CON FORMED COPY CREDIT NUMBER 503 TO Development Credit Agreement (Cocoa-Coffee Development Project) BETWEEN REPUBLIC OF TOGO AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED AUGUST 6, 1974 CONFORMED COPY CREDIT NUMBER 503 TO Development Credit Agreement (Cocoa-Coffee Development Project) BETWEEN REPUBLIC OF TOGO AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED AUGUST 6, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated August 6, 1974, between the REPUBLIC OF TOGO (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCI,ATION (hereinafter called the Association). WHEREAS (A) The Borrower has undertaken, w 1h the assistance of the Republic of France, a program for the rehabilitation and improvement of smallholder cocoa and coffee production; (B) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Development Credit Agreement, which constitutes the second stage of the program referred to in Whereas (A) above, by extending the Credit as hereinafter provided; (C) The Borrower intends to contract from the Fonds d'Aide et de Cooperation of the Republic of France a grant (hereinafter called the French Grant) in an amount of 8,500,000 French Francs to assist in financing part of the Project on the terms and conditions set forth in an agreement (hereinafter called the Convention de Financernent) to be entered into between the Borrower and the Republic of France; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Development Credit Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Development Credit Agreement, unless the context otherwise requires, the several terms defined in the General Conditions 4 have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Convention de Financement" means the agreement referred to in Whereas (C) of this Development Credit Agreement setting forth the terms and conditions of the French Grant and includes all agreements and arrangements, if any, incidental or supplemental thereto between the Republic of France and the Borrower; (b) "SRCC" means SocietM Nationale pour la Renovation et le Developpement de la Cacaoydre et de la Caf9idre Togolaises, an instrumentality of the Borrower; (c) "CNCA" means Caisse Nationale de Credit Agricole, an instrumentality of the Borrower; (d) "Project Area" means the plains of Litin6, and Klouto, and the plateau of Akposso and Dayes; (e) "Project Credit Unit" means the unit referred to in Section 3.07(a) of this Development Credit Agreement; (f) "Project Credit Unit Manager" means the specialist referred to in Section 3.07(b) of this Development Credit Agreement; (g) "Grant Agreement" means the agreement to be entered into between the Borrower and SRCC pursuant to Section 3.0 1(b)(i) of this Development Credit Agreement, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Grant Agreement; (h) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and CNCA pursuant to Section 3.01(b)(ii) of this Development Credit Agreement, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Subsidiary Loan Agreement; (i) "SRCC Project Account" and "CNCA Project Account" mean the accounts referred to in Section 3.02 of this Development Credit Agreement; and (j) "CFA Francs" means the currency of the Borrower. 5 ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to six million dollars ($6,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Development Credit Agreement, as such Schedule may be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit; provided, however, that no withdrawal shall be made from the Credit Account in' respect of amounts allocated to Category IV of Schedule I to this Development Credit Agreement until the Association shall have given the approval referred to in Section 3.09 of this Development Credit Agreement. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for the carrying out of works or services (other than consultants' services) for the Project, to be financed out of the proceeds of the Credit, shall be awarded in accordance with the provisions of Schedule 3 to this Development Credit Agreement. Section 2.04. The Closing Date shall be December 31, 1980 or such other date as shall be agreed between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on June I and December I in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 1 and December 1 commencing December 1, 1984, and ending June 1, 2024, each installment to and including the installment payable on June 1, 1994 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. 6 Section 2.08. The currency of the Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall cause: (i) SRCC to carry out Parts A.1, B, C, E, F.2 and G of the Project, and (ii) CNCA to carry out Parts A.2, D and F. 1 of the Project, all with due diligence and efficiency, under competent management and in conformity with sound administrative, financial and technical practices, and shall provide, or cause SRCC and CNCA to be provided with, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall: (i) make available the proceeds of the Credit allocated from time to time to Categories I, 11(a), III, IV, VII(b) and VIII of Schedule 1 to this Development Credit Agreement to SRCC under an agreement to be entered into between the Borrower and SRCC (hereinafter called the Grant Agreement) under terms and conditions satisfactory to the Association, and (ii) lend to CNCA the proceeds of the Credit allocated from time to time to Categories II(b), V and VI of Schedule 1 to this Development Credit, Agreement, and such additional funds from its own resources as shall be required for carrying out Parts A2 and D of the Project, and make available to CNCA, on a grant basis, the proceeds of the Credit allocated from time to time to Category VII(a) of Schedule I to this Development Credit Agreement, all in accordance with an agreement to be entered into between the Borrower and CNCA (hereinafter called the Subsidiary Loan Agreement), under terms and conditions which shall have been approved by the Association, (such terms and conditions shall include, inter alia, those set forth in Schedule 4 to this Development Credit Agreement, as such Schedule may be modified from time to time by agreement between the Borrower and the Association). (c) The Borrower shall exercise its rights under the Grant and the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and, except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Grant or the Subsidiary Loan Agreement or any provision thereof. (d) The Borrower shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable SRCC and CNCA to perform 7 all of their obligations under the Grant and the Subsidiary Loan Agreements and shall not take or permit to be taken any action which might interfere with such performance. Section 3.02. The Borrower shall: (i) cause SRCC and CNCA to establish in a banking institution, acceptable to the Borrower and the Association, and maintain until the Project is completed, separate accounts for the purpose of recording all amounts credited to and disbursed for the carrying out of the Project, (hereinafter called the SRCC and the CNCA Project Accounts respectively); and (ii) deposit in the SRCC and the CNCA Project Accounts, on or before January 1, April 1, July I and October I in each year until the Project is completed, such amounts as shall have been requested by SRCC and CNCA and approved by the Borrower in consultation with the Association, and as shall be necessary during the next three months for the carrying out of the Project except for the initial deposit required for purposes of Section 6.01(e) of this Development Credit Agreement. Section 3.03. In order to assist SRCC and CNCA in the carrying out of the Project, the Borrower shall cause SRCC and CNCA to employ management, credit and agricultural experts and consultants acceptable to the Association to an extent and upon terms and conditions satisfactory to the Association. Section 3.04. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, all goods and services financed out of the proceeds of the Credit shall be used exclusively for the Project until its completion. Section 3.05. (a) The Borrower shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in s'uch detail as the Association shall reasonably request. (b) The Borrower shall: (i) cause SRCC and CNCA to maintain records adequate to record the progress of the Project (including the cost thereof), to identify the goods and services financed out of the proceeds of the Credit made 8 available to SRCC and CNCA by the Borrower, and to disclose the use thereof in the Project; (ii) enable the Association's accredited representatives to inspect the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 3.06. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the carrying out of Parts A.1, E and G of the Project. Section 3.07. The Borrower shall: (a) cause CNCA to establish, not later than March 31, 1975, or such other date as shall be agreed between the Borrower and the Association, within CNCA and maintain until the completion of the Project, a Project Credit Unit, to be responsible for: (i) reviewing and submitting for approval within two weeks by CNCA's Loan Committee, loans to farmers as required in the carrying out of Part D of the Project, on the basis of SRCC's technical recommendations and the Project Credit Unit's own assessment of each farmer's credit worthiness; (ii) disbursing the cash portion of such loans; (iii) keeping loan accounts for both cash portions and in-kind portions of such loans furnished to each farmer by SRCC; (iv) collecting repayments of principal of such loans and interest thereby; and (v) if necessary, providing marketing services to farmers who have received credit under Part D of the Project, in accordance with paragraph 4(b) of Part C of Schedule 5 to this Development Credit Agreement; (b) cause CNCA to create, not later than March 31, 1975, or such other date as shall be agreed between the Borrower and the Association, within the Project Credit Unit and maintain until the completion of the Project, the position of Project Credit Unit Manager, such manager to (i) be acceptable to the Association, (ii) be appointed not later than March 31, 1975, or such other date as shall be agreed between the Borrower and the Association, (iii) have overall responsibility for the carrying out of Part D of the Project and (iv) be employed under terms and conditions satisfactory to the Borrower and the Association; (c) cause SRCC and CNCA to enter, not later than March 31, 1975, or such other date as shall be agreed between the Borrower and the Association, into an agreement, under terms and conditions satisfactory to the Association, 9 concerning the coordination of the activities of SRCC and the Project Credit Unit in the carrying out of Part D of the Project. Section 3.08. The Borrower shall carry out, not later than December 31, 1977, or such other date as shall be agreed between the Borrower and the Association, a land tenure survey in the Project Area. Section 3.09. The Borrower shall cause SRCC to submit, not later than December 31, 1974, or such other date as shall be agreed between ne Borrower and the Association, for approval by the Association a program, including curricula, phasing of courses and budget requirements, for the carrying out of Part B of the Project. Section 3.10. The Borrower shall cause SRCC to organize farmers desiring to participate in the carrying out of Part C of the Project in village production groups consisting of about ten to twenty farmers, in order to ensure the efficient carrying out of Parts C.2, C.3 and C.4 of the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause SRCC and CNCA to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of SRCC and CNCA. (b) The Borrower shall cause SRCC and CNCA to: (i) have their accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound 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 their 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 SRCC and CNCA and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause SRCC and the Project Credit Unit to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound practice. 10 Section 4.03. The Borrower shall cause CNCA to submit, within two months after completion of Part F. 1 of the Project, for approval by the Association, a plan to implement the conclusions and recommendations of the study contained in such Part of the Project. Section 4.04. The Borrower shall: (i) inform the Association about any new appointment proposed to be made, until the Project has been completed, to the posts of Directeur General of SRCC and chiefs of SRCC's extension unit and road department; and (ii) afford the Association a reasonable opportunity to express its views on candidates before appointments are made. Section 4.05. The Borrower shall review, on at least an annual basis, farmgate prices for cocoa and coffee and shall afford the Association a reasonable opportunity to express its views on the level of such prices during the course of any such review. Section 4.06. The Borrower shall: (i) cause SRCC and CNCA to adequately maintain the buildings, equipment, vehicles, roads and other facilities included il the Project and financed out of the proceeds of the Credit, and make all necessary repairs and renewals thereof, and (ii) provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 4.07. The Borrower shall continue to carry out, in the areas planted with cocoa within the Region des Plateaux, anticapsid treatment campaigns, free of charge to farmers and shall provide, promptly as needed, all the funds, facilities, services and other resources required for the purpose. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) The Fonds d'Aide et de Cooperation shall have suspended in whole or in part the right of the Borrower to make withdrawals under the Convention de Financement; (b) a default shall have occurred in the payment of principal or interest or any other payment required under the Subsidiary Loan Agreement; (c) a default shall have occurred in the performance of any other obligation: (i) on the part of the Borrower under the Convention de Financement, * 11 or the Subsidiary Loan Agreement or the Grant Agreement, or (ii) on the part of CNCA, under the Subsidiary Loan Agreement, or (iii) on the part of SRCC under the Grant Agreement, or under the agreement referred to in Section 3.07(c) of this Development Credit Agreement; (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or transformation of SRCC or of CNCA or for the suspension of their operations; and (e) an extraordinary situation shall have arisen which shall make it improbable that SRCC or CNCA will be able to perform their obligations under the Grant Agreement or the Subsidiary Loan Agreement respectively. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the events specified in paragraph (a) or in paragraph (b) of Section 5.01 of this Development Credit Agreement shall occur and shall continue for a period of thirty days. (b) the events specified in paragraph (c) of Section 5.01 of this Development Credit Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and (c) any event specified in paragraph (d) of Section 5.01 of this Development Credit Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of this Development Credit Agreement within the meaning of Section 12.01(b) of the General Conditions: (a) the consultants required to carry out Part F.1 of the Project have been employed; (b) the Convention de Financement has been executed and delivered on behalf of the Republic of France and the Borrower, respectively, and such execution and delivery have been duly authorized or ratified by all governmental. action and the conditions precedent to the initial disbursement under such Convention have 12 been fulfilled, subject only to the effectiveness of this Development Credit Agreement; (c) the Subsidiary Loan Agreement has been executed and delivered on behalf of the Borrower and CNCA, respectively, and such execution and delivery have been duly authorized or ratified by all necessary corporate and governmental action; (d) the Grant Agreement has been executed and delivered on behalf of the Borrower and SRCC, respectively, and such execution and delivery have been duly authorized or ratified by all necessary corporate and governmental action; and (e) the Borrower has established the SRCC and the CNCA Project Accounts and has deposited in each such account at least 50,000,000 and 25,000,000 CFA Francs, respectively. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Convention de Financement has been duly authorized or ratified by, and executed and delivered on behalf of, the Republic of France and the Borrower and constitutes a valid and binding obligation of the Republic of France and the Borrower in accordance with its terms; (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and CNCA, and constitutes a valid and binding obligation of the Borrower and CNCA in accordance with its terms; and (c) that the Grant Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and SRCC, respectively, and constitutes a valid and binding obligation of the Borrower and SRCC in accordance with its terms. Section 6.03. The date December 6, 1974 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Article IV of this Development Credit Agreement shall cease and determine on the date on which 13 this Development Credit Agreement shall terminate or on a date fifteen years after the date of this Development Credit Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministre des Finances et de l'Economie of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere des Finances et de l'Economie Lom6 Togo Cable address: MINIFINANCES Lom6 For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Development Credit 14 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. REPUBLIC OF TOGO By /s / H.E. Michel Messanir Kekeh Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Xavier de ]a Renaudi6re Director, Country Programs Department Western Africa Regional Office 15 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Construction of 190,000 70% buildings for Part A.1 of the Project II. Acquisition of vehicles and road construc- tion, office and house equipment: (a) For Part A.1 195,000 ) of the Proj- ) ect ) ) 100% of foreign (b) For Part A.2 50,000 ) expenditures or of the Proj- ) 70% of local ect ) expenditures (c) For Part E of 140,000 ) the Project ) III. Operating costs in- 1,970,000 85% curred by SRCC in the carrying out of Part C of the Proj- ect other than costs incurred in employing non-Togolese staff 16 Amount of the Credit Allocated o of (Expressed in Expenditures Category Dollar Equivalent) to be Financed IV. Training of SRCC and 75,000 80% CNCA staff V. Operating costs of 388,000 80% the Project Credit Unit VI. Loans to farmers 1,880,000 80% of amounts under Part D of disbursed by the Project CNCA VII. Consultants' serv- ices for: (a) Parts F.1 of 62,000 100% of foreign the Project expenditures (b) Part F.2 of 135,000 60% the Project VIII. Equipment, sup- 515,000 40% plies, consultants' services and operat- ing costs incurred by SRCC in the carry- ing out of Part G of the Project IX. Unallocated 400,000 TOTAL 6,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from the territory, and in the currency, of any country other 17 than the Borrower; provided, however, that if the currency of the Borrower is also that of another country from the territories of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (b) the term "local expenditures" means expenditures in the currency of the Borrower, and for goods or services supplied from, the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Credit, the Association may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of expenditures prior to the date of this Development Credit Agreement, except that withdrawals may be made in respect of Category III on account of expenditures incurred after July 1, 1974 in an aggregate amount not exceeding the equivalent of $50,000. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph I above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and wh ch in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures (except in the case of Category VII(a) or of foreign expenditures under Category II) in order that further withdrawals unIer such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Development Credit Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under this Development Credit Agreement, by notice to the Borrower, cancel such 18 amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 19 SCHEDULE 2 Description of the Project The Project is the second stage of the Borrower's program referred to in Whereas (A) of this Development Credit Agreement and consists of: A. Expansion of Facilities 1. Construction and equipping of one office, ten houses with office space, and one storage building and acquisition of road construction equipment, trucks, pick-ups, personnel vehicles and bicycles for SRCC. 2. Equipping of about ten offices, and acquisition of pick-ups, personnel vehicles and motorcycles for the Project Credit Unit. B. Training Carrying out of formal and in-service training for SRCC's and the Project Credit Unit's personnel in the technical aspects of cocoa and coffee production and in agricultural credit procedures. C. Planting 1. The carrying out in the Project Area planted with cocoa of: (i) a swollen shoot virus disease erradication program; and (ii) anticapsid treatment campaigns, free of charge to the farmers. 2. The planting and maintenance by about 6,500 farmers of: (i) about 4,400 hectares with cocoa in the Litim6 and Klouto areas only after completion of Part C. L(i) of the Project; and (ii) about 4,000 hectares with coffee in the Akposso and Dayes areas. 3. The provision by SRCC of agricultural extension services to farmers participating in the Project. 20 4. The propagation of planting materials, under the supervision of SRCC, and the provision of such planting material to village nurseries and farmers participating in the Project. D. Credit Provision by CNCA of agricultural credit to farmers participating in the Project, in accordance with the terms and conditions set forth in Schedule 5 to this Development Credit Agreement. E. Roads Construction of about 50 kilometers and rehabilitation of about 110 kilometers of feeder roads within the Project Area. F. Studies 1. To review CNCA's operations and administrative structure and to formulate and establish lending procedures for the Project Credit Unit, adapted to the special conditions prevailing in the Republic of Togo. 2. To evaluate the Project's results and the feasibility of future investments in cocoa and coffee cultivation. G. Research Applied research on aspects of cocoa and coffee production in the Republic of Togo, selected by SRCC in consultation with the Association. The Project is expected to be completed by June 30, 1980. 21 SCHEDULE 3 Procurement A. General Procedures 1. Except as provided in Part A.3 hereof, contracts shall be let under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. Bidders for the works included in Part A. 1 of the Project shall be prequalified as described in part 2.2 of the Guidelines and in this Schedule. 3. Office and house equipment to be financed out of Category II of Schedule 1 to this Development Credit Agreement may be procured in accordance with t'he Borrower's procurement procedures. B. Evaluation and Comparison of Bids for CYvil Works; preferences for Domestic Contractors 1. With respect to any contract for civil works included under Category I of the table set forth in Schedule 1 to this Development Credit Agreement, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, as determined by the Borrower, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying also for such preference shall be asked to provide, as part of the information for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. (b) After bids have been received and reviewed by the Borrower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and 22 (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. C. Review of Procurement Decisions by Association 1. Review of prequalification: The Borrower shall, before qualification is invited, inform the Association in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and, where applicable, of their eligibility for domestic preference under Part B. 1 above and of the reasons for the exclusion of any applicant for prequalification and for such eligibility shall be furnished by the Borrower to the Association for its comments before the applicants are notified, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request. 2. Review of invitation to bid and of proposed awards and final contracts: With respect to all contracts for civil works, vehicles and road construction equipment estimated to cost the equivalent of $25,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably -request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and the reasons for the intended award and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the Borrower's recommendation for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 23 (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 24 SCHEDULE 4 Summary of terms and conditions of the Subsidiary Loan Agreement 1. The Borrower shall lend to CNCA the equivalent of that part of the proceeds of the Credit which shall be withdrawn for expenditures made or to be made under Categories II(b), V and VI of Schedule 1 to this Development Credit Agreement and such additional funds from its own resources as shall be required for carrying out Parts A.2 and D of the Project, for a period of thirteen years, including a grace period of six years, at an interest rate of one per cent (1%) per annum on the amount of the Subsidiary Loan outstanding from time to time. 2. The Borrower shall make available to CNCA, on a grant basis, the equivalent of that part of the proceeds of the Credit which shall be withdrawn for expenditures made or to be made under Category VII(a) of Schedule I to this Development Credit Agreement. 25 SCHEDULE 5 Lending and Operating Policies and Procedures of CNCA in respect of Part D of the Project A. Purpose CNCA will make sub-loans to eligible farmers only for the purpose of assisting in the financing of eligible expenditures included in Part C.2 of the Project. B. Eligibility 1. In order to qualify for the granting of a sub-loan, each applicant must show to the satisfaction of the Project Credit Unit that he meets all such creditworthiness and technical criteria as shall be reasonably established from time to time by the Project Credit Unit and by SRCC, respectively. 2. A farmer shall not be eligible to receive a sub-loan unless he is a member of one of the village production groups referred to in Section 3.10 of this Development Credit Agreement. C. Terms and Conditions 1. Except as the Association shall otherwise agree, the amount of sub-loans shall not exceed CFA Francs 40,000 in the case of cocoa planters, and CFA Francs 73,000 in the case of coffee planters. 2. The principal amount of each sub-loan outstanding from time to time shall (a) bear interest at an annual rate of eight per cent (8%) to be capitalized during the grace period; and (b) be repaid over a period of nine years, including a grace period of five years in the case of cocoa planters and four years in the case of coffee planters. 3. The standard sub-loan agreement, between CNCA and each farmer shall include such other terms and conditions as shall be satisfactory to the Association, inter alia, good husbandry (including adequate phytosanitary measures) and residence covenants on the part of the farmer, disclosure and information covenants (according to Part D of this Schedule) on the part of CNCA and adequate rights for supervision, suspension of disbursements and foreclosure and other enforcement of security in favor of CNCA. 26 4. Without limitation upon the provisions of paragraph C.3 above, the sub-loan agreement shall contain the following security provisions: (a) Whenever the sub-borrower is a tenant or share-cropper farmer, the landlord having title to the land where the sub-loan proceeds will be invested, shall sign the sub-loan agreement as joint obligor; and (b) the farmers shall undertake to sell, upon the Project Credit Unit's request, such portions of their coffee and cocoa crops as the Project Credit Unit shall deem necessary to service the sub-loan out of such sale proceeds, to either (i) a licensed buying agent of the Office des Produits Agricoles diu Togo selected by the farmer and approved by the Project Credit Unit or (ii) the Project Credit Unit as licensed buying agent of the Office des Produits Agricoles du Togo. D. Disbursements and Records 1. Whenever any goods or services, to be financed out of the proceeds of any sub-loan and delivered in kind to the farmers, are procured or paid for by CNCA, or through SRCC's intermediary, CNCA must promptly inform its sub-borrowers of the amounts charged to their respective sub-loan accounts on account of such goods or services so procured or paid, such information to be supported with copies of the sub-borrower's receipt for such goods or services in the amounts so charged. 2. CNCA must furnish semi-annual statements to each sub-borrower, showing the amounts drawn on the sub-borrower's sub-loan account, including interest, payment., made and the outstanding balance of the respective sub-loan. E. Supervision 1. SRCC will ensure that amounts drawn on sub-loan accounts are applied exclusively to expenditures on the farm development plan that such sub-loan is intended to assist in financing. 2. SRCC staff will regularly visit the farms where farm development plans financed with sub-loans are being carried out to ensure that sub-borrowers are effectively and punctually carrying out such plans and complying with the provisions of their respective sub-loan agreements with CNCA.