Mexico - Agricultural Marketing Project For Perishables : Loan 2262 - Loan Agreement - Conformed

00C NT LOAN NUMBER 2262 ME DCIRAFNT9 Loan Agreement (Agricultural Marketing Project for Perishables) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NACIONAL FINANCIERA S.A. Dated c 5 , 1983 LOAN NUMBER 2262 ME LOAN AGREEMENT AGREEMENT, dated ) 444 .d. ..6 , 1983, between INTERNATIONAL BANK FORARECONSTRUCTION AND DEVELOPMENT (herein- after 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 Gua- rantee Agreements of the Bank, dated October 27, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agree- ments of the Bank being hereinafter called the General Condi- tions). Section 1.03. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the Gen- eral Conditions hive the respective meanings therein set forth and the following a-ditional terms have the following meanings: (a) "Banxico" means Banco de M6xico; (b) "Banrural" means Banco Nacional de Credito Rural, S.A.; (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) "FEFA Trust Agreement" means the Contrato de Fidei- comiso dated August 26, 1965, between the Guarantor and Banxico whereby the Fondo Especial para Financiamentos Agropecuarios was entrusted to Banxico as Trustee; and "FEFA" means the Fondo Especial para Financiamientos Agropecuarios established by the FEFA Trust Agreement and includes the technical and administrative organization, resources, staff and facilities used or to be used by Banxico to operate FEFA; -2- (e) "FICART Trust Agreement" means the Contrato de Fidei- comiso dated September 26, 1975, between the Guarantor and Banrural, as amended by the Convenio Modificatorio dated June 4, 1981, whereby the Fideicomiso para Credito en Areas de Riego y de Temporal was entrusted to Banrural as Trustee; and "FICART" means the Fideicomiso para Credito en Areas de Riego y de Temporal and includes the technical and administrative organization, resources, staff and facilities used or to be used by Banrural to operate FICART; (f) "FIDEC Trust Agreement" means the Contrato de Fidei- comiso dated May 7, 1980, between the Guarantor and Banxico whereby Fondo para el Desarrollo Comercial was entrusted to Banxico as Trustee; and "FIDEC" means Fondo para el Desarrollo Comercial and includes the technical and administrative organiza- tion, resources, staff and facilities used or to be used by Banxico to operate FIDEC; (g) "Sub-loan" means a medium- or long-term loan made or proposed to be made by Participating Banks out of the proceeds of the Loan for purposes of an Investment Project; (h) "Investment Project" means a specific marketing devel- opment project consisting in one or more of the activities described in Parts A or B of the Project to be carried out by a Beneficiary utilizing the proceeds of a Sub-loan; (i) "Beneficiary" means a person or a group of persons or an entity having juridical capacity under the laws of the Guaran- tor having as its main activity the production or wholesale or retail marketing of perishable products to which one of the Participating Banks proposes to mal-e or has made a Sub-loan; (j) "Participating Bank" means any credit institution approved by Banxico or Banrural to participate in the carrying out of Parts A and B of the Project by making Sub-loans to Bene- ficiaries; (k) "Group of Low-income Producers" means a group of pro- ducers of which two-thirds of its members have an individual annual income not exceeding 1,000 times the respective regional minimum wage and to whom a Participating Bank has made or pro- poses to make a Sub-loan under Part A of the Project; -3- (1) "Prevailing Interest Rate" or "ACF" means an annual rate of interest which reflects the average cost of borrowed funds to financial departments of multipurpose banks operating in Mexico as calculated and published by Banxico on a monthly basis; (m) "Peso" means the currency unit of the Guarantor; (n) "FIDEC Lending Policies and Operating Manual" means the manual on lending policies and procedures to be furnished to the Bank pursuant to Section 3.03 of the First Project Agreement; (o) "FICART Lending Policies and Operating Manual" means the Manual de Operacion of FICART as approved by its Comit4 T4cnico as of the date of this Agreement; (p) "FEFA Lending Policies and Operating Manual" means the Manual de Operacion of FEFA as approved by its Comit6 T4cnico as of the date of this Agreement; (q) "Sistema Nacional para el Abasto" means the Guarantor's marketing program as set forth in the Decree issued by the Gua- rantor on September 17, 1981, and published in the Diario Oficial de la Federacion on September 21, 1981, as amended as of the date of this Agreement; (r) "voluntary chains" means cadenas voluntarias, a com- mercial association of one or more wholesalers and/or a group of low and medium-income retailers as defined in FIDEC Lending Poli- cies and Operating Manual; (s) "Special Account" means the account to be established pursuant to paragraph (a) of Section 2.03 of this Agreement; and (t) "Central Bank" means Banco de Mexico. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Loan Agreement, an amount in various currencies equivalent to c.e hundred fifteen million dollars ($115,000,000). 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 -4- expenditures 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 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. (a) The Borrower shall cause to be opened and thereafter maintained a Special Account in the Central Bank on terms and conditions satisfactory to the Bank. Payments out of the Special Account shall be made exclusively to pay the reasonable cost of goods and services required to carry out the Project and to be financed by the Bank under this Agreement in accordance with the provisions of Section 2.02 and Schedule I hereto. (b) The Bank may, after the Effective Date and at the request of the Borrower, withdraw on behalf of the Borrower from the Loan Account and deposit in the Special Account an amount in dollars of up to $10,000,000. In the event the amount of such initial deposit into the Special Account is less than $10,000,000, the Borrower may from time to time request the Bank to withdraw from the Loan Account and make one or more additional initial deposits into the Special Account, but in no event shall the amount of such initial deposits exceed in the aggregate $10,000,000. At the request of the Borrower, the Bank shall further withdraw from the Loan Account and deposit in the Special Account such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for expenditures for the Project eligible for financing under this Agreement. Except as the Bank shall other- wise agree, each such deposit after the initial deposits shall be withdrawn by the Bank from the Loan Account under the same categories set forth in paragraph 1 of Schedule 1 to this Agreement, and in the same respective amounts, as have been justified by the documentation for the request for such deposit furnished pursuant to paragraph (d) of this Section. (c) Prior to or at the time of each request for a withdrawal by the Borrower from the Special Account, the Borro-wer shall furnish to the Central Bank an application for withdrawal from the Special Account on the basis of statements of expendi- tures showing that the payment was made on account of the reason- able cost of goods or services required for the Project and to be financed out of the proceeds of the Loan in accordance with para- graph (a) above. The Central Bank shall authorize withdrawals from the Special Account an amount in pesos determined on the -5- basis of such statements of expenditures, and shall debit the Special Account with the dollar equivalent of such amount in pesos determined on the basis of the rate of exchange between the dollar and the peso in effect at the time each payment was made. (d) Prior to or at the time of each request for a deposit by the Bank into the Special Account, the Borrower shall furnish to the Bank in respect of each withdrawal from the Special Account an application for withdrawal from the Loan Account on the basis of the statements of expenditures referred to in para- graph (c) of this Section together with a statement from the Central Bank indicating the amounts disbursed from the Special Account in connection with each such application. (e) If the Bank shall have determined that any payment out of the Special Account (A) was made for any expenditure or in any amount not eligible for financing by withdrawal from the Loan Accoun-'., or (B) was not justified O- the statements of expendi- ture furnished pursuant to paragraph (d) above, the Bank shall notify the Borrower 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 the Borrower into the Special Account, the Bank may refrain from making further deposits into such Account. (f) Notwithstanding the provision of paragraph (a) of this Agreement, when the withdrawals from the Loan Account deposited into the Special Account plus the amount of any agreement to reimburse made by the Bank pursuant to Section 5.02 of the Gen- eral Conditions shall have reached the equivalent of $95,000,000, the Bank shall be entitled, after consultations with the Bor- rower, to reduce the percentage of disbursements for expenditures under the Project or take any other action which will ensure the Bank that by the time the total amount of the Loan has been dis- bursed all deposits (including the amount corresponding to the initial deposit) made by the Bank into the Special Account were made on account of the reasonable cost of goods or services elig- ible for financing out of the proceeds of the Loan in accordance with paragraph (e) above. Section 2.04. The Closing Date shall be June 30, 1987, or such later date as the Bank shall establish. The Bank shall promptly, notify the Borrower and the Guarantor of such later date. -6- Section 2.05. (a) The Borrower shall pay to the Bank a fee equivalent to eight hundred fifty-six thousand seventy-nine dollars ($856,079). (b) On or promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount of the said fee in such currency or currencies as the Bank shall determine. Section 2.06. The Borrower shall pay to the Bank a commit- ment 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 2.07. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one half of one percent per annum above the Cost of Qualified Borrow- ings for the last Semester ending prior to the commencement of such Interest Period. (b) For purposes of this Section: (i) "Interest Period" means the six-month period com- mencing on each date specified in Section 2.08 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost" of Qualified Borrowings means the cost, expressed as a percentage per annum, as reasonably determined by the Bank, provided that the amount of $8,520.5 million referred to in (iii) (B) hereunder shall be reckoned at a cost of 10.93% per annum. (iii) "Qualified Borrowings" means (A) outstanding bor- rowings of the Bank drawn down after June 30, 1982; and (B) until July 1, 1985, the amount of $8,520.5 million (representing borrowings of the Bank between July 1, 1981 and June 30, 1982) less any part thereof repaid earlier than July 1, 1985. (iv) "Semester" means the first six months or the second six months of a calendar year. - 7 - (c) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower and the Guarantor of the Cost of Qualified Borrowings for such Semester. Section 2.08. Interest and other charges shall be payable semiannually on February 1 and August 1 in each year. Section 2.09. 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 Transfer of Loan Proceeds Section 3.01. (a) The Borrower shall enter into contractual arrangements with Banxico, acting as trustee for FIDEC, in terms and conditions satisfactory to the Bank, providing for, inter alia: (i) the transfer to FIDEC, on a grant basis, of the pro- ceeds of the Loan required by FIDEC for the carrying out of the Parts of the Projects assigned to it pursuant to the First Proj- ect Agreement; and (ii) the Borrower's obligation to transfer to FIDEC, on a grant basis, the amounts of the proceeds of the Loan repaid by FEFA and FICART to the Borrower pursuant to the lending arrangements referred to in paragraph (b) below. (b) The Borrower shall enter into contractual arrangements with Banxico, acting as trustee for FEFA, and with Banrural, acting as trustee for FICART, in terms and conditions satisfac- tory to the Bank, providing for, inter alia, the lending to FEFA and FICART of the proceeds of the Loan required by them for the carrying out of the Parts of the Project assigned to each of them pursuant to the First Project Agreement and the Second Project Agreement, respectively. (c) Except as the Bank shall otherwise agree, the Borrower shall not amend or fail to enforce any provision of the arrange- ments referred to in paragraphs (a) and (b) aDove. 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. -8- (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 princi- pal of, and interest and other charges on, the Loan, and in the creation of any such lien express provisions will be made to that effect, at no cost to the Bank; provided, however, that the fore- going 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 as security for the payment of debt incurred for the purpose of financing the purchase 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. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) a change shall have been made in the FEFA Trust Agree- ment, the FICART Trust Agreement or the FIDEC Trust Agreement which may materially and adversely affect the carrying out of the Project or the financial position or organization of FEFA, FICART or FIDEC, respectively; (b) Banxico, as trustee for FIDEC or FEFA, shall have failed to perform any of its obligations under the First Project Agreement or Banrural, as trustee for FICART, shall have failed to perform any of its obligations under the Second Project Agree- ment; (c) a resolution shall have been passed for the dissolution or liquidation of FIDEC, FEFA or FICART; (d) the Guarantor and the Bank shall have failed to reach the agreement referred to in Section 3.04 of the Guarantee Agree- ment; and (e) a change shall have been made in the FIDEC Lending Policies and Operating Manual or the FICART Lending Policies and -9- Operating Manual or FEFA Lending Policy and Operating Manual which may materially and adversely affect the execution of the Project. Section 5.02. For the purposeo of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the event specified in paragraph (b) of Section 5.01 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) or paragraph (c) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Condi- tions, namely, that the contractual arrangements referred to in Section 3.01 of this Agreement have been executed. Section 6.02. 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 fur- nished 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 3.01 of this Agreement and Section 3.03 of the Guarantee Agreement have been executed and delivered on behalf of the parties thereto and are legally binding on them; 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 - 10 - Banxico or by Banrural or pursuant to the FIDEC Trust Agreement, or the FEFA Trust Agreement, or the FICART 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, agree- ments 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 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 6.03. The date &'tt is1L4. 27 / IM , is hereby specified for the purpose of Section 12.04 of the General Condi- tions. 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 06008 Mexico, D.F. Mexico - 11 - Cable address: Telex: NAFIN NAFIME 383-1772538 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 / w 2 - Regional Vice President Latin America and the Caribbean NACIONAL FINANCIERA S.A. By Authorized Representative - 12 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 40,000,000 60% of amounts Part A of the disbursed by Project (except Participating for Sub-loans Banks for Sub- to Groups of loans Low-income producers) (2) Sub-loans for 50,000,000 60% of amounts Part B of the disbursed by Project (except Participating for voluntary Banks for Sub- chains) loans (3) Sub-loans for 5,200,000 60% of amounts Parts A and B disbursed by of the Project for Participating Groups of Low- Banks for Sub- income Producers loans and voluntary chains (4) Equipment and 3,000,000 100% of foreign materials for expenditures or Parts C, D, F 50% of local and G expenditures (5) Technical 2,300,000 75% services for Parts C, D, E, F and G of the Project - 13 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Fee 856,079 Amounts due under Section 2.05 of this Agreement (7) Initial deposit 10,000,000 Amounts due pur- in Special Account suant to Section 2.03 (b) of this Agreement (8) Unallocated 3,643,921 TOTAL 115,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" 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; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor or for goods or services supplied from the territory of the Guarantor. 3. 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. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for - 14 - expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $3,000,000, may be made on account of expenditures made before that date but after June 1, 1982. 5. 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 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 applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank, after consultation with the Borrower, shall have reasonably determined that the procurement of any item in any Category is inconsistert 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 reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 15 - SCHEDULE 2 Description of the Project The purpose of the Project is to modernize and expand the Guarantor's food marketing system at the producer, wholesale and retail levels within the policy framework set forth in the Gua- rantor's Sistema Nacional para el Abasto and will consist of th! following: Part A: Producer Level Marketing Investments Sub-loans for Investment Projects consisting in one or more of the following: (1) Establishing of new or expansion and modernization of existing: (i) assembling facilities, (ii) producer dis- tribution centers with access to major metropolitan markets, (iii) markets of origin in major producing zones, and (iv) collection centers for the processing of products for the domestic market. (2) Procurement of vehicles and equipment required for the transport and handling of products. Part B: Wholesale and Retail Levels Marketing Investments (i) Sub-loans for Investment Projects to be carried out by groups of wholesalers and retailers and consisting of modernization and expansion of existing wholesale warehouse facilities, construction of new warehouses, and retail facilities, handling equipment and trucks. (ii) Sub-loans for Investment Projects to be carried by wholesalers moving into wholesaler market facilities and consisting of acquisition of warehouse space, vehicles and handling equipment. (iii) Sub-loans for Investment Projects consisting of the establishment of retail units for perishables in neighborhood shopping areas, including the acquisition of vehicles and equipment. (iv) Sub-loans for Investment Projects consisting of the construction of retail units in low income neighbor- hoods. - 16 - (v) Sub-loans for Investment Projects consisting in the construction of wholesale and retail market facilities in medium-sized cities. Part C: National Market Information System Support for the operations of the Guarantor's national market information system which is designed to provide reliable and timely information on market transactions of major agricul- tural products. Part D: FIDEC's Institutional Strengthening Improvement of FIDEC's capabilities for the preparation of investment programs and evaluation and supervision of marketing investment projects. Part E: Promotion Program A program to promote among potential beneficiaries, FIDEC's role in the financing of marketing development projects. Part F: Training A training program for suitable FIDEC's staff and members of institutions participating in the Project in the fields of food marketing and management and rural and urban marketing systems. Part G: Studies Studies on: (a) central wholesale facilities in urban centers; (b) transportation services for perishable products; and (c) marketing of perishable product. The Project is expected to be completed by December 31, 1986. - 17 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each February I and August 1 beginning August 1, 1986 through August 1, 1997 4,790,000 On February 1, 1998 4,830,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 18 - 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 The interest rate (ex- pressed as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment multiplied by: Not more than three years 0.20 before maturity More than three years but 0.40 not more than six years before maturity More than six years but 0.73 not more than 11 years before maturity More than 11 years but not 0.87 more than 13 years before maturity More than 13 years before 1.00 maturity 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 J day of Z , 198 s3-. FOR SECRETARY