Mexico - Sixth Agricultural Credit Project : Loan 1569 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1569 ME Loan Agreement (Sixth Agricultural Credit Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NACIONAL FINANCIERA, S.A. Dated September 27, 1978 LOAN NUMBER 1569 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) "Banxico" means Banco de M6xico, S.A., trustee of Fondo; (b) "Project Agreement" means the agreement between the Bank and Banxico of even date herewith, 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; (c) "Law" means the law of the Guarantor published in the Diario Oficial of December 31, 1954 creating the Fondo de Garantfa y Fomento para la Agricultura, Ganaderfa y Avicultura, and includes its Reglamento of May 6, 1955; (d) "Trust Agreement" means the Contrato de Fideicomiso dated June 24, 1955 between the Government of United Mexican States and Banxico whereby the Fondo de Garantfa y Fomento para la Agricultura, Ganaderfa y Avicultura was entrusted to Banxico as trustee pursuant to the Law; (e) "Fondo" means the technical and administrative organiza- tion, resources, staff and facilities used or to be used by - 2 - Banxico to operate the Fondo de Garantia y Fomento ara la Agricultura, Ganaderia y Avicultura and the Special Trust Fund; (f) "Special Trust Agreement" means the Contrato de Fideicomiso dated Augsut 26, 1965 between the Government of United Mexican States and Banxico; and "Special Trust Fund" means the Fondo Especial de Financiamientos Agro2ecuarios established by the Special Trust Agreement; (g) "prior loan agreements" means the loan agreements dated October 1, 1965, June 12, 1969, June 9, 1971, June 18, 1973, and March 11, 1976, respectively, between the Bank and the Bor- rower; "prior guarantee agreements" means the guarantee agreements of even date therewith between the Guarantor and the Bank; "prior project agreements" means the project agreements of even date therewith between the Bank and Banxico; and "prior loans" means the loans provided for in the prior loan agreements; (h) "prior projects" means the projects described in Sched- ule 1 to the prior project agreements; (i) "BNCR" means Banco Nacional de Crfdito Rural, an agricultural bank established under the Decree of the Guarantor dated July 5, 1975; (j) "FINASA" means Financiera Nacional Azucarera established by the Guarantor on August 22, 1953; (k) "Participating Banks" means BNCR, the Banks of BNCR's system, FINASA, any other public credit institution approved by the Bank and any private credit institution approved by Banxico to participate in the carrying out of the Project in accordance with Schedule 2 to the Project Agreement; (1) "beneficiary" means a farmer or a group of farmers having juridical capacity under the laws of the Guarantor to enter into contractual arrangements and to which a Participating Bank proposes to make or has made a sub-loan; (m) "low-income beneficiary" means an individual beneficiary whose main source of income is derived from farming and whose net annual family income does not excebd 1,000 times the daily minimum rural wage for the region where he is located, or a group of such beneficiaries; -3- (n) "sub-loan" means a long- or medium-term loan made or proposed to be made by a Participating Bank to a beneficiary for a project in accordance with the provisions of the Project Agreement and to be partially financed out of the proceeds of the Loan; (o) "project" means (i) an on-farm investment for crop or livestock production, and (ii) planning and establishment or expansion or improvement of primary processing or service type agro-industries, to be carried out by a beneficiary and to be financed in part by means of a sub-loan; and (p) "peso" means the currency unit of the Guarantor. 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 two hundred million dollars ($200,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Sched- ule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cosL of goods and services required for the Project described in Schedule 1 to the Project Agreement and to be financed out of the proceeds of the Loan. Section 2.03. The Closing Date shall be June 30, 1982 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 seven and one-half per cent (7.50%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. -4- Section 2.06. Interest and other charges shall be payable semiannually on May 1 and November 1 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 1 to this Agreement. ARTICLE III Execution of the Project Section 3.01. The Borrower shall cause the proceeds of the Loan to be applied in accordance with the provisions of this Agreement and the Project Agreement to expenditures on the Proj- ect. Section 3.02. The Borrower shall cause all goods and ser- vices financed out of the proceeds of the Loan to be used exclu- sively in carrying out the Project. Section 3.03. The Borrower shall make contractual arrange- ments satisfactory to the Bank, providing for such matters as are set forth in Section 2.02 of the Project Agreement, and except as the Bank shall otherwise agree, the Borrower shall not change or fail to enforce any provision of such arrangements. ARTICLE IV Other 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 i2so 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 provi- aions 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 banking transactions and -5- securing a debt maturing not more than one year after ihe date on which it is originally incurred. Section 4.02. The Borrower shall maintain or c,ause to be maintained records adequate to reflect in accordance tvith consis- tently maintained sound accounting practices the operations and financial condition of the Borrower with respect to the Loan. 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 Ageeement; 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 ai 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 matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: -6- (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Banxico and is legally binding upon Banxico in accordance with its terms; (b) that the arrangements referred to in Section 3.03 of this Agreement and 2.02 of the Project Agreement are legally binding on the parties thereto; and (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 Borrower and Banxico to perform all of the respective covenants, agreements and obligations of the Borrower and Banxico in 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 specified for the purpose of Section 12.04 of the General Conditions. ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section :11.01 of the General Conditions: For the 3ank: '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) -7- For the Borrower: Nacional Financiera, S.A. Isabel la Cat6lica 51 Mexico 1, D.F. Mexico 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 (1) Sub-loans for on- farm investments, breeding stock, farm machinery and equipment, construc- tion, water supply and irrigation, land preparation and development, and pasture and orchard establish- ment: (a) Part 1 (a) (i) of the Project (i) crop pro- 32,100,000 ) 50% of Fondo duction ) payments made ) to Participat- ) ing Banks to ) finance sub- (ii) livestock 35,600,000 ) loans for a production ) project (b) Part 1 (a) (ii) of the Project (i) crop pro- 51,300,000 ) 44% of Fondo duction ) payments made ) to Participat- ) ing Banks to ) finance sub- (ii) livestock 56,300,000 ) loans for a production ) project -9- Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (2) Sub-loans for agro- 17,500,000 44% industries under Part 1 (b) of the Project: machinery, equipment, civil works and utilities (3) Training, including 6,625,000 50% travel abroad, civil works, equipment and livestock under Part 2 (a) of the Project (4) Monitoring and tech- 575,000 100% of for- nical services under eign expendi- Part 2 (b) and (c) of tures the Project TOTAL 200,000,000 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; (b) payments for taxes imposed under the laws of the Guaran- tor or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph 1 above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Loan will be withdrawn on account of such taxeis; - 10 - (c) payments made by Fondo to Participating Banks to finance any sub-loan which shall exceed the equivalent of eight hundred thousand dollars ($800,000), unless such sub-loan shall have been approved by the Bank; and (d) payments made by Fondo to finance any sub-loan made by a public credit institution, unless such institution has been approved by the Bank as eligible for rediscount facilities under the Project as required by Section 2.05 of the Project Agreement. 4. If the Bank, after consulting with the Borrower, shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth in Sched- ule 2 to the Project 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 reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 11 - 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 7,690,000 On May 1, 1995 7,750,000 * 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 equivalents determined as for purposes of withdrawal. - 12 - 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% - 13 - 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 or projects or program or programs for which the Loan is granted, as described in Schedule 1 to the Project 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 or 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 specifi- cally 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 laws 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 Arti- cles of Agreement of the Bank." (d) Section 10.02 shall read as follows: "Obligations of the Guarantor. The obligations of the Guarantor under the Guarantee Agreement shall not be - 14 - 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 of time, forbearance or concessi)n 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 Agree- ment contemplated by the terms thereof; any failure of the Borrower or Banxico to comply with any requirement 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 acquiescence 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 or subsequent default."