Mexico - Lazaro Gardenas Industrial Port Project : Loan 2450 - Project Agreement - 1 - Conformed

OFFICIA NUMBER 2450 ME DOCUI ESP Project Agreement (Lazaro Cardenas Industrial Port Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and SERVICIOS PORTUARIOS DE LAZARO CARDENAS, S.A. DE C.V. Dated , 1984 LOAN NUMBER 2450 ME PROJECT AGREEMENT AGREEMENT, dated , 1984, between INTERNATIONAL BANK FOR RCONSTRUCTION AND DEVELOPMENT (herein- after called the Bank) and SERVICIOS PORTUARIOS DE LAZARO CARDENAS, S.A. DE C.V. (hereinafter called ESP). WHEREAS (A) by the Loan Agreement of even date herewith between the Bank and BANCO NACIONAL PESQUERO Y PORTUARIO, S.A. (hereinafter called the Borrower), the Bank has agreed to lend to the Borrower an amount in various currencies equivalent to seventy-six million three hundred thousand dollars ($76,300,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that ESP agree to undertake such obligations toward the Bank as are hereinafter set forth; and WHEREAS ESP, 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: 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. ARTICLE II Execution of the Project Section 2.01. (a) ESP declares its commitment to the objec- tives of the Project as set forth in Schedule 1 to the Guarantee Agreement, and to this end, shall carry out Parts B and E (ii) and (iv) of the Project described in said Schedule, with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. (b) ESP shall enter into the contractual arrangements referred to in Section 3.01 (a) of the Loan Agreement. Except as - 2 - the Bank shall otherwise agree, ESP shall not amend or fail to enforce any provision of such contractual arrangements. Section 2.02. In order to assist ESP in carrying out Part E (ii) and (iv) of the Project, ESP shall, as and when appropriate, employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, such consultants to be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guide- lines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 2.03. Except as the Bank shall otherwise agree, pro- curement of the goods required for Part B of the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 2 to the Guarantee Agreement. Section 2.04. (a) ESP undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan made available to it by the Borrower 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 ESP to replace or repair such goods. (b) ESP shall cause all goods and services financed out of the proceeds of the Loan made available to it by the Borrower to be used exclusively for the purposes of the Project. Section 2.05. (a) ESP shall furnish to the Bank, promptly upon their preparation, the technical designs, specifications, contract documents and procurement schedules for Part B of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) ESP shall: (i) maintain records and procedures adequate to record and monitor the progress of Parts B and E (ii) and (iv) of the Project (including their cost and the achievement of the objectives of such Parts of the Project), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) enable the Bank's accredited representatives to visit the facilities included in the Project and to examine the goods financed out of the proceeds -3- of the Loan and any relevant records and documents; and (iii) furnish to the Bank reports on the progress of Parts B and E (ii) and (iv) of the Project with a periodicity acceptable to the Bank, and from time to time, all such other information as the Bank shall reasonably request concerning such Parts of the Project, their cost, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Upon the award by ESP of any contract for goods or services 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. (d) ESP shall enable the Bank's accredited representatives to examine all plants, installations, sites, works, buildings, property and equipment of ESP and any relevant records and documents. Section 2.06. (a) ESP shall, at the request of the Bank, exchange views with the Bank with regard to the progress of Parts B and E (ii) and (iv) of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Loan. (b) ESP shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of Parts B and E (ii) and (iv) of the Project, the accomplishment of the purposes of the Loan, or the performance by ESP of its obligations under this Agreement. Section 2.07. ESP shall: (i) not later than September 15, 1985, present to the Bank the conclusions of the study included in Part E (iv) of the Project; and (ii) exchange views with the Bank on the conclusions of such study and on an action plan for their implementation, taking into account such exchange of views. ARTICLE III Management and Operations of ESP Section 3.01. ESP shall carry on its operations in accordance with sound administrative, and financial practices under the supervision of qualified and experienced management. -4- Section 3.02. ESP shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering and financial practices. Section 3.03. ESP shall take out and maintain with responsi- ble insurers, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) ESP shall maintain separate accounts and records adequate to reflect in accordance with consistently- maintained appropriate accounting practices the operations, receipts and payments for or in connection with carrying out Parts B, and E (ii) and (iv) of the Project including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure. (b) ESP shall retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure, and shall enable the Bank's representatives to examine such records. Section 4.02. ESP shall: (a) have the accounts referred to in paragraph (a) of this Section and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (b) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year: (i) certified copies of its financial statements for such year as so audited; and (ii) the report of such audit by said auditors of such scope and in such detail as the Bank shall have reasonably requested, including, without limitation to the foregoing, - 5 - separate opinions by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Loan made available to it and withdrawn from the Loan Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and (c) furnish to the Bank such other information concerning said accounts, financial statements, records and expenditures, as well as the audit thereof, as the Bank shall from time to time reasonably request. Section 4.03. (a) Except as the Bank shall otherwise agree, ESP shall produce, for each of its fiscal years after its fiscal year ending in 1986, total revenues equivalent to not less than the sum of its (i) total operating expenses; and (ii) the amount by which debt service requirements exceed the provision for depreciation. ESP shall produce for its fiscal years ending in 1985 and 1986 total revenues equivalent to not less than its total working expenses for each such year, respectively. (b) Before the end of each of its fiscal years, ESP shall, on the basis of its forecasts, review whether it would meet the requirements set forth in paragraph (a) in respect of such year and the next following fiscal year and shall furnish to the Bank the results of such review upon its completion. (c) If any such review shows that ESP would not meet the requirements set forth in paragraph (a) for ESP's fiscal years covered by such review, ESP shall, as appropriate, take all necessary measures (including proposals to the Guarantor to adjust the structure or levels of its tariffs) in order to meet such requirements. (d) For the purposes of this Section: (i) The term "total revenues" means the sum of total operating revenues and net non-operating income. (ii) The term "total operating revenues" means revenues from all sources related to operations. (iii) The term "net non-operating income" means the difference between: -6- (A) revenues from all sources other than those related to operations; and (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above. (iv) The term "total operating expenses" means all expenses related to operations, including admin- istration, adequate maintenance, taxes and pay- ments in lieu of taxes, and provision for depreciation on a straight-line basis for the useful life of ESP's fixed assets in operation, as valued from time to time in accordance with sound and consistently maintained methods of valuation, but excluding interest and other charges on debt. (v) The term "total working expenses" means the total operating expenses, as so defined, less deprecia- tion and taxes and payments in lieu of taxes. (vi) The term "debt service requirements" means the aggregate amount of repayments of, and interest and other charges on, debt. (vii) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Guarantor, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Bank. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. - 7 - Section 5.02. This Agreement and all obligations of the Bank and of ESP thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify ESP thereof. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement 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 designated by notice to the party giving such notice or making such request. 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 ESP: Servicios Portuarios de Lazaro Cardenas, S.A. de C.V. Rio Tepalcatepec No. 29 Puerto Industrial de Lazaro C'rdenas Michoacan Mexico -8- Telex: 01772873 CPLCME Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of ESP may be taken or executed by its Director General or such other person or persons as its Director General shall designate in writing, and ESP shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the .District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Latin America and the Caribbean SERVICIOS PORTUARIOS DE LAZARO CARDENAS, S.A. DE C.V. ByeA Authorized Representative 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 , 198 . FOR SECRETARY