Page  1
CONFORMED COPY
LOAN NUMBER
3191
HU
BB Project Agreement
(Financial System Modernization Project)
 
between
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
and
BUDAPEST BANK LTD.
 
Dated June
1,
1990
LOAN NUMBER
3191
MU
BB PROJECT AGREEMENT
AGREEMENT, dated June
1,
1990, between
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
(the Bank) and BUDAPEST BANK LTD. (the Participating
Bank).
 
WHEREAS
(A) by the Loan Agreement of even date
herewith between National Bank of Hungary
(the Borrower)
and the Bank, the Bank has agreed to make available to
the Borrower an amount in various currencies equivalent
to sixty-six million dollars
($66,000,000), on the terms
and conditions set forth in the Loan Agreement, but only
on condition that the Participating Bank agree to
undertake such obligations toward the Bank as are set
forth in this Agreement;
Page  2
(B)
by a subsidiary loan agreement to be entered
into between the Borrower and the Participating Bank
(the
Subsidiary Loan Agreement),  part of the proceeds of the
loan provided for under the Loan Agreement will be made
available to the Participating Bank on the terms and
conditions set forth in the Subsidiary Loan Agreement;
and
WHEREAS the Participating Bank, 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 Participating Bank's Activities
under Part C of the Project
Section
2.01. (a) The Participating Bank 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 its activities under Part C of the
Project with due diligence and efficiency and in
conformity with appropriate technical, administrative,
financial and economic practices, and shall provide, or
cause to be provided, promptly as needed, the funds,
facilities, services and other resources required for the
purpose.
(b)
Without limitation upon the provisions of
paragraph
(a) of this Section and except as the Bank and
the Participating Bank shall otherwise agree, the
Participating Bank shall carry out its activities under
Part C of the Project in accordance with the
implementation program set forth  in the  Schedule to
this Agreement.
Section
2.02.  (a) In order to assist the
Participating Bank in carrying out its activities under
Part C of the Project, the Participating Bank shall
employ consultants whose qualifications, experience and
terms of reference shall be satisfactory to the Bank.
 
(b)
Except as the Bank shall otherwise agree,
procurement of the goods,  works  and consultants'
services required for the carrying out by the
Participating Bank of its activities under Part C of the
Project and to be financed out of the proceeds of the
Loan shall be governed by the provisions of Schedule
4
to
the Loan Agreement.
 
Section
2.03.
The Participating Bank shall carry out
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the obligations set forth in Sections
9
.
04
,
9
.
05
,
9
.
06
,
9.07 and 9.08 of the General Conditions (relating to
insurance, use of goods and services, plans and
schedules, records and reports, and maintenance,
respectively)
in respect of this Agreement and its
activities under Part C of the Project.
 
Section
2.04. The Participating Bank shall duly
perform all its obligations under the Subsidiary Loan
Agreement.
Except as the Bank shall otherwise agree, the
Participating Bank shall not take or concur in any action
which would have the effect of amending, abrogating,
assigning or waiving the Subsidiary Loan Agreement or any
provision thereof.
 
Section
2.05.  (a)
The Participating Bank shall, at
the request of the Bank, exchange views with the Bank
With regard to progress of its activities under Part C 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 Part C of
the Project.
 
(b)
The Participating Bank shall promptly inform the
Bank of any condition which interferes or threatens to
interfere with the progress of its activities under Part
C of the Project,  the accomplishment of the purposes of
Loan, or the performance by the Participating Bank of its
obligations under this Agreement and under the Subsidiary
Loan Agreement.
ARTICLE III
Financial Covenants
Section
3.01.  (a)
The Participating Bank shall
maintain records and accounts adequate to reflect in
accordance with sound accounting practices its operations
and financial condition.
 
(b)
The Participating Bank shall:
 
(i)
have its records, accounts and financial
statements
(balance sheets, statements of
income and expenses and related statements)
for each fiscal year, commencing with its
fiscal year ending December
31,
1989,
audited,  under  terms  of  reference
satisfactory to the Bank and 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 five months after
the end of each such year:  (A)
certified
copies of its financial 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 said records,
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accounts and financial statements as well
as 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 and Guarantee
Agreements become effective.
 
Section
4.02. This Agreement and all obligations of
the Bank and of the Participating Bank thereunder shall
terminate on the date on which the Loan and Guarantee
Agreements shall terminate in accordance with their
respective terms,  and the Bank shall promptly notify the
Participating Bank 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 radio gram 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.U.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
 
INTBAFRAD
197688
(TRT),
Washington, D.C.
248423
(RCA),
64145
(WUI) or
82987
(FTCC)
 
For the Participating Bank:
 
Budapest Bank
Budapest V
Deak Ferenc Utca
5
H-1852 Budapest
Republic of Hungary
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Telex:
 
223013
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 the
Participating Bank, may be taken or executed by its chief
executive officer or such other person or persons as the
Participating Bank shall designate in writing, and the
Participating Bank 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/
Eugenio F. Lari
Acting Regional Vice President
Europe, Middle East and North Africa
BUDAPEST BANK LTD.
By
/s/
Mikloe Pulai
Authorized Representative
SCHEDULE
Implementation Program
1.
The Participating Bank shall:  (a) carry out its
activities under Part C of the Project to strengthen its
organization, management and operations in accordance
with an action program satisfactory to the Bank; and
(b)
maintain at all times a task force satisfactory to the
Bank,  to coordinate and monitor the carrying out of said
action program.
2.
In order to strengthen its financial structure under
Part C of the Project, the Participating Bank shall:
 
(a)
develop, on the basis of guidelines
satisfactory to the Bank, and adopt, not later than
December
31, 1990, an action plan to progress towards
restoring a sound financial structure in accordance with
prudent loan classification and provisioning criteria;
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and
(b)
carry out such action plan with due diligence
and efficiency.