Mexico - Tropical Agricultural Development Project : Loan 1553 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1553 ME Loan Agreement (Tropical Agricultural Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NACIONAL FINANCIERA, S.A. Dated September 27, 1978 LOAN NUMBER 1557 ME LOAN AGREEMENT AGREEMENT, dated September 27, 1978, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and NACIONAL FINANCIERA, S.A. (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 3 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) "Pilot Projects Area" means the total area occupied by the six pilot projects included in the Project, each one of them with an area ranging from 2,000 to 20,000 hectares. (b) "Project Area" means an area of about 500,000 hectares located in the tropical lowlands on the Gulf Coast and Southeast regions of Mexico and includes the Pilot Projects Area. (c) "INIA" means Instituto Nacional de Investigaci6nes Agricolas of the Guarantor. (d) "INIP" means the Instituto Nacional de Investigaci6nes Pecuarias of the Guarantor. (e) "CSAT" means the Colegio Superior de Agricultura Tro- pical of the Guarantor. (f) "INCAFOR" means the Direcci6n General de Investigact6n y Capacitaci6n Forestales of the Guarantor. -2- (g) "Law" means the law of the Guarantor published in the Diario Oficial of December 31, 1954 establishing the Fondo de Garantia y Fomento para la Agricultura, Ganaderia y Avicultura, and includes its Reglamento of May 6, 1955. (h) "Trust Agreement" means the Contrato de Fideicomiso dated June 24, 1955 between the Guarantor and Banxico whereby the Fondo de Garantla y Fomento para la Agricultura, Ganaderfa 7 Avicultura was entrusted to Banxico as trustee pursuant to the Law. (i) "Special Trust Agreement" means the Contrato de Fidei- comiso dated August 26, 1965 between the Guarantor and Banxico; and "Special Trust Fund" means the Fondo Especial de Financiamien- tos Agropecuarios established by the Special Trust Agreement. (j) "Fondo" means the technical and administrative organi- zation, resources, staff and facilities used or to be used by Banxico to operate the Fondo de Garantia y Fomento para la Agricultura, Ganaderia y Avicultura and the Special Trust Fund. (k) "Banxico" means Banco de Mexico, S.A., as trustee of Fondo. (1) "Project Agreement" means the agreement between the Bank and Banxico of even date herewith for purposes of the execution of Part C of the Project, as such agreement may be amended from time to time; and such term includes all agreements supplemental to the Project Agreement and all schedules thereto. (i) "Participating Banks" means any public credit institu- tion approved by the Bank and any private credit institution approved by Banxico to participate in the carrying out of Part C of the Project. (n) "Sub-borrower" means a farmer or a group of farmers which qualifies as a beneficiary of agricultural credit in accor- dance with Ley General de Cr6dito Rural of the Guarantor pub- lished in the Diario Official of April 5, 1976, as amended on December 30, 1977, living in the Pilot Projects Area and to which a Participating Bank proposes to make or has made a sub-loan on the terms and conditions set forth in the Schedule to the Project Agreement. -3- (o) "Sub-loan" means a medium- or long-term sub-loan made or proposed to be made under Part C of the Project by a Partici- pating Bank to a sub-borrower out of the proceeds of the Loan. 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 equivalent to fifty-six million dollars ($56,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expendi- tures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 1 to the Guarantee Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 2 to the Guarantee Agreement. Section 2.04. The Closing Date shall be December 31, 1983 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. 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 principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of seven and one-half per cent (7.50%) 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 semiannually on May 1 and November 1 in each year. -4- Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 2 to this Agreement. ARTICLE III Transfer of Loan Proceeds Section 3.01. The Borrower shall make the following con- tractual arrangements satisfactory to the Bank: (a) with the Guarantor providing, inter alia, (i) for the transfer to the Guarantor of part of the proceeds of the Loan for the purpose of carrying out the Project, except Part C of the Project, and (ii) for the transfer by the Guarantor to the Borrower of such funds as the Borrower shall be required to pay to the Bank on account of principal, interest and other charges on the Loan; and (b) with Banxico providing, inter alia, for the transfer to Banxico of part of the proceeds of the Loan for the purpose of carrying out Part C of the Project. Except as the Bank shall otherwise agree, the Borrower shall not change or fail to enforce any provision of such arrangements. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any external debt. (b) 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 external debt, such lien will lpso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such pro- perty; or (B) any lien arising in the ordinary course of banking transactione and securing a debt maturing not more than one year after the date on which it is originally incurred. -5- 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 pursuant to paragraph (k) thereof: (a) a default shall have occurred in the performance of any covenant or agreement on the part of Banxico under the Project Agreement; and (b) a change shall have been made in the Law or in the Trust Agreement or in the Special Trust Agreement, which shall adversely and materially affect the carrying out or operation of the Project. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Guarantor, the Borrower and Banxico; and (b) any event specified in paragraph (b) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following are specified as additional L_t- ters, within the meaning of Section 12.02 (c) of the General Con- ditions, 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, Banxico and constitutes a valid and binding obligation of Banxico in accor- dance with its terms; (b) that the arrangements referred to in Section 3.01 of this Agreement are legally binding on the parties thereto; and -6- (c) that all necessary acts, consents and approvals to be performed or given by the Guarantor, its political subdivisions or agencies or by any agency of any political subdivision or by Banxico or pursuant to the Law, the Trust Agreement or the Special Trust Agreement or otherwise to be performed or given in order to authorize the carrying out of the Project and to enable the Guarantor, the Borrower and Banxico to perform all of the respective covenants, agreements and obligations of the Guarantor, the Borrower and Banxico in the Guarantee Agreement, the Loan Agreement and the Project Agreement contained, together with all necessary powers and rights in connection therewith, have been duly and validly performed or given and no other such acts, consents and approvals are required to be performed or given for said purpose. Section 6.02. The date December 27, 1978, is hereby speci- fied for the puzpose of Section 12.04 of the General Conditions. ARTICLE VII Addresses Section 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: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Borrower: Nacional Financiera, S.A. Isabel la Catolica 51 Mexico 1, D.F. Mexico -7- Cable address: Telex: NAFIN NAFIN 383-1775765 Mexico City Mexico City 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/ Nicolas Ardito-Barletta Regional Vice President Latin America and the Caribbean NACIONAL FINANCIERA, S.A. By /s/ J. Espinosa de los Reyes Authorized Representative -8- SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed Pilot Projects (1) Civil works, equip- 14,700,000 49% ment and consulting services (2) Sub-loans under 11,300,000 49% of payments Part C.1 of made by Fondo the Project to Participat- ing Banks in respect of sub- loans under Part C.1 of the Project Research (Part E of the Project) (3) Civil works, equip- ment and furniture for research stations: (a) INIA 1,600,000 49% (b) INIP and INCAFOR 1,000,000 49% -9- Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (4) Vehicles, farm and scientific equipment, and chemical reagents: (a) INIA and INIP 1,500,000 49% (b) INCAFOR 400,000 49% (5) Scholarships, salaries, 1,900,000 49% travel and living ex- penses for visiting scientists, and library equipment and materials Extension (6) Civil works, equip- 700,000 49% ment and furniture for the Training Center included in Part D of the Project (7) Salaries of exten- 6,000,000 49% sion workers and of the staff of the Training Center included in Part D of the Project (8) Vehicles, equipment 1,300,000 49% and materials for extension services (9) Unallocated 15,600,000 TOTAL 56,000,000 - 10 - 2. The disbursement percentages have been calculated in com- pliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the terrItory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) payments made for expenditures in respect of a specific pilot project included in the Project, unless such pilot project has been appraised in a manner satisfactory to the Guarantor and the Bank and the results of such appraisal are satisfactory to the Guarantor and the Bank; (c) Categories (3) (b) and (4) (b) on account of payments made for expenditures in respect of a specific research program, unless such program has been appraised in a manner satisfactory to the Guarantor and the Bank and the results of such appraisal are satisfactory to the Guarantor and the Bank; and (d) payments made for consulting services exceeding 10% of the cost of civil works financed under Category (1). 4. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Cate- gory, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank and the Borrower are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, - 11 - reduce the disbursement percentage then applicable to such expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. If the Bank, after consultation with the Borrower, shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reason- able opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 12 - SCHEDULE 2 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each May 1 and November 1 beginning November 1, 1982 through November 1, 1994 2,155,000 On May 1, 1995 2,125,000 * 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 equiva- lents determined as for purposes of withdrawal. -13 - 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: Time of Prepayment Premium Not more than three years before maturity 1.30% More than three years but not more than six years before maturity 2.65% More than six years but not more than eleven years before maturity 4.85% More than eleven years but not more than fifteen years before maturity 6.60% More than fifteen years before maturity 7.50% - 14 - SCHEDULE 3 Modifications of General Conditions For the purpose of this Agreement, the provisions of the General Conditions are modified as follows: (a) Paragraph 11 of Section 2.01 shall read as follows: "The term 'Project' means the project for which the Loan is granted, as described in Schedule 1 to the Guarantee Agreement and as the description thereof shall be amended from time to time by agreement between the Guarantor, the Bank, the Borrower and Banxico." (b) Section 6.06 shall read as follows: "Effectiveness of Provisions after Suspension for Cancellation. Notwithstanding any cancellation or suspension, all the provisions of the Loan Agreement, the Guarantee Agreement and the Project Agreement shall continue in full force and effect except as in this Article specifically provided." (c) Section 10.01 shall read as follows: "Enforceability. The rights and obligations of the Bank, the Borrower, the Guarantor, and Banxico under the Loan Agreement, the Guarantee Agreement, and the Project Agreement shall be valid and enforceable in accordance with their terms notwithstanding the law of any State, or political subdivision thereof, to the contrary. Neither the Bank nor the Borrower nor the Guarantor nor Banxico shall be entitled in any proceeding under this Article to assert any claim that any provision of these General Conditions or of the Loan Agreement or the Guarantee Agreement or the Project Agreement is invalid or unenforceable because of any provision of the Articles of Agreement of the Bank." (d) Section 10.02 shall read as follows: -15 - "Obligations of the Guarantor. The obligations of the Guarantor under the Guarantee Agreement shall not be discharged except by performance and then only to the extent of such performance. Such obligations shall not be subject to any prior notice to, demand upon or action against the Borrower or Banxico or to any prior notice to or demand upon the Guarantor with regard to any default by the Borrower or Banxico, and shall not be impaired by any of the following: any extension forbearance or concession given to the Borrower or Banxico; any assertion of, or failure to assert, or delay in asserting, any right, power or remedy against the Borrower or Banxico or in respect of any security for the Loan; any modification or amplification of the provisions of the Loan Agreement or the Project Agreement contemplated by the terms thereof; any failure of the Borrower or Banxico to comply with any require- ment of any law of the Guarantor." (e) Section 10.03 shall read as follows: "Failure to Exercise Rights. No delay in exercising, or omission to exercise, any right, power or remedy accruing to any party under the Loan Agreement or Guarantee Agreement or Project Agreement upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof or an acquies- cence in such default; nor shall any action of such party in respect of such default, or any acquiescence by it in any default, affect or impair any right, power or remedy of such party in respect of any other subsequent default."