Honduras - Highway Construction Project : Loan 0195 - Loan Agreement - Conformed

Irk, LOAN NUMBER 195 HO Loan Agreement (Highway Construction Project) BETWEEN REPUBLIC OF HONDURAS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED MAY 9, 1958 LOAN NUMBER 195 HO Loan Agreement (Highway Construction Project) BETWEEN REPUBLIC OF HONDURAS AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED MAY 9, 1958 AGREEMENT, dated May 9, 1958, between REPUBLIC OF HONDURAS (hereinafter called the Borrower) and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS: A. By a Loan Agreement dated December 22, 1955 be- tween the Borrower and the Bank (hereinafter called the Highway Maintenance Loan Agreement) the Bank agreed to lend to the Borrower an amount equivalent to $4,200,000 for financing the costs in foreign exchange of a two-year program of highway repair and maintenance; B. The Borrower has requested the Bank and the Devel- opment Loan Fund, an agency of the United States of America, to assist in the financing of a road construction project; Now THEREFORE, the parties hereto agree as follows: ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 3 of the Bank dated June 15, 1956, subject, however, to the modifications thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 3 as so modified 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 five million five hundred thousand dollars ($5,500,000). 4 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 The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the .joan Regulations. 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charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. Such commit- ment charge shall accrue from a date sixty days after the date of this Agreement to t1hic respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrower shall pay interest at the rate of five and three-eighths per cent (5%%) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Except as the Borrower and the Bank 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 ce-nt (/ of 1%) 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 payable semiannually 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 Agreement. 5 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 described in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan and the methods and pro- cedures for procurement of such goods shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. 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 Estado en el Despacho de Economia y Hacienda and the Contralor General de la Republica of the Borrower, acting jointly, and such person o- persons as they, acting jointly, shall appoint in writing are designated as authorized representatives of the Bor- rower for the purposes of Section 6.12 of the Loan Regula- tions. 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 engineering consultants 6 satisfactory to the Borrower and the Bank upon terms and conditions satisfactory to the Borrower and the Bank. (c) Except as the Bank shall otherwise agree, the roads and structures included in the Project shall be constructed by contractors satisfactory to the Borrower and the Bank, employed under contracts satisfactory to the Borrower and the Bank awarded on the basis of international competitive bidding. (d) The general design standards and the types of pave- ment to be used for the roads and structures the construc- tion of which is included in the Project shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. (e) The Borrower shall cause the funds obtained pur- suant to the agreement or agreements referred to in Sec- tion 8.01 (a) to be used in carrying out the Project. (f) Whenever there is reasonable cause to believe that funds available to the agency or agencies of the Borrower responsible for the construction of the Project or any part thereof will be inadequate to meet the estimated expendi- tures required for carrying out the Project, the Borrower shall make arrangements satisfactory to the Bank promptly to provide such funds, as are needed to meet such expendi- tures. (g) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans and specifica- tions and work program for the Project and any material modifications subsequently made therein, in such detail as the Bank shall from time to time request. (h) The Borrower shall maintain or cause to be main- taine 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 progress of the Project (including the cost thereof) and to reflect in accordance with con- sistently maintained sound accounting practices the opera- 7 tions and financial condition of the agency or agencies of the Borrower responsible for the construction or operation 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 reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the goods, and the operations and finan- cial condition of the agency or agencies of the Borrower 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 information with respect to financial and economic conditions in the territories of the Borrower and the international balance 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 interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Bank to visit any 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 8 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 of 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; or (ii) any lien arising in the ordinary course of banking trans- actions 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 political 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 territories; 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 Bond is beneficially owned by an individual 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 execution, issue, delivery or registration thereof and the Borrower shall pay all such taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the 9 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 Bank that adequate arrangements have been made to insure the goods financed out of the proceeds of the Loan against risks inci- dent to their purchase and importation into the territories of the Borrower. SECTION 5.08. The Borrower shall cause the roads con- structed 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. SECTION 5.09. The Borrower and the Bank agree that in order to carry out efficiently the Project and the program provided for under the Highway Maintenance Loan Agree- ment, until the Project shall have been completed, the Bor- rower should exercise reasonable restraint in the construc- tion or reconstruction of roads not included in the Project. To this end, until the Project shall have been completed, the Borrower and the Bank shall from time to time agree as to construction or reconstruction work outside the Project and amounts to be expended therefor. ARTICLE VI Amendments of Highway Maintenance Loan Agreement SECTION 6.01. The Highway Maintenance Loan Agree- ment is hereby amended as follows: (a) Section 4.02 shall read as follows: SECTION 4.02. The Secretario de Estado en el Des- pacho de Economia y Hacienda and the Contralor Ge- 0 10 neral de la Republica of the Borrower, acting jointly, and such person or persons as they, acting jointly, shall appoint in writing are designated as authorized repre- sentatives of the Borrower for the purposes of Section 6.12 of the Loan Regulations. (b) Section 5.08 (a) shall read as follows: Section 5.08. (a) The Borrower shall cause all maintenance equipment and materials, and all spare parts, financed out of the proceeds of the Loan, to be used exclusively in the carrying out of the program referred to in paragraph 2 of Schedule 2 to this Agreement and thereafter shall cause all such equipment, materials and spare paits to be used exclusively for the purposes of road maintenance. (c) Section 6.01 shall read as follows: Section 6.01. (i) If any event specified in para- graph (a) or paragraph (b) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified or referred to in Section 7.01 of the Loan Agreement (Highway Con- struction Project), dated May 9, 1958, between the Bor- rower and the Bank, shall have occurred and shall have continued for the period specified therein, or (iii) 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 subse- quent 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 prin- cipal shall become due and payable immediately, any- thing in this Agreement or in the Bonds to the contrary notwithstanding. (d) A new Section shall be added as follows: Section 6.02. For the purposes of Section 5.02 (h) of the Loan Regulations the following additional events 11 are specified: If there shall have occurred any event speci- fied or referred to in Section 7.01 of the Loan Agreement (Highway Construction Project), dated May 9, 1958, be- tween the Borrower and the Bank. (e) Paragraph 2 of Schedule 2 shall read as follows: 2. The execution of a three-and-one-half-year pro- gram of highway repair and maintenance in the zones where field organizations are established. (f) The penultimate paragraph of Schedule 2 shall read as follows: The Secretaria de Estado en el Despacho de Comu- nicaciones y Obras Publicas of the Borrower through its Direccion General de Caminos will be the agency of the Borrower technically responsible for carrying out the Project. ARTICLE VII Remedies of the Bank SECTION 7.01. (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, (ii) if any event speci- fied or referred to in Section 6.01 of the Highway Mainte- nance Loan Agreement shall have occurred and shall have continued for the period specified therein, or (iii) 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 out- standing to be due and payable immediately, and upon any such declaration such principal shall become due and pay- able immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. 12 SECTION 7.02. For the purposes of Section 5.02 (h) of the Loan Regulations, the following additional events are specified: (a) If there shall have occurred any event speci- fied or referred to in Section 6.01 of the Highway Mainte- nance Loan Agreement. (b) If the right of the Borrower to obtain funds under the agreement or agreements referred to in Section 8.01 (a) shall have been suspended or terminated. ARTICLE VIII Effective Date; Termination SECTION 8.01. The following event is specified as an addi- tional condition to the effectiveness of this Agreement with- in the meaning of Section 9.01 (b) of the Loan Regulations: (a) An agreement shall have been entered into with the Development Loan Fund or some alternative source satis- factory to the Bank, on terms satisfactory to the Bank, providing for funds in an aggregate amount of $5,000,000 or the equivalent thereof in lempiras, for the carrying out of the Project, and such agreement shall have become fully effective. SECTION 8.02. The following is specified as an additional matter, within the meaning of Section 9.02 (c) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: (a) that the agreement referred to in Section 8.01 (a) above has been duly authorized or ratified by, and executed and delivered on behalf of the respective parties thereto and constitutes a valid and binding obligation in accordance with its terms. SECTION 8.03. A date 60 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. 13 ARTICLE IX Miscellaneous Section 9.01. The Closing Date shall be March 1, 1961. SECTION 9.02. 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 Alternative address for cablegrams and radiograms: Hacienda Tegucigalpa For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. SECTION 9.03. The Secretario de Estado en el Despacho 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- 14 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 F. VILLAR Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DE 'ELOPMENT By J. BURKE KNAPP Vice President 15 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* March 1, 1961 $ 97,000 September 1, 1961 99,000 March 1, 1962 102,000 September 1, 1962 105,000 March 1, 1963 107,000 September 1, 1963 110,000 March 1, 1964 113,000 September 1, 1964 116,000 March 1, 1965 119,000 September 1, 1965 123,000 March 1, 1966 126,000 September 1, 1966 129,000 March 1, 1967 133,000 September 1, 1967 136,000 March 1, 1968 140,000 September 1, 1968 144,000 March 1, 1969 148,000 September 1, 1969 152,000 March 1, 1970 156,000 September 1, 1970 160,000 March 1, 1971 164,000 September 1, 1971 169,000 March 1, 1972 173,000 September 1, 1972 178,000 March 1, 1973 183,000 September 1, 1973 187,000 March 1, 1974 192,000 September 1, 1974 198,000 March 1, 1975 203,000 September 1, 1975 208,000 March 1, 1976 214,000 September 1, 1976 220,000 March 1, 1977 226,000 September 1, 1977 232,000 March 1, 1978 238,000 * 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 this column represent dollar equivalents determined as for purposes of withdrawal. 16 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 3 years before maturity. . of 1% More than 3 years but not more than 6 years before maturity......... 1/%0 More than 6 years but not more than 11 years before maturity........... 2%% More than 11 years but not more than 16 years before maturity............ 3%% More than 16 years but not more than 18 years before maturity......... 4 More than 18 years before maturity .... 5 17 SCHEDULE 2 Description of Project A. Bufalo-Puerto Cortes Highway A paved, all-weather road approximately 72 km. in length will be constructed between the junction of the north road and the road to La Lima near Bufalo and the docks at Puerto Cortes, bypassing the center of San Pedro Sula and passing through Chamelecon. B. Bridges on Western Highway Bridges and culverts (including culverts on those existing portions of the road which will remain in use) together with approximately 50 km. of approaches and access roads will be constructed in order to make the Western Highway between Chamelecon and Santa Rosa de Copan an all- weather road. C. Southern Highway The base and pavement of the Southern Highway between Tegucigalpa and the intersection of the Southern Highway with the Inter-American Highway at Jicaro Galan will be completed. D. Plans and Specifications for Extension of the Western Road Plans and specifications will be prepared for construction of the section of the Western Highway between Santa Rosa de Copan and the Northern Highway of El Salvador. 18 SCHEDULE 3 Modifications of Loan Regulations No. 3 For the purposes of this Agreement the provisions of Loan Regulations No. 3 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: 1. Section 2.02 shall be deleted.