Argentina - Grain Storage Project : Loan 1521 - Project Agreement - 4 - Conformed

OFFICIAL UrIMENTS LOAN NUMBER 1521 AR Project Agreement (Grain Storage Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and FERROCARRILES ARGENTINOS Dated , 1984 LOAN NIMBER 1521 AR PROJECT AGREEMENT AGRfEEMENT, dated a.-n, 1984, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank) and FERROCARRILES ARGENTINOS (hereinafter called FA). WHEREAS (A) by the Loan Agreement dated June 29, 1978 between The Argentine Republic (hereinafter called the Borrower) and the Bank (hereinafter called the Loan Agreement), the Bank agreed to lend to the Borrower an amount in various currencies equivalent to one hundred and five million dollars ($105,000,000) (hereinafter called the Loan), on the terms and conditions set forth in the Loan Agreement; (B) at the Borrower's request the Bank has agreed to amend the Loan Agreement and to reduce the amount of the Loan in the terms set forth in the Amending Agreement to the Loan Agreement of even date herewith between the Borrower and the Bank (herein- after called the Amending Agreement), but only on condition, inter alia, that FA agree to undertake such obligations toward the Bank as hereinafter set forth; (C) by a subsidiary loan agreement to be entered into between the Borrower and FA, part of the proceeds of the loan provided for under the Loan Agreement will be made available to FA on the terms and conditions therein set forth; and WHEREAS FA, 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. - 2 - ARTICLE II Execution of the Project Section 2.01. FA shall carry out Part C of the Project, described in Schedule 2 to the Loan Agreement, with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, railways and grain transportation practices. Section 2.02. Except as the Bank shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 5 to the Loan Agreement. Section 2.03. (a) FA 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, transporta- tion 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 FA to replace or repair such goods. (b) FA 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 2.04. (a) FA shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) FA shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), 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 representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be - 3 - derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Upon the award by FA of any contract for goods, works 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) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between FA and the Bank, FA shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of Part C of the Project, its cost and the benefits derived and to be derived from it, the performance by FA and the Bank of their respective obligations under the Project Agreement and the accomplishment of the pur- poses of the Loan. (e) FA shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of FA and any relevant records and documents. Section 2.05. FA shall duly perform all its obligations under the FA Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, FA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Susidiary Loan Agreement or any provision thereof. Section 2.06. (a) FA shall, at the request of the Bank, exchange views with the Bank with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) FA 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 FA of its obligations under this Agreement and under the FA Subsidiary Loan Agreement. Section 2.07. (a) FA shall enter into contractual arrange- ments with the Grain Board, satisfactory to the Bank, providing for the participation of FA and the Grain Board in the carrying out of Parts C and F of the Project; such arrangements to define the responsibilities of both Executing Agencies and their respec- tive contributions to the execution of such Parts of the Project. (b) FA shall enter into contractual arrangements satisfac- tory to the Bank providing technical assistance services by FA to assist BNA in the evaluation of the Investment Projects to be financed by BNA under the Project. (c) FA shall duly perform all its obligations under such contractual arrangements referred to in paragraphs (a) and (b) of this Section and, except as the Bank shall otherwise agree, FA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving such con- tractural arrangements or any provision thereof. ARTICLE III Management and Operations of FA Section 3.01. FA shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and railway practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. FA 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 railway, engineering, financial and administrative practices. Section 3.03. FA shall take out and maintain with responsi- ble insurers, or make other provisions satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) FA shall maintain records adequate to reflect, in accordance with consistently maintained appropriate accounting practices, its operations and financial condition. - 5 - (b) FA shall: (i) maintain separate accounts to reflect all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure; and (ii) 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. FA shall: (a) have its accounts and financial statements (balance sfteets, 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 four 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 lank shall have reasonably requested, including, without limitation to the foregoing, 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; (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; and (d) furnish to the Bank every 12 months starting March 31, 1985, information, of such scope and detail as the Bank shall reasonably request, related to the grain operation based on the railways' costing system, to enable the Bank to monitor FA's compliance with the working ratio set forth in Section 4.04 (a) of this Agreement. Section 4.03. FA shall: (a) not later than April 2, 1984, carry out, under terms of reference satisfactory to the Bank, - 6 - and furnish to the Bank costing and marketing studies of grain transportation; (b) based on such studies, and taking into account the Bank's comments thereon, not later than July 31, 1984, prepare a tariff adjustment program, satisfactory to the Bank, aimed at achieving the working ratio set forth in Section 4.04 of this Agreement for FA's grain operations; (c) carry out such tariff adjustment program in accordance with a timetable satisfactory to the Bank; and (d) periodically review, together with the Bank, the prog- ress in the execution of such tariff adjustment program, such review to take place at least once annually not later than June 30, each year. Section 4.04. (a) Except as the Bank shall otherwise agree, FA shall take all such measures, including the adjustment of tariffs for its grain operations in consultation with the Bank, as shall be required to maintain a working ratio of 65 for its grain operations in fiscal year 1986 and thereafter; (b) For the purposes of paragraph (a) of this Section: (i) the term "working ratio" means the ratio of operating expenses to gross operating revenue; (ii) the term "operating expenses" means the aggregate of operating expenses of FA for grain operations including those for staff, office, materials, fuel and lubricants, maintenance of fixed assets in operation and taxes (excluding income taxes), if any, but excluding provisions for depreciation of such assets and interest and other charges on debt; and (iii) the term "gross operating revenue" means FA's gross revenues derived from its grain operations. 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 Amending Agreement becomes effective. -7- Section 5.02. This Agreement and all obligations of the Bank and of FA thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify FA 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 FA: Avda. Doctor Ramos Mejfa 1302 Buenos Aires Argentina -8- Cable Address: Telex: FERROARGEN 122507 BUEFA AR Buenos Aires 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 FA, or by FA on behalf of the Borrower under the Loan Agreement, may be taken or executed by the President of FA or such other person or persons as the President of FA shall designate in writing, and FA 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 / By e Regional Vice President Latin America and the Caribbean FERROCARRILES ARGENTINOS 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 ---- dayof ,'198I. FOR SECRETARY