Mexico - Capital Goods Industries Development Project : Loan 2142 - Amendment to the Loan Agreement - Conformed

/ OFFICIAL DOCUMENTS OAN NUMBER 2142 HE Amendment to the Loan Agre ment (Capital Goods Industries Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and . NACIONAL FINANCIERA S.A. Dated , 1983 LOAN NUMBER 2142 ME AMENDMENT TO THE LOAN AGREEMENT AGREEMENT, dated CA/ TA-6 c 7 , 1983, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and NACIONAL FINANCIERA S.A. (hereinafter called the Borrower). WHEREAS by a Loan Agreement between the Bank and the Borrower dated September 5, 1982 (hereinafter called the Loan Agreement), the Bank made a loan to the Borrower in an amount in various currencies equivalent to $152,300,000 for purposes of assisting the Borrower in the carrying out of a capital goods industries program; WHEREAS subsequent to the signing of such Agreement the Borrower and the United Mexican States have requested the Bank to amend the terms of the Loan Agreement in order that the Loan provided therein may be partially utilized to provide assistance for export activities in Mexico; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context otherwise requires the several terms defined in the Loan Agreement and in the General Conditions (as therein defined) have the respective meaning therein set forth. ARTICLE II Amendment to the Loan Agreement Section 2.01. The addition of the following paragraphs under Section 1.02: "(aa) "Annual Export Plan" means a specific export plan included under Part G of the Project to be carried out by an Export Enterprise over a twelve-month period utilizing the proceeds of an Export Sub-loan; (bb) "Export Enterprise" means an enterprise directly or indirectly engaged in manufacturing, processing or agro- industrial activities or the provision of technical services - 2 - (except for petroleum extraction or basic petro-chemical activities), which has undertaken the carrying out of an Annual Export Plan; (cc) "Export Sub-loan" means a loan made or to be made by FOMEX through a Participating Intermediary to an Export Enterprise out of the proceeds of the PROFIDE Fund and "free-limit Export Sub-loan" means an Export Sub-loan, as so defined, which qualifies as a free-limit Export Sub-loan pursuant to the provisions of Section 2.02 (f) of this Agreement; (dd) "PROFIDE Fund" means the export development fund established and to be operated pursuant to the provision of Section 2.02 (a) of the FOMEX Project Agreement; (ee) "FOMEX" means Fondo para el Fomento de las Exportaciones de Productos Manufacturados, a special fund entrusted by the Guarantor to Banco de Mexico, pursuant to the FOMEX Agreement; such term includes the technical and administrative organization, resources, staff and facilities used or to be used by Banco de Mexico to operate FOMEX; (ff) "FOMEX Agreement" means the Contrato de Fideico- miso dated May 14, 1962, as amended from time to time, between the Guarantor and Banco de Mexico, whereby FOMEX was entrusted to Banco de Mexico; (gg) "FOMEX Project Agreement" means the agreement between the Bank and Banco de Mexico of even date herewith, as such agreement may be amended from time to time, and such term includes all agreements supplemental to the FOMEX Project Agreement; and (hh) "PROFIDE Operating Regulations" means the Procedimientos de Operaci6n del Programa de Financiamiento en Divisas para la Exportaci6n, approved by FOMEX's Comite Tecnico, and referred to in Section 3.01 (a) of the Amendment to the Loan Agreement." Section 2.02. The deletion of paragraphs (g) and (n) of Section 1.02 and their substitution by the following: "(g) "Program Operating Regulations" means the regulations on lending and investment policy dated April 26, - 3 - 1982, approved by the Borrower in the capacity referred to in Section 1.03 (iii) of this Agreement as amended from time to time; (n) "Participating Intermediary" means a credit institution approved by the Trustee or Banco de Mexico, in its capacity as administrator of FOMEX, for participating in the casrying out of Parts C and D of the Project or Part G of the Project, respectively." Section 2.03. The deletion of the word "and" before numeral (ii) in paragraph (a) of Section 2.02, the substitution of the period at the end of such sub-paragraph by a comma followed by the word "and" and the addition of the following sub-paragraph (iii): "(iii) by FOMEX on account of withdrawals made by a Partic ipating Intermediary for an Export Enterprise under an Export Sub-loan to meet the reasonable foreign currency cost of the goods described under Part G of the Project in respect of which the withdrawal from the Loan Account is requested, provided, however, that no withdrawal shall be made in respect of an Export Sub-loan unless the Export Sub-loan has been approved by the Bank or it is a free-limit Export Sub-loan for which the Bank has authorized with- drawals from the Loan Account." Section 2.04. The deletion of paragraph (b) of Section 2.02 and its substitution by the following: "(b) The proceeds of the Loan shall be allocated as follows: Category (1) $48,049,261 equivalent for Sub-loans and Investments for Parts A, C, D, E and F of the Project. Category (2) $2,000,000 equivalent for goods and services for Part B of the Project. Category (3) $80,000,000 equivalent for Export Sub- loans for Part G of the Project. -4- Category (4) $20,000,000 Initial deposit to PROFIDE Fund. Category (5) $2,250,739 equivalent for amount due on account of fee referred to in Section 2.05 of this Agreement. The foregoing allocation of the proceeds of the Loan being subject to change from time to time as determined by the Bank after consultation with the Borrower." Section 2.05. The addition of the following paragraph (f) under Section 2.02 of the Loan Agreement: "(f) A free-limit Export Sub-loan shall be any Export Sub-loan to an Export Enterprise for an amount not exceeding $2,500,000 equivalent when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the PROFIDE Fund to such Export Enterprise." Section 2.06. The deletion of sub-paragraph (e) (ii) of Section 2.02 and its substitution by the following: "expenditures by an Investment Enterprise or an Export Enterprise, as the case may be, in respect of a Sub-loan or Investment or an Export Sub-loan subject to the Bank's approval if such expenditures shall have been made more than one hundred eighty days prior to the date on which the Bank shall have received in respect of such Sub-loan or Invest- ment or Export Sub-loan the application and information required by Section 2.03 (a) of this Agreement or Section 2.03 (a) of the FOMEX Project Agreement, as the case may be, or, in respect of a free-limit Sub-loan or free-limit Investment or free-limit Export Sub-loan, more than one hundred eighty days prior to the date on which the Bank shall have received in respect of such free-limit Sub-loan or free-limit Investment or free-limit Export Sub-loan the request and information required by Section 2.03 (b) of this Agreement or 2.03 (b) of the FOMEX Project Agreement, as the case may be." Section 2.07. The substitution of the period at the end of paragraph (e) of Section 2.02, the addition thereafter of the word "or" and the addition of the following sub-paragraph (ix): - 5 - "(ix) expenditures by an Export Enterprise to be financed out of the proceeds of an Export Sub-loan, if the principal amount withdrawn and outstanding of the Export Sub-loans made to such Export Enterprise, when added to the proposed Export Sub-loan, exceeds the lower of: (A) 60% of the estimated export earnings under the Export Enterprise's Annual Export Plan, or (B) $5,000,000." Section 2.08. The addition under Section 2.02 of the Loan Agreement of the following paragraph (g): "(g) (i) The Bank shall, promptly at the request of the Borrower, withdraw on behalf of the Borrower from the Loan Account and make available to Banco de Mexico, in its capacity as administrator of FOMEX, for deposit in the PROFIDE Fund the amount of $20,000,000 dollars. Thereafter, at the request of the Borrower, the Bank shall further so withdraw from the Loan Account and deposit into the PROFIDE Fund such amounts as shall be required to reim- burse FOMEX for disbursements made out of the PROFIDE Fund for Export Sub-loans included under Part G of the Project which are eligible for financing under this Agreement, provided, however, that in the event the amount of the undisbursed balance in the PROFIDE Fund exceed $25,000,000, the Bank may, after consultation with the Borrower, refrain from making further deposits into the PROFIDE Fund. Except as the Bank shall otherwise agree, each such deposit after the first deposit shall be withdrawn by the Bank from the Loan Account in accordance with the provisions of sub-paragraph (a)' (iii) above and in the same respective amounts as have been justified by the evidence supporting the request for such deposit furnished pursuant to sub-paragraph (ii) below. (ii) Prior to or at the time of each request by the Borrower for a deposit by the Bank into the PROFIDE Fund, the Borrower shall furnish to the Bank, in respect of any payments made out of the PROFIDE Fund an application for withdrawal on the basis of certificates of expenditure showing that the payment was made on account of the reasonable price of goods required for Part G of the Project -6- and to be financed out of the proceeds of the Loan in accordance with sub-paragraph (a) (iii) above. (iii) If the Bank shall have determined that any payment out of the PROFIDE Fund (A) was made for any expenditure or in any amount not eligible for financing by withdrawal from the Loan Account, or (B) was not justified by the certificates of expenditure furnished pursuant to sub-paragraph (ii) above, the Bank shall notify the Borrower and Banco de Mexico of such circumstances, and if after a period of 30 days from the issuance of such notice an amount equal to the amount of such payment or the portion thereof not so eligible or justified has not been deposited by Banco de Mexico into the PROFIDE Fund, the Bank may refrain from making further deposits into such Fund. (iv) Notwithstanding the provision of sub-paragraph (i) above, when the withdrawals from the Loan Account deposited into the PROFIDE Fund shall have reached the equivalent of $80,000,000, the Bank shall be entitled, after consultations with the Borrower, to reduce the percentage of disbursements for expenditures under Part G of the Project or take any other action which will ensure the Bank that by the time the total amount of the loan allocated to Part G of the Project has been disbursed all deposits (including the amount corresponding to the initial deposit) made by the Bank into the PROFIDE Fund were made on account of the reasonable cost of goods or services eligible for financing out of the proceeds of the loan in accordance with sub-paragraph (a) (iii) above." Section 2.09. The deletion of Section 3.01 and its substitu- tion by the following: "Section 3.01. (a) The Borrower shall enter into contractual arrangements with the Guarantor in terms satisfactory to the Bank, providing for, inter alia, (i) the transfer of the proceeds of the Loan to the Guarantor in the same terms and conditions as those of the Loan; (ii) the designation of the Borrower as administrator for the Guaran- tor for purposes of executing the Guarantor's capital goods -7- industries development program, including the administration of the Loan proceeds assigned under Categories (1) and (2) of Section 2.02 (b) of this Agreement; (iii) the Borrower's obligation to deposit on behalf of the Guarantor into the PROFIDE Fund the proceeds of the Loan allocated under Category (3) of Section 2.02 (b) of this Agreement pursuant to the provisions set forth in Section 2.02 (a) of this Agreement and 2.02 of the FOMEX Project Agreement; (iv) the Borrower's obligation (in its capacity as administrator for the Guarantor referred to in (ii) above) to use the proceeds accrued to the Borrower from the repayment of the proceeds of the Loan pursuant to the arrangements referred to in paragraph (b) below exclusively for making loans and invest- ments for the same purposes, and in similar terms and conditions as those of the Project (except 'arc G of the Project). (b) the Borrower shall, in .its capacity as administra- tor pursuant to sub-paragaraph (a) (ii) above: (i) enter into contractual arrangements, satisfactory to the Bank, with the Trustee, Banco Mexicano SOMEX and FISOMEX pro- viding, inter alia, for the terms and conditions for the lending of the proceeds of the Loan allocated under Category (1) of Section 2.02 (b) of this Agreement to enable each of the above-mentioned entities to carry out their respective Part of the Project; and (ii) make arrangements, satisfac- tory to the Bank for the lending to itself of the proceeds of the Loan required to carry out Parts A and B of the Project. (c) Except as the Bank shall otherwise agree, the Borrower shall not change or fail to enforce any provision of the arrangements referred to in paragraphs (a) and (b) above." Section 2.10. The substitution of paragraph (a) of Section 4.01 by the following: "(a) The purposes of the Project are: (i) to assist the Borrower, the Trustee, Banco Mexicano SOMEX and FISOMEX in financing such productive facilities and resources in Mexico as will contribute to the economic development of the country; and (ii) provision of foreign exchange financing to exporters in Mexico to acquire essential imported inputs, -8- spare parts and services for the carrying out of their exporting operations." Section 2.11. The addition of the following Part to the description of the Project in paragraph (b) of Section 4.01: "FOMEX G. Sub-loans consisting of the financing of imported raw materials, components, spare parts and services for Export Enterprises." Section 2.12. The deletion of paragraph (b) of Section 5.01 and its substitution by the following: "(b) The Borrower shall in the capacity referred to in Section 3.01 (a) (ii) of this Agreement, open on its books a Project Account in order to maintain records adequate to reflect the operations, receipts and payments for or in connection with the carrying out of the Project (except Part G of the Project), all in accordance with consistently maintained sound accounting practices." Section 2.13. The deletion of paragraphs (f), (g) and (h) of Section 6.01 and their substitution by the following: "(f) the Trustee shall have failed to perform any of its obligations under the Banxico Project Agreement, or Banco Mexicano SOMEX or FISOMEX shall have failed to perform any of its obligations under the SOMEX Project Agreement or Banco de Mexico shall have failed to perform any of its obligations under the FOMEX Project Agreement; (g) a change shall have been made in the Trust Agreement or the FOMEX Agreement which may adversely and materially affect the carrying out of the Project or the financial position, organization or other resources of FONEI or FOMEX, respectively; (h) a change shall have been made in the, FONEI Operating Regulations or the PROFIDE Operating Regulations which may materially and adversely affect the carrying out of the Project; and" Section 2.14. The addition of the following paragraph (i) under Section 6.01: -9- "(i) a change shall have been made to the Decreto de Control de Cambios published in the Diario Oficial de la Federacion on December 13, 1982, or other pertinent foreign exchange control instructions or regulations which may adversely and materially affect the carrying out of Part G of the Project." Section 2.15. The deletion of paragraph (a) of Section 6.02 and its substitution by the following: "(a) the event specified in paragraph (a) or paragraph (b) or paragraph (g) or paragraph (h) of Section 6.01 shall occur;" ARTICLE III Effectiveness Section 3.01. This Agreement shall come into force and effect upon fulfillment, in terms satisfactory to the Bank, of the following conditions: (a) that FOMEX shall have issued and put into full force and effect the PROFIDE Operating Regulations in terms satisfactory to the Bank; (b) that the Bank has been furnished with evidence that the contractual arrangements referred to in Section 3.01 (a) of the Loan Agreement and Section 3.08 (a) and (b) of the Guarantee Agreement have been executed; (c) that the PROFIDE Fund has been established; (d) that arrangements, satisfactory to the Bank, have been made to enable Export Enterprises to utilize: (i) the proceeds of the Export Sub-loans for the importation of the goods and services required for the carrying out of their Annual Export Plans, and (ii) a portion of their foreign currency export earnings to meet the service of their respective Export Sub-loans; and (e) that the Bank has been furnished with legal opinions in terms satisfactory to the Bank from counsel acceptable to the Bank covering the following matters: - 10 - (i) that this Amendment to the Loan AgreemenitL has been duly authorized or ratified by the Borrower, and is legally binding upon the Borrower in accordance with its terms; (ii) that the Amendment to the Guarantee Agreement has been duly authorized or ratified by the Guarantor, and is legally binding upon the Guarantor in accordance with its terms; (iii) that the FOMEX Project Agreement has been duly authorized or ratified by Banco de Mexico, and is legally binding upon Banco de Mexico, in accordance with its terms; and (iv) that the contractual arrangements between the Borrower and the Guarantor and between the Guarantor and FOMEX referred to in Section 3.01 (a) of the Loan Agreement and Section 3.08 (a) and (b) of the Guarantee Agreement, respectively, are legally Y:nding upon the respective parties thereto in accordance with their terms. - 11 - 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 Latin America and the Caribbean NACIONAL FINANCIERA S.A. By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this d day of 4 M 198..3. FOR SECRETARY