Yugoslavia - Eighth Highway Project : Loan 1377 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1377 YU LOAN AGREEMENT (Eighth Highway Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and ZAJEDNICA PREDUZECA ZA PUTEVE S.R. SRBIJE (Association of Enterprises for Roads of the Socialist Republic of Serbia) REPUBLICKA ZAJEDNICA ZA PUTEVE, SARAJEVO (Republic Community for Roads, Sarajevo) SOCIJALISTICKA REPUBLIKA MAKEDONIJA (The Socialist Republic of Macedonia) SAMOUPRAVNA INTERESNA ZAJEDNICA ZA MAGISTRALNE I REGIONALNE PUTEVE, S.A.P. KOSOVO, PRISTINA (The Self-Managing Community of Interest for Arterial and Regional Roads, S.A.P. Kosovo, Pristina) Dated April 13, 1977 LOAN AGREEMENT AGREEMENT, dated April 13, 1977, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, party of the first part (such party of the first part hereinafter called the Bank) and ZAJEDNICA PREDUZECA ZA PUTEVE S.R. SRBIJE (Association of Enterprises for Roads of the Socialist Republic of Serbia) (hereinafter sometimes called the Serbian Borrower), REPUBLICKA ZAJEDNICA ZA PUTEVE, SARAJEVO (Republic Community for Roads, Sarajevo) (hereinafter sometimes called the Bosnia-Herzegovinan Borrower), SOCIJALISTICKA REPUBLICA MAKEDONIJA (The Socialist Republic of Macedonia) (hereinafter sometimes called the Macedonian Borrower), SAMOUPRAVNA INTERESNA ZAJEDNICA ZA MAGISTRALNE I REGIONALNE PUTEVE, S.A.P. KOSOVO, PRISTINA (The Self-Managing Community of Interest for Arterial and Regional Roads, S.A.P. Kosovo, Pristina) (hereinafter sometimes called the Kosovan Borrower), parties of the second part (any such parties of the second part hereinafter sometimes individually called a Borrower and all such parties of the second part hereinafter sometimes collectively called the Borrowers). (A) The Borrowers have agreed to carry out Part I and the Kosovan Borrower has agreed to carry out Part II (C) of the Project described in Schedule 2 to this Agreement, and the Socialist Federal Republic of Yugoslavia (hereinafter called the Guarantor) has agreed to cause Part II (A) and (B) thereof to be carried out by respectively the CRO and the CYR (as such terms are defined hereinafter); (B) The Socialist Republic of Bosnia and Herzegovina (hereinafter called Bosnia-Herzegovina), the Socialist Republic of Macedonia (hereinafter called Macedonia), the Socialist Republic of Serbia (hereinafter called Serbia) and the Socialist Autonomous Province of Kosovo (hereinafter called Kosovo) each have adopted or will adopt or cause to be adopted all regulations necessary to authorize (a) the construction of the respective road sections included under Part I of the Project (including, without limitation, the regulation(s) necessary to authorize the Kosovan Borrower to construct the portion of the Pristina-Seskovac road which is situated within the territory of Serbia, and to act, with respect thereto, as executing agency of the Serbian Borrower), and (b) the provision of the financial resources required for the complete execution of Parts I and II (C) of the Project to be made available respectively by: (i) Bosnia-Herzegovina to the Bosnia-Herzegovinan Borrower, for the purposes of Part I (A) of the Project; (ii) Macedonia for the purposes of Part I (B) of the Project; (iii) Serbia to the Serbian Borrower, for purposes of Part I (C) of the Project; and (iv) Kosovo to the Kosovan Borrower, for the purposes of Parts I (D) and II (C) of the Project; (C) Bosnia-Herzegovina, Macedonia, Serbia and Kosovo have each agreed to make available or cause to be made available, on appropriate terms, any additional funds required for the carrying out of the Project over and above the funds to be made available in accordance with the regulations referred to in Recital B and the Loan provided hereunder; (D) The Borrowers have requested the Bank to assist each of them in the financing of its Individual Part of the Project, by making the Loan as provided hereinafter; (E) The Borrowers have agreed to designate the CRO (as defined hereinafter) as the representative of each of the Borrowers for certain purposes under this Agreement, as is hereinafter set forth; (F) The Guarantor, in consideration of the Bank's entering into this Agreement with the Borrowers, has agreed to guarantee the obligations of the Borrowers in respect of their respective Individual Portions of the Loan (as defined hereinafter); WHEREAS the Bank, on the basis inter alia of the foregoing, has agreed to make a loan to the Borrowers for such purposes in the amount and on the terms and conditions in this Agreement set forth or referred to; NOW THEREFORE, the parties hereto hereby agree as follows: -3- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Schedule 5 to this Agreement (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Individual Part of the Project", used with respect to any of the Borrowers, means that portion of Part I or II of the Project described in Schedule 2 to this Agreement which is identified with the Republic or Province in which such Borrower is established; (b) "Individual Portion of the Loan", used with respect to any of the Borrowers, means such portion of the Loan as shall have been allocated to such Borrower for the purpose of assisting in the financing of such Borrower's Individual Part of the Project, all in accordance with the provisions of this Agreement; (c) the term "Republic" means any of the Socialist Republics of (i) Bosnia and Herzegovina, (ii) Croatia, (iii) Macedonia, (iv) Montenegro, (v) Serbia and (vi) Slovenia; (d) the term "Province" means either of the Socialist Autonomous Provinces of (i) Kosovo and (ii) Vojvodina; (e) the term "CRO" means the Savet Republickih i Pokrajinskih Organizacija za Puteve (Council of Republic and Provincial Road Organizations), a voluntary association established by agreement of the Road Funds and Road Councils of the respective Republics and Provinces, dated June 17, 1971, including any successor thereto and chaired by one of the member organizations appointed for one or more years pursuant to Article 4 of said agreement; (f) the term "Social Accounting Service" means the Sluzba Drustvenog Knjigovodstva referred to in Article 281 of the Constitution of the Guarantor; (g) "Special Account" means the account referred to in paragraph 2 (a) of Schedule 7 to this Agreement; (h) "Borrowers' Statutes" means the respective Statutes of the Bosnia-Herzegovinan Borrower dated November 10, 1975, the Statutes of the Serbian Borrower, dated July 13, 1973 and the Statutes of the Kosovan Borrower, dated April 6, 1976; and (i) "CYR" means Zajednica Jugoslovenskih Zeleznica (Community of Yugoslav Railways), an association of railway transport enterprises in Yugoslavia established by Self-Management Agreement on Association of Railway Transport Enterprises into the Community of Yugoslav Railways, dated July 3, 1973 (Official Paper of the Community of Yugoslav Railways, July 27, 1974), in accordance with the Law on th, Obligatory Association of Railway Transport Enterprises into -the Community of Yugoslav Railways (Official Gazette of the Socialist Federal Republic of Yugoslavia No. 25/72), and having a Statute defining, inter alia, the objectives and work of the Borrower and its organization and management, approved by the Assembly of the Borrower on December 27, 1966 (Official Paper of the Community of Yugoslav Railways, January 14, 1967). ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrowers, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to fifty-six million dollars ($56,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrowers and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. -5- Section 2.03. Except as the Bank shall otherwise agree, contracts for civil works required for the Project to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be March 31, 1981, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrowers of such later date. Section 2.05. The Borrowers 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 withdrawn from time to time. Section 2.06. The Borrowers shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on May 1 and November 1 in each year. Section 2.08. The Borrowers shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreenant. Section 2.09. (a) Of the amounts in the currencies specified in Article IV of the General Conditions to be paid to the Bank by the Borrowers on each payment date pursuant to the foregoing Sections 2.05 through 2.08 of this Agreement, each of the Borrowers shall only be liable for, and shall pay a share equivalent to: (i) the commitment charge accrued on the principal amount of its Individual Portion of the Loan not withdrawn or cancelled and the additional commitment charge accrued on special commitments entered into by the Bank at the request of such Borrower; -6- (ii) the interest accrued on the principal amount of its Individual Portion of the Loan withdrawn and outstanding; and (iii) a portion of the amount of each maturity of the Loan proportionate to the principal amount of its Individual Portion of the Loan, provided that such portion shall not have been repaid by such Borrower in advance of maturity as provided in paragraph (b) below. (b) Each of the Borrowers shall have the right, upon payment of all accrued interest and payment of the premium specified in Schedule 3 to this Agreement, and upon not less than 45 days' notice to the Bank, to repay in advance of maturity: (i) all of the principal amount of its Individual Portion of the Loan at the time withdrawn and outstanding; or (ii) all of the principal amount of the Loan to be repaid by such Borrower on one or more maturity dates in accordance with paragraph (a) above, provided that on the date of such prepayment there shall not be outstanding any portion of the Loan to be repaid by such Borrower and maturing after such maturity dates. (c) It is the policy of the Bank to encourage the repayment prior to maturity of portions of its Loans retained by the Bank in its own account. Accordingly the Bank will sympathetically consider, in the light of all circumstances then existing, any request by a Borrower that the Bank waive the payment of any premium payable under paragraph (b) of this Section on prepayment of any portion of the Loan which the Bank has not sold or agreed to sell. (d) Each of the Borrowers may by notice to the Bank cancel any amount of its Individual Portion of the Loan which such Borrower shall not have withdrawn prior to the giving of such notice, except that none of the Borrowers may so cancel any amount of its Individual Portion of the Loan in respect of which the Bank - 7 - shall have entered into a special commitment pursuant to Section 5.02 of the General Conditions. Section 2.10. Each of the Borrowers shall designate or cause the CRO to be designated as its representative for the purposes of taking any action required or permitted to be taken under the provisions set forth or referred to in Sections 2.02, 2.05, 2.06, 2.07, 2.08 and 2.09 of this Agreement, and Articles III, IV and V and Section 6.05 of the General Conditions, and for such purpose, the CRO and such Borrowers shall take such actions as are set forth in Schedule 7 to this Agreement. Section 2.11. All obligations of the Borrowers under the Loan Agreement, unless such obligations shall have been expressly undertaken by each of the Borrowers separately, shall be joint and several and the obligation of any of them to comply with any provision of the Loan Agreement is not subject to any prior notice to, demand upon or action against any other of them. No extension of time or forbearance given to any of the Borrowers in respect of the performance of any of its obligations under the Loan Agreement and no failure of the Bank to give any notice or to make any demand or protest whatsoever to any of the Borrowers, or strictly to assert any right or pursue any remedy against any of them in respect of the Loan Agreement and no failure by any of the Borrowers to comply with any requirement of any law, regulation or order shall in any way affect or impair any obligation of the Borrowers under the Loan Agreement. ARTICLE III Execution of the Project Section 3.01. (a) Each of the Borrowers shall carry out its Individual Part of the Project (i) with due diligence and efficiency and in conformity with appropriate engineering, administrative and financial practices, and (ii) in cooperation with the other three Borrowers and the CRO (as such cooperation is described in more detail in Schedule 8 to this Agreement) in a practical manner designed to ensure the most efficient execution of Part I of the Project as a whole, and Part II (C) of the Project, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. - 8 - (b) Without any limitation upon the generality of the foregoing, the Kosovan Borrower shall defer substantial improvement of the gravel/earth road between Luzane and Tulare until such time as such improvement shall be economically justified. Section 3.02. (a) Each of the Borrowers shall: (i) construct the roads included in its Individual Part of the Project in accordance with such design standards as are set forth in Schedule 6 to this Agreement or as shall be agreed upon from time to time between such Borrower and the Bank; (ii) furnish to the Bank (through the CRO), for its approval, promptly upon their preparation, the plans, specifications, contract documents and construction schedules for its Individual Part of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall from time to time reasonably request; and (iii) acquire, promptly as needed, all land required for the carrying cu.t of its Individual Part of the Project and furnish to the Bank (through the CRO), promptly after such acquisition, evidence satisfactory to the Bank that such land is available for the purpose of carrying out its Individual Part of the Project. Section 3.03. (a) In order to assist the Kosovan Borrower in carrying out the study included in Part II (C) of the Project, such Borrower shall, on or before September 30, 1977 (unless the Bank shall otherwise agree), employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) On or before December 31, 1978 (unless the Bank shall otherwise agree), the Kosovan Borrower shall review the recommendations of such study with the Bank and determine, in agreement with the Bank, which of such recommendations shall be implemented and the terms and conditions of such implementation. -9- Section 3.04. Except as the Bank shall otherwise agree, each of the Borrowers shall cause all goods and services financed out of the proceeds of its Individual Portion of the Loan to be used exclusively for its Individual Part of the Project. Section 3.05. (a) Each of the Borrowers shall in respect of its Individual Part of the Project: (i) maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) enable the Bank's accredited representatives to examine the Project, the operation thereof, the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) (acting through CRO) furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (b) the Borrowers shall cause the CRO to maintain records adequate for the purposes of Sections 2.10 and 3.05 (a) hereof. Section 3.06. (a) Each of the Borrowers shall take or cause to be taken all such actions as are necessary in order to ensure that if any tolls are imposed on the use of any highway included under its Individual Part of the Project, such tolls will be set at such rates as will ensure an economic use of such highway and alternative routes or means of transportation. (b) The Bosnia-Herzegovinan Borrower shall take all appropriate measures to control land development along the alignment of the highway included in Part I.A of the Project that will ensure an economic use of such highway. ARTICLE IV Management and Operations of the Bosnia-Herzegovinan, Serbian and Kosovan Borrowers and of the Highway Operations of Macedonia Section 4.01. Each of the Borrowers ;shall exercise its powers and functions with respect to all public roads in its respective Republic or Province, as the case may be (except roads falling - 10 - within the jurisdiction of municipalities), so as to ensure: (i) that such roads will be adequately maintained and repaired in accordar.n..e with sound engineering and financial practices, and that the funds, facilities, services and other resources required therefor will be provided, promptly as needed; (ii) that the systematic collection and recording of such technical, economic and financial data will be continued as shall be reasonable for the proper planning or maintenance, improvements and extensions of such roads; and (iii) that the dimensions and axle-loads of vehicles using such roads shall not exceed such limits as are appropriatc to the design standards for such roads. Section 4.02. Each of the Bosnia-Herzegovinan, Serbian and Kosovan Borrowers shall at all times cayry out its operations and manage its affairs in accordance with sound engineering, business, financial and administrative principles and practices, and under the supervision of experienced and competent management. Section 4.03. Each of the Bosnia-Herzegovinan, Serbian and Kosovan Borrowers shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with sound practices. Section 4.04. Each of the Bosnia-Herzegovinan, Serbian and Kosovan Borrowers shall operate and maintain its plants, equipment and properties, and from time to time make all necessary renewals and repairs thereof, in accordance with sound engineering and administrative practices. Section 4.05. Each of the Bosnia-Herzegovinan, Serbian and Kosovan Borrowers shall at all times maintain the right to carry on its operations, and take all steps necessary to acquire, maintain and renew all rights and franchises which are necessary or useful in the conduct of its business. Section 4.06. Except as the Bank may otherwise agree, none of the Bosnia-Herzegovinan, Serbian and Kosovan Borrowers shall sell, lease, transfer, assign or otherwise dispose of any of its rights, property or assets except in the ordinary course of business. - 11 - Section 4.07. The Macedonian Borrower shall carry out its highway operations in accordance with appropriate administrative, financial and highway practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. ARTICLE V Financial Covenants Section 5.01. Each of the Borrowers shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its highway operations and its financial resources and expenditures related to such operations. Section 5.02. (a) Each of the Borrowers represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. (b) Each of the Borrowers undertakes that, except as the Bank shall otherwise agree: (i) if such Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of such Borrower as security for any debt, such Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to (A) 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 (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. - 12 - ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) Bosnia-Herzegovina, Macedonia, Serbia or Kosovo shall have failed to make available, as and when needed, the financial resources provided under the respective regulations referred to in Recital B of this Agreement; (b) Bosnia-Herzegovina, Macedonia, Serbia or Kosovo shall have failed to carry out any of its undertakings or agreements referred to in Recital C of this Agreement; (c) any provision (i) of any of the regulations referred to in Recital B of this Agreement, or (ii) of any of the agreements referred to in Recital C of this Agreement, or (iii) of such Articles of the Statutes of any of the Bosnia-Herzegovinan, Serbian or Kosovan Borrowers as affect in any way whatever such Borrower's ability to carry out its Individual Part of the Project or such Borrower's existence as an independent enterprise, or (iv) of such Articles of CRO's Statutes as affect in any way whatever CRO's ability to carry out any of its obligations in the Loan Agreement contained, shall have been amended, suspended, abrogated or terminated without the prior approval of the Bank; and (d) any part of the principal amount of any loan to any of the Borrowers having an original maturity of one year or more shall, in accordance with its terms, have become due and payable in advance of maturity as provided in the relative contractual instruments, or any security for any such loan shall have become enforceable. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely, that any of the events specified in paragraphs (a), (b), (c), or (d) of Section 6.01 of this Agreement shall occur. - 13 - ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) Bosnia-Herzegovina, Macedonia, Serbia or Kosovo have each adopted regulations in form and substance satisfactory to the Bank, as referred to in Recital B of this Agreement, and such regulations are in full force and effect; (b) Bosnia-Herzegovina, Macedonia, Serbia or Kosovo have each given guarantees, in form and substance satisfactory to the Bank, in respect of the provision of all necessary funds in respect of its respective part of the Project, including cost-overruns, as referred to in Recital C of this Agreement, and such guarantees are in full force and effect; (c) all necessary consents and approvals have been given for the CRO to undertake the obligations referred to herein; (d) the Borrowers have entered into an agreement with the members of CRO other than the Borrowers, and CRO has taken a decision, providing for the execution by CRO in accordance with the provisions of this Agreement of the study included in Part II (A) of the Project, and for the financing of the costs of such study; and (e) CYR has decided to carry out the rail costs study included in Part II (B) of the Project. Section 7.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the regulations referred to in paragraph (a) of Section 7.01 of this Agreement have been duly adopted and are in full force and effect; (b) that the guarantees referred to in paragraph (b) of Section 7.01 of this Agreement have been duly and validly given and are in full force and effect; - 14 - (c) that the consents and approvals referred to in paragraph (c) of Section 7.01 of this Agreement have been duly and validly given and are in full force and effect; and (d) that the execution and delivery of the agreement referred to in Section 7.01 (d) hereof have been duly authorized or ratified by all necessary governmental action. Section 7.03. The date July 11, 1977 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: 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) 64145 (WUI) For the Borrowers: Savjet Republickih i Pokrajinskih Organizacija za Puteve Administratija Titova 64 61000 Ljubljana Yugoslavia - 15 - 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, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ A. David Knox Acting Regional Vice President Europe, Middle East and North Africa ZAJEDNICA PREDUZECA ZA PUTEVE S.R. SRBIJE (Association of Enterprises for Roads of the Socialist Republic of Serbia) REPUBLICKA ZAJEDNICA ZA PUTEVE, SARAJEVO (Republic Community for Roads, Sarajevo) SOCIJALISTICKA REPUBLIKA MAKEDONIJA (The Socialist Republic of Macedonia) SAMOUPRAVNA INTERESNA ZAJEDNICA ZA MAGISTRALNE I REGIONALNE PUTEVE, S.A.P. KOSOVO, PRISTINA (The Self-Managing Community of Interest for Arterial and Regional Roads, S.A.P. Kosovo, Pristina) By /s/ Naum Ackovski Authorized Representative - 16 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil Works (a) for Part 7,000,000 35% I (A) of the Project (b) for Part 24,000,000 29% I (B) of the Project (c) for Part 20,720,000 33% I (C) of the Project (d) for Part 4,000,000 32% I (D) of the Project (2) Technical Assistance (a) for Part II 140,000 100% of foreign (A) of the expenditures Project (b) for Part II 140,000 100% of foreign (C) of the expenditures Project TOTAL 56,000,000 - 17 - 2. For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of a country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower concerned, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category or sub-Category will be insufficient to finance the agreed percentage of all expenditures in that Category or sub-Category, the Bank may, by notice to the Borrower concerned, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category or sub-Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category or sub-Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower concerned, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 18 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part I. Highway Construction or Reconstruction The construction or reconstruction in the Republics of Bosnia-Herzegovina, Macedonia and Serbia and in the Autonomous Province of Kosovo of the following highway sections, each portion to be carried out by the respective Borrower: (A) Bosnia-Herzegovina Portion: a two-lane highway as the first phase of an ultimate four-lane divided highway with limited access between Banja Luka and Klasnice (about 9.3 km). (B) Macedonia Portion: two additional traffic lanes to the limited access main highway between Kumanovo and Titov Veles (about 52.7 km). (C) Serbia Portion: two additional traffic lanes to, and the reconstruction of the existing two-lane limited access highway from Mali Pozaverac to Ralja (about 28 km). (D) Kosovo Portion: a new two-lane paved highway along the approximate alignment of an old earth road between Pristina, Makovac and Petrilja on the Pristina-Leskovac route (about 40 km). - 19 - Part II. (A) Road-User Charges Study: A study to be carried out by the CRO for the purpose of (i) examining the fiscal, economic and administrative aspects of the present system of levying road user charges, taxing vehicles and allocating resources to the highway sub-sector in Yugoslavia and (ii) making recommendations concerning appropriate pricing policies and systems for levying road-user charges to achieve an optimal economic utilization of present and proposed road (including urban road) facilities. (B) Rail Costs Study: A study to be carried out by the CYR for the purpose of (i) studying rail costs in Yugoslavia and (ii) establishing a cost account system which would provide the railway management with all the data required for the continuing analysis of the relationship between costs and tariffs and for cost control and comparison thereof. (C) Highway Development Plan in Kosovo: A study to be carried out by the Kosovan Borrower for the purpose of preparing (i) an integrated highway development program in Kosovo with priorities set on economic criteria and (ii) a detailed highway investment program covering the period 1978-1980 and an outline for the highway investment program covering the period 1981-1985. Part I of the Project is expected to be completed by September 30, 1980. Part II (A) of the Project is expected to be completed by December 31, 1978. Phases I and II of Part II (B) of the Project are expected to be completed by June 30, 1978 and June 30, 1979, respectively. Part II (C) of the Project is expected to be completed by June 30, 1978. - 20 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each May 1 and November 1 beginning November 1, 1980 through November 1, 1991 2,335,000 On May 1, 1992 2,295,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 21 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.70% More than three years but not more than six years before maturity 3.40% More than six years but not more than eleven years before maturity 6.25% More than eleven years but not more than thirteen years before maturity 7.35% More than thirteen years before maturity 8.50% - 22 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Contracts for civil works shall be procured in accordance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. Conditions of bid invitation shall not require that foreign firms enter into compulsory joint ventures with Yugoslav firms. 3. (a) All bidders for civil works included under the Project shall be prequalified as described in Part 1.3 of the Guidelines. (b) Bid invitations for all contracts shall be advertised also in well-known technical journals or trade publications outside Yugoslavia. (c) Foreign contractors shall not be required to register in Yugoslavia as a prerequisite for submitting bids. In the event. that registration shall be necessary after a foreign contractor has been notified that he will be awarded a contract, the Borrowers shall facilitate the registration. (d) A time period of at least 60 days shall be allowed for submission of bids. (e) Bid bonds or guarantees in the amount of at least 3% of the bid value shall be required with the submission of bids. (f) Each civil works contract shall be on a unit-price basis and shall include: (i) a price adjustment clause as described in paragraph 2.11 of the Guidelines; (ii) a provision for retention money in the amount of at least 5% of the contractor's monthly statements; and - 23 - (iii) an obligation to provide a performance bond in the amount of 100% of the contract value or alternatively, at the contractor's option, a bank guarantee in the amount of at least 10% of the contract value. B. Review of Procurement Decisions by the Bank 1. Review of prequalification. Each concerned Borrower through CRO shall, before qualification is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by said Borrower through CRO to the Bank for its comments before the applicants are notified of the decision of such Borrower, and shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts. With respect to all contracts for civil works: (a) Before bids are invited, each concerned Borrower through CRO shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, each concerned Borrower through CRO shall, before a final decisiGn on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent - 24 - with the Guidelines or this S,hedule, promptly inform such Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished through CRO to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. C. Cooperation among the Borrowers and CRO In taking any actic-n required or permitted to be taken under the provisions seL forth or referred to in the Guidelines or in this Schedule 4 to the Loan Agreement, the Borrowers shall proceed in cooperation with each other and with the CRO as set forth in Schedule 8 to the Loan Agreement. - 25 - SCHEDULE 5 Modifications of General Conditions For the purpose of this Agreement, the provisions of the General Conditions are modified as follows: 1. Paragraph 4 of Section 2.01 is amended to read as follows: "4. The term 'Loan' means the loan provided for in the Loan Agreement and the term 'Individual Portion of the Loan' means the portion of the Loan allocated a particular Borrower in accordance with the Loan Agreement. 2. Paragraph 6 of Section 2.01 is amended to read as follows: "6. The term 'Borrower' means all the parties to the Loan Agreement to which the Loan is made, except that in Section 4.05, Section 5.02, Section 5.03, Section 5.07, paragraphs (a), (c), (d), (e), (h) and (i) of Section 6.02, paragraphs (c), (e), (f) and (g) of Section 7.01 and Section 10.02, such term means one or more such parties." 3. Section 3.05 is deleted. 4. Paragraph (b) of Section 4.02 is amended by deleting the words "Section 3.05" and by substituting the words "paragraph (b) of Section 2.09 of the Loan Agreement". 5. Section 6.01 is deleted. - 26 - SCHEDULE 6 Highway Design Standards The Borrowers concerned shall construct the highways included in Part I of the Project in accordance with the design standards set out below: Mali Pozarevac- Kumanovo- Miladinovci- Petrovec- Katlanovo- Banja Luka- Pristina- Unit Ralija Miladinovci Petrovec Katlanovo Titov Veles Klasnice Leskovac Type of Terrain - Hilly Rolling Flat Flat Hilly Flat/ Hilly/ Rolling Mountainous Design speed km/hr 120 120 120 120 100 120 40 Max. Gradient % 1 4 3 3 5 2 9 Carriageway Width m 2 x 7.5 7.5 7.5 7.5 7.5 7.5 6 Emergency Lane Width a 2 x 2.5 2.5 2.5 2.5 2.5 2 x 2.5 Shoulder Width m 2 x 1.0 1.0 & 2.0 1.0 & 2.0 1.0 & 2.0 1.0 & 2.0 1.0 & 1.0 2 x 1.0 Minimum Radius Hori- zontal Curves a 700 700 700 700 500 600 40 Minimum Radius Vertical Curves Summits a 20,000 20,000 20,000 20,000 18,000 20,000 4,000 Saga m 18,000 18,000 18,000 18,000 12,000 18,000 2,000 - 27 - Mali Pozarevac- Kumanovo- Miladinovci- Petrovec- Katlanovo- Banja Luka- Pristina- Unit Ralja Miladinovci Petrovec Katlanovo Titov Veles Klasnice Leskovac Type of Terrain - Hilly Rolling Flat Flat Hilly Flat/ Hilly/ Rolling Mountainous Maximum Single Axle Load ton 10 10 10 10 10 10 10 Type of Wear- ing Sur- face - Asphaltic bF,phaltic Asphaltic Asphaltic Asphaltic Asphaltic Surface Concrete Concrete Concrete Concrete Concrete Concrete Concrete - 28 - SCHEDULE 7 Actions to be taken by each of the Borrowers and by the CRO in accordance with the provisions set forth or referred to in Section 2.10 of the Loan Agreement: 1. (a) Upon any such Borrower's respective written request the CRO shall promptly take the following action with respect to the Borrower's Individual Portion of the Loan: (i) make applications for withdrawal from the Loan Account and pay to the Borrower, or on its order the amounts so withdrawn; (ii) request the Bank to enter into any special commitments in accordance with the provisions of Section 5.02 of the General Conditions; (iii) give the Bank notice of any repayment in advance of maturity in accordance with the provisions of paragraph (b) of Section 2.09 of the Loan Agreement; (iv) request the Bank to purchase any currency needed by the Borrower for payment of principal, interest and other charges, as provided by Section 4.05 of the General Conditions; (v) give the Bank any notice of cancellation in accordance with the provisions of paragraph (d) of Section 2.09 of the Loan Agreement; and (vi) in general, take any action required or permitted to be taken by the Borrower in accordance with the provisions of the General Conditions and the Loan Agreement referred to in Section 2.10 of the Loan Agreement. (b) Any request submitted to the CRO in accordance with the provisions of paragraph (a) above shall be in such form, and include such supporting documentation as the CRO shall determine in accordance with the provisions of the Loan Agreement. 2. All payments to be made to the Bank by any of the Borrowers shall be made through the CRO, provided that for such purpose: - 29 - (a) the CRO shall open an account with a Yugoslav bank to be used exclusively for making such payments (hereinafter called the Special Account), the necessary details about such Special Account to be communicated to all Borrowers; (b) each of the Borrowers shall make any such payment into the Special Account in such currency or currencies, and not later than five working days before such date, as such payments have to be made to the Bank in accordance with the provisions of the Loan Agreement; (c) not later than 15 working days before any payment is to be made into the Special Account in accordance with the provisions of paragraph (b) above, the CRO shall advise the respective Borrowers of the currency or currencies of payment and of the payment due date; and (d) using the funds paid by the Borrower into the Special Account, the CRO shall promptly make to the Bank the payments to be made by such Borrower. 3. The CRO shall (i) assign qualified and experienced staff in sufficient numbers for the carrying out of the actions to be carried out by it on behalf of the Borrowers in accordance with this Schedule 7, (ii) periodically determine its costs and expenditures incurred in carrying out such actions, and (iii) charge each of the Borrowers with such costs and expenditures in the same approximate proportion as its Individual Portion of the Loan bears to the total amount of the Loan. Each of the Borrowers shall promptly reimburse the CRO for its share of such costs and expenditures as so determined by the CRO. - 30 - SCHEDULE 8 Cooperation between the Borrowers and the CRO in the carrying out of Part I of the Project (see Section 3.01 of, and Part C of Schedule 4 to, the Loan Agreement): 1. The CRO shall establish and maintain a unit (hereinafter called the Unit) at CRO's headquarters for the coordination of construction, subject to the approval of the Borrowers. The Unit shall be supported by such full-time staff provided by the CRO as the Borrowers shall deem necessary. The CRO shall periodically determine its costs and expenditures incurred in operating the Unit and shall charge each of the Borrowers with such costs and expenditures in the same approximate proportion as its Individual Portion of the Loan bears to the total amount of the Loan. Each of the Borrowers shall promptly reimburse the CRO for its share of such costs and expenditures as so determined by the CRO. 2. The Unit shall have the functions set forth below as well as any other functions the Borrowers may assign to it, namely, to take any action required or permitted to be taken by the Borrowers in accordance with the provisions set forth or referred to in Schedule 4 to the Loan Agreement, and in particular and without limitation, to evaluate bids, to review the Borrowers' proposals about making awards and to forward such proposals to the Bank, all as required by the provisions set forth in paragraphs 1 and 2 of Part B of Schedule 4 to the Loan Agreement.