Nicaragua - Agricultural Development Project : Loan 0130 - Loan Agreement - Conformed

LOAN NUMBER 130 NI Loan Agreement (Agricultural Development Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INSTITUTO DE FOMENTO NACIONAL DATED AUGUST 26, 1955 AGREEMENT, dated August 26, 1955, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and INSTITUTO DE FOMENTO NACIONAL (hereinafter called the Borrower). ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated February 15, 1955 (said Loan Regulations No. 4 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 one million five hundred thousand dollars ($1,500,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations; provided, however, that no withdrawals shall be made from the Loan Account in respect of goods to be incorporated into a milk processing plant until the plans for the construction of such plant and the use of such goods in such plant shall have been approved by the Bank. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per 4 cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. SECTION 2.04. The Borrower shall pay interest at the rate of four and one-fourth per cent (41/4%) per annum on the principal amount of the Loan so withdrawn and out- standing from time to time. SECTION 2.05. Except as the Bank and the Borrower 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 cent (1/2 of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on April 1 and October 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall apply or cause to be applied the proceeds of the Loan exclusively to financing the cost of goods required to carry out the Project described in Schedule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan shall be determined by agreement between the Bank and the Borrower, subject to modification by further agreement between them. SECTION 3.02. The Borrower shall cause all goods fi- nanced out of the proceeds of the Loan to be imported into the territories of the Guarantor and there to be used ex- clusively in the carrying out of the Project. 5 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 General Manager (Gerente General) of the Borrower, and such person or persons as he shall appoint in writing are designated as authorized representa- tives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound financial practices. (b) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof. in the Project, to record the progress of the Project (in- cluding the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the financial condition and operations of the Borrower, and to separate the accounts of its banking activities from the accounts of its non-banking activities; 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 financial condition and operations of the Borrower (including its banking and non-banking activities). SECTION 5.02. (a) The Bank and the Borrower shall co- operate fully to assure that the purposes of the Loan will 6 be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably re- quest with regard to the general status of the Loan. (b) The Bank and the Borrower 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. SECTION 5.03. Except as the Bank shall otherwise agree, the Borrower shall not incur any debt except short-term debt not in excess of the aggregate principal amount of 2,500,000 c6rdobas at any one time existing and maturing not more than one year after the date on which such debt is originally incurred; provided, however, that the fore- going provisions shall not apply to the incurring of debt through utilization, in accordance with the terms of any credit established prior to the date of this Agreement, of any unused amounts available under such credit. SECTION 5.04. The Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any debt, such lien will ipso facto equally and ratably secure the pay- ment 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; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally in- 7 curred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. SECTION 5.05. The Borrower shall pay or cause to be paid all taxes or fees, if any, imposed under the laws of the Guarantor or laws in effect in the territories of the Guaran- tor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agree- ment or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the pro- visions of this Seetion 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 Guarantor. SECTION 5.06. The Borrower shall pay or cause to be paid all taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.07. Except as shall be otherwise agreed be- tween the Bank and the Borrower, the Borrower shall insure or cause to be insured the goods financed with the proceeds of the Loan against risks incident to their purchase and importation into the territories of the Guarantor. Such insurance shall be consistent with sound commercial prac- tice and shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable. SECTION 5.08. The Borrower shall make arrangements satisfactory to the Bank to insure that adequate facilities 8 will be available to service and repair all machinery and equipment purchased out of the proceeds of the Loan. SECTION 5.09. The Borrower shall, if necessary for the carrying out of the Project, make adequate credit available to the users of machinery and equipment purchased out of the proceeds of the Loan on terms and conditions satisfac- tory to the Bank. SECTION 5.10. The Borrower shall not enter into con- tracts with distributors of pasture-improvement equipment and users of land-clearing machinery relating to equipment or machinery purchased out of the proceeds of the Loan, until it has been advised that such contracts are in form and substance satisfactory to the Bank. SECTION 5.11. The Borrower shall not, without the con- sent of the Bank, directly or indirectly make investments amounting in the aggregate to more than 3,000,000 c6rdobas at any one time in the operations of the grain storage facilities of the Guarantor. ARTICLE VI Remedies of the Bank SECTION 6.01. (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, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regu- lations 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- 9 able immediately, anything in this Agreement or in the' Bonds to the contrary notwithstanding. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1957. SECTION 7.02. A date sixty days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SECTION 7.03. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Instituto de Fomento Nacional Managua, Nicaragua For the Bank: International Bank for Reconstruction and Development 1818 H Street, N. W. Washington 25, D. C. United States of America 10 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan 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 RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President INSTITUTO DE FOMENTO NACIONAL By ALFREDO J. SACASA Authorized Representative 11 SCHEDULE 1 Amortization Schedule Principal Payment Amount Outstanding of Principal After Each Payment Date (expressed in (expressed in Payment Due dollars) * dollars) * April 1, 1957 $1,500,000 October 1, 1957 $ 99,000 1,401,000 April 1, 1958 101,000 1,300,000 October 1, 1958 103,000 1,197,000 April 1, 1959 103,000 1,094,000 October 1, 1959 108,000 986,000 April 1, 1960 110,000 876,000 October 1, 1960 111,000 765,000 April 1, 1961 115,000 650,000 October 1, 1961 117,000 533,000 April 1, 1962 84,000 449,000 October 1, 1962 86,000 363,000 April 1, 1963 59,000 304,000 October 1, 1963 60,000 244,000 April 1, 1964 44,000 200,000 October 1, 1964 45,000 155,000 April 1, 1965 30,000 125,000 October 1, 1965 30,000 95,000 April 1, 1966 32,000 63,000 October 1, 1966 32,000 31,000 April 1, 1967 15,000 16,000 October 1, 1967 16,000 * 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 these columns represent dollar equivalents determined as for purposes of withdrawal. 12 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 1 year before maturity . /... 2% More than 1 year but not more than 3 years before maturity ............... 3/4% More than 3 years but not more than 6 years before maturity ................ 1% More than 6 years but not more than 9 years before maturity ............... 11/2% More than 9 years before maturity ........ 2% 13 SCHEDULE 2 Description of the Project The Project forms part of a two-year program of the Borrower for increasing the productivity of Nicaragua's agriculture, and consists of the importation into Nicaragua of machinery, equipment, materials and livestock for utili- zation in land-clearing, erosion control, milk processing, and the improvement of pasture and cattle breeding stock.