Honduras - Highway Maintenance Project : Loan 0135 - Loan Agreement - Conformed

LOAN NUMBER 135 HO Loan Agreement (Highway Maintenance Project) BETWEEN REPUBLIC OF HONDURAS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 22, 1955 AGREEMENT, dated December 22, 1955, between RE- PUBLIC OF HONDURAS (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank). ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement ac- cept all the provisions of Loan Regulations No. 3 of the Bank dated February 15, 1955 (said Loan Regulations No. 3 being 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 Agreement set forth or referred to, an amount in various currencies equivalent to four million two hundred thousand dollars ($4,200,000). 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 The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to the rights of cancellation and sus- pension set forth in, the Loan Regulations. Notwithstanding any other provision of this Agreement, unless the Bank shall otherwise agree, the Borrower shall not be entitled to make withdrawals from the Loan Account in respect of goods until the consultants employed by the Borrower pursuant to Section 5.01 (b) shall have recom- mended the use of such goods in the Project. 4 SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. SECTION 2.04. The Borrower shall pay interest at the rate of four and one-half per cent (41/ ) per annum on the principal amount of the Loan so withdrawn and outstand- ing from time to time. SECTION 2.05. Except as the Borrower and the Bank shall otherwise agree, the charge payable for special commit- ments entered into by the Bank at the request of the Bor- rower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent ( of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on June 1 and December 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 Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively to financing the cost of goods required to carry out the Project desc'ribed in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. 5 SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be used in the territories of the Borrower 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 Secretario de Economia y Hacienda and the Presidente del Tribunal Superior de Cuentas of the Borrower acting jointly and such person or persons as they shall jointly appoint in writing are designated as author- ized representatives of the Borrower for the purposes of Section 6.12 of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) In the carrying out of the Project the Borrower shall employ competent and experienced technical consultants mutually satisfactory to the Borrower and the Bank upon terms and- conditions mutually satisfactory to the Bor- rower and the Bank. (c) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, such plans and specifications for the Project, and any material modifica- tions subsequently made therein, as the Bank shall reason- ably request. 6 (d) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, and to record the progress of the Project (in- cluding the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the financial condition and operations of the agency or agencies of the Borrower responsible for the construction or opera- tion of the Project or any part thereof; 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 information as the Bank shall reason- ably request concerning the expenditure of the proceeds of the Loan, the Project, and the goods, and the financial con- dition and operations of the agency or agencies of the Bor- rower responsible for the construction or operation of the Project or any part thereof. SECTION 5.02. (a) The Borrower and the Bank shall cooperate 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 request with regard to the general status of the Loan. On the part of the Borrower, such information shall include informa- tion with respect to financial and economic conditions in the territories of the Borrower and the international bal- ance of payments position of the Borrower. (b) The Borrower and the Bank 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. (c) The Borrower shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any 7 part of the territories of the Borrower for purposes related to the Loan. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external 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 cf this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is orig- inally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. The term "assets of the Borrower" as used in this Sec- tion includes assets of the Borrower or of any of its politi- cal subdivisions or of any agency of the Borrower or of any such political subdivision, including assets of the Banco Central de Honduras. SECTION 5.04. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Borrower or laws in effect in its ter- ritories; provided, however, that, unless the Borrower shall otherwise agree, the provisions of this Section shall not apply to taxation of, or fees upon, payments under any Bond to a holder thereof other than the Bank when such 8 Bond is beneficially owned by an individtal or corporate resident of the Borrower or by a citizen of the Borrower. SECTION 5.05. The Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the executioii, issue, delivery or registration thereof and the Borrower shall pay all such taxes and fees, if any, imposed under the laws of the coun- try or countries in whose currency the, Loan and the Bonds are payable or laws in effect in the territories of such country or countries. SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Borrower or laws in effect in its territories. SECTION 5.07. The Borrower shall satisfy the Bfa:nk that adequate arrangements have been made to insure the goods financed with the proceeds of the Loan against risks inci- dent to their purchase and importation into the territories of the Borrower. SECTION 5.08. (a) The Borrower shall cause all main- tenance equipment and materials, and all spare parts, financed out of the proceeds of the Loan, to be used exclu- sively in the carrying out of the two-year program referred to in paragraph 2 of Schedule 2 to this Agreement and thereafter shall cause all such equipment, materials and spare parts to be used exclusively for the purpQses of road maintenance. (b) The Borrower shall cause all its machinery and equip- ment for highway construction and maintenance to be ade- quately maintained and repaired, and shall cause suitable workshops to be maintained in suitable places for that purpose. 9 SECTION 5.09. The Borrower agrees to take such steps as shall be necessary to provide promptly, as and when re- quired to avoid delays in carrying out the Project in ac- cordance with this Agreement, such funds as shall be necessary for that purpose. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regula- tions shall occur and shall continue for a period of thirty days, or (ii) if any event specified 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 Agreement or in the Bonds to the contrary notwithstand- ing. ARTICLE VII Effective Date; Termination SECTION 7.01. The following event is specified as an ad- ditional condition to the effectiveness of this Agreement within the meaning of Section 9.01 (a) (ii) of the Loan Regulations: The Loan Agreement shall have been approved by the Consejo de Estado of the Borrower. SECTION 7.02. The following is specified as an addi- tional matter, within the meaning of Section 9.02 (c) of the S 10 Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: The approval of the Loan Agreement by the Consejo de Estado of the Borrower has been duly and validly given. SECTION 7.03. A date sixty days after the date of this 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 June 1, 1957. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Secretario de Economia y Hacienda Palacio de Hacienda Tegucigalpa, D.C., Honduras For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America SECTION 8.03. The Se -Ptario de Economia y Hacienda of the Borrower is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respec- S 11 tive names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF HONDURAS by CARLOS IZAGUIRRE Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT by R. L. GARNER Vice President 12 SCHEDULE 1 Amortization Schedule Principal Payment of Amount Outstanding Principal After Each Payment (expressed in (expressed Date Payment Due dollars) * in dollars) * June 1, 1957 $4,200,000 December 1, 1957 $239,000 3,961,000 June 1, 1958 244,000 3,717,000 December 1, 1958 249,000 3,468,000 June 1, 1959 255,000 3,213,000 December 1, 1959 261,000 2,952,000 June 1, 1960 267,000 2,685,000 December 1, 1960 273,000 2,412,000 June 1, 1961 279,000 2,133,000 December 1, 1961 285,000 1,848,000 June 1, 1962 291,000 1,557,000 December 1, 1962 298,000 1,259,000 June 1, 1963 304,000 955,000 December 1, 1963 311,000 644,000 June 1, 1964 319,000 325,000 December 1, 1964 325,000 * To th 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. 13 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 pursuant 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 2 years before maturity 1/2 of 1% More than 2 years but not more than 4 years before maturity .......... .1% More than 4 years but not more than 6 years before maturity ........... 11/2% More than 6 years before maturity ... . 2% 14 SCHEDULE 2 Description of the Project The Project consists of: 1. Improvement of highway orga-nization through: (a) the reorganization and strengthening of the Direc- cidn General de Caminos, including the training of technical and administrative personnel; (b) the setting up of field maintenance organizations in an appropriate number of zones to be determined by agreement between the Borrower and the Bank; (c) the equipping of the headquarters and of the field organizations with the necessary facilities; (d) the acquisition of road maintenance equipment and materials, and of spare parts both for new and for existing equipment; (e) the training of personnel to operate, service and repair the maintenance equipment. 2. The execution of a two-year program of highway repair and maintenance in the zones where field organizations are established. 3. The conduct of a preliminary survey for the improve- ment and completion of the Northern Highway from Comayagua to Puerto Cortes and of the Western High- way from San Pedro Sula to the Salvadorean border. The Secretaria de Fomento of the Borrower through its Direccidn General de Caminos will be the agency of the Bor- rower technically responsible for carrying out the Project. It is estimated that at present prices the local currency costs of executing the Project would amount to a minimum of 4 million lempiras annually.