OFiCIAT DOCUMENTS LOAN NUMBER 2193 BR Project Agreement (Project for the Preparation of Metropolitan Development Programs for Salvador and Fortaleza) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPHENT and SUPERINTENDENCIA DE DESENVOLVIMENTO DO NORDESTE - SUDENE and STATE OF CEARA and AUTARQUIA DA REGIAO METROPOLITANA DE FORTALEZA - AUMEF and MUNICIPALITY OF FORTALEZA and MUNICIPALITY OF CAUCAIA Dated , /S , 1982 LOAN NUMBER 2193 BR PROJECT AGREEMENT AGREEMENT, dated 13 , 1982, between INTERNATIONAL BANK FOR RECONSTR CTION AND DEVELOPMENT (herein- after called the Bank) and SUPERINTENDENCIA DE DESENVOLVIMENTO DO NORDESTE - SUDENE (hereinafter called SUDENE) and the STATE OF CEARA (hereinafter called the State) and AUTARQUIA DA REGIAO METROPOLITANA DE FORTALEZA - AUMEF (hereinafter called AUMEF) and MUNICIPALITY of FORTALEZA (hereinafter called Fortaleza) and MUNICIPALITY OF CAUCAIA (hereinafter called Caucaia). WHEREAS (A) by the Loan Agreement of even date herewith between 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 eight million nine hundred thousand dollars ($8,900,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that SUDENE, the State, AUMEF, Fortaleza and Caucaia agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary agreement to be entered into between SUDENE, the State and AUMEF, the proceeds of the loan provided for under the Loan Agreement for Parts D, E and F of the Project will be made available to the State on the terms and conditions therein set forth; (C) SUDENE warrants and represents that it is authorized under the laws of the Borrower to undertake the obligations in this Agreement contained; (D) SUDENE, the State and AUMEF each warrants and represents that it is authorized under the laws of the Borrower and the State to undertake the obligations in this Agreement contained; (E) Fortaleza and Caucaia each warrants and represents that it is authorized under the laws of the Borrower, the State and Fortaleza to undertake the obligations in this Agreement contained; and (F) SUDENE, the State, AUMEF, Fortaleza and Caucaia, in consideration of the Bank's entering into the Loan Agreement with the Borrower, have agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto 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 General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of Parts D, E and F of the Project Section 2.01. (a) The State, AUMEF, Fortaleza and Caucaia shall carry out Parts D, E and F of the Project described in Schedule 2 to the Loan Agreement, with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and urban development practices. (b) SUDENE shall supervise and coordinate the execution of Parts D, E and F of the Project, with due diligence and efficiency and in conformity with appropriate administrative, financial and urban development practices. (c) SUDENE, the State, AUMEF, Fortaleza and Caucaia shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the carry- ing out of the Project. (d) The State, Fortaleza and Caucaia shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the operation and maintenance of the facilities included in Parts D, E and F of the Project. Section 2.02. In order to assist in the carrying out of the Project, the State, AUMEF, Fortaleza and Caucaia shall employ consultants whose selection, qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank in accordance with the principles and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. -3- Section 2.03. SUDENE shall maintain an urban project coordination unit, with a competent staff in adequate numbers, including, inter alia, a project coordinator whose qualifica- tions, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 2.04. (a) AUMEF shall enter into convenios with the Executing Entities as necessary or appropriate, the terms and conditions of which shall be satisfactory to the Bank, for the purpose of determining the rights and obligations of the parties thereto in respect of the carrying out of each part of Parts D, E and F of the Project. (b) The State and AUMEF shall ensure that no provision of any convenio is assigned, amended, abrogated, or waived without the Bank's agreement. Section 2.05. Except as the Bank shall otherwise agree, pro- curement of the goods and civil works required for the Project and to be financed out of the proceeds of the Loan shall be made in accordance with local competitive bidding procedures satis- factory to the Bank. Section 2.06. SUDENE, the State, AUMEF, Fortaleza and Caucaia shall review with the Bank and the Borrower, through SG/MINTER, during the month of April 1983, the progress to date in execution of Parts D, E and F of the Project, and during the month of April each year thereafter, the progress in execution of Parts D, E and F of the Project during the previous twelve months, and the revisions that may be necessary or appropriate to the annual financing plan for such Parts D, E and F of the Project, such revisions to be taken into account in the budget preparation process of all Executing Entities. Section 2.07. AUMEF shall prepare by March 31 of each year a report evaluating the adequacy of expenditures for the purposes referred to in Section 2.01 (d) of this Agreement with respect to the operation and maintenance of facilities under the Project. Section 2.08. The State, Fortaleza and Caucaia shall, or shall cause each of the Executing Entities to, establish and maintain, in cooperation with AUMEF, an adequate management and coordination system for each part of the Project for which each such Executing Entity is responsible. 4- Section 2.09. The State, AUMEF, Fortaleza and Caucaia shall take all necessary measures to ensure that the costs for the sanitary land-fill under Part F (1) (a) of the Project, the urban services center under Part F (1) (b) of the Project, the water and sewerage connections under Part F (2) of the Project and the sanitation installations under Part F (2) of the Project are adequately covered by direct or indirect fees, taxes or other charges for such services. Section 2.10. (a) The State, AUMEF, Fortaleza and Caucaia undertake 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, 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) The State, AUMEF, Fortaleza and Caucaia shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the purposes of the Project. Section 2.11. (a) AUMEF shall make available to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Parts D, E and F of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) SUDENE, the State, AUMEF, Fortaleza and Caucaia shall: (i) maintain records and procedures adequate to record and monitor the progress of Parts D, E and F of the Project (includ- ing 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 such Parts of the Project; (ii) enable the Bank's representatives to visit the facilities and construction sites included in Parts D, E and F of 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 through SUDENE at regular intervals all such information as the Bank shall reasonably request concerning Parts D, E and F of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. -5- (c) 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 to for this purpose by SUDENE, the State and the Bank, SUDENE and AUMEF shall prepare and furnish to the Bank through SG/MINTER a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of Parts D, E and F of the Project, its cost and the benefits derived and to be derived from it, the performance by SDU/MINTER, SUDENE, the State, AUMEF, Fortaleza, Caucaia, the Executing Entities and the Bank of their respective obligations under the Loan Agreement, this Agreement, the RMF Subsidiary Agreement and the convenios and the accomplishment of the purposes of the Loan. Section 2.12. SUDENE, the State and AUMEF shall duly perform all their obligations under the RMF Subsidiary Agreement. Except as the Bank shall otherwise agree, SUDENE, the State and AUMEF shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the RMF Subsidiary Agreement or any provision thereof. Section 2.13. The State, AUMEF, Fortaleza and Caucaia shall take, or cause to be taken, all measures necessary for the acquisition of such land rights in respect of land as shall be required for the construction and operation of the facilities in the Fortaleza Metropolitan Region provided under the Project. Section 2.14. SUDENE, the State, AUMEF, Fortaleza and Caucaia shall not take, and the State, Fortaleza and Caucaia shall not permit to be taken (and shall cause each of their political or administrative subdivisions and each of the entities owned or controlled by, or operating for the account or benefit of, the State, Fortaleza and Caucaia or such subdivisions not to take or permit to be taken) any action that would prevent or interfere with the execution of the Project or with the perfor- mance of the Borrower's obligations under the Loan Agreement or the performance of the obligations of any Executing Entity under the Project. Section 2.15. (a) SUDENE, the State, AUMEF, Fortaleza and Caucaia shall exchange views with the Bank with regard to the progress of the Project, the performance of their obligations under this Agreement, the RMF Subsidiary Agreement, and any convenio and any other matter relating to the purposes of the Loan. - 6 - (b) SUDENE, the State, AUMEF, Fortaleza and Caucaia shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of Parts D, E or F of the Project, the accomplishment of the purposes of the Loan, or the performance by SUDENE, the State, AUMEF, Fortaleza, Caucaia or any Executi:, Entity of its obligations under this Agreement, the RMF Subsidiary Agreement or any convenio. ARTICLE III Management and Operations of SUDENE and AUMEF Section 3.01. SUDENE and AUMEF shall carry on their respective operations and conduct their affairs in accordance with sound administrative, financial, engineering and urban development practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. ARTICLE IV Other Covenants Section 4.01. AUMEF shall: (a) maintain a consolidated Project account to reflect the operations, resources and expendi- tures in respect of Parts D, E and F of the Project; and (b) make available to SG/MINTER such accounts for purposes of the audit to be carried out pursuant to Section 4.02 (a) of tne Loan Agreement, Section 4.02. SUDENE, the State, AUMEF, Fortaleza and Caucaia shall, or shall cause the Executing Entities to: (a) maintain separate Project accounts adequate to reflect therein, in accordance with consistently maintained sound accounting practices, their respective operations, resources and expenditures in respect of Parts D, E and F of the Project, including separate Project accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure; and (b) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other -7- documents) evidencing the expenditures on account of which with- drawals are requested from the Loan Account on the basis of statements of expenditure, and shall enable the Bank's repre- sentatives to examine such records; and (c) make available to SG/MINTER the accounts and records referred to in paragraphs (a) and (b) above for purposes of the audit to be carried out pursuant to Section 4.02 (a) of the Loan Agreement. 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 Loan Agreement becomes effective. Section 5.02. This Agreement and all obligations of the Bank and of SUDENE, the State, AUMEF, Fortaleza and Caucaia thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify SUDENE, the State, AUMEF, Fortaleza and Caucaia 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: -8- 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 SUDENE: Superintendencia de Desenvolvimento do Nordeste - SUDENE Praga Joao Gongalves de Sousa Cidade Universitaria Recife, Pernambuco Brazil, C.E.P. 50.000 Cable address: Telex: SUDENE 812436 SDNE BR Pernambuco For the State: State of Ceara Secretaria do Planejamento e Coordina,'Ao Centro Administrativo Fortaleza, Ceara Brazil C.E.P. 60.000 For AUMEF: Autarquia da Regigo Metropolitana de Fortaleza - AUMEF Rua Mons. Bruno 1001 Aldeota, Fortaleza, Ceara Brazil C.E.P. 60.000 -9- For Fortaleza: Municipality of Fortaleza Pago Municipal Centro, Fortaleza, Ceara Brazil C.E.P. 60.000 For Caucaia: Municipality of Caucaia Caucaia, Ceara, Brazil C.E.P. 60.000 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 SUDENE or AUMEF may be taken or executed by its Superintendent or such other person or persons as he shall designate in writing, and SUDENE and AUMEF shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of the State may be taken or executed by the Governor of the State or such other person or persons as he shall designate in writing, and the State shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.04. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Fortaleza or Caucaia may be taken or executed by its Mayor or such other person or persons as he shall designate in writing, and Fortaleza and Caucaia shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.05. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. - 10 - 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, Unites States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By by Regional Vice President Latin America and the Caribbean SUPERINTENDENCIA DE DESENVOLVIMENTO DO NORDESTE - SUDENE By Authorized Representative STATE OF CEARA By Authorized Representative AUTARQUIA DA REGIAO METROPOLITANA DE FORTALEZA - AUMEF By Authorized Representative - 11 - MUNICIPALITY OF FORTALEZA By Authorized Representative MUNICIPALITY OF CAUCAIA 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 A4 ., 198 . FOR SECRETARY