Tunisia - Second Agricultural Credit Project : Loan 1340 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1340 TUN LOAN AGREEMENT (Second Agricultural Credit Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANQUE NATIONALE DE TUNISIE Dated December IT, 1976 LOAN AGREEMENT AGREEMENT, dated December 17, 1976, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and BANQUE NATIONALE DE TUNISIE (hereinafter called the Borrower). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the project described in Schedule 2 to this Agreement by making the Loan as herewith provided; (B) by the Development Credit Agreement dated July 12, 1971, between the Republic of Tunisia (hereinafter called the Guarantor) and the International Development Association (here- inafter called the Association), the Association made a credit to the Guarantor to assist the Guarantor in the financing of a first agricultural credit project (hereinafter called the First Project), in an amount in various currencies equivalent to three million dollars ($3,000,000), upon the terms and conditions set forth in the said Development Credit Agreement; (C) by the Loan Agreement dated July 12, 1971 between the Bank and the Borrower, the Bank made a loan to the Borrower to assist in the financing of the First Project in an amount in var- ious currencies equivalent to five million dollars ($5,000,000), upon the terms and conditions set forth in the said Loan Agree- ment; (D) by the Guarantee Agreement (Second Agricultural Credit Project) of even date herewith between the Guarantor and the Bank, the Guarantor has agreed to guarantee the Loan and to undertake certain obligations with respect to the Project. -2- WHEREAS the Bank has agreed, on the basis inter alia, of the foregoing to make the Loan to the Borrower upon the terms and con- ditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: * -3- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following ad- ditional terms have the following meanings: (a) "Tunisian Dinars" and the letter "D" mean dinars in the currency of the Guarantor; (b) "BNT Statutes" means the statutes of the Borrower as the same may be amended from time to time; (c) "Statement of Policy" means the statement on lending, investment and financial policy adopted by the Board of Directors of the Borrower on March 8, 1971; (d) "subsidiary" means any company of which a majority of the issued voting stock or other proprietary interest is owned or effectively controlled by the Borrower or by any one or more 4- subsidiaries of the Borrower or by the Borrower and one or more of its subsidiaries; (e) "SONAMO" means Soci$t Nationale de Motoculture, "6ta- bliasement pblic a caract*re commercial et industriel" established and operating under the laws of the Guarantor; (f) "SCMV" means Soci4t6 Civile de Mise en Valeur, a farmer association investing mainly in date palm plantations; (g) "service coperative" means a cooperative providing trac- tor and harvesting services to small and medium farmers; (h) "sub-loan" means a loan made or proposed to be made by the Borrower to a sub-borrower in accordance with the provisions of Schedule 4 to this Agreement and to be partially financed out of the proceeds of the Loan; (i) "sub-borrower" means SONAMO, a SCMV, a service coopera- tive, an agro-industrial enterprise or an individual farmer who proposes to enter or enters into arrangements with the Borrower for purposes of obtaining a sub-loan; (j) "investment project" means a project to be carried out by a sub-borrower and to be financed in part by means of a sub- loan; and (k) "FOSDA" means Fonds Spgcial de DLveloppement Agricole, a fund established by the Guarantor under Law No. 63-17 dated May 27, 1963 for agricultural lending by the Borrower. * -5- 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 re- ferred to, an amount in various currencies equivalent to twelve million dollars ($12,000,000). 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 Proj- ect described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. . Section 2.03. The Closing Date shall be December 31, 1980 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.04. 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 2.05. The Borrower shall pay interest at the rate of eight and seventy hundredths per cent (8.T0%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. -6- Section 2.06. Interest and other charges shall be payable semi-annually on Mar-i 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate agricultural, banking and financial practices. Section 3.02. Except as the Bank shall otherwise agree the Borrower shall: (a) make sub-loans in accordance with the policies and pro- cedures set forth in Schedule 4 to this Agreement; and (b) employ, not later than six months after the date of this Agreement or such other date as the Bank shall agree, a quali- fied and experienced engineer specialized in agro-industries, and maintain not less than five qualified and experienced agricultural engineers and such other professional staff and supporting ser- vices as shall be required for the carrying out of the Project. Section 3.03. The Borrower shall: (a) make any sub-loan on terms whereby the Borrower shall obtain, by written contract with the sub-borrower or by other appropriate legal means, rights adequate to protect the interests of the Guarantor, the Bank and the Borrower, including in the case -8- of any such sub-loan, the right of the Borrower to: (i) require the sub-borrower to carry out and operate the investment project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to establish and maintain adequate records; (ii) require that (A) contracts for the drilling of wells be procured on the basis of competitive bidding locally advertised, (B) all other goods and services to be financed out of the proceeds of the sub-loans be purchased through regular commercial channels, at a reasonable price (in the case of equipment for oil mills and pump stations price quCtations shall be obtained from at least three sources of supply), account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of their quality and competence of the parties render- ing them and (C) goods and services financed out of the proceeds of the sub-loans be used exclusively in the carrying out of the investment project; (iii) inspect, by itself or jointly with re- presentatives of the Bank, if the Bank shall so request, such goods and the sites, works, plants and construction included in the investment project, the operation thereof, and any relevant records and documents; (iv) require that the sub-borrowers shall take out and maintain with responsible insurers such insurance, against such risks ard in such amounts, as shall be consistent with sound business practice; (v) obtain all such information as the Guarantor, the Bank and the Borrower shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the sub-borrower; and (vi) suspend or terminate the right of the sub-borrower to the use of the proceeds of the sub-loan upon failure to perform its obligations under its contract with the Borrower; and ) -9-9 (b) exercise its rights in relation to each investment project in such manner as to: (i) protect the interests of the Guarantor, the Bank and the Borrower; and (ii) achieve the pur- poses of the Project. Section 3.04. The Borrower shall furnish to the Bank, promptly after its execution, two conformed copies of each contract for well drilling to be financed out of the proceeds of a sub-loan. Section 3.05. The Borrower shall: (a) prepare, not later than nine months after the date of this Agreement or such other date as the Bank and the Borrower shall agree, a proposal for an investment monitoring sy,tem to monitor, on a sample basis, the benefits derived from sub-loans by sub-borrowers; (b) furnish to the Bank, promptly upon its preparation, such proposal and afford the Bank a reasonable opportunity to comment thereon; and (c) establish, not later than twelve months after the date of this Agreement or such other date as the Bank and the Borrower shall agree, such system and operate it thereafter. Section 3.06. The Borrower shall ensure that adequate short- term financing is available to sub-borrowers as required for the carrying out of their investment projects. -10- Section 3.07. The Borrower shall use the amounts made avail- able to the Borrower by the Guarantor as provided in Section 3.07 (a) of the Guarantee Agreement to make grants to sub-borrowers which are small and medium farmers in such amounts as shall re- present for each category of investment project the percentage of its estimated total cost specified in paragraph C of Schedule 4 to this Agreement. I * -11 - ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall at all times manage its affairs, maintain its financial position, plan its future expan- sion and carry out its operations, all under the supervision of qualified and experienced management and staff and in accordance with the BNT Statutes and the Statement of Policy. Section 4.02. The Borrower shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. 0I - 12 0 ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.02. The Borrower 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 appropriate auditing principles consistently ap- plied, by independent auditors acceptable to the Bank; (ii) fur- nish to the Bank and to aJ.l members of its Board of Directors as soon as available, but in any case not later than six months after ,he 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 state- ments of the Borrower and the audit thereof as the Bank shall from time .to time reasonably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally * -13- 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; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satis- factory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; 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 property; or (B) any lien arising in the ordinary course of bank- ing transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 5.04. The Borrower shall not make any repayment in advance of maturity in respect of any outstanding debt of the Bor- rover (other than the Loan) which, in the judgment of the Bank, would materially affect the Borrower's ability to meet its fi- nancial obligations. Section 5.05. The Borrower shall take such steps satisfactory to the Bank as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the currencies (including Tunisian Dinars) used in its operations. Section 5.06. The Borrower shall duly perform all its obliga- tions under agreements under which funds have been lent or other- vise put at the disposal of the Borrower by the Guarantor or its agencies or others for relending, investment or management. The -14- Borrower shall promptly inform the Bank of any action which would have the effect of assigning, or of amending, abrogating or waiving any material provision of, any such agreement. Section 5.07. The Borrower shall exercise its rights under subscriptions and agreements to subscribe to its capital shares so as to ensure receipt of the capital funds available to it promptly as needed for its operations. Section 5.08. (a) The Borrower shall in respect of each sub- loan, maintain a separate set of accounts to reflect, in accordance with consistently maintained appropriate accounting practices: (i) the nature of the funds made available to the Borrower by the Guar- antor for the purposes of enabling the Borrower to make sub-loans; (ii) the amount of disbursements under sub-loans; (iii) the amounts of principal, interest and other charges due in respect of sub- loans; and (iv) the amounts of principal interest and other charges overdue and payable to the Borrower for two years on account of sub-loans. (b) The Borrower shall every year (i) notify the Guarantor of the amount of principal interest and other charges overdue and payable to the Borrower for two years on account of sub-loans, (ii) charge the Guarantor for such amounts as provided in paragraph (c) of Section 3.06 of the Guarantee Agreement. -15- ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, tte following additional events are specified pursuant to paragraph (k) thereof: (a) Any part of the principal amount of any loan to the Borrower 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. (b) The BNT Statutes shall have been amended or repealed so as to affect materially and adversely the operations or financial condition of the Borrower. (c) A change, which would materially and adversely affect the objectives, financial condition or operations of the Borrower, shall have been made in the Statement of Policy without the Bank's consent. (d) A subsidiary or any other entity shall have been created or acquired or taken over by the Borrower, if such creation, ac- quisition or taking over would adversely affect the conduct of the Borrower's business or the Borrower's operations or financial situation or the carrying out of the Project. -16 0 Section 6.02. For the purposes of Section 7.01 of the General Conditions, the folloving additional events are specified pursuant to paragraph (h) thereof: (a) any event specified in paragraph (d) of Section 6.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraph (a), (b) or (c) of Sec- tion 6.01 of this Agreement shall occur. * - 17- ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement with- in the meaning of Section 12.01 (c) of the General Conditions: (a) the Bank has been furnished with evidence satisfactory to the Bank that the revised terms and conditions of FOSDA, as re- flected in paragraphs B.1 and 2 and C of Schedule 4 to this Agree- ment have been substantially adopted and are in effect for all loans made by the Borrower out of the proceeds of FOSDA; and (b) the Borrower has furnished to the Bank (i) a report of the audit of its accounts and financial statements for fiscal year 1975 of such scope and in such detail as requested by the Bank, and (ii) certified copies of its audited financial statements for such year. Section 7.02. The date March 16, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 18 - 11-10-T6 ARTICLE VIII Addresses Section 8.01. 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. For the Borrower: Banque Nationale de Tunisie 19 Avenue de Paris Tunis, Tunisia Cable address: Telex: 366 BANKAGRIC Tunis ...... -19- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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/ Munir Benjenk Regional Vice President Europe, Middle East and North Africa BANQUE NATIONALE DE TUNISIE By Is/ Ali Hedda Authorized Representative -20- 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 ex- penditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Sub-loans under 3,900,000 ) Part A of the ) Project ) (2) Sub-loans under 3,700,000 ) Part B of the ) 75% of amounts Project ) disbursed by the Borrover (3) Sub-loans under 1,900,000 ) under such sub- Part C of the ) loans Project ) (4) Sub-loans under 2,500,000 ) Part D of the ) Project ) - TOTAL 12,000,000 -21- 2. The disbursement percentage has been calculated in compliance 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 impor- tation, 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 with- drawals shall be made: (a) in respect of payments made for expenditures prior to the date of this Agreement; (b) from Category (1) in respect of payments made by the Borrower to finance: (i) any sub-loan to SONAMO unless such sub-loan shall have been approved by the Bank, and the amount to be financed out of the proceeds of the Loan in res- pect of such sub-loan does not exceed $900,000 equivalent when added to any other amounts financed out of the proceeds of the Loan in respect of sub- loans to SONAND; and -22- I* (ii) any sub-loan to a service cooperative of more than 30,000D unless such sub-loan shall have been approved by the Bank, and the amount to be financed out of the proceeds of the Loan in respect of such sub- loan does not exceed $600,000 equivalent when added to any other amounts financed out of the proceeds of the Loan in respect of sub-loans to service cooperatives; (c) from Category (2) in respect of payments made by the Borrower to finance any sub-loan of more than 50,OOOD, unless such sub-loan shall have been approved by the Bank; and (d) from Categories (3) and (4) in respect of payments made by the Borrower to finance any sub-loan of more than 100,OOOD, un- less such sub-loan shall have been approved by the Bank. 4. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set fotth in the table in paragraph 1 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 Category, 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 are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then appli- cable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall * - 23-- have been made; provided, however, that, unless the Bank shall otherwise agree, no amount allocated to Category (1) or Category (3) shall be reallocated to Category (2) or Category (4). 5. If the Bank shall have reasonably determined that the pro- curement of any item to be financed out of the proceeds of a sub- loan is inconsistent with the procedures set forth or referred to in Section 3.03 (a) (ii) of this Agreement, no sub-loan disburse- ment for such item shall be financed out of the proceeds of the Loan. - 24 - 0 SCHEDULE 2 Description of the Project The Project, which is part of the Borrower's agricultural lending program, consists of the following Parts: A. Medium- and long-term sub-loans to small and medium farmers for general farm development and to SONAMO and service coop- eratives for agricultural machinery. B. Medium- and long-term sub-loans to commercial farmers for general farm development and, especially for grEin, dairy, fruit and vegetable production. C. Medium- and long-term sub-loans to SCMVs for the development of collectively-owned date-palm plantations. D. Medium- and long-term sub-loans to agro-industrial enterprises for food processing, packing and storage. -25 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 15 and September 15 beginning March 15, 1981 through September 15, 1988 750,000 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. -26- Premiums on Prepayment The following percentages are specified as the premiums pay- able 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 two years before maturity 1.45% More than two years but not more than four years before maturity 2.90% More than four years but not more than eight years before maturity 5.80% More than eight years but not more than ten years before maturity 7.25% More than ten years before maturity 8.70% -27T - SCHEDULE 4 Lending Policies and Procedures A. General 1. The Borrower's technical staff shall: (i) assist applicants in preparing detailed farm plans; (ii) appraise all sub-loan requests; and (iii) supervise all sub-loans. 2. In preparing, appraising and supervising sub-loans under Parts A and C of the Project, the Borrower shall be assisted, as and when needed, by field staff from the Guarantor's Ministry of Agriculture. B. Eligibility for Sub-loans under Part A of the Project 1. Sub-loans under Part A of the Project shall be made to sub- borrowers on the basis of, inter alia: (a) farm size; (b) nature of the investment; and (c) crop pattern. -28- 2. Sub-loans under Part A of the Project shall not be made to finance harvestors, tractors or appliances for such machinery ex- cept for sub-loans to service cooperatives and SONAMO. 3. Sub-loans under Part A of the Project shall only be made to sub-borrowers whose income is mainly provided by their agricultural activities. 4. The aggregate amount of sub-loans under Part A of the Project or of such sub-loans and any other loans the terms and conditions of which are similar to those of sub-loans under Part A of the Project, made to any one sub-borrower shall not exceed 5,OOOD. C. Terms and Conditions of Sub-loans under Parts A and C of the Project 1. Sub-loans under Parts A and C of the Project shall be subject to the terms and conditions set forth below: -29 - Own Term (grace) Sub-loan Grant Contribution Interest Years Not less Not more Not less Not less Not more Type of Investment Project 1. Irrigation (a) New vells and irrigation 70 10 20 6 7 (2) (b) Irrigation structure for SCMVs TO 20 10 6 7 (2) (c) New deep wells 50 40 10 6 20 (2) 2. Orchard and tree crop establishment 60 20 20 6 (0)* 10-15 (5-8) . 3. Livestock, forage production and Pasture Improve- ment - Seeds 50 30 20 6 (0)* 2 (1) - Grazing 50 30 20 6 (0)* 5 (1) - Cattle 65 15 20 6 5 - Buildings and equipment 65 15 20 6 5-15 (2) - Sheep 65 15 20 6 3 * During grace period. -30- Own Term (grace) Sub-loan Grant Contribution Interest Years Not less Not more Not less Not less Not more 4. (a) Harvesters, tractors, and appliances for such machinery for SONAMO and services coop- eratives invoice 70 - 30 6 3-7 (2) (b) Light agricul- tural machinery and equipment for small and medium farmers 70 10 20 6 3-10 (2) 5. Processing and mar- keting facilities operated by SCMVs and service coop- eratives - Building 80 - 20 6 15 (2) - Equipment 80 - 20 6 5 (2) 2. A grant shall not be given in the case of investment projects consisting of the rehabilitation of existing investments which have already been amortized. D. Terms and Conditions of Sub-loans under Parts B and D of the Project Interest on and repayment of sub-loans under Parts B and D of the Project shall be as follows: -31- Maximum Interest Grace Repayment Period (% per annum) Period after Grace Part B Grain Farms and Mixed Farming 7 1 7 Dairy Farms 7 3 5 Part D Olive Oil Mills 8 2 5 Other Investments 8 (to be agreed on a case-by- case basis) E. Risk The Borrover shall bear the fll risk of default on all sub- loans except sub-loans under Parts A and C of the Project. With respect to such sub-loans the Borrower shall bear at least 10% of the risk of default on any of such sub-loans made not later than two years after the Effective Date and at least 25% of such risk on any of such sub-loans made thereafter. F. Security Arrangements A certificat de possession shall be accepted as adequate title for purposes of creating a lien on the land subject of such certificat as security for the repayment of a sub-loan. For purposes of this paragraph "certificat de possession" means the certificate described in Law No. T-53 of the Guarantor dated June 10, 1974.