Bolivia - Banco Industrial Mining And Industrial Credit Project : Loan 1290 - Project Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1290 BO PROJECT AGREEMENT (Banco Industrial Mining and Industrial Credit Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANCO INDUSTRIAL S.A. Dated October 15, 1976 PROJECT AGREEMENT AGREEMENT, dated October 15, 1976, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and BANCO INDUSTRIAL S.A. (hereinafter called BISA), a development bank established and operating under the laws of Republic of Bolivia. 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 ten million dollars ($10,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that BISA agrees to undertake such obligations toward the Bank as hereinafter set forth; (B) by a subsidiary loan agreement between the Borrower and BISA, the proceeds of the loan provided for under the Loan Agree- ment will be made available to BISA on the terms and conditions therein set forth; and WHEREAS BISA, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligatiois 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 Gen- eral Conditions (as so defined) have the respective meanings therein set forth. -3- ARTICLE II Management and Operations of the Borrower Section 2.01. (a) BISA shall carry out the Project described in Section 3.01 of the Loan Agreement and conduct its operations and affairs in accordance with sound financial standards and practices, with qualified management and personnel, and in ac- cordance with the Statutes and, except as the Bank shall otherwise agree, in accordance with the Statement of Policy. (b) Without limitation upon the generality of the provisions of paragraph (a) of this Section, BISA 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(i) charge interest at a rate of not less than twelve per cent (12%) per annum on the principal amount of any sub-loan withdrawn and outstanding from time to time; and (ii) pass on to each Investment Enterprise pro rata the fee referred to in Section 2.10 of the Loan Agreement. Section 2.02. (a) In accordance with and, subject to, the provisions of the Loan Agreement and this Agreement, BISA shall present Investment Projects to the Bank for approval or for au- thorization to make withdrawals from the Loan Account. (b) When presenting a sub-loan (other than a free-limit sub-loan) or an investment to the Bank for approval, BISA shall furnish to the Bank an application, in form satisfactory to the Bank, together with a description of the Investment Enterprise and an appraisal of the Investment Project (including a descrip- tion of the expenditures proposed to be financed out of the -4- proceeds of the Loan relent to BISA under the Subsidiary Loan Agreement) and the proposed terms and conditions of the sub-loan or investment, including the schedule of amortization of the sub- loan or of repayment by BISA of the amount of the proceeds of the Loan relent to BISA under the Subsidiary Loan Agreement to be used for the investment, and such other information as the Bank shall reasonably request. (c) Each request by BISA for authorization to make with- drawals from the Loan Account in respect of a free-limit sub-loan shall contain a summary description of the Investment Enterprise and the Investment Project (including a description of the expen- ditures proposed to be financed out of the proceeds of the Loan relent to BISA under the Subsidiary Loan Agreement) and the terms and conditions of such free-limit sub-loan, incAuding the schedule of amortization therefor. (d) The amortization schedule applicable to each sub-loan and the schedule of repayment by BISA to the Borrower in respect of each investment shall provide for an appropriate period of grace (not exceeding three years), and, unless the Bank, the Bor- rower and BISA shall otherwise agree, (i) shall not extend beyond fifteen years from the date of approval by the Bank of such sub- loan or investment, or in the case of a free-limit sub-loan, of authorization by the Bank to make withdrawals from the Loan Account in respect thereof, and (ii) shall provide for approximately equal semi-annual, or more frequent, aggregate payments of principal and interest or approximately equal semi-annual, or more frequent, payments of principal. -5- (e) Except as the Bank, the Borrower and BISA 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, 1978. Section 2.03. (a) BISA undertakes that, unless the Bank shall otherwise agree, any sub-loau or investment will be made on terms whereby BISA 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 BISA, including, in the case of any sub-loan and to the extent that it shall be appropriate in the case of any investment, the right of BISA to: (i) require the Investment Enterprise to carry out and operate the Investment Proj- ect with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain ade- quate records; (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 maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them and (2) such goods and services shall be used exclusively in the carrying out of the Investment Project; (iii) inspect, by itself or jointly with repre- sentatives of the Bank if the Bank shall so request, such goods and the sites, works, plants and construction included in the In- vestment 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 in- surance, against such risks and in such amounts, as shall be -6- 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 acquisition, transporta tion 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 BISA shall reasonably request relating to the foregoing and to the administration, operations and finan- cial condition of the Investment Enterprise; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Loan upon failure by such Investment Enter- prise to perform its obligations under its contract with BISA. (b) BISA shall exercise its rights in relation to each In- vestment Project in such manner s to: (i) protect the interests of the Bank and BISA, (ii) comply with its obligations under this Agreement and the Subsidiary Loan Agreement, and (iii) achieve the purposes of the Project. (c) BISA shall transmit to the Bank, for its prior approval, any substantial changes proposed to be made by BISA in respect of the repayment provisions of any sub-loan. Section 2.04. BISA shall furnish to the Bank all such in- formation as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan relent to BISA under the Subsidiary Loan Agreement, the Project, the Investment En- terprises, the Investment Projects, and the sub-loans and in- vestments. -7- Section 2.05. BISA shall duly perform all its obligations under any agreement under which funds have been lent or otherwise put at the disposal of BISA by the Borrower or its agencies or others for relending, investment or management. BISA shall promptly inform the Bank of any action which would have the effect of as- signing, or of amending, abrogating or waiving any material pro- vision of, any such agreement. Section 2.06. If BISA establishes or acquires any subsidiary, BISA shall cause such subsidiary to observe and perform the obli- gations of BISA 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. BISA shall duly perform all its obligations un- der the Subsidiary Loan Agreement. Except as the Bank shall other- wise agree, BISA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiv- ing the Subsidiary Loan Agreement or any provision thereof. Section 2.08. Except as the Bank and BISA shall otherwise agree, BISA: (i) shall not sell, lease, transfer or otherwise dis- pose 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, pri- vileges and franchises necessary or useful in the conduct of its business. -8- Section 2.09. Except as the Bank shall otherwise agree, BISA shall, not later than six months after the conclusion of a review of the Borrower's banking law (Lev de Sistema Financiera Nacional) presently being carried out or twelve months after the date of this Agreement, whichever shall be the earlier, complete a study for the purpose of designing a program for the sale, in the capital market of Bolivia, of certificates of indebtedness with a maturity of not less than one year. Such program shall enable BISA, to the extent possible, to: (i) sell the equivalent of $750,000 worth of such certificates within six months after the completion of such study; and (ii) have outstanding the equivalent of $2,000,000 worth of such certificates by December 31, 1978. BISA shall use its best efforts to carry out such program. -9- ARTICLE III Financial Covenants Section 3.01. BISA shall maintain records adequate to record the progress of the Project and of each Investment Project (in- cluding the cost thereof) and to reflect in accordance with con- sistently maintained sound accounting practices the operations and financial condition of BISA. Section 3.02. BISA shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited in accordance with sound auditing principles consistently applied, by indepen- dent 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 fi- nancial 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 finan- cial statements of BISA and the audit thereof as the Bank shall from time to time reasonably request. Section 3.03. Except as the Bank shall otherwise agree, BISA shall: (i) conduct its operations and affairs in such manner as shall be necessary to maintain, at all times, its debt/equity ra- tio within the limit provided in Section 3.05 of this Agreement; and (ii) if such ratio shall, for reasons beyond BISA's control, be exceeded, promptly take all such reasonable action as shall be necessary or advisable to bring such ratio within such limit. - 10 - Section 3.04. BISA shall not make any repayment in advance of maturity in respect of any outstanding debt of BISA which, in the judgment of the Bank, would materially affect BISA's ability to meet its financial obligations. Section 3.05. Except as shall be otherwise agreed between the Bank and BISA, BISA shall not incur or permit any subsidiary to incur: (i) any Category I debt if, after the incurring of such debt, the consolidated Category I debt of BISA and all its subsi- diaries then incurred and outbjanding would be greater than the consolidated capital and surplus of BISA and all its subsidiaries; or (ii) any Category II debt if, after the incurring of such debt, the consolidated Category II debt of BISA and all its subsidiaries then incurred and outstanding would be greater than six times the consolidated capital and surplus of BISA and all its subsidiaries. For the purposes of this Section: (a) "Category I debt" means any debt incurred by BISA or any subsidiary pursuant to the program referred to in Section 2.09 of this Agreement; and "Category II debt" means any debt other than a Category I debt incurred by BISA or any subsidiary. (b) Debt shall be deemed to be incurred: (i) under a loan contract or agreement (including the Subsidiary Loan Agreement) on the date and to the extent the amount of the loan is drawn down and outstanding pursuant to such loan or agreement, and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent that the guaranteed debt is outstanding. - 11 - (c) Whenever in connection with this Section it shall be necessary to value in terms of Bolivian Pesos debt payable in for- eign currency, such valuation shall be made at the prevailing law- ful rate of exchange at which such foreign currency is, at the time of such valuation, obtainable by BISA for the purposes of servicing such debt. (d) "consolidated Category I debt of BISA and all its sub- sidiaries" and "consolidated Category II debt of BISA and all its subsidiaries" mean the total amount of debt of BISA and subsidi- aries, excluding any debt owed by BISA to any subsidiary or by any subsidiary to BISA or to any other subsidiary in regard of, res- pectively, Category I debt and Category II debt. (e) "consolidated capital and surplus of BISA and subsidi- aries" means the aggregate of (i) the unimpaired paid-up capital, surplus and free reserves of BISA and subsidiaries after excluding therefrom such amounts as shall represent (1) equity interests of BISA in any subsidiary or of any subsidiary in BISA or any other subsidiary and (2) unless the Eank shall otherwise agree, asset revaluations and intangibles, and (ii) any loan to BISA or its sub- sidiaries which the Bank shall deem to be included in such consol- idated capital and surplus for the purposes of this Section. Section 3.06. BISA shall take such steps satisfactory to the Bank as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the cur- rencies (including Bolivian Pesos) used in its operations. - 12 - Section 3.07. The Bank and BISA shall from time to time, at the request of either party, exchange views through their repre- sentatives with regard to the administration, operations and fi- nancial condition of BISA and its subsidiaries, and BISA shall furnish to the Bank all such information as the Bank shall rea- sonably request concerning the administration, operations and financial condition of BISA and subsidiaries. Section 3.08. BISA shall enable the Bank's representatives to inspect the records referred to in Section 3.01 of this Agree- ment and any relevant documents. - 13 - 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. (a) This Agreement and all obligations of the Bank and of BISA thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms. (b) If the Loan Agreement terminates in accordance with its terms, the Bank shall promptly notify BISA of this event. 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. 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- natel 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 614145 (wUI) For BISA: Banco Industrial S.A. P.O. Box 1290 La Paz Bolivia Cable address: Telex: BISA BX 5279 La Paz - 15 - 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 BISA may be taken or executed by its General Manager or such other person or persons as he shall designate in writing. Section 5.03. BISA shall furnish to the Bank sufficient evi- dence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of BISA, take any action or execute any documents required or permitted to be taken or exe- cuted by BISA 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. 11 - 16 - 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 INDUSTRIAL S.A. By /s/ Jorge Lopez Pacheco 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 6&A-4v, 197L. FOR SECRETARY