Colombia - Small-Scale Industry Project : Loan 1071 - Loan Agreement - Conformed

714 CONFORMED COPY LOAN NUMBER 1071 CO Loan Agreement (Small-Scale Industry Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND BANCO DE LA REPUBLICA DATED JANUARY 16, 1975 CONFORMED COPY LOAN NUMBER 1071 CO Loan Agreement (Small-Scale Industry Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND BANCO DE LA REPUBLICA DATED JANUARY 16, 1975 LOAN AGREEMENT AGREEMENT, dated January 16, 1975, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and BANCO DE LA REPUBLICA (hereinafter called the Borrower). 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 2 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 have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Declaration of Policies and Procedures" means the declaration of lending and investment policy approved by the Board of Directors of Corporacion Financiera Popular (CFP) on October 27, 1974, as amended to the date of this Agreement; (b) "Estatutos" means the Estatutos of CFP, dated November 25, 1969, as amended to the date of this Agreement and as the same may be amended from time to time; (c) "foreign currency" means any currency other than the currency of the Guarantor; (d) "Investment Enterprise" means a privately controlled enterprise to which CFP proposes to make or has made a sub-loan or a technical assistance sub-loan; (e) "Investment Project" means a specific development project for productive purposes within the territories of the Borrower to be carried out by an Investment Enterprise utilizing the proceeds of a sub-loan; 4 (f) "Pesos" and "Col.$" mean the currency of the Guarantor; (g) "Project Agreement" means the agreement between the Bank and CFP of even date herewith, as the same may be amended from time to time, and includes the Schedule to this Agreement; (h) "sub-loan" means a loan made or proposed to be made by CFP out of the proceeds of the Loan to an Investment Enterprise for an Investment Project and "free-limit sub-loan" means a sub-loan, as so defined, which qualifies as a free-limit sub-loan pursuant to the provisions of Section 2.02(b) of this Agreement; (i) "subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by CFP or any Investment Enterprise or by any one or more subsidiaries of CFP or any Investment Enterprise or by CFP or any Investment Enterprise and one or more of its subsidiaries; (j) "Subsidiary Loan" means the loan made by the Borrower to CFP under the Subsidiary Loan Agreement; (k) "Subsidiary Loan Agreement" means the agreement of even date herewith between the Borrower and CFP pursuant to Section 3.02 (a) of this Agreement, as the same may be amended from time to time; (1) "technical assistance" means a technical assistance investment and a technical assistance sub-loan; (m) "technical assistance investment" means an investment to finance consultants' costs of economic and sectoral studies related to small and medium-scale industry and of evaluating CFP's technical assistance programs and organizational improvements; and (n) "technical assistance sub-loan" means a sub-loan made or proposed to be made by CFP to an Investment Enterprise for the purpose of financing technical assistance. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies e .uivalent to five million five hundred thousand dollars ($5,500,000). 5 Section 2.02. (a) The Borrower may withdraw from the Loan Account: (i) such amounts as shall have been disbursed (or, if the Bank shall so agree, amounts required to meet disbursements to be made) by CFP in a currency other than pesos to finance the reasonable cost of equipment, machinery and civil works required for the Investment Project in respect of which the withdrawal is requested; (ii) the equivalent of ninety per cent (90%) of such amounts as shall have been disbursed (or, if the Bank shall so agree, amounts required to meet disbursements to be made) by CFP in pesos to finance equipment, the reasonable cost of machinery and civil works required for the Investment Project in respect of which the withdrawal is requested; and (iii) one hundred per cent (100%) of such amounts as shall have been disbursed (or if the Bank shall so agree, amounts required to meet disbursements to be made) by CFP in pesos to finance technical assistance under a technical assistance investment or a technical assistance sub-loan; provided, however, that no withdrawals shall be made: (i) in respect of payment for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; (ii) on account of amounts disbursed under any sub-loan which by itself or together with any other sub-loan to the sarne Investment Enterprise shall exceed Col.$2,500,000 or Col.$4,000,000 in the case of an Investment Enterprise with total assets over Col.$10,000,000 but not exceeding Col.$20,000,000; and (iii) in respect of a sub-loan oy a technical assistance investment unless (A) the sub-loan or the technical assistance investment shall have been approved by the Bank, or (B) the sub-loan shall be a free-limit sub-loan approved by CFP. (b) A free-limit sub-loan shall be a sub-loan: (i) made or proposed to be made by CFP; and 6 (ii) limited to an amount to be financed under this Agreement which shall not exceed the sum of Col.$1,500,000 when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the Loan for such Investment Project, the foregoing amount being subject to change from time to time as determined by the Bank after informing the Guarantor of the reasons for any such change. (c) Except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made on account of expenditures made by an Investment Enterprise in respect of a sub-loan subject to the Bank's approval, if such expenditures shall have been made before the date of this Agreement or more than 180 days prior to the date on which the Bank shall have received in respect of such sub-loan the application and information required by Section 2.03(a) of this Agreement or, under a free-limit sub-loan, more than 180 days prior to the date on which CFP shall have approved such free-limit sub-loan. Section 2.03. (a) When submitting a sub-loan (other than a free-limit sub-loan) to the Bank for approval, the Borrower shall furnish to the Bank an application, in form satisfactory to the Bank, together with a description of the Investment Enterprise and an appraisal of the Investment Project (including a description of the expenditures proposed to be financed out of the proceeds of the Loan) and the proposed terms and conditions of t:-e sub-loan. (b) When submitting a technical assistance investment to the Bank for approval, the Borrower shall furnish to the Bank an application, in form satisfactory to the Bank, together with a description of the objectives to be pursued with such investment (including a description of the expenditures proposed to be financed out of the proceeds of the Loan) and the proposed terms and conditions of the technical assistance investment. (c) Each request by CFP to the Borrower to make withdrawals from the Loan Account in respect of a free-limit sub-loan shall contain a summary description of the Investment Enterprise and the Investment Project (including a description of the expenditures proposed to be financed out of the proceeds of the Loan) and the terms and conditions of such free-limit sub-loan. The Borrower shall furnish to the Bank a summary of the description of expenditures referred to above. (d) Each request by CFP to the Borrower to make withdrawals from the Loan Account in respect of a technical assistance sub-loan shall contain a summary description of the objectives to be pursued with such sub-loan (including a description of the expenditures proposed to be financed out of the proceeds of 7 the Loan) and the terms and conditions of the technical assistance sub-loan. The Borrower shall furnish to the Bank a summary of the description of expenditures referred to above. (e) Except as the Bank and the Borrower shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (a), (b), (c) and (d) of this Section shall be submitted to the Bank on or before December 31, 1976. (f) In approving a sub-loan or a technical assistance investment or in authorizing withdrawals in respect of a free-limit sub-loan or a technical assistance sub-loan, the Bank shall allocate such part of the Loan as it shall determine to the Investment Project or the technical assistance proposed to be financed and shall notify the Borrower of such allocation. At the request of the Borrower, the Bank shall reduce such allocation by any amounts not required for such Investment Project or technical assistance, and such amounts may be reallocated to other Investment Projects or technical assistance, respectively. Section 2.04. The Closing Date shall be December 31, 1977 or such other date as shall be determined by the Bank. Section 2.05. 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 amount of the Loan allocated from time to time to Investment Projects or technical assistance pursuant to Section 2.03(f) of this Agreement and not withdrawn from the Loan Account. Such charge shall accrue from the several dates on which amounts shall be allocated to Investment Projects or technical assistance to the respective dates on which (a) they are withdrawn from the Loan Account or are cancelled pursuant to Article VI of the General Conditions or (b) the allocation to Investment Projects or technical assistance is reduced in respect of such amounts pursuant to said Section 2.03(f). Section 2.06. The Borrower shall pay interest at the rate of eight per cent (8%) 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 March 15 and September 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. 8 ARTICLE III Description of the Project; Use of the Proceeds of the Loan Section 3.01. The purpose of the Project is to assist CFP in financinc. such productive facilities and resources in Colombia as shall contribute to the ecoi1omic and social development of the country. The Project consists in the financing of: (a) technical assistance under technical assistance investments and technical assistance sub-loans; and (b) Investment Projects through sub-loans to Investment Enterprises in accordance with the Estatutos and the Declaration of Policies and Procedures of CFP. Section 3.02. (a) Except as the Bank shall otherwise agree, the Borrower shall relend the proceeds of the Loan to CFP under a subsidiary loan agreement, satisfactory to the Bank, between the Borrower and CFP, which shall include inter alia the following allocation to CFP of the proceeds of the Loan: (i) an amount equivalent to $500,000 for technical assistance investments and technical assistance sub-l0ans; (ii) an amount of up to the equivalent of $1,875,000 for sub-loans approved by the Bank or CFP pursuant to Section 2.03(a) and (b) espectively, of this Agreement to Investment Enterprises with total assets not exceeding Col.$10,000,000; (iii) an amount of up to the equivalent of $625,000 for sub-loans approved by the Bank or CFP pursuant to Section 2.03(a) and (b), respectively, of this Agreement to Investment Enterprises with total assets over Col.$10,000,000 but not exceding Col.$20,000,000; and (iv) amounts of up to the equivalent of (1) $1,875,000 for the purposes specified in (ii) above and (2) $625,000 for the purposes specified in (iii) above, provided, that: (A) the amounts allocated in (ii) and (iii) above shall have previously been committed in full; (B) the Bank shall have reviewed the interest rates charged on sub-loans, and, if found inappropriate, the Borrower and the Guarantor shall have revised such interest rates in a manner satisfactory to the Bank; and (C) the performance of CFP in carrying out the Project, including Sections 2.07 and 9 2.08 of the Project Agreement, during the period in which the funds allocated in (ii) and (iii) above have been committed, shall have been satisfactory to the Bank. (b) Without any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall cause CFP to perform in accordance with the provisions of the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable CFP to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.03. The Borrower shall not, without the prior agreement of the Bank, suspend or terminate the right of CFP to have access to the proceeds of the Loan under the Subsidiary Loan Agreement or declare the principal amount of the Subsidiary Loan thereunder due and payable prior to the agreed maturity unless the right of the Borrower to withdraw the proceeds of the Loan shall have been suspended or terminated by the Bank or the Bank shall have declared the principal amount of the Loan relent to CFP to be due and payable immediately or a default shall have occurred in the due and punctual payment of any monies payable by CFP to the Borrower and such default shall continue for thirty days after notice thereof shall have been given by the Borrower to CFP. Section 3.04. The Borrower shall furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditures of the proceeds of the Loan. Section 3.05. The Bank and the Borrower shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain records adequate to reflect separately from its other operations and in accordance with consistently maintained sound accounting practices the operations in respect of the Project. 10 (b) The Borrower shall (i) have the records referred to in paragraph (a) hereof for each fiscal year certified in accordance with sound principles consistently applied by an organization 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 such records for such year as so certified and (B) the report of such certification by said organization, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records and the certification thereof as the Bank shall from time to time reasonably request. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified: (a) a default shall occur in the due and punctual payment of any amount payable by CFP to the Borrower under the Subsidiary Loan Agreement; (b) a default shall occur in the performance of any other obligation on the part of CFP under the Subsidiary Loan Agreement; (c) any part of the principal amount of any loan to CFP 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; (d) CFP shall have been unable to pay its debts as they mature or any action or proceeding shall have been taken by CFP or by others whereby any of the property of CFP shall or may be distributed among its creditors; (e) a change shall have been made in the Estatutos or in the Declaration of Policies and Procedures of CFP which shall, in the Bank's judgment, materially and adversely affect the financial condition or operations of CFP; (f) a resolution shall have been passed for the dissolution or liquidation of CFP; (g) the Guarantor or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of CFP or for the suspension of its operations; and 11 (h) a subsidiary or any other entity shall have been created or acquired or taken over by CFP, if such creation, acquisition or taking over would adversely affect the conduct of CFP's business or CFP's financial situation or the efficiency of CFP's management and personnel or the carrying out of the Project. Section 5.02. For the purposes of Section 7.01 of the General Conditions the following additional events are specified: (a) the event specified in paragraph (a) or paragraph (c) or paragraph (e) of Section 5.01 shall occur and shall continue for a period of thirty days; (b) the event specified in paragraph ( or paragraph (h) of Section 5.01 shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, the Guarantor and CFP; and (c) the event specified in paragraph (d) or paragraph (f) or paragraph (g) of Section 5.01 shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of this Loan Agreement within the meaning of Section 12.01(c) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of CFP have been duly authorized or ratified by all necessary corporate and governmental action. (b) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and CFP have been duly authorized or ratified by all corporate and governmental action. (c) The condition of CFP as represented or warranted to the Bank at the date of this Agreement has undergone no material adverse change between such date and the date agreed upon between the Bank and CFP for purposes of this paragraph. (d) The contract for the study referred to in Section 2.09 of the Project Agreement has been concluded. 12 (e) The amendment of CFP's Estatutos referred to in Section 3.08 of the Project Agreement has been made. (f) CFP has employed the staff referred to in Section 3.09 of the Project Agreement. Section 6.02. The following are specified as additional matters within the meaning of Section 12.01(c) of the General Conditions to be included in the opinion or opinions to be furnished to the Bank: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, CFP, and constitutes a valid and binding obligation of CFP in accordance with its terms. (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and CFP and constitutes a valid and binding obligation of the Borrower and of CFP in accordance with its terms. (c) That the amendment of CFP's Estatutos referred to in Section 3.08 of the Project Agreement is valid and binding under the laws of the Guarantor. Section 6.03. The date of April 16, 1975, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Miscellaneous Secticm 7.01. 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: INTBAFRAD Washington, D.C. 13 For the Borrower: Banco de la Repiblica Bogotd, Colombia Cable address: REDESBANCO Bogotd 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 / Gerald Alter Regional Vice President Latin America and the Caribbean BANCO DE LA REPUBLICA By /s/ Oscar Alviar Authorized Representative 14 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* September 15, 1978 230,000 March 15, 1979 240,000 September 15, 1979 250,000 March 15, 1980 265,000 September 15, 1980 270,000 March 15, 1981 280,000 September 15, 1981 295,000 March 15, 1982 305,000 September 15, 1982 320,000 March 15, 1983 330,000 September 15, 1983 340,000 March 15, 1984 360,000 September 15, 1984 370,000 March 15, 1985 385,000 September 15, 1985 405,000 March 15, 1986 415,000 September 15, 1986 440,000 * 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. 15 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 or to Section 2.09(a) of the Loan Agreement: Time of Prepayment Premium Not more than two years before maturity 1-1/4% More than two years but not more than four years before maturity 2-1/2% More than four years but not more than eight years before maturity 4-1/4% More than eight years but not more than ten years before maturity 6-1/2% More than ten years before maturity 8% 16 SCHEDULE 2 Modifications of the General Conditions For the purposes of the Loan Agreement, the provisions of the General Conditions are modified as follows: (1) The following subparagraph (d) is added to Section 3.05: "(d) The Bank and the Borrower may from time to time agree upon arrangements for prepayment of the Loan and the application of such prepayment in addition to, or in substitution for, those set forth in paragraph (b) of Section 3.05." (2) The words "Investment Projects" are substituted for the words "the Project" at the end of Section 5.03. (3) Section 6.03 is deleted and replaced by the following new Section: "Section 6.03. Cancellation by the Bank. If (a) the right of the Borrower to make withdrawals from the Loan Account shall have been suspended with respect to any amount of the Loan for a continuous period of thirty days or (b) by the date specified in paragraph (e) of Section 2.03 of the Loan Agreement no applications or requests permitted under paragraph (a) or paragraph (b) or paragraph (c) or paragraph (d) of such Section shall have been received by the Bank in respect of any portion of the Loan, or having been so received, shall have been denied, or (c) after the Closing Date an amount of the Loan shall remain unwithdrawn from the Loan Account, the Bank may by notice to the Borrower terminate the right of the Borrower to submit such applications or requests or to make withdrawals from the Loan Account, as the case may be, with respect to such amount or portion of the Loan. Upon the giving of such notice such amount or portion of the Loan shall be cancelled."