Conformed Copy - L3288 - Shanghai Industrial Development Project - Project Agreement 2

Page 1 CONFORMED COPY LOAN NUMBER 3288-0 CHA 3288-1 3288-2 3288-3 3288-4 (Shanghai Industrial Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and SHANGHAI MUNICIPALITY Dated March 15, 1991 LOAN NUMBER 3288-0 CHA 3288-1 3288-2 3288-3 3288-4 SHANGHAI PROJECT AGREEMENT AGREEMENT, dated March 15, 1991, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and SHANGHAI MUNICIPALITY (Shanghai Municipality). WHEREAS: by the Loan Agreement of even date herewith between People's Republic of China (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to one hundred fifty million dollars ($150,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Shanghai Municipality agree to undertake such obligations toward the Bank as are set forth in this Agreement and that the Financial Intermediaries agree to undertake such obligations toward the Bank as are set forth in the Financial Intermediaries Project Agreement; and Page 2 WHEREAS Shanghai Municipality, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, 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) Shanghai Municipality declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, shall carry out Part B.2 of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and industrial practices, and shall provide, or cause to be provided, promptly as needed, the facilities, services, other resources and funds required for Parts A and B of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Bank and Shanghai Municipality shall otherwise agree, Shanghai Municipality shall carry out Part B.2 of the Project and coordinate the carrying out of Parts A and B.1 of the Project in accordance with the Implementation Program set forth in the Schedule to this Agreement. Section 2.02. (a) Shanghai Municipality shall relend the proceeds of the Loan to the Financial Intermediaries under subsidiary loan agreements, one with each Financial Intermediary, whose terms and conditions shall have been approved by the Bank, which shall include: (i) interest payable at a rate equal to the variable rate payable under Section 2.05 of the Loan Agreement; (ii) repayment by the Financial Intermediaries within twenty years, including a period of grace of five years; (iii) all foreign exchange risks to be borne by the Financial Intermediary; and (iv) commitment charges payable at the rate payable under Section 2.04 of the Loan Agreement. (b) Shanghai Municipality shall exercise its rights under the Subsidiary Loan Agreements in such manner as to protect the interests of the Bank and Shanghai Municipality and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, Shanghai Municipality shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement to affect the provisions of paragraph (a) above. Section 2.03. Shanghai Municipality shall carry out the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Shanghai Project Agreement and Part B.2 of the Project. Section 2.04. (a) Shanghai Municipality shall, at the request of the Bank, exchange views with the Bank with regard to progress of the Project, the performance Page 3 of its obligations under this Agreement and under the Subsidiary Loan Agreements, and other matters relating to the purposes of the Loan. (b) Shanghai Municipality shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by Shanghai Municipality of its obligations under this Agreement and under the Subsidiary Loan Agreements. ARTICLE III Financial Covenants Section 3.01. (a) Shanghai Municipality shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of Part B.2 of the Project of its departments or agencies responsible for carrying out Part B.2 of the Project. (b) Shanghai Municipality shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, a certified copy of 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 said records, accounts 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 Shanghai Municipality thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify Shanghai Municipality thereof. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. 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 designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Bank: Page 4 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 92987 (FTCC) For Shanghai Municipality: Shanghai Municipal Finance Bureau 60 Jiu Jiang Road Shanghai People's Republic of China Telex: 33062 BOCSH CN Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Shanghai Municipality may be taken or executed by the Mayor or Vice Mayor or such other person or persons as the Mayor or Vice Mayor shall designate in writing, and Shanghai Municipality 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 collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 /s/ A. Karaosmanoglu Regional Vice President Asia SHANGHAI MUNICIPALITY By /s/ Zhao Xixin Authorized Representative SCHEDULE Implementation Program 1. Shanghai Municipality shall: (a) by April 15 in each year, conduct an assessment of the impact of policy reforms in the Project Sub-sectors in the preceding year; and (b) thereafter, exchange views with the Bank on the results of such assessment. 2. Shanghai Municipality shall: (a) maintain a Steering Committee to oversee Page 5 Project implementation; and (b) maintain a project implementation unit to coordinate implementation of the Project; both with composition, functions and responsibilities acceptable to the Bank, and, for such unit, staffed by competent staff in adequate numbers. 3. (a) For the purposes of Part A of the Project and Section 1.02 (q) of the Loan Agreement, Project Sub-sectors shall be: (i) printing machinery; (ii) electrical apparatus; (iii) electronic components; (iv) precision and scientific instruments; and (v) other industrial sub-sectors agreed between the Bank and Shanghai Municipality. Prior to requesting inclusion of a sub-sector under (v) above, Shanghai Municipality shall adopt a development program and strategy for such Sub-sector acceptable to the Bank. (b) In order for an enterprise to be eligible for Sub-loans, its powers and responsibilities shall be specified in a charter acceptable to the Bank. 4. Shanghai Municipality shall make arrangements to ensure that each Investment Enterprise shall complete the consolidation of its financial accounts within nine months of charter issuance. 5. Shanghai Municipality shall carry out the study under Part B.2 (a) of the Project in accordance with terms of reference and timing acceptable to the Bank. 6. Shanghai Municipality shall: (a) ensure that overseas training under Technical Assistance Projects shall be carried out in accordance with annual programs acceptable to the Bank; and (b) provide to the Bank for concurrence, by September 30 in each year, the proposed training program for the following year.