Bolivia - Small-Scale Mining Development Project : Loan 1331 - Project Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1331 BO PROJECT AGREEMENT (Small-Scale Mining Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANCO MINERO DE BOLIVIA Dated October 15, 1976 PROJECT AGREEMENT AGREEMENT, dated October 15, 1976, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and BANCO MINERO DE BOLIVIA (hereinafter called BAMIN). WHEREAS (A) by the Loan Agreement of even date herewith be- tween Republic of Bolivia (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to twelve million dollars ($12,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that BAMIN agree to undertake such obligations toward the Bank as hereinafter set forth; (B) by a subsidiary loan agreement between the Borrower and BAMIN, part of the proceeds of the loan provided for under the Loan Agreement will be made available to BAMIN on the terms and condi- tions therein set forth; and WHEREAS BAMIN, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement., the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. -3- ARTICLE II Management and Operations of BAMIN Section 2.01. (a) BAMIN shall carry out Parts A and C II of the Project described in Section 3.01 (a) of the Loan Agreement and conduct its operations and affairs in accordance with sound financial standards and practices, with qualified management and personnel in adequate numbers, and in accordance with the Statutes and Statement of Policy. (b) BAMIN shall, unless the Borrower and the Bank shall otherwise agree: (i) charge interest at a rate of not less than twelve per cent (12%) per annum on the principal amount of any sub-loan withdrawn and outstanding from time to time; (ii) charge to each Investment Enterprise pro rata the fee referred to in Sec- tion 2.11 of the Loan Agreement; and (iii) pay such fee to the Borrower. (c) In carrying out Part C II of the Project, BAMIN shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 2.02. (a) In accordance with, and subject to, the provisions of the Loan Agreement and this Agreement, BAMIN shall present sub-loans for Investment Projects to the Bank for approval or for authorization to make withdrawals from the Loan Account. (b) When presenting a sub-loan (other than a free-limit sub- loan) to the Bank for approval, BAMIN shall furnish to the Bank an application, in form satisfactory to the Bank, together with (i) a description of the Investment Enterprise and an appraisal of the Investment Project, including a description of the expen- ditures proposed to be financed out of the proceeds of the Loan relent to BAMIN under the Subsidiary Loan Agreement; (ii) the pro- posed terms and conditions of the sub-loan, including the schedule of amortization of the sub-loan; and (iii) such other information as the Bank shall reasonably request. (c) Each request by BAMIN for authorization to make with- drawals from the Loan Account in respect of a free-limit sub-loan shall contain (i) a sumnary description of the Investment Enter- prise and the Investment Project, including a description of the expenditures proposed to.be financed out of the proceeds of the Loan relent to BAMIN under the Subsidiary Loan Agreement, and ii the terms and conditions of such free-limit sub-loan, in- cluding the schedule of amortization therefor. (d) The amortization schedule applicable to each sub-loan shall provide for an appropriate period of grace, and, unless the Bank, the Borrower and BAMIN shall otherwise agree (i) shall not extend beyond fifteen years from the date of this Agreement, and (ii) shall provide for approximately equal semi-annual, or more frequent, aggregate payments of principal and interest or approx- imately equal semi-annual, or more frequent, payments of principal. (e) Except as the Bank, the Borrower and BAMIN shall other- wise agree, applications and requests made pursuant to the provi- sions of paragraphs (a) and (b) of this Section shall be presented to the Bank on or before December 31, 1979. -5- Section 2.03. (a) BAMIN undertakes that, unless the Bank shall otherwise agree, any sub-loan will be made on terms whereby BAMIN shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Bank and BAMIN, including the right of BAMIN to: (i) require the Investment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards (including the receipt of technical assistance from experts satis- factory to the Borrower, the Bank and BAMIN) and to maintain ade- quate records audited by independent auditors; (ii) require that: (1) the goods and services to be financed out of the proceeds of the Loan shall be purchased at a reasonable price, account being 'taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of main- tenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties ren- dering them and (2) such goods and services shall be used exclu- sively in the carrying out of the Investment Project; (iii) in- spect, by itself or jointly with representatives of the Bank if the Bank shall so request, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) require that: (1) the Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (2) without any limitation upon the foregoing, such insurance shall cover marine, transit and other hazards incident to the ac- quisition, transportation and delivery of goods financed out of the proceeds of the Loan to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) obtain all such information as the Bank or BAMIN shall reason- ably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise; and (vi) suspend or terminate the right of the Investment Enter- prise to the use of the proceeds of the Loan upon failure by such Investment Enterprise to perform its obligations under its con- tract with BAMIN. (b) BAMIN shall exercise its rights in relation to each In- vestment Project in such manner as to: (i) protect the interests of the Bank and BAMIN, (ii) comply with its obligations under this Agreement and the Subsidiary Loan Agreement, and (iii) achieve the purposes of the Project. Section 2.04. BAMIN shall furnish to the Bank all such infor- mation as the Bank shall reasonably request concerning the expen- diture of the proceeds of the Loan relent to BAMIN under the Sub- sidiary Loan Agreement, the Project, the Investment Enterprises, the Investment Projects, and the sub-loans. Section .2.05. BAMIN shall duly perform all its obligations under agreements under which funds have been lent or otherwise put at the disposal of BAMIN by the Borrower or its agencies or others for relending, investment or management. BAMIN shall promptly inform the Bank of any action which would have the ef- fect of assigning, or of amending, abrogating or waiving any ma- terial provision of, any such agreement. Section 2.06. Except as the Bank shall otherwise agree, BAMIN shall not establish or acquire any subsidiary. If BAMIN establishes or acquires any subsidiary with the approval of the Bank, BAMIN shall cause such subsidiary to observe and perform the obligations of BAMIN hereunder to the extent to which such obligations shall or can be applicable thereto, as though such obligations were binding upon such subsidiary. Section 2.07. BAMIN shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, BAMIN shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.08. Except as the Bank and BAMIN shall otherwise agree, BAMIN: (i) shall not sell, lease, transfer or otherwise dispose of any of its property or assets, except in the ordinary course of business; and (ii) shall take all action necessary to maintain its corporate existence and right to carry on its opera- tions and to acquire, maintain and renew all rights, powers, priv- ileges and franchises necessary or useful in the conduct of its business. Section 2.09. BAMIN shall continue to maintain separate ac- counts of the assets, liabilities, equity, income and expenditures of the Credit Department and the Trading Department and shall not transfer any resources or assign any liabilities from the Credit Department to the Trading Department or vice versa. -8- ARTICLE III Financial Covenants Section 3.01. BAMIN shall maintain records in its Credit De- partment adequate to record the progress of Part A of the Project and of each Investment Project (including the cost thereof) and to reflect in accordance with consistently maintained sound ac- counting practices its operations and financial condition. Section 3.02. BAMIN shall: (i) have its accounts and finan- cial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited separately for its Credit Department and its Trading Department, in accor- dance with sound auditing principles consistently applied, by in- dependent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements .of BAMIN and the audit thereof as the Bank shall from time to time reasonably request. Section 3.03. Except as the Bank shall otherwise agree, BAMIN shall: (i) conduct the operations and affairs of the Credit Depart- ment in such manner as shall be necessary to maintain, at all times, said Department's debt/equity ratio within the limit referred to in Section 3.05 of this Agreement; and (ii) if such ratio shall, for -9- reasons beyond BAMIN's control, be exceeded, promptly take all such reasonable action as shall be necessary or advisable to bring such ratio within such limit. Section 3.04. BAMIN shall not make any repayment in advance of maturity in respect of any outstanding debt of BAMIN which, in the judgment of the Bank, would materially affect BAMIN's ability to meet its financial obligations. Section 3.05. Except as shall be otherwise agreed from time to time between the Bank and BAMIN, BAMIN shall not incur for the account of the Credit Department any debt if, after the incurring of such debt, the debt of the Credit Department then incurred and outstanding would be greater than four times the capital and su- plus of the Credit Department. For the purposes of this Section: (a) "debt" means any liability, including guarantees and other contingent liabilities, incurred by the Credit Department; (b) whenever in connection with this Section it shall be necessary to value in terms of Bolivian Peso debt payable in foreign currency, such valuation shall be made at the prevailing lawful rate of exchange at which such foreign currency is, at the time of such valuation, obtainable by BAMIN for the purposes of ser- vicing such debt; and (c) "capital and surplus of the Credit Department" means the aggregate of the unimpaired paid-up capital, surplus and free reserves assigned by BAMIN to the Credit Department. - 10 - Section 3.06. BAMIN shall take such steps satisfactory to the Bank as shall be necessary to protect the Credit Department against risk of loss resulting from changes in the rates of ex- change between the currencies (including Bolivian Peso) used in its operations. Section 3.07. The Bank and BAMIN shall from time to time, at the request of either party, exchange views through their representatives with regard to the administration, operations and financial condition of BAMIN and its subsidiaries, and BAMIN shall furnish to the Bank all such information as the Bank shall reasonably request concerning the administration, operations and financial condition of BAMIN and subsidiaries. Section 3.08. BAMIN shall enable the Bank's representatives to inspect the records referred to in Section 3.01 of this Agree- ment and any relevant documents. - 11 - ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 4.02. This Agreement and all obligations of the Bank and of BAMIN thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms. Section 4.03. All the provisions of this Agreement shall con- tinue in full force and effect notwithstanding any cancellation or suspension under the Loan Agreement. - 12 - ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have desig- nated by notice to the party giving such notice or making such re- quest. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H 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) For BAMIN: Banco Minero de Bolivia La Paz Bolivia Cable address: Telex: BAMIN 3560020 La Paz 113 - 13 - Section 5.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of BAMIN may be taken or executed by its Gen- eral Manager or such other person or persons as he shall designate in writing. Section 5.03. BAMIN shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of BAMIN, take any action or execute any documents required or permitted to be taken or executed by BAMIN pursuant to any of the provisions of this Agreement. Section 5.04. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. -14- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ S.M.L. van der Meer Acting Regional Vice President Latin America and the Caribbean BANCO MINERO DE BOLIVIA By Is! Alberto Crespo Gutierrez Authorized Representative