Subsidiary Loan Agreement. Section 2.06. Except as the Association and BDRN shall otherwise agree, BDRN 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 2.07. BDRN shall cause each of its Subsidiaries (if any) to observe and perform the obligations of BDRN 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. Section 2.08. BDRN shall not amend its By-laws in any material way except in agreement with the Association and shall exchange views with the Association on any proposal to modify its Statutes. Section 2.09. In order to assist BDRN in carrying out Parts A.2 and A.3 of the Project, BDRN shall employ within six months of the date of this Agreement a senior advisor to the Director of its Development Department and an economic advisor for such Department, each qualified and experienced and employed under terms and conditions satisfactory to the Association, as well as a Nigerien counterpart to such economic advisor.
-5- ARTICLE III Financial Covenants Section 3.01. BDRN shall maintain record adequate to record 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 the operations and financial condition of BDRN and shall enable the Association's representatives to examine such records. Section 3.02. BDRN 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 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 BDRN and the audit thereof as the Association shall from time to time reasonably request. Section 3.03. Except as the Association and BDRN shall otherwise agree, BDRN shall not incur or permit any Subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BDRN and all its Subsidiaries then incurred and outstanding would exceed three and one-half times the consolidated capital and surplus of BDRN and all its Subsidiaries. For the purpose of this Section: (a) The term "debt" means any debt incurred by BDRN or any Subsidiary maturing more than one year after the date or which it is originally incurred, including debt assumed or guaranteed by BDRN 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
-6- 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 CFA 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 Niger for the purposes of servicing such debt. (d) The term "consolidated debt of BDRN and all its Subsidiaries" means the total amount of debt of BDRN and all its Subsidiaries excluding (i) debt owed by BDRN to any Subsidiary or by any Subsidiary to BDRN 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 BDRN and all its Subsidiaries" means the aggregate of (i) the total unimpaired paid-in capital, surplus and free reserves of BDRN and of all its Subsidiaries after excluding therefrom such amounts as shall represent equity interests of BDRN in any Subsidiary, or of any such Subsidiary in BDRN or in any other Subsidiary and (ii) such amount of any loan which the Association may determine to be included in the consolidated capital and surplus of the Borrower. Section 3.04. Extept as the Association and BDRN shall otherwise agree, BDRN 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. BDRN shall take such steps satisfactory to the Association as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the various currencies (including CFA Francs) used in its borrowing and lending operations. ARTICLE IV Consultation, Information and Inspection Section 4.01. (a) The Association and BDRN shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and BDRN shall from time to time, at the request of either party, exchange views through their representatives with regard to the progress of the Project, the
'7 þëtftttie by ftlig of its oblig tig titder this Agtettiet and the SUbatldlåty Lödn Agrteednëtit, the id hl tnh, nobiatiinus änd ti ai1titål tdti h of URN åtid other tftttets teltting tn the hut00,4 df the CUedit. (b) Mjto 'h0d11 fttu-ittsh to the Asaoriation alt cirh finfontin t fötåt the Asoidtiott shal reå-iötiåbl reque,t rottretnrtig the ddi1tåtkttotintp, c etastia änd finarial rnditiotn of ~0N änd ftn subsidiåtes, if ätty. Sect1ott 4. 02. 9~kN mhtll prnptlyl tiform the A ociatiton of åtty cottdition which 1titetferes with, or threäterm tn itrfere With, the acertdpi1ishtenttt- of the purposes of the Crvdlt or the Potföttötice by 90RN of its thitgatinu uidet this Agreeentt nr the SubjidIdty Lon Agreetettt. Sectfoti 4.(). BURN shall etble the Ansocintion's reptpsn tattves to Itspect the rerötds referred t-n Itt Section 3.01 of thli Agtëeofltt åttd åtly teltevanit docnr(tq. ARtiCLV v ttfective båte; Termibåtiori Cåttcellttion and Suspelslof Section 5.01. This Agreetmentt shall cotue into force and eftect ot the date upon which the tevelopmfent Credit Agreetnent becomes effective. 8ctlont 5.02. (a) this Agreemett and all obitgattons of the Aociattiou atid of 13ORN thereunider shall termtinate or the ëåtliet of the föllowitig two datedå (1) the date ob which the Developmtent Credit Agreement shäll terttidtatë; or (ii) a date ëightetnt years after the date of this Agreemht. (b) if the hevéloppieit Ctedit Agteediett tetmitates before the däte specifiëd Ii paragtaph (å) (ii) of this Section, the Assocatiöt sháål tolptiy notify ffrn of this event, atd upon the givtg of Euch botice, tids Agtetëient ad all obligations of the þatties theteundet shall förthwtth tertmidate.
-8- Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under Article VI of 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, or by BDRN on behalf of the Borrower under the Development Credit Agreement, or under 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: 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. 24423 (RCA) or 89658 (WUI) For BDRN: Banque de D&veloppement de la R&publique du Niger Boite Postale 227 Niamey Ripublique du Niger Cable address: Boite Postale 227 Niamey Telex: 5213 NI SONIBANK
-9- Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed by BDRN under this Agreement, or under Section 2.03 of the Development Credit Agreement by BDRN on behalf of the Borrower, may be taken or executed by the Directeur General of BDRN or by such other person or persons as BDRN shall designate in writing, and BDRN shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. 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/ Roger Chaufournier Regional Vice President Western Africa DEVELOPMENT BANK OF THE REPUBLIC OF NIGER By /s/ Andre Joseph Wright Authorized Representative
- 10 - SCHEDULE Lending Policies and Procedures 1. For the purposes of this Schedule: (a) "Small-scale Enterprise" means an Investment Enterprise of which the majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by nationals of the Borrower and for which in the Investment Project the ratio of fixed investment cost to jobs to be created is equal to or less than the equivalent of $5,000, such amount being subject to modification by agreement between the Borrower and the Association. (b) "Medium-scale Enterprise" means an Investment Enterprise of which the majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by nationals of the Borrower and for which in the Investment Project the ratio of fixed investment cost to jobs to be created is above the amount established under paragraph (a) above. 2. Unless the Association shall otherwise agree, no more than 60% of the amount withdrawn under Part A.1 of the Praject shall be relent to Medium-scale enterprises. 3. Sub-loans shall bear interest at the rate of 11% per annum on outstanding balances, provided, however, that Sub-loans subject to interest-rate ceilings imposed by the Central Bank for the Western African States shall bear interest at the highest permissible level. 4. BDRN shall require Investment Enterprises to finance at least 10% of the costs of their Investment Projects and, in the case of Medium-scale Enterprises, at least 25% from sources other than their Sub-loans. 5. Sub-loans shall have terms of between three and fifteen years including appropriate periods of grace.