Mexico - Pollution Control Project : Loan 2154 - Project Agreement - Conformed

 A LOAN NM ER 2154 ME DOCUMENTS_ Project Agreement (Pollution Control Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANCO DE MBXICO, S.A. Dated / , 1982 LOAN NUMBER 2154 ME PROJECT AGREEMENT AGREEMENT, dated Lb , 1982, between INTERNATIONAL BANK FOR RECONSTRUCTIOW AN DEVELOPMENT (hereinafter called the Bank) and BANCO DE MEXICO, S.A. (hereinafter called the Trustee). WHEREAS by a trust agreement between the Guarantor and the Trustee, dated October 29, 1971, the Guarantor has entrusted a special fund (Fondo de Equipamiento Industrial) to the Trustee for the purpose of promoting and financing the development of industrial and service enterprises; WHEREAS the Guarantor, the Borrower and the Trustee have requested the Bank to assist in financing such development; WHEREAS by the Loan Agreement of even date herewith between the Bank and the Borrower, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to sixty million dollars ($60,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that, inter alia, the Trustee agrees to undertake such obligations toward the Bank as are hereinafter set forth; WHEREAS the Trustee, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to under- take 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 and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of Parts A and B of the Project Section 2.01. (a) The Trustee shall, by means of FONEI, carry out Parts A and B of the Project described in Section 4.01 of the Loan Agreement with due diligence and efficiency and in - 2 - conformity with sound industrial, administrative and financial policies and practices, and in accordance with the FONEI Operating Regulations, the Guidelines and the Project Execution Paper, and shall, at all times, make available, promptly as needed, such funds and other resources as shall be required to meet FONEI's operating expenses. (b) Except as the Bank shall otherwise agree, and without limitation to the obligations of the Trustee under the preceding paragraph, the Trustee shall: (i) make, or cause to be made, available to FONEI for purposes of Parts A and B of the Project at least $86,000,000 equivalent for a period of not less than 10 years from the date of this Agreement and on suQ', terms and conditions and at such times as shall be required for the carrying out of said Parts of the Project in accordance with Section 2.01 (a) of this Agreement; and (ii) inform the Bank of the terms and conditions other than the amortization period on which such funds have been made available to FONEI, and afford the Bank a reasonable opportunity to comment thereon. (c) The Trustee shall consult with the Bank in making any change in the FONEI Operating Regulations. (d) The Trustee shall at all times maintain the provisions of the Guidelines, as such Guidelines may be amended from time to time by agreement between the Bank and the Trustee. Section 2.02. Except as the Bank shall otherwise agree: (a) The Trustee shall, out of FONEI's resources, make FONEI Loans to Participating Intermediaries which shall have made Sub-loans to Investment Enterprises for Pollution Control Sub- Projects in accordance with the FONEI Operating Regulations, the Guidelines and the Project Execution Paper. (b) (i) Interest on Sub-loans shall be payable in accor- dance with a variable rate to be adjusted, if necessary, every six months so as to make it equal to up to three percentage points less than the prevailing interest rate on the month before that in which the adjustment is made; and (ii) Sub-loans shall be -3- repayable over a period of not more than 13 years, including a grace period of not more than 3 years. (c) The agreements providing for FONEI Loans' shall provide that if Sub-loans or any part thereof shall be repaid to Partici- pating Intermediaries in advance of maturity, or if they shall be sold, transferred, assigned or otherwise disposed of for value by the Participating Intermediaries, the Participating Inter- mediaries shall repay promptly to the Trustee, the amdunt of the FONEI Loans corresponding to the Sub-loans or parts thereof so repaid in advance or disposed of for value. Section 2.03. (a) When presenting a Sub-loan (other than a free-limit Sub-loan) to the Bank for approval, the Trustee shall furnish to the Bank an application together with a description of the Investment Enterprise and an appraisal of the Pollution Control Sub-Project (including a description of the expenditures proposed to be financed out of the proceeds of the Loan) and the proposed terms and conditions of the Sub-loan, and such other information as the Bank shall reasonably request. (b) Each request by the Trustee for authorization to make withdrawals from the Loan Account in respect of a free-limit Sub-loan shall contain a summary description of the Investment Enterprise and the Pollution Control Sub-Project (including a description of the expenditures proposed to be financed out of the proceeds of the Loan) and the terms and conditions of such free-limit Sub-loan, and such other information as the Bank shall reasonably request. (c) Except as the Bank and the Trustee shall otherwise agree, the applications and requests to be furnished to the Bank pursuant to paragraph (a) hereof shall be delivered to the Bank before Devember 31, 1985. Section 2.04. (a) The Trustee undertakes that, unless the Bank shall otherwise agree, all Sub-loans will be made on terms whereby the Participating Intermediary shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Trustee and the Participating Intermediary and to accomplish the purposes of the Project including the right of the Participating Intermediary to: (i) require the Investment-Enterprise to carry out and operate the Pollution Control Sub-Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) require that (A) the goods and services to be financed out of the proceeds of the Sub-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 maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them and (B) such goods and services shall be used exclusively in the carrying out of the Pollution Control Sub-Project; (iii) inspect, by itself or jointly with representatives of the Bank and the Trustee if the Bank shall so request, such goods and the sites, works, plants and construction included in the Pollution Control Sub-Project, the operation thereof, and any relevant records and documents; (iv) required that 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 that such insurance cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Loan to the place of use or installa- tion, and that any indemnity thereunder 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 Trustee or the Participating Intermediary shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprises; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Sub-loan upon failure by such Investment Enterprise to perform any of its obligations under its contract with the Participating Intermediary. (b) The Trustee shall cause each Participating Intermediary to exercise its rights in relation to each Pollution Control Sub-project in such manner as to: (i) protect the interests of the Bank and the Trustee; (ii) comply with its obligations in respect of the corresponding FONEI Loan; and (iii) achieve the purposes of Parts A and B of the Project. Section 2.05. (a) The Trustee shall furnish, or cause to be furnished to the Bank, all such information as the Bank shall reasonably request concerning the FONEI Loans, the Sub-loans, the Investment Enterprises, and the Pollution Control Sub-Projects. (b) The Trustee: (i) shall maintain, or cause to be main- tained, records and procedures adequate to record and monitor the -5- progress of Parts A and B of the Project and the Pollution Con- trol Sub-Projects and to identify the goods and services financed out of the proceeds of the Loan, and (ii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning Parts A and B of the Project and the Pollution Control Sub-Projects, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) The Trustee shall cooperate fully with the Guarantor in the preparation of the report required under Section 3.05 (c) of the Guarantee Agreement. Section 2.06. The Trustee shall enter into the contractual arrangements referred to in Section 3.01 of the Loan Agreement. Except as the Bank shall otherwise agree, the Trustee shall not change or fail to enforce any provision of such arrangements. Section 2.07. (a) The Trustee shall, at the request of the Bank, exchange views with the Bank with regard to the progress of Parts A and B of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Loan. (b) The Trustee shall prompt. inform the Bank of any con- dition which interferes, or threatens to interfere with, the pro- gress of the Project, the accomplishment of the purposes of the Loan, or the performance by the Trustee of its obligations under this Agreement. ARTICLE III Other Covenants Section 3.01. The Trustee shall operate FONEI in accordance with sound financial, industrial and. administrative policies and practices, under the supervision of experienced and competent management. Section 3.02. The Trustee shall maintain records adequate to reflect in accordance with consistently maintained sound account- ing practices the operations and financial condition of FONEI in respect of Parts A and B of the Project and shall cause the Participating Intermediaries to maintain such records for pur- poses of the Pollution Control Sub-Projects financed by them. -6- Section 3.03. The Trustee shall: (a) have an annual audit satisfactory to the Bank made of the accounts and financial statements (balance sheets, statements of income and expenses and related statements) of FONEI for each fiscal year, in accordance with sound auditing principles consistertly applied, by indepen- dent and qualified auditors appointed by the Guarantor; (b) fur- nish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (i) certified copies of such 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; and (c) furnish to the Bank such other information concerning the accounts and financial statements of FONEI and the audit thereof as the Bank shall from time to time reasonably request. 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 the Trustee thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms. 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 addresses as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: -7- 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 the Trustee: Banco de Mfxico, S.A. 5 de Mayo No. 2 Mexico 1, D.F. Mfxico Cable address: BANXICO Mfxico 1. D.F. Mexico 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 the Trustee, may be taken or executed by its Director General or such other person or persons as the Director General shall designate in writing, and the Trustee shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. -8- 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 FOI RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Latin America and the Caribbean BANCO DE MEXICO, S.A. as Trustee for the Fondo de Equipamiento Industrial By 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 /h.iday of , 198 . FOR SECRETARY