CONFORMED COPY LOAN NUMBER 1075 BR Project Agreement (Fifth Highway Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE STATE OF RIO GRANDE DO SUL DATED JANUARY 17, 1975 CONFORMED COPY LOAN NUMBER 1075 BR Project Agreement (Fifth Highway Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE STATE OF RIO GRANDE DO SUL DATED JANUARY 17, 1975 PROJECT AGREEMENT AGREEMENT, dated January 17, 1975, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and THE STATE OF RIO GRANDE DO SUL (hereinafter called the State). WHEREAS by the Loan Agreement of even date herewith between the Federative Republic of Brazil (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to one hundred and ten million dollars ($110,000,000), on the terms and conditions set forth in the Loan Agreement, a portion of which is to be made available to the State's Highway Department pursuant to the provisions of the Loan Agreement, but only on condition that the State agree to undertake such obligations toward the Bank as hereinafter set forth; and WHEREAS the State, 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 and in the General Conditions (as so defined) have the respective meanings therein set forth and the term "DER" means the State's Highway Department, which has been designated by the State to act on its behalf as the agency charged with the execution of Part D.2 of the Project described in Schedule 2 to the Loan Agreement (hereinafter called the State Project) which is to be executed by the State as in the Loan -,Agreement and hereinafter provided. ARTICLE II Execution of the Project Section 2.01. (a) The State shall carry out the State Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. 4 (b) The State Project shall be carried out in accordance with the plan set forth in Estudo para Conservageao da Rede Rodovidria Federal no Rio Grande do Sud pelo DAERIRS dated March 1974, as amended with regard to its schedule for delegating responsibility to the State for the maintenance of federal roads, or as shall be agreed among the Borrower, the State, and the Bank. Section 2.02. In order to assist the State in carrying out the State Project, the State shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, all in accordance with the provisions set forth or referred to in Section 3.04 of the Loan Agreement. Section 2.03. Except as the Bank shall otherwise agree, the goods, works and services (other than consultants' services) for the State Project to be financed out of the portion of the proceeds of the Loan made available by the Borrower to the DER, shall be procured in accordance with the provisions set forth or referred to in Section 2.03 of the Loan Agreement. Section 2.04. (a) The State undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the portion of the proceeds of the Loan made available to the DER 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 the State to replace or repair such goods. (b) Except as the Bank may otherwise agree, the State shall cause all goods and services financed out of the portion of the proceeds of the Loan made available to the DER by the Borrower to be used exclusively for the Project. Section 2.05. (a) The State shall cause to be furnished to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The State: (i) shall cause to be maintained records adequate to record the progress of the State Project (including the cost thereof) and to identify the goods and services financed out of the portion of the proceeds of the Loan made available to the DER by the Borrower, and to disclose the use thereof in the State Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Bank's representatives to visit the State Project and to examine the goods financed out of such portion of the proceeds and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the State Project, the expenditure 5 of the proceeds of the Loan so made available to the DER and the goods and services financed out of such portion of the proceeds, and the operations, administration and financial condition of the DER. (c) The State shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the DER and any relevant records and documents. Section 2.06. The State shall cause the DER to duly perform all its obligations under the Subsidiary Agreement. Except as the Bank shall otherwise agree, the State shall not allow the DER to take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Agreement or any provision thereof. Section 2.07. (a) The State 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 DER's performance under the Subsidiary Agreement, and other matters relating to the purposes of the Loan. (b) The State shall promptly inform the Bank of any condition which interferes or threatens to interfere with, the progress of the State Project, the accomplishment of the purposes of the Loan, or the performance by the State of its obligations under this Agreement or DER's performance under the Subsidiary Agreement. ARTICLE III Highway Administration and Maintenance Section 3.01. The State shall take appropriate measures to ensure that the provisions of the Borrower's Decreto-Lei No. i 17 of January 31, 1967, regarding the limitation of the size and weight of vehicles using the state highway networks located in the territories of the State are fully enforced. Section 3.02. The State shall cause to be adequately maintained: (a) the highways included in its state highway network; and (b) the highways included in the federal highway network located in its territories, the maintenance of which (A) has been delegated to the State by DNER, or (B) may be delegated to the State pursuant to the provisions of Section 3.09 of the Loan Agreement; 6 and shall cause all necessary repairs of the highways referred to under (a) and (b) above to be made promptly, all in accordance with sound engineering practice. The State shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. 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 State thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with, its terms. Section 4.03. All the provisions of this Agreement shall continue 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 designated by notice to the party giving such notice or making such equest. 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: INTBAFRAD Washington, D.C. 0 7 For the State: Departamento Aut6nomo de Estradas de Rodagem-DAER Av. Borges de Medeiros, No. 1555 Porto Alegre, Rio Grande do Sul Brazil 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 State may be taken or executed by the General Director of the DER or such other person or persons as he shall designate in writing. Section 5.03. The State shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of the State, take any action or execute any documents required or permitted to be taken or executed by the State pursuant to any of the provisions of this Agreement. Section 5.04. 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 Colnbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s / Gerald Alter Regional Vice President Latin America and the Caribbean THE STATE OF RIO GRANDE DO SUL By /s / Ary dos Santos Pinto Authorized Representative