Colombia - Sixth Development Finance Companies Project - Corporacion Financiera Nacional : Loan 1223 -Subsidiary Loan Agreement- incomplete - Conformed

CONFORMED COPY LOAN NUMBER 1223 CO SUBSIDIARY LOAN AGREEMENT (Sixth Development Finance Companies Project) between BANCO DE LA REPUBLICA and CORPORACION FINANCIERA NACIONAL Dated March 31, 1976 SUBSIDIARY LOAN AGREEMENT AGREEMENT, dated March 31, 1976, between BANCO DE LA RE- PUBLICA (hereinafter called Banco) and CORPORACION FINANCIERA NACIONAL (hereinafter called Financiera). WHEREAS by a loan agreement of even date herewith (hereinafter called the Loan Agreement) between International Bank for Recon- struction and Development (hereinafter called the Bank) and Banco, the Bank has agreed to make to Banco a loan in various currencies equivalent to eighty million dollars ($80,000,000) (hereinafter called the Loan) on the terms and conditions set forth therein; WHEREAS under the terms of said Loan Agreement, Banco has agreed to relend to Financiera part of the proceeds of the Loan under a subsidiary loan agreement satisfactory to the Bank; and WHEREAS the parties hereto have agreed to enter into this Agreement, which is one of the Subsidiary Loan Agreements referred to in Section 3.03 of the Loan Agreement; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement shall have the respective meanings therein set forth and the term "Subsidiary Loan" means the loan provided for under Section 2.01 of this Agreement. * - 3- ARTICLE II The Subsidiary Loan Section 2.01. Banco agrees, subject to the provisions of the Loan Agreement, to relend to Financiera, such amounts in various currencies out of the proceeds of the Loan as shall be withdrawn by Banco from the Loan Account on account of expenditures for eligible sub-loans or investments made by Financiera, on such terms and conditions as are set forth or referred to in this Agreement. Section 2.02. (a) Upon request of Financiera, Banco shall forthwith (i) request the Bank to approve sub-loans or investments in respect of which the approval of the Bank is required or to authorize withdrawals from the Loan Account in respect of free- limit sub-loans or free-limit investments; (ii) make application for withdrawal from the Loan Account of amounts which Banco is entitled to withdraw therefrom in accordance with Section 2.02 of the Loan Agreement for Investment Projects or Technology Im- provement Programs financed by Financiera; and (iii) pay to, or on the order of, Financiera the amounts so withdrawn; provided, however, that if Banco shall determine, after taking into account the economic policies of the Guarantor, that any Investment Project or Technology Improvement Program in respect of which a request for the Bank's approval or authorization to make withdrawals is received from Financiera, shall not make a significant contribution to the economic development of Colombia, Banco may, by notice to the Bank and Financiera setting forth the reasons for such deter- mination, refuse to submit such request for approval or authorization an. the corresponding applications for withdrawal. (b) Financiera shall furnish to Banco for each Investment Project or Technology Improvement Program the documents and other evidence required by paragraph (a) or (b) of Section 2.04 of the Loan Agreement, as the case may be, and such otaer information as Banco shall reasonably request. Section 2.03. Banco shall open a Subsidiary Loan Account on its books in the name of Financiera and shall credit to it the amount of the Subsidiary Loan. Any amount of the Subsidiary Loan shall be deemed to be withdrawn from the Subsidiary Loan Account simultaneously with each withdrawal by Banco from the Loan Account in accordance with Section 2.02 of this Agreement, and in the same amounts and currencies of such withdrawal. Section 2.04. The several portions of the principal amount of the Subsidiary Loan withdrawn from the Subsidiary Loan Account shall be repaid by Financiera to Banco in pesos. Unless the Guaran- tor, the Bank and Banco shall otherwise agree pursuant to the pro- visions of the Loan Agreement, the amounts in pesos to be so repaid by Financiera shall be determined, for each such portion of the Subsidiary Loan, by agreement between Banco and Financiera at the time of the respective withdrawal from the Subsidiary Loan Account, to be either: (a) the peso equivalent of the foreign currency amounts so withdrawn determined as of the respective date of each withdrawal; or (b) the peso equivalent of the value in dollars of the amounts in foreign currency so withdrawn determined as of the respective dates of repayment; 0~ -- provided, however, that: (i) in respect of any portion of the Subsidiary Loan withdrawn for the purpose of making a sub-loan, the choice between paragraph (a) or paragraph (b) of this Section shall be determined by the corresponding repayment provisions of such sub-loan; (ii) any portion of the Subsidiary Loan withdrawn for the purpose of making an investment in an Investment Enterprise referred to in Section 3.06(v) of the Loan Agreement (other than an investment referred to in (iii) below) shall always be repaid in accordance with the provisions of paragraph (b) of this Section; and (iii) any portion of the Subsidiary Loan withdrawn for the purpose of making a minority investment in a New Investment Enterprise for financing an Industrial Decentralization Investment Project shall always be repaid in accordance with the provisions of para- graph (a) of this Section. Section 2.05. Unless the Guarantor, the Bank and Banco shall otherwise agree pursuant to Sections 2.02, 2.03, 3.06, 3.07 and 3.08 of the Loan Agreement, Financiera shall pay to Banco interest in pesos in the following manner: (a) On portions of the Subsidiary Loan repayable in accord- ance with Section 2.04(a) of this Agreement, interest shall be paid at an annual rate of twenty-two per cent (22%), with the exception of those portions of the Subsidiary Loan used for making sub-loans for Technology Improvement Programs where the interest shall be fifteen per cent (15%) per annum. (b) On portions of the Subsidiary Loan repayable in accord- ance with Section 2.04(b) of this Agreement, interest shall be paid at an annual rate of nine and one-quarter per cent (9-1/4%). - 6 - (c) On portions of the Subsidiary Loan used for making minority investments in new Investment Enterprises for financing Industrial Decentralization Investment Projects, interest shall be paid at an annual rate ranging from seventeen per cent (17%) to twenty-two per cent (22%), to be determined by agreement between Banco and Financiera before such minority investment shall have been approved by Banco. (d) Interest on each such portion of the Subsidiary Loan shall: Ci) be calculated on the principal amount of the Subsidiary Loan outstanding at each interest payment date, provided, however, that whenever such principal amount shall be repayable in accordance with Section 2.04(b) of this Agreement, the peso equivalent of each such portion of the Subsidiary Loan shall be determined as of the date of the interest payment to be made; (ii) accrue from the respective dates on which each such portion shall have been withdrawn; and (iii) be computed on the basis of a 360-day year of twelve 30-day months. Section 2.06. (a) Financiera shall pay in pesos to Banco a commitment charge equivalent to one-sixth of the amount of the commitment charge payable by Banco to the Bank pursuant to Section 2.06 of the Loan Agreement, subject to such adjustments as Banco -7- shall from time to time reasonably determine as any portion of the Loan is relent to any of the Financieras. (b) At the written request of Financiera, Banco shall forth- with request the Bank to enter into special ccnmitments in respect of the cost of imported goods required to carry out any Investment Project or Technology Improvement Program approved by the Bank or authorized for withdrawal by the Bank. Such special commitments shall be upon such terms as shall be agreed upon between the Bank and Banco, as provided in the Loan Agreement, and Financiera shall pay to Banco the equivalent in pesos of the amount of such commit- ment charge payable by Banco to the Bank pursuant to Section 3.02 of the General Conditions, such equivalent to be determined as of the respective dates on which such commitment charge is so payable. Section 2.07. (a) Financiera shall repay the principal amount of each portion of the Subsidiary Loan withdrawn from the Subsid- iary Loan Account in accordance with the amortization schedule applicable to the Investment Project or Technology Improvement Program for which such portion shall have been withdrawn. Any such amortization schedule shall provide for full repayment of funds lent or invested by Financiera for any such Investment Project or Technology Improvement Program in approximately equal semi-annual installments, payable on March 31 and September 30 in each year and shall conform to the provisions of Sections 3.06(i), 3.07(iii) and 3.08(iv) of the Loan Agreement. (b) Notwithstanding paragraph (a) of this Section, if an Investment Enterprise shall repay in advance of maturity all or any portion of the principal amount of any sub-loan, or if -8- Financiera shall sell, transfer, assign or otherwise dispose of, for value, a sub-loan or an investment or any part thereof,, Financiera shall repay to Banco on the next following interest payment date an amount of the Subsidiary Loan equivalent to the amount withdrawn from the Subsidiary Loan Account in respect of such sub-loan or investment or part thereof and corresponding to the principal amount of the Loan to be repaid by Banco to the Bank pursuant to Section 2.09 of the Loan Agreement. Section 2.08. Interest and commitment charges shall be payable by Financiera to Banco semi-annually on March 31 and September 30 in each year. Section 2.09. Except as Banco and Financiera shall otherwise agree, Financiera may repay in advance of maturity at par all or part of the principal amount of the Subsidiary Loan and any such repayment shall be applied to the several maturities thereof in inverse chronological order. Section 2.10. Whenever it shall be necessary for the purposes of this Agreement to determine the value in terms of pesos of any foreign currency, such value shall be as determined by the Bank from time to time. -9- ARTICLE III The Project; Use of Proceeds of the Subsidiary Loan Section 3.01. This Subsidiary Loan is made by Banco to Financiera exclusively for the financing of the Project described in Section 3.01 of the Loan Agreement and Financiera shall apply the proceeds thereof exclusively to finance the Investment Projects and Technology Improvement Programs for which they were withdrawn and in accordance with, and subject to, the provisions of the Loan Agreement and of this Agreement. - 10 - ARTICLE IV Particular Covenants of the Financiera Section 4.01. Financiera shall carry out the Project and conduct its operations and affairs in accordance with sound finan- cial and investment standards and practices, under the supervision of qualified and experienced management, and in accordance with its Estatutos and its Statement of Operating Policies And Procedures. Section 4.02. Financiera shall take such measures and action necessary or convenient for the expansion of its operations and for the improvement of appraisal and supervision of Investment Projects and Technology Improvement Programs as shall be agreed from time to time between the Bank and Financiera. Section 4.03. (a) Financiera shall exercise its rights in relation to each of its Investment Projects and Technology Improve- ment Programs financed in whole or in part out of the proceeds of the Loan in such manner as to protect the interests of the Bank, Banco and Financiera. (b) Financiera undertakes that unless the Bank shall otherwise agree, any sub-loan or investment will be made on terms whereby Financiera shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, adequate rights protecting the interests of the Bank, Banco and Financiera, en- abling Banco to carry out its obligations under the Loan Agreement, and including, without limitation, in the case of any such sub-loan and, to the extent that it shall be appropriate, ir tJ>h case of any such investment, the right to: * -11 - (i) cause such Investment Enterprise to carry out and operate the respective Investment Project or Technology Improvement Program with due diligence and efficiency and in accordance with sound technical, managerial and financial standards, including the maintenance of adequate records and documents; (ii) apply to sub-loans the terms and conditions set forth or referred to in Sections 3.06 and 3.07 of the Loan Agreement; (iii) cause such Investment Enterprise to use the proceeds of the Loan exclusively to finance the goods and services required to carry out the Investment Project or Technology Investment Program in respect of which such proceeds were withdrawn and ensure that such goods and services shall be used exclusively in the carrying out of such Investment Project or Technology Improvement Program; (iv) ensure the Bank's and Financiera's rights to inspect such goods and the sites, works, plants and construc- tion included in such Investment Project or Techno- logy Improvement Program, the operation thereof and any relevant records and documents; (v) require that such Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, - 12 .- as shall be consistent with sound business practice and that, without any limitation upon the foregoing, such insurance shall cover marine, transit and other hazards incident to the acquisition, trans- portation and delivery of the goods financed out of the proceeds of the Loan to the place of use or installation, and that any indemnity thereunder shall be payable in a currency freely usable by such Investment Enterprise to replace or repair such goods; (vi) obtain all such information as the Bank, Banco and Financiera shall reasonably request relating to the foregoing and to the administration, operations and financial condition of such Investment Enterprise; (vii) establish and amend the amortization schedule applicable to the respective sub-loan in accordance with Section 2.07 of this Agreement; and (viii) suspend or terminate further access by such Invest- ment Enterprise to the use of the proceeds of the Loan upon failure by such Investment Enterprise to carry out the terms of such sub-loan or investment. Section 4.04. (a) Financiera 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 Investment Enterprises, its Investment Projects and Technology Improvement Programs, the sub-loans and investments and the admin- istration, operations and financial condition of Financiera. -13- (b) Financiera shall maintain records adequate to record the progress of the Project and of each of its Investment Projects and Technology Improvement Programs (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of Financiera. Financiera shall enable the Bank's representatives to examine such records. (c) Financiera shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank, as soon as available but in any case not later than four months after the end of each such year (A) certified copies of its financial statements for such year as so audited, and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of Financiera and the audit thereof as the Bank shall from time to time reasonably request. Section 4.05. (a) Financiera shall cooperate fully with the Bank to assure that the purposes of the Loan will be accomplished. To that end, Financlera shall from time to time, at the request of the Bank exchange views with the Bank through their representa- tives with regard to the progress of the Project, the performance by Financiera of its obligations under this Agreement, the admin- istration, operations and financial condition of Financiera and any other matters relating to the purposes of the Loan. -14- (b) Financiera shall promptly inform Banco and the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan, the mainte- nance of the service of the Subsidiary Loan or the performance by Financiera of its obligations under this Agreement. Section 4.06. (a) Financiera shall consult Banco concerning any proposed amendment of its Estatutos and its Statement of Oper- ating Policies and Procedures and shall not, without the prior approval of Banco, amend, abrogate or waive any provision thereof. (b) Financiera shall transmit to Banco, for its prior ap- proval, any substantial changes proposed to be made in respect of the repayment provisions of any sub-loan. Section 4.07. Without limitation on the obligations of Financiera set forth in Section 2.07(b) of this Agreement, if Financiera shall sell, lease, transfer, mortgage or otherwise dispose of or encumber its property or assets except in the ordi- nary course of its operations as set forth in its Statement of Operating Policies and Procedures, Financiera shall, unless Banco otherwise agrees, promptly repay an amount of the Subsidiary Loan equivalent to the fair value of such property or assets or make other arrangements satisfactory to Banco to protect or secure the interests of Banco. Section 4.08. Financiera shall make all reasonable efforts to (i) raise on an annual basis, if the circumstances prevailing in the capital market within the territories of the Guarantor so permit, resources in such capital market in such amounts as shall -15 - be substantially equivalent to the amounts disbursed in each year by Financiera under this Subsidiary Loan Agreement; and (ii) with a view to raising funds as provided in paragraph (i) of this Sec- tion, cooperate with one or more other Financieras to raise or mobilize, through the sale within the territories of the Guarantor of debt securities or instruments or through increases in the "consolidated capital and surplus of Financiera and all its Finan- cial Subsidiaries" (as defined in Section 4.09(d) of this Agreement), such amounts in pesos as shall be required to increase the total aggregate resources available for the operation of all Financieras during the period August 31, 1975 to August 31, 1976, by an amount equivalent to not less than Col$400 million, or such other amount as shall be agreed by the Bank. Section 4.09. Except as the Bank shall otherwise agree, Financiera shall not incur, or permit any of its Financial Subsid- iaries to incur: (i) any Category I debt if, after the incurring of any such debt, the consolidated Category I debt of Financiera and all its Financial Subsidiaries then incurred and outstanding would be greater than two times the consolidated capital and sur- plus of Financiera and all its Financial Subsidiaries; or (ii) any Category II debt if, after the incurring of any such debt, the consolidated Category II debt of Financiera and all its Financial Subsidiaries then incurred and outstanding would be greater than seven times the consolidated capital and surplus of Financiera and all its Financial Subsidiaries. (a) The term "Category I debt" means any debt incurred by Financiera or any of its Financial Subsidiaries in carrying out those activities authorized under Decree 399 of the Guarantor - 16 - dated March 6, 1975; and the term "Category II debt" means any debt other than a Category I debt incurred by Financiera or any of its Financial Subsidiaries. (b) Debt shall be deemed to be incurred (i) under a loan contract or agreement, on the date and to the extent that the amount of the loan is drawn down and outstanding pursuant to such a loan contract or agreement, and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into, but only to the extent that the guarantee debt is outstanding. (c) The terms "consolidated Category I debt of Financiera and all its Financial Subsidiaries" and "consolidated Category II debt of Financiera and all its Financial Subsidiaries" mean the total amount of debt of Financiera and all its Financial Subsid- iaries, excluding any debt owed by Financiera to any Financial Subsidiary or by any Financial Subsidiary to Financiera or to any other Financial Subsidiary, in regard of, respectively, Category I debt and Category II debt. (d) The term "consolidated capital and surplus of Financiera and all its Financial Subsidiaries" means the aggregate of the total unimpaired paid-up capital and the unallocated surplus and free reserves of Financiera and all its Financial Subsidiaries, after excluding therefrom such amounts as shall represent (i) equity interests of Financiera in any Financial Subsidiary or of any Financial Subsidiary in Financiera or any other Financial Subsidiary and (ii) provisions for probable losses on the out- standing amount of all loans and investments made or guarantees