Page 1 CONFORMED COPY TF025177 Japanese Grant Agreement (Fes Environment Rehabilitation Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT on its own behalf and as Administrator of Grant Funds provided by JAPAN and AGENCE POUR LA DEDENSIFICATION ET LA REHABILITATION DE LA MEDINA DE FES Dated December 5, 1994 TF025177 JAPANESE GRANT AGREEMENT AGREEMENT, dated December 5, 1994, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT acting on its own behalf (the Bank) and as Administrator (the Administrator) of grant funds provided by JAPAN (Japan) and AGENCE POUR LA DEDENSIFICATION ET LA REHABILITATION DE LA MEDINA DE FES (the Recipient). WHEREAS (A) pursuant to a letter agreement dated July 30, 1990 between Japan and the Bank and International Development Association (the Association), Japan has requested the Bank and the Association, and the Bank and the Association have agreed, to administer grant funds to be made available by Japan for the financing of certain programs and projects supported by the Bank and the Association, as the case may be, in accordance with the provisions of such letter agreement; WHEREAS (B) Japan has agreed to make available to the Recipient a grant out of said grant funds (the Grant) to finance the cost of carrying out the technical assistance described in Schedule 1 to this Agreement (the Technical Assistance) on the terms and conditions hereinafter set forth; WHEREAS (C) pursuant to a letter of agreement of even date herewith between the Kingdom of Morocco (the Kingdom) and the Bank, the Kindgom has agreed to undertake certain obligations in respect of the Grant as set forth in such letter of agreement; WHEREAS (D) the Kingdom has requested the Bank to carry out the Technical Assistance; Page 2 WHEREAS (E) the Bank has agreed to carry out the Technical Assistance on the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions; Term of Technical Assistance Section 1.01. The Technical Assistance shall be undertaken by consultants (the Consultants) who shall, as far as practicable, include Consultants with expertise in the following areas: (a) environment; (b) infrastructure; (c) heritage conservation; and (d) environmental and social assessment. Section 1.02. As used in this Agreement, the terms "yen" and "¥" mean the currency of Japan, the term "ADER-FES" means the Agence pour la Dédensification et la Réhabilitation de la Médina de Fes, an agency of the Kingdom established on June 23, 1989, and the term "Consultants" includes individual consultants as well as any consulting firm that provides any of the experts referred to in Section 1.01. Section 1.03. The Consultants are expected to commence their services on October 1, 1994 and to provide a total of 35 man-months of service between that time and December 31, 1995. ARTICLE II Responsibilities of the Bank and the Administrator Section 2.01. The Grant to be provided by Japan for the Technical Assistance shall be in an amount of fifty nine million two hundred thousand yen (¥59,200,000). Section 2.02. The Administrator shall utilize the Grant to finance the following expenditures in connection with the services of the Consultants: (a) remuneration, per diem and other allowances; (b) international and local travel expenses; and (c) out-of-pocket expenses, including communications and reports, incurred by the Consultants in foreign and local currency in the performance of their services. Section 2.03. The Bank shall make reasonable efforts to secure the services of the Consultants. Section 2.04. The recruitment, engagement and supervision of the Consultants shall be the responsibility solely of the Bank and shall be done according to the Bank's applicable procedures, including preparing, in conjunction with the Governor of Fes-Medina, the terms of reference and the short list of consultants. ARTICLE III Responsibilities of the Recipient Section 3.01. The Recipient shall cooperate with the Administrator, the Bank and the Consultants to ensure that the Technical Assistance is carried out promptly and effectively and, for this purpose, shall issue appropriate instructions to its officials, agents and representatives. Section 3.02. The Recipient shall: (a) make arrangements for all personnel of the Consultants assigned to the Technical Assistance (other than nationals of the Recipient or permanent residents of the Recipient's territories) and all dependents of such personnel promptly to be Page 3 provided with any necessary entry and exit visas, residence and work permits, exchange documents and travel documents required for their stay in the Recipient's territories during the duration of the Technical Assistance; (b) facilitate clearance through its customs of any equipment, materials and supplies required for the Technical Assistance and any personal effects of the personnel of the Consultants assigned to the Technical Assistance (other than nationals of the Recipient or permanent residents of the Recipient's territories) and the dependents of such personnel; (c) permit the Consultants to bring into, and withdraw from, the Recipient's territories reasonable amounts of foreign currency for purposes related to the Technical Assistance; (d) permit the personnel of the Consultants assigned to the Technical Assistance (other than nationals of the Recipient or permanent residents of the Recipient's territories) and the dependents of such personnel to bring into, and withdraw from, the Recipient's territories reasonable amounts of foreign currency for their personal use; and (e) exempt the Consultants and the personnel of the Consultants assigned to the Technical Assistance from (or the Recipient shall pay on behalf of the Consultants and such personnel) any taxes, duties, fees, levies and other impositions imposed under the laws and regulations in effect in the Recipient's territories on the Consultants and such personnel in respect of: (i) any payments whatsoever made to the Consultants and such personnel (other than nationals of the Recipient or permanent residents of the Recipient's territories) in connection with the carrying out of the Technical Assistance; (ii) any equipment, materials and supplies brought into the Recipient's territories by the Consultants for the purpose of carrying out the Technical Assistance and which, after having been brought into such territories, will be subsequently withdrawn therefrom by them; (iii) any equipment, material and supplies brought into the Recipient's territories by the Consultants for the purpose of carrying out the Technical Assistance and which will be consumed therein or become the property of the Recipient; and (iv) any property brought into the Recipient's territories by the Consultants or such personnel (other than nationals of the Recipient or permanent residents of the Recipient's territories) or the dependents of such personnel for their personal use and which will be consumed therein or subsequently withdrawn therefrom by them upon their respective departure from the Recipient's territories, provided that the Consultants, such personnel and their dependents shall follow the usual customs procedures of the Recipient in importing property into the Recipient's territories. Section 3.03. The Recipient shall be responsible for dealing with any claims arising out of, or resulting from, the Technical Assistance that may be brought by third parties against the Administrator or the Bank. The Recipient shall indemnify the Administrator and the Bank against any costs, claims, damages or liabilities arising out of, or resulting from, any acts or omissions in connection with the Technical Assistance, except those resulting from the gross negligence or willful misconduct of the Administrator or the Bank, as the case may be. Section 3.04. For purposes of carrying out the Technical Assistance, the Recipient shall make available to the Consultants, free of charge, the data, services, facilities and equipment set forth in Schedule 2 to this Agreement. ARTICLE IV Reports and Other Matters Section 4.01. The Recipient, the Bank and the Administrator shall, from time to time, at the request of any party, exchange views on the Technical Assistance and consult on any reports prepared by the Consultants and the implementation of any recommendations made in those reports. The draft and final reports of the Technical Page 4 Assistance shall be submitted to the Recipient through the Governor of Fes-Medina, who shall communicate his comments, if any, within thirty (30) calendar days from receipt of said reports. Section 4.02. The Bank and the Administrator may use any reports prepared by the Consultants for any purpose that the Bank or the Administrator, as the case may be, may consider appropriate but those reports may not be made public except by agreement between the Recipient, the Bank and the Administrator. ARTICLE V Enforceability of Agreement; Failure to Exercise Rights; Arbitration Section 5.01. The rights and obligations of the Bank, the Administrator and the Recipient under this Agreement shall be valid and enforceable in accordance with their terms notwithstanding the law of any State or political subdivision thereof to the contrary. Neither the Bank nor the Administrator nor the Recipient shall be entitled in any proceeding under this Article to assert any claim that any provision of this Agreement is invalid or unenforceable because of any provision of the Articles of Agreement of the Bank. Section 5.02. No delay in exercising, or omission to exercise, any right, power or remedy accruing to any party under this Agreement upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof or an acquiescence in such default. No action of such party in respect of any default, or any acquiescence by it in any default, shall affect or impair any right, power or remedy of such party in respect of any other or subsequent default. Section 5.03. Any dispute arising out of or related to this Agreement which is not settled by agreement of the parties shall be finally settled by arbitration in accordance with the UNCITRAL Arbitration Rules in force on the date of this Agreement. The place of arbitration shall be Washington, D.C. In the event of a conflict between the UNCITRAL Arbitration Rules and the terms of this Agreement, the terms of this Agreement shall govern. ARTICLE VI Effective Date, Suspension and Termination Section 6.01. This Agreement shall become effective upon its execution by the parties. Section 6.02. The Recipient may at any time request the Bank and the Administrator in writing to terminate the Technical Assistance. Whether or not the Recipient has made such a request, the Administrator may at any time suspend or, after consultation with the Recipient, terminate the right of the Recipient to receive Grant funds for the Technical Assistance if any of the following circumstances shall have occurred and be continuing: (a) The Kingdom shall have failed to make payment of principal or interest or any other amount due to the Bank or the Association: (i) under any loan or guarantee agreement between the Kingdom and the Bank, or (ii) under any development credit agreement between the Kingdom and the Association, or (iii) in consequence of any guarantee or other financial obligation of any kind extended by the Bank to any third party with the agreement of the Kingdom. (b) The Recipient shall have failed to perform any obligation under this Agreement. (c) The Bank or the Association shall have suspended in whole or in part the right of the Kingdom to make withdrawals under any loan agreement with the Bank or any development credit agreement with the Association because of a failure by the Kingdom to perform any of its obligations under such agreement or any guarantee agreement with the Bank. (d) Any event shall have arisen that, in the opinion of the Bank or the Administrator, as the case may be, interferes or threatens to interfere with the successful implementation of the Technical Assistance, the accomplishment of its purposes, or the execution of the Technical Assistance in accordance with the terms and conditions of this Agreement. Page 5 (e) The Kingdom: (i) shall have been suspended from membership in or ceased to be a member of the Bank or (ii) shall have ceased to be a member of the International Monetary Fund. (f) A representation made by the Recipient in or pursuant to this Agreement, or any statement furnished in connection therewith, and intended to be relied upon by the Administrator in making the Grant, shall have been incorrect in any material respect. Section 6.03. If the Technical Assistance is suspended or terminated, the Recipient and the Administrator shall consult with each other concerning any further action that may be necessary or desirable. Section 6.04. The Administrator is not an agent of or trustee for the Recipient and shall not have any fiduciary relationship with the Recipient. The Recipient shall have no right to any portion of the Grant that is not expended by the Administrator pursuant to this Agreement. ARTICLE VII Representation Section 7.01. All communications with respect to this Agreement shall be addressed as follows: For the Recipient: ADER-FES FES Kingdom of Morocco Telex: 51066 For the Administrator and the Bank: Infrastructure Division, Maghreb and Iran Department (MN1IN) International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT on its own behalf and as Administrator of the Grant By /s/ Daniel G. Ritchie Acting Regional Vice President Page 6 Middle East and North Africa AGENCE POUR LA DEDENSIFICATION ET LA REHABILITATION DE LA MEDINA DE FES By /s/ Abdellatif El Hajjami Director General Authorized Representative SCHEDULE 1 Description of Technical Assistance The Technical Assistance consists of the following activities, subject to such modifications thereof as the Administrator and the Recipient may agree upon from time to time: Part A: Carrying out of detailed feasibility studies for environmental improvements, including: (i) new solid waste management system, from collection to disposal and elimination of waste from both households and craft industries; (ii) transfer and relocation plan for polluting craft industries, including regulatory measures for toxic chemical and dangerous substances; and (iii) formulation of a policy and action plan for relocating Medina residents living in unsafe or unsanitary housing, including a pilot operation of housing rehabilitation and financing for the poor. Part B: Assessment of the technical, financial and economic feasibility of the first phase of an urban infrastructure rehabilitation and development program in the Medina and its surrounding area, comprising access routes in the Medina, social facilities, and a public transport terminal. Part C: Assessment of the current organization of cultural heritage conservation works and future development of a training and technology transfer program. Part D: Carrying out of an environmental and social assessment, including formulation of mitigation plans, and an institutional audit to identify project execution capacity, and socio-economic studies to assess beneficiaries participation. SCHEDULE 2 Description of Services, Facilities and Equipment to be Made Available by the Recipient The Recipient shall provide the Consultants with logistical and office support, facilitate access to relevant documentation, ensure that counterpart working groups team up with the Consultants, and provide transportation services.