FlCl AL LOAN NUMBER 2298 COB

Loan Agreement(Ouesso Wood-Processing Project)

between

THE PEOPLE' S REPUBLIC OF THE CONGO

and

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

Dated , 1983

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LOAN NUMBER 2298 COB

LOAN AGREEMENT

AGREEMENT, dated I . , 1983, betweenTHE PEOPLE'S REPUBLIC OF THE CONGO (hereinafter called the Bor-rower or the Congo) and ILTERNATIONAL BANK FOR RECONSTRUCTION ANDDEVELOPMENT (hereinafter called the Bank).

WHEREAS (A) the Borrower has requested the Bank to assist inthe financing of the foreign exchange cost of the Projectdescribed in Schedule 2 to this Agreement by making the Loan ashereinafter provided;

(B) SCBO (as hereinafter defined) intends to contract from:(i) Banque Internationale pour l'Afrique Occidentale (hereinaftercalled BIAO) a crédit acheteur in an approximate amount offifty-three million French francs (FF53,000,000) (hereinaftercalled BIAO Crédit Acheteur) to be guaranteed by CompagnieFrançaise d'Assurance au Commerce Extérieur (hereinafter calledCOFACE); and (ii) Banque Nationale de Développement Congolaise(hereinafter called BNDC) a loan in an amount of one billion onehundred million CFA francs (CFAF 1,100,000,000) (hereinaftercalled BNDC Loan), to assist in financing part of the Project onthe terms and conditions set forth in agreements (hereinaftercalled BIAO Credit Agreement, COFACE Guarantee Agreement and BNDCLoan Agreement) to be entered into between SCBO, on the one hand,and BIAO, COFACE and BNDC, on the other hand;

(C) (i) Farts A through D of the Project will be carriedout by SCBO with the Borrower's assistance and, as part of suchassistance, the Borrower will make available to SCBO part of theproceeds of the Loan as hereinafter provided, and (ii) Part E ofthe Project will be carried out by the Borrower;

(D) Silos (as hereinafter defined) and Agro-Finance (ashereinafter defined), as shareholders of SCBO, will providefinancing and other support for the Project, as set forth in theCommercial Shareholders' Agreement described in Section 1.02 (j)hereof; and

WHEREAS the Bank has agreed, on the basis, inter alia, ofthe foregoing, to make the Loan to the Borrower upon the termsand conditions hereinafter set forth;

NOW THEREFORE the parties hereto hereby agree as follows:

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ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all the

provisions of the General Conditions Applicable to Loan and

Guarantee Agreements of the Bank, dated October 27, 1980, withthe same force and effect as if they were fully set forth herein,subject, however, to the modifications thereof set forth inSchedule 4 to this Agreement (said General Conditions Applicableto Loan and Guarantee Agreements of the Bank, as so modified,being hereinafter called the General Conditions).

Section 1.02. Wherever used in this Agreement, unless the

context otherwise requires, the several terms defined in theGeneral Conditions and in the Preamble to this Agreement have

the respective meanings therein set forth and the followingadditional terms have the following meanings:

(a) "Project Agreement" means the agreement between theBank and SCBO of even date herewith, as the same may be amendedfrom time to time, and such te- includes all schedules to theProject Agreement and all agree, Ats supplemental to the ProjectAgreement.

(b) "Subsidiary Loan Agreement" means the agreement to beentered into between the Borrower and SCBO pursuant to Section3.02 (b) of this Agreement, as the same may be amended from timeto time, and such term includes all schedules to the SubsidiaryLoan Agreement.

(c) "Project Preparation Advances" means collectively theproject preparation advance granted by the Association to theBorrower pursuant to an exchange of letters and telegram dated

December 1, 1977, March 31, 1978 and May 22, 1978 between theBorrower and the Association and the project preparation advance

granted by the Bank to the Borrower pursuant to an exchange of

letters dated November 12, 1982 and June 8, 1983 between theBorrower and the Bank,

(d) "SCBO" means Societe Congolaise des Bois de Ouesso, asociete anonyme d'economie mixte organized and operating under

the laws of Congo.

(e) "SCBO Statuts" means the Statuts of SCBO approved bythe Borrower's Decret No. 81/811 dated November 26, 1981, as

amended from time to time.

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(f) "Agro-Finance" means Agro-Finance S.A., a societeanonyme organized under the laws of the Grand Duchy of Luxembourgpursuant to statuts dated September 2, 1981.

(g) "Silos" means Les Silos du Sud-Ouest, a societe anonymeorganized under the laws of France pursuant to statuts datedDecember 3, 1979.

(h) "Project Documents" means collectively the Conventiond'Etablissement related to SCBO dated April 23, 1983, theBorrower's Decret No. 83/200 dated March 26, 1983, the Borrower'sArrete No. 1146/MEF/SGEF/DF/BC-13-06 dated February 2, 1982, theBorrower's Arrete No. 1147/MEF/SGEP/DF/BC-13-06 dated February 2,1982 and the letter No. 152/MEF/DF dated June 23, 1982 from theBorrower's Direction des Forets, as amended from time to time.

(i) "Marketing Agreement" means the agreement between SCBOand the ultimate purchaser of the export output of the Project,as from time to time entered into or extended to market theexport output of the Project.

(j) "Commercial Shareholders' Agreement" means the agree-ment of even date herewith between, on the one hand, Silos andAgro-Finance, as shareholders of SCBO, and, on the other hand,the Bank, whereby Silos and Agro-Finance undertake to providefinancing and other support for the Project, as more fully setforth in such agreement.

(k) "Fee" means the fee referred to in Section 2.05 hereof.

(1) "Subsidiary" means any corporation, a majority of whoseoutstanding voting stock shall be owned, or which shall be effec-tively controlled, by SCBO or by one or more Subsidiaries of SCBOor by SCBO and one or more of its Subsidiaries.

(m) "CFAF" and "CFA franc" mean the currency unit of theBorrower.

(n) "Turnkey Contract" means the contract referred to inSection 2.01 of the Project Agreement.

(o) "Subordinated debt" means any debt incurred by SCB0which shall have been made subordinate and junior in any paymentright to the funds made available to SUBO for the financing ofthe Project.

ARTICLE 1I

The Loan

Section 2.01. The Bank agrees to lend to the Borrower, on

the terms and conditions in the Loan Agreement set forth or

referred to, an amount in various currencies equivalent to twelve

million dollars ($12,000,000).

Section 2.02. (a) The amount of the Loan may be withdrawn

from the Loan Account in accordance with the provisions of

Schedule 1 to this Agreement, as such Schedule may be amended

from time to time by agreement between the Borrower and the Bank,

for expenditures made (or, if the Bank shall so agree, to be

made) in respect of the reasonable cost of goods and services

required for the Project described in Schedule 2 to this Agree-

ment and to be financed out of the proceeds of the Loan and in

respect of interest and other charges on the Loan.

(b) On each of the semiannual interest payment dates

specified in Section 2.08 of this Agreement, the Bank shall, on

behalf of the Borrower, withdraw from the Loan Account and pay to

itself the amounts required to pay, on such date, interest and

other charges on the Loan accrued and payable on the date set

forth, and up to the amount allocated, in Schedule 1 to this

Agreement, as such Schedule may be amended from time to time by

agreement between the Borrower and the Bank.

(c) Promptly after the Effective Date, the Bank shall, on

behalf of the Borrower, withdraw from the Loan Account and pay to

the Association and the Bank the amounts required to repay the

principal amounts of the Project Preparation Advances withdrawn

and outstanding as of such date and to pay all unpaid charges

thereon. The unwithdrawn balances of the authorized amounts of

the Project Preparation Advances shall thereupon be cancelled.

Section 2,03. Except as the Bank shall otherwise agree,

arocurement of the civil works required for the Project and to be

financed out of the proceeds of the Loan shall be governed by the

provisions of the Schedule to the Project Agreement.

Section 2.04. The Closing Date shall be December 31, 1986 or

such later date as the Bank shall establish. The Bank shall

promptly notify the Borrower and SCBO of such later date.

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Section 2.05. (a) The Borrower shall pay to the Bank a feeequivalent to $29,925.

(b) On or promptly after the Effective Date, the Bank

shall, on behalf of the Borrower, withdraw from the Loan Accountand pay to itself the amount of the said fee in such currency orcurrencies as the Bank shall determine.

Section 2.06. The Borrower shall pay to the Bank a commit-ment charge at the rate of three-fourths of one per cent (3/4 of1%) per annum on the principal amount of the Loan not withdrawnfrom time to time.

Section 2.07. (a) The Borrower shall pay interest on theprincipal amount of the Loan withdrawn and outstanding from timeto time at a rate per annum for each Interest Period equal to onehalf percent per annum above the Cost of Qualified Borrowings forthe last Semester ending prior to the commencement of suchInterest Period.

(b) As soon as practicable after the end of each Semester,the Bank shall notify the Borrower of the Cost of QualifiedBorrowings for such Semester.

(c) The interest rate for the Interest Period commencing on

1 \) ~ shall be \O.4 % per annum.

(d) For purposes of this Section:

(i) "Interest Period" means the six-month periodcommencing on each date specified in Section 2.08of this Agreement, including the Interest Periodin which this Agreement is signed.

(ii) "Cost" of Qualified Borrowings means the cost,expressed as a percentage per annum, as reasonablydecermined by the Bank, provided that the amountof $8,520.5 million referred to in (iii) (B)hereunder shall be reckoned at a cost of 10.93%per annum.

(iii) "Qualified Borrowing," means (A) outstandingborrowings of the Bank drawn down after June 30,1982; and (B) until July 1, 1985, the amount of$8,520.5 million (representing borrowings of the

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Bank between July 1, 1981 and June 30, 1982) lessany part thereof repaid earlier than July 1, 1985.

(iv) "Semester" means the first six months or thesecond six months of a calendar year.

Section 2.08. Interest and other charges shall be payablesemiannually on March 1 and September 1 in each year.

Section 2.09. The Borrower shall repay the principal amountof the Loan in accordance with the amortization schedule setforth in Schedule 3 to this Agreement.

Section 2.10. SCB0 is designated as representative of theBorrower for the purposes of taking any action required orpermitted to be taken under the provisions of Section 2.02 ofthis Agreement and Article V of the General Conditions as regardsCategories (1), (2), (4), (5) (as regards SCBO's share of theFee) and (6) of the table set out in paragraph 1 of Schedule 1

hereto.

ARTIC'LE III

Execution of the Project

Section 3.01. (a) The Borrower shall carry out Part E of theProject with due diligence and efficiency and in conformity withappropriate administrative and financial practices and the

provisions included in such Part of the Project and shallprovide, promptly as needed, the funds, facilities, services andother resources required for the purpose.

(b) In order to assist the Borrower in carrying out Part Eof the Project, the Borrower shall, by June 30, 1984 (or such

other date as the Bank may agree), employ consultants whose

qualifications, experience and terms and conditions of employment

shall be satisfactory to the Bank, such consultants to beselected in accordance with principles and procedures satis-factory to the Bank on the basis of the "Guidelines for the Useof Consultants by World Bank Borrowers and by the World Bank asExecuting Agency" published by the Bank in August 1981.

(c) The Borrower shall cause all services from Part E ofthe Project financed out of the proceeds of the Loan to be usedexclusively for the purposes of such Part of the Project.

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(d) The Borrower shall furnish to the Bank, promptly upon

their preparation, the plans, specifications, reports, and con--

tract documents for Part E of the Project, and any material modi-

fications thereof or additions thereto, in such detail as the

Bank shall reasonably request.

(e) The Borrower: (i) shall enable the Bank's representa-

tives to visit the facilities and construction sites included in

the Project and to examine any relevant records and documents;

(ii) shall maintain records and procedures adequate to record and

monitor the progress of Part E of the Project (including its cost

and the benefits to be derived from it), to identify the services

for Part E of the Project financed out of the proceeds of the

Loan, and to disclose their use in such Part of the Project: and

(iii) shall furnish to the Bank at regular intervals all such in-

formation as the Bank shall reasonably request concerning Part E

of the Project, its cost and, where appropriate, the benefits to

be derived from it, the expenditure of the proceeds of the Loan

allocated thereto and the services financed out of such proceeds.

(f) Upon the award by the Borrower of any contract for ser-

vices to be financed out of the proceeds of the Loan, the Bank

may publish a description thereof, the name and nationality of

the party to whom the contract was awarded and the contract

price.

(g) Promptly after completion of Part E of the Project, but

in any event not later thar: six months after the Closing Date or

such later date as may be agreed for this purpose between the

Borrower and the Bank, the Borrower 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 such Part of the Project, its cost and the benefits derived

and to be derived from it, the performance by thi Borrower and

the Bank of their respective obligations under the Loan Agreement

and the accomplishment of the purposes of the Loan.

Section 3.02. (a) (i) Without any limitation or restriction

upon any of its other obligations under the Loan Agreement, the

Borrower shall, within its powers, take all appropriate steps to

cause SCBO to perform in accordance with the provisions of the

Project Agreement all the obligations of SCBO therein set forth,shall take or cause to be taken, all action, including the provi-

sion of funds, facilities, services and other resources, neces-

sary or appropriate to enable SCBO to perform such obligations,

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and shall not take or permit to be taken any action which would

prevent or interfere with such performance or with the managing

of SCBO as an efficient commercial enterprise; (ii) without any

limitation upon the generality of the foregoing, and -except as

the Bank shall otherwise agree:

(A) Until completion of Parts A, B, C and D of the

Project, the Borrower:

(1) shall not require SCBO to pay any dividend

or make any other distribution with respect

to its share capital, and shall ensure that

all earnings be retained and used by SCBO

exclusively for the purposes of such Parts of

the Project; nor to pay any interest on, or

principal of, any subordinated debt; and

(2) shall, whenever there is reasonable cause to

believe that the funds available to SCBO will

be inadequate to meet the estimated expendi-

tures required for the carrying out of such

Parts of the Project, make arrangements

satisfactory to the Bank and SCBO promptly to

provide to SCBO, in proportion to its holding

of SCBO shares, such additional funds as

shall be necessary for the purpose.

(B) The Borrower shall, whenever there is reason-

able cause to believe that the funds available to

SCBO will be inadequate for ensuring the compli-

ance by SCBO with Sections 4.04 and 4.06 of the

Project Agreement, make arrangements satisfactory

to the Bank promptly to provide to SCBO, in

proportion to its holding of SCBG shares, such

additional funds as shall be necessary for the

purpose.

(C) For the purpose of (A) above, "completion of

Parts A, B, C and D of the Project" means comple-

tion of a six-month period during which at least

50,000 m3 of logs shall have been produced and the

sawmill and veneer plant included in Part B of the

Project shall have operated, on average, at no

less than 80% of their rated production capacity;

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and (iii) until the Loan Agreement and Project Agreement shallhave been terminated, the Borrower shall not, without the priorapproval of the Bank:

(A) sell, pledge, or otherwise dispose of, any of itsshares of SCBO or permit a change in thepercentage of its holding of such shares asexisting at the date hereof; or

(B) permit the modification of SCBO Statuts.

(b) The Borrower shall relend the proceeds of the Loanallocated, from time to time, to Categories (1), (2), (4), (5)(as regards SCBO's share of the Fee) and (6) of the table set outin, paragraph 1 of Schedule 1 hereto to SCBO, under a subsidiaryloan agreement to be entered into between the Borrower and SCBO,under terms and conditions which shall have been approved by theBank.

(c) The Borrower shall exercise its rights under the Subsi-diary Loan Agreement and the Project Documents in such manner asto protect the interests of the Borrower, the Bank and SCBO andto accomplish the purposes of the Loan, and, except as the Bankshall otherwise agree, the Borrower shall not assign, amend,abrogate or waive the Subsidiary Loan Agreement or the ProjectDocuments or any provision thereof.

Section 3.03. The Borrower undertakes: (i) to take allappropriate steps to monitor the river and railway fleet capacityof Agence Transcongolaise des Communications (hereinafter calledATC) in relation to the actual demand for transportation of logsand processed wood-products; and (ii) whenever there is reason-able cause to believe that the projected requirements of Congocall for an expansion of the size of such fleet, to make arrange-ments satisfactory to the Bank to cause ATC to be providedpromptly with all funds as shall be necessary for the purpose.

ARTICLE IV

Other Covenants

Section 4.01. (a) It is the policy of the Bank, in makingloans to, or with the guarantee of, its members not to seek, innormal circumstances, special security from the member concernedbut to ensure that no other external debt shall have priority

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over its loans in the allocation, realization or distribution of

foreign exchange held under the control or for the benefit of

such member. To that end, if any lien shall be created on any

public assets (as hereinafter defined), as security -for any

external debt, which will or might result in a priority for the

benefit of the creditor of such external debt in the allocation,realization or distribution of foreign exchange, such lien shall,unless the Bank shall otherwise agree, ipso facto, and at no cost

to the Bank, equally and ratably secure the principal of, and

interest and other charges on, the Loan, and the Borrower, in

creating or permitting the creation of such lien, shall make

express provision to that effect; provided, however, that, if for

any constitutional or other legal reason such provision cannot be

made with respect to any lien created on assets of any of its

administrative subdivisions, the Borrower shall promptly and at

no cost to the Bank secure the principal of, and interest and

other charges on, the Loan by an equivalent lien on other public

assets satisfactory to the Bank.

(b) The foregoing undertaking shall not apply to: (i) any

lien created on property, at the time of purchase thereof, solely

as security for payment of the purchase price of such property or

as security for the payment of debt incurred for the purpose of

financing the purchase of such property; and (ii) any lien

arising in the ordinary course of banking transactions and

securing a debt maturing not more than one year after its date.

(c) As used in this Section, the term "public assets" means

assets of the Borrower, of any administrative subdivision thereof

and of any entity owned or controlled by, or operating for the

account or benefit of, the Borrower or any such subdivision,

including gold and foreign exchange assets held by any institu-

tion performing the functions of a central bank or exchange

stabilization fund, or similar functions, for the Borrower.

Section 4.02. The Borrower shall maintain or cause to be

maintained records adequate to reflect in accordance with con-

sistently maintained sound accounting practices the operations,

resources and expenditures, in respect of Part E of the Project,

of the departments or agencies of the Borrower responsible for

carrying out of such Part of the Project or any part thereof.

ARTICLE V

Remedies of the Bank

Section 5.01. For the purposes of Section 6.02 of the

General Conditions, the following additional events are specified

pursuant to paragraph (k) thereof:

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(a) SCBO shall have failed to perform any of its obliga-tions under the Project Agreement.

(b) As a result of events which have occurred after thedate of the Loan Agreement, an extraordinary situation shall havearisen which shall make it improbable that SCBO will be able toperform its obligations under the Project Agreement.

(c) SCBO Statuts shall have been amended, suspended,abrogated, repealed or waived so as to affect materially andadversely the ability of SCBO to perform any of its obligationsunder the Project Agreement.

(d) The Borrower or any other authority having jurisdictionshall have taken any action for the dissolution or disestablish-ment of SCBO or for the suspension of its operations.

(e) Silos or Agro-Finance shall have failed to perform anyof its respective obligations under the Commercial Shareholders'Agreement.

(f) The Project Documents shall have been amended, sus-pended, abrogated, repealed or waived without the Bank's priorapproval.

(g) The Marketing Agreement shall have been entered into,

extended, amended, suspended, abrogated, repealed or waivedwithout the Bank's prior approval.

(h) (i) Subject to subparagraph (ii) of this paragraph:

(A) The right of SCBO to withdraw the proceeds of

any loan (including the BIAO Credit Acheteurand the BNDC Loan) made to SCBO for thefinancing of the Project shall have beensuspended, cancelled or terminated in wholeor in part, pursuant. to the terms of theagreement providing therefor or the COFACEGuarantee Agreement, as the case may be; or

(B) any such loan shall have become due andpayable prior to the agreed maturity thereof.

(ii) Subparagraph (i) of this paragraph shall not applyif SCBO establishes to the satisfaction of theBank that: (A) such suspension, cancellation,termination or prematuring is not caused by the

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failure of SCBO to perform any of its obligationsunder such agreement; and (B) adequate funds forthe Project are available to SCBO from othersources on terms and conditions consistent withthe obligations of the Borrower under this Agree-ment and of SCB0 under the Project Agreement.

(i) Any representation made by SCBO pursuant to the Project

Agreement, or any statement furnished in connection therewith,and intended to be relied upon by the Bank in making the Loan,shall have been incorrect in any material respect.

(j) The Turnkey Contract shall have been amended, suspend-ed, abrogated, repealed or waived without the Bank's prior appro-val.

Section 5.02. For the purposes of Section 7.01 of theGeneral Conditions, the following additional events are specifiedpursuant to paragraph (h) thereof:

(a) any event specified in paragraphs (a) or (e) of Sec-

tion 5.01 of this Agreement shall occur and shall continue for aperiod of sixty days after notice thereof shall have been givenby the Bank to the Borrower;

(b) any event specified in paragraphs (c), (d), (f), (g) or(j) of Section 5.01 of this Agreement shall occur; and

(c) the event specified in paragraph (h)(i)(B) of Sec-

tion 5.01 of this Agreement shall occur, subject to the provisoof paragraph (h) (ii) of that Section.

ARTICLE VI

Effective Date; Termination

Section 6.01. The following events are specified as addi-tional conditions to the effectiveness of the Loan Agreementwithin the meaning of Section 12.01 (c) of the General Condi-tions:

(a) The Subsidiary Loan Agreement has been executed on be-half of the Borrower and SCBO.

(b) The Bank has been duly notified that all conditions (ifany) precedent to the first disbursement of funds under the BIAOCredit Agreement and the BNDC Loan Agreement have been fulfilled,save for the effectiveness hereof.

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Section 6.02. The following are specified as additionalmatters, within the meaning of Section 12.02 (c) of the GeneralConditions, to be included in the opinion or opinions to befurnished to the Bank:

(a) The Project Agreement has been duly authorized orratified by SCBO, and is legally binding upon SCBO in accordancewith its terms.

(b) The Subsidiary Loan Agreement has been duly authorizedor ratified by the Borrower and SCB0 and is legally binding uponthe Borrower and SCB0 in accordance with its terms.

(c) The Commercial Shareholders' Agreement has been dulyauthorized or ratified by Silos and Agro-Finance, and is legallybinding upon each of such parties thereto in accordance with itsterms.

Section 6.03. The date u 1 1 , is herebyspecified for the purposes of Section 12.04 of the GeneralConditions.

ARTICLE VII

Representative of the Borrower; Addresses

Section 7.01. Except as provided for in Section 2.10 hereof,the Ministre des Finances de la Republique Populaire du Congo isdesignateO as representative of the Borrower for the purposes ofSection 11.03 of the General Conditions.

Section 7.02. The following addresses are specified for thepurposes of Section 11.01 of the General Conditions:

For the Borrower:

Ministere des Finances de la R6publiquePopulaire du Congo

BrazzavilleB.P. 1183Republique Populaire du Congo

Cable address: Telex:

MINIFINANCES PRESICONGOBrazzaville 52 10 KGRepublique Populaire du Congo

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For the Bank:

International Bank for

Reconstruction and Development

1818 1H Street, N.W.Washington, D.C. 20433

United States of America

Cable address: Telex:

INTBAFRAD 440098 (ITT)

Washington, D.C. 248423 (RCA) or

64145 (WUI)

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.

THE PEOPLE'S REPUBLIC OF THE CONGO

By ISAuthorized Re lesentative

INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT

By fs/ J,,Regional Vice President

Western Africa

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SCHEDULE 1

Withdrawal of the Proceeds of the Loan

1. The table below sets forth the Categories of items to befinanced out of the proceeds of the Loan, the allocation ofamounts of the Loan to each Category and the percentage ofexpenditures for items so to be financed in each Category:

Amount of theLoan Allocated % of(Expressed in Expenditures

Category Dollar Equivalent) to be Financed

(1) Civil works 6,000,000 90%for theProj ect

(2) Consultants' 2,250,000 100% of foreignservices for expendituresParts B, C andD of the Project

(3) Consultants' 1,500,000 100% of foreignservices and expendituresoverseas train-ing underPart E of theProject

(4) Refunding of 750,000 Amounts dueProject Prepa- pursuant toration Advances Section 2.02(c)

hereof

(5) Fee* 29,925 Amount due pur-suant to Sec-tion 2.05 (a)hereof

(6) Interest and 500,000 Amount dueother charges under Sectionon the Loan 2.02 (b) ofaccrued on this Agree-or before ment

August 31, 1986

* It is understood that Congo and SCBO shall be liable forthis Fee as follows:- Congo: $ 3,741- SCBO : $26,184

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Amount of theLoan Allocated % of(Expressed in Expenditures

Category Dollar Equivalent) to be Financed

(7) Unallocated 970,075

TOTAL 12,000,000

2. For the purposes of this Schedule, the term "foreignexpenditures" means expenditures in the currency of any countryother than the Borrower and for goods or services supplied fromthe territory of any country other than the Borrower.

3. The disbursement percentages have been calculated in com-

pliance with the policy of the Bank that no proceeds of the Loanshall 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 thatend, if the amount of any such taxes levied on or in respect ofany item to be financed out of the proceeds of the Loan decreases

or increases, the Bank may, by notice to the Borrower, increaseor decrease the disbursement percentage then applicable to suchitem as required to be consistent with the aforementioned policy

of the Bank.

4. Notwithstanding the provisions of paragraph 1 above, no

withdrawals shall be made in respect of payments made for

expenditures prior to the date of this Agreement.

5. Notwithstanding the allocation of an amount of the Loan or

the disbursement percentages set forth in the table in para-

graph 1 above, if the Bank has reasonably estimated that the

amount of the Loan then allocated to any Category will be insuf-

ficient to finance the agreed percentage of all expenditures in

that Category, the Bank may, by notice to the Borrower: (i) re-allocate to such Category, to the extent required to meet the

estimated shortfall, proceeds of the Loan which are then allo-cated to another Category and which in the opinion of the Bank

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 expendituresin order that further withdrawals under such Category may

continue until all expenditures thereunder shall have been made.

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6. If the Bank shall have reasonably determined that the pro-curement of any item in any Category is inconsistent with the

procedures set forth or referred to in this Agreement, no

expenditures for such item shall be financed out of the proceedsof the Loan and the Bank may, without in any way restricting orlimiting any other right, power or remedy of the Bank under the

Loan Agreement, by notice to the Borrower, cancel such amount ofthe Loan as, in the Bank's reasonable opinion, represents the

amount of such expenditures which would otherwise have been

eligible for financing out of the proceeds of the Loan.

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SCHEDULE 2

Description of the Project

The main objective of the Project is the establishment of an

integrated logging and wood-processing operation near Ouesso in

northern Congo.

The Project consists of the following Parts:

Part A: Provision of the equipment necessary to operate the

about 1.1 million ha of forest area covered by the

Project Documents and to produce at least 100,000 m3 of

logs annually.

Part B: Construction of a sawmill with an annual production

capacity of at least 23,000 m3 of sawwood and of a

veneer plant with an annual veneer production capacity

of at least 4,200 m3 and provision of the necessary

maintenance and service facilities.

Part C: Construction of (i) housing and related social

facilities for forestry workers, and (ii) a dock at the

mill site.

Part D (i) Design and initial operation of the sawmill and

veneer plant (including the marketing of the production

thereof), and (ii) training of SCBO personnel.

Part E: (i) Carrying out of studies on the ways and means of

ensuring the successful integration of the Pygmy pop-

ulation of the Ouesso area into the activities of such

area and, upon completion of such studies, implementa-

tion by December 31, 1985 (or such other date as the

Bank may agree), of an action plan acceptable to the

Bank to be based on the recommendations emanating from

such studies; and (ii) strengthening, within the Bor-

rower's ministry responsible for water and forestry, of

the unit responsible for planning new enterprises,

conducting contract negotiations with foreign in-

vestors, liaising with joint-venture partners and

monitoring both the on-going operations in the forestry

sector and the world market.

The Project is expected to be completed by June 30, 1986.

19 -

SCHEDULE 3

Amortization Schedule

Payment of PrincipalDate of Payment Due (Expressed in dollars)*

On each March 1 and September 1

beginning March 1, 1988through March 1, 1998 545,000

On September 1, 1998 555,000

* The figures in this column represent dollar equivalentsdetermined as of the respective dates of withdrawal; seeGeneral Conditions, Section 3.04.

- 20 -

Premiums on Prepayment

The following percentages are specified as the premiums

payable on repayment in advance of maturity of any port4on of the

principal amount of the Loan pursuant to Section 3.04 (b) of the

General Conditions:

Time of Prepayment Premium

The interest rate (ex-

pressed as a percentage

per annum) applicable to

the balance outstandingon the Loan on the day

of prepayment multipliedby:

Not more than three years 0.20

before maturity

More than three years but 0.40

not more than six years

before maturity

More than six years but 0.73not more than eleven years

before maturity

More than eleven years but not 0.87

more than thirteen years

before maturity

More than thirteen years before 1.00

maturity

- 21 -

SCHEDULE 4

Modifications of General Conditions

For the purpose of this Agreement, the provisions of theGeneral Conditions are modified as follows:

(1) By adding to Section 2.01 the following new paragraphs:

"20. The term "SCBO" means Societ' Congolaise des Boisde Ouesso.

21. The term "Agro-Finance" means Agro-Finance S.A.

22. The term "Silos" means Les Silos du Sud-0uest.

23. The term "Project Agreement" means the agreementbetween the Bank and SCB0 of even date with theLoan Agreement.

24. The term "Commercial Shareholders' Agreement" meansthe agreement among the Bank, Agro-Finance andSilos of even date with the Loan Agreement."

(2) By the deletion of Section 10.01 and the substitutiontherefor of the following new Section:

"Section 10.01. (a) Enforceability. The rights and

obligations of the Bank, the Borrower and SCBO underthe Loan Agreement and the Project Agreement shall bevalid and enforceable in accordance with their termsnotwithstanding the law of any State, or political

subdivision thereof, to the contrary. Neither the Banknor the Borrower nor SCBO shall be entitled in anyproceeding under this Article to assert any claim thatany provision of these General Conditions or of theLoan Agreement or the Project Agreement is invalid orunenforceable because of any provision of the Articlesof Agreement of the Bank.

(b) Governing Law. The rights and obligations ofthe Bank, Agro-Finance and Silos under the CommercialShareholders' Agreement shall be governed and construedin accordance with the laws of the Grand Duchy of

Luxembourg."

- 22 -

(3) By the deletion of Section 10.04 and the substitutiontherefor of the following new Section 10.04:

"Section 10.04. Arbitration.

(a) Any controversy between the parties to the Loan Agree-ment or the parties to the Project Agreement or the parties tothe Commercial Shareholders' Agreement, and any claim by any suchparty against any other such party arising under the Loan Agree-ment or the Project Agreement or the Commercial Shareholders'Agreement which shall not be settled by agreement of the partiesshall be submitted to arbitration by an Arbitral Tribunal ashereinafter provided.

(b) The parties to such arbitration shall be the Bank onthe one side and the Borrower, SCB0, Silos and/or Agro-Finance onthe other side, as the case may be.

(c) The Arbitral Tribunal shall consist of three arbitra-tors appointed as follows: one arbitrator shall be appointed bythe Bank; a second arbitrator shall be appointed by the Borroweror SCB0 or Silos and Agro-Finance as the case may be; and thethird arbitrator (hereinafter sometimes called the Umpire) shallbe appointed by agreement of the parties or, if they shall notagree, by the President of the International Court of Justice or,

failing appointment by him, by the Secretary-General of theUnited Nations; provided that, if the Borrower, SCBO, Silos andAgro-Finance shall not agree on the appointment of a common arbi-trator, one arbitrator shall be appointed by the Borrower onlyand a second one by SCB0, Silos and Agro-Finance or, if SCB0,Silos and Agro-Finance shall not agree on such common arbitrator,such common arbitrator shall be appointed by Agro-Finance only.In the event that the Borrower, SCBO, Silos and Agro-Financeshall so appoint two separate arbitrators, the Bank on its part,shall appoint two arbitrators, and the four arbitrators so

appointed shall, together with the Umpire appointed as providedabove, henceforth constitute the Arbitral Tribunal. If any partyor group of parties shall fail to appoint an arbitrator inaccordance with the provisions of this Section, such arbitratorshall be appointed by the Umpire. In case any arbitratorappointed in accordance with this Section shall resign, die orbecome unable to act, a successor arbitrator shall be appointedin the same manner as herein prescribed for the appointment ofthe original arbitrator and such successor shall have all thepowers and duties of such original arbitrator.

- 23 -

(d) An arbitration proceeding may be instituted under thisSection upon notice by the party instituting such proceeding to

the other party. Such notice shall contain a statement settingforth the nature of the controversy or claim to be submitted toarbitration and the nature of the relief sought and the name ofthe arbitrator appointed by the party instituting such proceed-ing. Within thirty days after such notice, the other party shallnotify the party instituting the proceeding of the name of thearbitrator appointed by such other party.

(e) If within sixty days after the notice instituting thearbitration proceeding the parties shall not have agreed upon anUmpire, any party may request the appointment of an Umpire asprovided in paragraph (c) of this Section.

(f) The Arbitral Tribunal shall convene at such time andplace as shall be fixed by the Umpire. Thereafter, the ArbitralTribunal shall determine where and when it shall sit.

(g) The Arbitral Tribunal shall decide all questions

relating to its competence and shall, subject to the provisionsof this Section and except as the parties shall otherwise agree,determine its procedure. All decisions of the Arbitral Tribunalshall be by majority vote.

(h) The Arbitral Tribunal shall afford to all parties afair hearing and shall render its award in writing. Such awardmay be rendered by default. An award signed by a majority of theArbitral Tribunal shall constitute the award of such Tribunal. Asigned counterpart of the award shall be transmitted to eachparty. Any such award rendered in accordance with the provisionsof this Section shall be final and binding upon the parties tothe Loan Agreement, the Project Agreement and the CommercialShareholders' Agreement. Each party shall abide by and complywith any such award rendered by the Arbitral Tribunal inaccordance with the provisions of this Section.

(i) The parties shall fix the amount of the remuneration of

the arbitrators and such other persons as shall be required forthe conduct of the arbitration proceedings. If the parties shallnot agree on such amount before the Arbitral Tribunal shallconvene, the Arbitral Tribunal shall fix such amount as shall bereasonable under the circumstances. The Bank, the Borrower, SCBO,Agro-Finance and Silos shall each defray its own expenses in thearbitration proceedings. The cost of the Arbitral Tribunal shall

- 24 -

be divided between and borne equally by the Bank on the one sideand the Borrower, SCBO, Agro-Finance and Silos on the other side.Any question concerning the division of the costs of the ArbitralTribunal or the procedure for payment of such costs .shall bedetermined by the Arbitral Tribunal.

(j) The provisions for arbitration set forth in this Sec-tion shall be in lieu of any other procedure for the settlementof controversies between the parties to the Loan Agreement, theProject Agreement and the Commercial Shareholders' Agreement orany claim by any such party against any other such party arisingthereunder.

(k) If within thirty days after counterparts of the awardshall be delivered to the parties the award shall not be compliedwith, any party may enter judgment upon, or institute a proceed-ing to enforce, the award in any court of competent jurisdictionagainst any other party, may enforce such judgment by executionor may pursue any other appropriate remedy against such otherparty for the enforcement of the award and the provisions of theLoan Agreement, the Project Agreement or the CommercialShareholders' Agreement. Notwithstanding the foregoing, thisSection shall not authorize any entry of judgment or enforcementof the award against any party that is a member of the Bankexcept as such procedure may be available otherwise than byreason of the provisions of this Section.

(1) Service of any notice or process in connection with anyproceeding under this Section or in connection with any proceed-ing to enforce any award rendered pursuant to this Section may bemade in the manner provided in Section 11.01. The parties to theLoan Agreement, the Project Agreement and the Commercial Share-holders' Agreement waive any and all other requirements for theservice of any such notice or process."

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 day of M-, 198

FOR SECRETARY