Ecuador - Guayas Highway Project : Loan 0094 - Loan Agreement - Conformed

LOAN NUMBER 94 EC Loan Agreement (Guayas Highway Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND COMITE EJECUTIVO DE VIALIDAD DE LA PROVINCIA DEL GUAYAS DATED FEBRUARY 10, 1954 AGREEMENT, dated February 10, 1954 between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank) and COMITE EJECUTIVO DE VIALIDAD DE LA PROVINCIA DEL GUAYAS (hereinafter called the Borrower). ARTICLE I Loan Regulations SECTIoN 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank.dated October 15, 1952 (hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Loan Agreement set forth or referred to, an amount in various currencies equivalent to eight million five hundred thousand dollars ($8,500,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to .the rights of cancellation and sus- pension set forth in, the Loan Regulations. No withdrawals from the Loan Account shall be made in respect of the ferryboats referred to in paragraplh 3 of Schedule 2 until the Borrower shall have obtained (1) firm prices for their reconditioning, if the ferryboats have previously been used, 4 and (2) assurances satisfactory to the Bank that such ferry- boats are suitable for operation between the cities of Guaya- quil and Duran on the Guayas River. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-quarters of one per cent (% of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. The date specified for the purposes of Section 2.02 of the Loan Regulations is 60 days after the date of this Agree- ment or the Effective Date, whichever shall be the earlier. SECTION 2.04. The Borrower shall pay interest at the rate of four and five-eighths per cent (4% o) per annum on the principal amount of the Loan so withdrawn and out- standing from time to time. SECTION 2.05. Except as the Bank and the Borrower shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (1 of 170) per annum on the principal amount of any such special com- mitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on March 1 and September 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Loan Agreement. 0 5 ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall apply the proceeds of the Loan exclusively to financing the cost of goods required to carry out the Project described in Schedule 2 to this Loan Agreement. The specific goods to be financed out of the proceeds of the Loan shall be determined by agree- ment between the Bank and the Borrower, subject to modifi- cation by further agreement between them. SECTION 3.02. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Loan to be imported into the territories of the Guarantor and there to be used exclusively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Director Principal of the Borrower and such other person or persons as the Borrower shall appoint in writing are designated as authorized representa- tives of the Borrower for thi purposes of Section 6.12(a) of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall carry out the Proj- ect with due diligence and efficiency and in conformity with sound engineering and financial practices. For such purposes it shall employ contractors mutually satisfactory 6 to the Bank and the Borrower upon terms and conditions satisfactory to the Bank. (b) The Borrower shall carry out its functions in accord- ance with sound management principles under the direc- tion of a competent and experienced general superintendent mutually satisfactory to the Bank and. the Borrower. The Borrower shall also employ a competent and experienced technical consultant or consultants mutually satisfactory to the Bank and the Borrower to advise in the carrying out of its highway construction program. (c) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans and specifications for the Project and any material modifications subsequently made therein. (d) The Borrower shall maintain records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the prog- ress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the financial condition and operations of the Borrower; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such in- formation as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the goods, and the financial condition and operations of the Borrower. (e) The Borrower shall keep separate books and accounts for its highway activities. Except as the Bank shall other- wise agree, revenues and receipts allocated to the Bor- rower's highway activities shall not be used to defray the cost of any of its other activities. 7 SECTION 5.02. (a) The Bank and the Borrower shall co- operate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably re- quest with regard to the general status of the Loan. (b) The Bank and the Borrower shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. SECTION 5.03. (a) Except as the Bank shall otherwise agree, the Borrower shall not incur any debt if, on the date such debt is to be incurred, the total debt of the Borrower to be outstanding, including such proposed debt, would exceed the equivalent of 8,000,000 sucres in currency of the Guarantor. For purposes of this Section: (i) the term "debt" shall be deemed to mean all in- debtedness of the Borrower including loans or credits contracted for but not yet drawn down; provided, however, that the term shall not include the Loan or any loans or credits contracted on or before December 31, 1953; (ii) debt shall be deemed to be incurred on the date on which a loan or credit is contracted; (iii) the equivalent in currency of the Guarantor of amounts of debt payable in any other currency shall be determined on the basis of the rate of exchange, on the date on which the Borrower incurs the addi- tional debt, which is available to the Borrower for the purchase of such other currency for debt service. 8 (b) The Borrower undertakes that, except as the Bank shall otherwise agree, if any lion shall be created on any assets of the Borrower as security for any debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing provisions of this subsection shall not apply (i) to any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (ii) to any lien created on revenues or receipts of the Borrower as security for the payment of indebtedness not exceeding at any one time the aggregate principal amount of 8,000,000 sucres in- curred after December 31, 1933 in currency of the Guaran- tor in the ordinary course of the Borrower's business. SECTION 5.04. Except as the Bank shall otherwise agree, the Borrower shall not undertake or execute any major project or development other than the Project unless prior to the time such project or development is undertaken or executed the Borrower shall have satisfied the Bank that it has on hand, or has made satisfactory arrangements to secure, the necessary funds to carry out such project or development. For purposes of this Section, a major project or development shall be deemed to be one the estimated cost of which is more than 15,000,000 sucres. SECTION 5.05. The Borrower shall pay or cauFe to be paid all taxes or fees, if any, imposed under the laws of the Guarantor or laws in effect in the territories of the Guarantor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the provisions of this Section shall not apply to taxa- tion of, or fees upon, payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guaran- tor. 9 SECTION 5.06. The Borrower shall pay or cause to be paid all taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries on or in connection with the exe- cution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.07. Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall insure or cause to be insured the goods financed with the proceeds of the Loan against risks incident to their pur- chase and importation into the territories of the Guarantor. Each contract of insurance shall be for such amounts and on such terms as shall be consistent with sound commercial practice and shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable. SECTION 5.08. (a) The Borrower shall cause all its ma- chinery and equipment for highway maintenance and con- struction to be adequately maintained and repaired, and shall cause suitable workshops to be maintained in suitable places for that purpose. (b) The Borrower shall cause the roads constructed with the proceeds of the Loan to be adequately maintained and shall cause all necessary repairs thereof to be made, all in accordance with sound engineering practices. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a), paragraph (b), paragraph (e) or paragraph (f) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event 10 sptcified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Loan Agree- ment or in the Bonds to the contrary notwithstanding. ARTICLE VII Effective Date; Termination SECTION 7.01. The following events are specified as ad- ditional conditions to the effectiveness of this Loan Agree- ment within the meaning of Section 9.01 (c) of the Loan Regulations: (a) The Borrower shall have made arrangements satisfactory to the Bank for compliance with the pro- visions of subsections (a) and (b) of Section 5.01 of this Agreement; (b) The Guarantor shall have furnished to the Bank evidence satisfactory to the Bank that the provi- sions of Section 3.01 of the Guarantee Agreement are valid and binding obligations of Banco Central del Ecuador; (c) The Guarantor shall have furnished to the Bank evi- dence satisfactory to the Bank that after the date of this Agreement and prior to the Effective Date Banco Central del Ecuador shall have taken no action which would have constituted a violation of the provisions of Section 3.01 of the Guarantee Agreement had such agreement been effective on the date such action was taken. 11 SECTION 7.02. The following is specified as an addi- tional matter, within the meaning of Section 9.02 (d) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: That the provisions of Section 3.01 of the Guarantee Agreement constitute a valid and binding obligation of Banco Central del Ecuador in accord- ance with their terms. SECTION 7.03. A date 60 days after the date of this Loan Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. ARTICLE VIII Miscellaneous SECTION 8.01 The Closing Date shall be December 31, 1957. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Comit6 Ejecutivo de Vialidad de la Provincia del Guayas Guayaquil Ecuador For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respec- 12 tive names and delivered 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 R. L. GARNER Vice President COMITE EJECUTIVO DE VIALIDAD DE LA PROVINCIA DEL GUAYAS By ANTONIO MATA M. Adhorized Representative 13 SCHEDULE 1 Amortization Schedule Principal Payment of Amount Outstanding Principal After Each Payment Date (expressed (expressed in Payment Due in dollars)* dollars) * September 1, 1957 $8,500,000 March 1, 1958 $568,000 7,932,000 September 1, 1958 581,000 7,351,000 March 1, 1959 595,000 6,756,000 September 1, 1959 608,000 6,148,000 March 1, 1960 622,000 5,526,000 September 1, 1960 637,000 4,889,000 March 1, 1961 651,000 4,238,000 September 1, 1961 667,000 3,571,000 March 1, 1962 682,000 2,889,000 September 1, 1962 698,000 2,191,000 March 1, 1963 714,000 1,477,000 September 1, 1963 730,000 747,000 March 1, 1964 747,000 - * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in these columns represent dollar equivalents determined as for purposes of withdrawal. 14 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursurant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 1 year before maturity.......... 1/2% More than 1 year and not more than 3 years before maturity .................... % More than 3 years and not more than 5 years before maturity ............................ 1% More than 5 years and not more than 7 years before maturity ........................ 1%1 o More than 7 years before maturity .......... 2o INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By R. L. GARNER Vice President COMITE EJECUTIVO DE VIALIDAD DE LA PROVINCIA DEL GUAYAS By ANTONIO MATA M. Authorized Representative 15 SCHEDULE 2 Description of the Project 1. Approximately 586 kilometers of paved all-weather roads are to be constructed in the Province of Guayas and adjoining provinces. The specific works to be carried out are as follows: Approximate Length of Road in Kilometers Guayaquil-Balzar-Empalme 155.0 Duran-Yaguachi-Babahoyo 58.0 Chilcales-Bucay 38.0 Nobol-Jipijapa-Portoviejo 144.0 Palestina-Los Rios Province boundary 14.0 Ferry Installations-Guayas Rio 3.0 Guayaquil-Progreso 66.0 Boliche-El Oro Highway 100.0 Airport-Highway No. 7, km. 8 8.0 586.0 The roads will be constructed with an adequate, stabilized base and will be surfaced with a three-course asphalt pave- ment having a minimum \vidtli of 6.5 meters. Adequate drainage, culverts and bridges will be provided. 2. Suitable shops and facilities will be established and maintained for the repair and servicing of equipment for highway maintenance and construction. A training pro- 16 gram will be inaugurated and maintained to train personnel to operate, service and repair such equipment. 3. Suitable ferryboats will be acquired and put into operation between Guayaquil and Duran. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By R. L. GARNER Vice President COMITE EJECUTIVO DE VIALIDAD DE LA PROVINCIA DEL GUAYAS By ANTONIO MATA M. Authorized Representative