Mexico - Rainfed Agricultural Development Project : Loan 1945 - Loan Agreement - Conformed

DOCUAMENTS LOAN NUMBER 1945 ME Loan Agreement (Rainfed Agricultural Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NACIONAL FINANCIERA, S.A. Dated , 1981 LOAN NUMBER 1945 ME LOAN AGREEMENT AGREEMENT, dated d>sede 1L-, 1981, 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 October 27, 1980, 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 Mexico, S.A; (b) "Banrural" means Banco Nacional de Credito Rural, S.A. and a "Banrural Bank" means a bank of Banco Nacional de Credito Rural S.A.'s system; (c) "Project Agreements" means the agreement between the Bank and Banxico (hereinafter called the First Project Agreement) and the agreement between the Bank and Banrural (hereinafter called the Second Project Agreement), both of even date herewith, as such agreements may be amended from time to time; and the terms "First Project Agreement" and "Second Project Agreement" include all schedules and agreements supplemental thereto; (d) "SARR" means the Secretarfa de Agricultura y Recursos Hidr5ulicos of the Guarantor; (e) 'SAHOP" means the Secretaria de Asentamientos Humanos y Obras Pfiblicas of the Guarantor; - 2 - (f) "Fondo Law" means the law of the Guarantor published in the Diario Oficial of December 31, 1954, creating the Fondo de Garantla y Fomento para la Agricultura, Ganaderfa y Avicultura, and includes its Reglamento of May 6, 1955; (g) "Fondo Trust Agreement" means the Contrato de Fidei- comiso dated June 24, 1955, between United Mexican States and Banxico whereby the Fondo de Garantla y Fomento para la Agricul- tura, Ganaderfa y Avicultura is entrusted to Banxico as trustee pursuant to the Fondo Law; (h) "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, the Special Trust Fund and the Fondo Especial de Asistencia Tecnica y Garantla para Creditos Agropecuarios; (i) "Special Trust Agreement" means the Contrato de Fideicomiso dated August 26, 1965, between United Mexican States and Banxico; and "Special Trust Fund" means the Fondo Especial para Financiamientos Agropecuarios established by the Special Trust Agreement; (j) Fondo Especial de Asistencia Tecnica y Garantia para Creditos Agropecuarios means the fund for technical assistance and guarantee for agricultural credits entrusted to Banxico by a trust agreement between United Mexican States and Banxico dated October 30, 1972; (k) "Participating Bank" means any public credit institution approved by the Bank and any other private credit institution approved by Banxico to participate in the carrying out of Part C (1) of the Project in accordance with Schedule 1 to the First Project Agreement; (1) "Ficar Trust Agreement" means the Contrato de Fidei- comiso dated September 26, 1975, between United Mexican States and Banrural, as amended by the Convenio Modificatorio dated December 14, 1977, whereby the Fideicomiso para credito en areas de riego is entrusted to Banrural as trustee; (m) "FICAR" means the technical and administrative organi- zation, resources, staff and facilities used or to be used by Banrural to operate the Fideicomiso para credito en areas de riego; - 3 - (n) "short-term sub-loan" means a loan made with a maturity of not more than 24 months made or proposed to be made by a Banrural Bank or a Participating Bank to a beneficiary for a Sub-project in accordance with the provisions of the Project Agreements and to be partially financed out of the proceeds of the Loan and "medium-term sub-loan" means a loan with a maturity of more than 24 months made or proposed to be made by a Banrural Bank or a Participating Bank to a beneficiary for a Sub-project in accordance with the provisions of the Project Agreements and to be partially financed out of the proceeds of the Loan; (o) "Sub-project" means an on-farm investment for crop, livestock or forestry production to be carried out by a benefi- ciary (as this term is variously defined in Sections 1.01 (a) of the Project Agreements) and to be financed in part by means of a short-term sub-loan or a medium-term sub-loan; (p) "peso" means the currency unit of the Guarantor; and (q) "Project Area" means the territories of the Guarantor's rainfed districts of Cardenas, Chilpancingo, Cholula, Coat- zacoalcos, Jalapa, Martinez de la Torre, Morelia, Villahermosa and Zapopan. 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 eighty million dollars ($280,000,000). 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. The Closing Date shall be June 30, 1986 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 nine and one-fourth per cent (9-1/4%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.06. Interest and other charges shall be payable semiannually on February 1 and August 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 2 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 Agreements to expenditures on the Project. Section 3.02. The Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively in carrying out the Project. Section 3.03. The Borrower shall make contractual arrange- ments with the Guarantor, Banxico and Banrural, satisfactory to the Bank, providing for such matters as are set forth in Section 3.03 of the Guarantee Agreement, in Section 2.02 of the First Project Agreement and in Section 2.02 of the Second Project Agreement, respectively, and except as the Bank may 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. -5 - (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 ipso 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 effe-Ct, 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 property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 4.02. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition 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) (i) a default shall have occurred in the performance of any covenant or agreement on the part of Banxico under the First Project Agreement; or (ii) a change shall have been made in the Fondo Law or the Fondo Trust Agreement or the Special Trust Agreement which shall adversely and materially affect the carrying out or operation of Part C (1) of the Project; provided, however, that the suspension of the right to make withdrawals from the Loan Account shall be limited to that portion of the Loan which has been allocated to Category 5 of the table set forth in paragraph 1 of Schedule 1 to this Agreement under Part C (1) of the Project; or (b) (i) a default shall have occurred in the performance of any covenant or agreement on the part of Banrural under the Second Project Agreement; or -6- (ii) a change shall have been made in the Ficar Trust Agreement which shall adversely and materially affect the carrying out or operation of Part C (2) of the Project; provided, however, that the suspension of the right to make withdrawals from the Loan Account shall be limited to that portion of the Loan which has been allocated to Category (5) of the table set forth in paragraph 1 of Schedule 1 to this Agreement under Part C (2) 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 paragraphs (a) (i) and (b) (i) 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 or to the Guarantor, the Borrower and Banrural, as the case may be; and (b) any event specified in paragraph (a) (ii) or paragraph (b) (ii) 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: (a) that the First Project Agreement and the Second Project Agreement have been duly authorized or ratified by, and executed and delivered on behalf of, Banxico and Banrural, respectively, and are legally binding upon Banxico and Banrural in accordance with their terms; (b) that the arrangements referred to in Section 3.03 of this Agreement and Section 3.03 of the Guarantee Agreement and Sections 2.02 of the Project Agreements have been executed and delivered on behalf of the parties thereto and are legally binding on them; and -7- (c) that all necessary acts, consents and approvals to be performed or given by the Guarantor, its political subdivi- sions or agencies or by any agency of any political subdivision or by Banxico or by Banrural or pursuant to the Fondo Law, the Fondo Trust Agreement, or the Special Trust Agreement, the Ficar Trust Agreement, or otherwise to be performed or given in order to authorize the carrying out of the Project and to enable the Borrower, Banxico and Banrural to perform all of the respective covenants, agreements and obligations of the Borrower, Banxico and Banrural in the Loan Agreement, the First Project Agreement and the Second Project Agreement contained, together with all neces- sary 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 a- , is hereby specified for the purpose 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 Cat6lica 51 Mexico 1, D.F. Mexico -8- 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 th.ir 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 Regional Vice President Latin America and the Caribbean NACIONAL FINANCIERA, S.A. Authorized Representative -9- 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) Civil works 58,500,000 45% (2) Equipment and Vehicles 16,500,000 45% (3) Salaries and Operating 58,000,000 45% Expenses (4) Training and 10,000,000 45% Studies (5) Credit (a) Medium 72,000,000 45% Term (b) Short Term 36,000,000 45% (6) Unallocated 29,000,000 TOTAL 280,000,000 2. The disbursement percentages have 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 importation, manufacture, procurement or supply thereof; to thCat 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 - 10 - 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 payments made: (a) for expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $6,000,000 on account of payments made for such expenditures before that date but after July 31, 1980; (b) by FONDO to any Participating Bank and FICAR to any Banrural Bank to finance any medium-term sub-loan which shall exceed the equivalent of eight hundred thousand dollars ($800,000) or such other amount as shall be agreed between the Bank and the Borrower unless such sub-loan shall have been approved by the Bank; (c) by FONDO to any Participating Bank and by FICAR to any Banrural Bank to finance any short-term sub-loan which shall bear interest at an annual rate not mutually acceptable to the Bank and Banxico or the Bank and Banrural, as the case may be, or which shall exceed the equivalent of four hundred thousand dollars ($400,000) or such other amount as shall be agreed between the Bank and the Borrower unless such sub-loan shall have been approved by the Bank; and (d) for amounts retained for the guarantee of civil works contracts under the Project. 4. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth 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 insofficient 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 and the Borrower are not needed to meet other expenditure; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expend- itures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. - 11 - 5. Notwithstanding the provisions of paragrah 4 above, except as the Bank may otherwise agree, no reallocation shall be made from Category 5 (b) to any other Category. 6. The Bank shall disburse for expenditures under each Category at the percentage set forth in the table in paragraph 1 above through July 31, 1984, and thereafter at a percentage of expenditures to result in a disbursement percentage of thirty-five percent (35%) of all expenditures under each Category. 7. If, after consultation with the Borrower, the Bank 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 reasonably 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 February 1 and August 1 beginning August 1, 1984 through August 1, 1995 11,665,000 On February 1, 1996 11,705,000 * 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 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.85% More than three years but not more than six years before maturity 3.70% More than six years but not more than eleven years before maturity 6.80% More than eleven years but not more than thirteen years before maturity 8.00% More than thirteen years before maturity 9.25% - 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 or projects or program or programs 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, Banxico and Banrural." (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 Agreements 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, Banxico and Banrural under the Loan Agreement, the Guarantee Agreement, the First Project Agreement and the Second 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 nor Banrural 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 First Project Agreement or the Second Project Agreement is invalid or unenforceable because of any provision of the Articles of Agreement of the Bank." - 15 - (d) Section 10.02 shall read as follows: "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 Banrural or to any prior notice to or demand upon the Guarantor with regard to any default by the Borrower or Banxico or Banrural, and shall not be impaired by any of the following: any extension of time, forbearance or concession given to the Borrower or Banxico or Banrural; any assertion of, or failure to assert, or delay in asserting, any right, power or remedy against the Borrower or Banxico or Banrural or in respect of any security for the Loan; any modification or amplification of the provisions of the Loan Agreement or the First Project Agreement or the Second Project Agreement contemplated by the terms thereof; any failure of the Borrower or Banxico or Banrural 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 Agreements 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." 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 -day of IA , 198 / FOR SECRETARY