Nicaragua - Agricultural Machinery Project : Loan 0044 - Loan Agreement - Conformed

LOAN NUMBER 44 NI Loan Agreement (Agricultural Machinery Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND BANCO NACIONAL DE NICARAGUA DATED JUNE 7, 1951 PRESS OF BYRON S. ADAMS loan greement AGREEMENT, dated June 7, 1951, between INTERNA- TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank) and BANCO NACIONAL DE NICARAGUA (hereinafter called the Borrower). ARTICLE I The Loan SECTION 1.01. The Bank agrees to lend to the Borrower, on the terms and conditions hereinafter in this Agreement set forth or referred to, the sum of one million two hundred thousand dollars ($1,200,000), or the equivalent in curren- cies other than dollars. SECTION 1.02. The parties to this Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated December 6, 1950 (hereinafter called the Loan Regulations), a copy of which has been furnished to the Borrower, with the same force and effect as if they were fully set forth herein. SECTION 1.03. The Bank shall open a Loan Account on its books in the name of the Borrower and shall cr.3dit 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 The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. Copies of forms of withdrawal applications have been delivered to the Bor- rower. SECTION 1.04. 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charge at the rate of three quarters of one per cent (% of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. For the pur- 4 poses of Section 2.02 of the Loan Regulations the term "Effective Date" shall mean the Effective Date or Au- gust 15, 1951, whichever shall be the earlier, or such other date as shall be agreed upon between the Bank and the Borrower. SECTION 1.05. The Borrower shall pay interest at the rate of four per cent (4%) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 1.06. Interest and commitment charge shall be payable semi-annually on March 15 and September 15 in each year. SECTION 1.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE II Use of Proceeds of the Loan SECTION 2.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively to the cost of goods which will be required for the carrying out of the Project as do- scribed in Schedule 2 attached hereto. The specific goods to be purchased out of the proceeds of the Loan shall be determined by agreement between the Bank and the Bor- rower, and the list of such goods may be modified from time to time by agreement between them. SECTION 2.02. The Borrower shall cause all goods pur- chased in whole or in part with the proceeds of the Loan to be used in the territories of the Guarantor exclusively in the carrying out of the Project. 5 ARTICLE III Bonds SECTION 3.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 3.02. The General Manager (Gerente General) of the Borrower and such person or persons as he shall appoint in writing are designated as authorized represen- tatives of the Borrower for the purposes of Section 6.12(a) of the Loan Regulations. ARTICLE IV Particular Covenants SECTION 4.01. (a) The Borrower will carry out the Proj- ect with due diligence and efficiency. (b) The Borrower will afford to the Bank all reasonable opportunity to inspect any and all goods paid for out of the proceeds of the Loan and any relevant records and documents and will furnish to the Bank all such informa- tion as the Bank shall reasonably request relating to the end-use of such goods. SECTION 4.02. (a) The Borrower will maintain or cause to be maintained books, accounts and records adequate to identify the goods purchased ini whole or in part with the proceeds of the Loan, to disclose the end-use thereof in the Project, to record the progress of the Project and to reflect the operations and transactions of the Borrower in connec- tion with the Project. (b) The operations and transactions of the Borrower in connection with the Project will be administered and accounted for by the Borrower separately from its other activities. SECTION 4.03. (a) The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan 6 shall be accomplished. To that end, each of them shall fur- nish 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 in- formation with respect to the operations and financial con- dition of the Borrower and the Project. The Borrower and the Bank shall from time to time exchange views through their representatives with regard to matters relat- ing to the purposes of the Loan and the maintenance of the service thereof; and the Borrower shall promptly inform the Bank of any condition that shall interfere with, or threaten to interfere with, the accomplishment of the pur- poses of the Loan or the maintenance of the se-vice thereof. (b) If the Borrower shall propose to incur any sub- stantial external debt, the Borrower will inform the Bank of the proposal and, before the taking of the proposed ac- tion will afford the Bank all opportunity which is reason- ably practicable in the circumstances to exchange views with the Borrower with respect thereto; provided, how- ever, that the foregoing provisions shall not apply to: (i) the incurring of additional external debt through utiliza- tion, in accordance with the terms of any credit established prior to the date of this Agreement, of a ny unused amounts available under such credit; or (ii) the incurring by the Borrower in the ordinary course of its business of any indebtedness maturing not more than two years after its date. SECTTON 4.04. It is the mutual intention of the Borrower and the Bank that no other debt shall enjoy any priority over the Loan by way of a lien on assets of the Borrower. To that end, the Borrower specifically undertakes that, ex- cept as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any debt, such lien shall 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 creo- 7 [ion of any such lien express provision shall be made to that effect. However, this Section shall not apply to: (i) any lien created on any 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 debt maturing not more than one year after its date and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien to secure debt incurred in the ordinary course of the Borrower's banking business and maturing not more than one year after its date. SECTION 4.05. The Borrower will pay or cause to be paid any and all taxes that shall be imposed upon this Agree- ment, the Bonds or the Guarantee Agreement, or the execu- tion or delivery thereof, or the registration thereof with any agency or official of the Guarantor, or the payment of principal, interest or other charges thereunder. Such principal, interest and other charges will be paid without deduction for and free of any and all such taxes iroposed by the Guarantor or any taxing authority thereof or there- in. This Section shall not apply to taxation of payments made under the provisions of any Bond to a holder thereof, other than the Bank, when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 4.06. Except as shall be otherwise agreed in writing between the Bank and the Borrower, the Borrower will insure or cause to be insured with responsible insurers all goods purchased in whole or in part with the proceeds of the Loan. Such insurance shaTl cover such marine, transit and other hazards incident to delivery of the goods into the territories of the Guarantor, and shall be for such amounts, as shall be consistent with sound commercial prac- tice. Each contract of insurance shall be payable in dollars or in the currency in which the cost of the goods insured ihereunder shall be payable. 8 ARTICLE V Remedies of the Bank SECTION 5.01. If any event specified in paragraphs (a) or (b) of Section 5.02 of the Loan Regulations shall occur and shall have continued for a period of thirty days or if an event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall have continued 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 op- tion, 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 notwithstanding. ARTICLE VI Miscellaneous SECTION 6.01. The Closing Date shall be July 1, 1952. SECTION 6.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N. W. Washington 25, D. C. For the Borrower: Banco Nacional de Nicaragua Managua Nicaragua 9 SECTION 6.03. The date specified for the purposes of Sec- tion 9.04 of the Loan Regulations shall be August 15, 1951. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECON- STRUCTION AND DEVELOPMENT By EUGENE R. BLACK President BANCO NACIONAL DE NICARAGUA By LE6N DEBAYLE Authorized Representative 10 SCHEDULE 1 Amortization Schedule Principal Amount Outstanding Payment of After Date Payment Due Principal Each Payment September 15, 1953 ........ $1,200,000 March 15, 1954 $ 37,000 1,163,000 September 15, 1954 38,000 1,125,000 March 15, 1955 131,000 994,000 September 15, 1955 134,000 860,000 March 15, 1956 136,000 724,000 September 15, 1956 139,000 585,000 March 15, 1957 142,000 443,000 September 15, 1957 145,000 298,000 March 15, 1958 148,000 150,000 September 15, 1958 150,000 ........ 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 6 months before maturity % More than 6 months and not more than 2 years and 6 months before maturity %4 More than 2 years and 6 months and not more than 4 years and 6 months before maturity 1% More than 4 years and 6 months before maturity 1%% 11 SCHEDULE2 Description of the Project 1. The project is a program for the purchase and impor- tation into Nicaragua, as hereinafter described and pursu- ant to such arrangements and upon such terms as shall be agreed upon in writing between the Bank and the Borrower, of agricultural machinery and spare parts and repair and maintenance equipment therefor, and for the utilization on Nicaraguan farms of such machinery and parts in the pro- ductive development of Nicaraguan agricultural resources. 2. The machinery to be imported shall include tractors and complementary equipment therefor, such as plows, har- rows, cultivators, seeding machines, crop dusters, harves- ters, threshing machines; land-clearing and earth-moving equipment; and other agricultural productive equipment. 3. The Borrower will take the necessary steps to insure that the distribution to the farmers of the agricultural machinery will be made on as broad and equitable a basis as possible. 4. The agricultural machinery will be purchased and im- ported by bona fide dealers for resale by them to farmers who have received loans from the Borrower to finance all or part of the purchase price. 5. The Borrower will make arrangements adequate to insure that none of such machinery shall be diverted to other than agricultural uses. 6. The Borrower will make arrangements to insure that services of agIic'ultural machinery technicians and an ade- quate supply of spare parts and other equipment necessary for the maintenance and repair of the agricultural ma- chinery will be available. 7. Amounts received by the Borrower on account of re- payments of the loans referred to in paragraph 4 hereof will, to the extent of the local currency equivalent of the 12 foreign exchange cost of the machinery financed by such loans, be held by the Borrower as a fund for use in the purchase of the currency required by the Borrower to repay the Loan and the Bonds.