Conformed Copy - L2859 - Agricultural Extension Project, PROCATI - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 2859 ME (Agricultural Extension Project, PROCATI) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NACIONAL FINANCIERA, S.N.C. Dated July 31, 1987 LOAN NUMBER 2859 ME LOAN AGREEMENT AGREEMENT, dated July 31, 1987 between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and NACIONAL FINANCIERA, S.N.C. (the Borrower). WHEREAS (A) the United Mexican States (the Guarantor) and the Borrower, having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, have requested the Bank to assist in the financing of the Project; (B) by an agreement (the Guarantee Agreement) of even date herewith between the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Loan and to undertake such other obligations as set forth in Page 2 the Guarantee Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985 (the General Conditions), with the last sentence of Section 3.02 deleted, constitute an integral part of this Agreement. Section 1.02. 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 additional terms have the following meanings : (a) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "PROCATI" means Producer Organization, Training, Extension and Research Project; (c) "SARH" means the Secretariat of Agriculture and Hydraulic Resources (Secretaria de Agricultura y Recursos Hidraulicos) of the Guarantor; (d) "Investigative Unit" means a unit for research within an Eligible District (as hereinafter defined) which includes a researcher, vehicle, field equipment and limited office construction and office equipment; (e) "Programming Unit" means the unit established by SARH and referred to in Section 3.07 of the Guarantee Agreement in each Eligible District (as hereinafter defined) that shall be responsible for monitoring and evaluating the implementation of the Project in such District; (f) "Chapingo" means the Post -Graduate College of Chapingo (Colegio para Post-Graduados de Chapingo); (g) "UAIM" means Women's Agroindustrial Unit (Unidad Agricola Industrial de la Mujer); (h) "Project Area" means the areas within the territory of the Guarantor not included in the PRODERITH Projects (as hereinafter defined), but including irrigated areas in the arid northwest, and the temperate central highlands; (i) "PRODERITH Projects" means the Programa de Desarrollo Rural Integrado del Tropico Humedo, financed pursuant to the Loan Agreement entered into between the Bank and the Borrower dated September 27, 1978 (Loan No. 1553 ME) and the Loan Agreement between the Bank and the Borrower, dated April 9, 1986 (Loan No. 2658 ME); (j) "Eligible District" means a rural development district in the Project Area, referred to in Section 3.05 of the Guarantee Agreement; (k) "Institutional and Manpower Development Program" means a Page 3 program to develop the capacity to deliver improved agricultural extension services at the district level, including a timetable for the implementation thereof; (l) "peso" means the currency unit of the Guarantor; and ( m ) "extension services" means the agricultural extension services provided, or to be provided, in the territory of the Guarantor. 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 the Loan Agreement, an amount in various currencies equivalent to twenty million dollars ($20,000,000). Section 2.02. (a) 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 Bank and the Borrower, for 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. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a Special Account on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1992, 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 percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (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 Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Guarantor and the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six - month period commencing on each date specified in Section 2.06 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost of the outstanding borrowings of the Bank drawn down after June 30, 1982, expressed as a percentage per annum, as reasonably determined by the Bank. (iii) "Semester" means the first six months or the second Page 4 six months of a calendar year. Section 2.06. Interest and other charges shall be payable semiannually on March 1 and September 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 3 to this Agreement. ARTICLE III Transfer of Loan Proceeds; Other Covenants Section 3.01. The Borrower shall enter into contractual arrangements, satisfactory to the Bank, with the Guarantor providing, inter alia, for: (i) the transfer to the Guarantor of the proceeds of the Loan for carrying out the Project; and (ii) the transfer by the Guarantor to the Borrower of such funds as the Borrower shall be required to pay to the Bank on account of prin- cipal interest and other charges on the Loan. Except as the Bank shall otherwise agree, the Borrower shall not change or fail to enforce any provision of such contractual arrangements. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 3.03. The Bank and the Borrower agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating respectively to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) in respect of the Project shall be carried out by the Guarantor pursuant to Section 3.02 of the Guarantee Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain separate records for the Special Account, adequate to reflect, in accordance with sound accounting practices, the resources and expenditures in connection with the execution of the Project. (b) The Borrower shall: (i) have such separate records and the Special Account, for each fiscal year audited in accordance with generally accepted auditing standards and practices consistently applied, by independent and qualified auditors; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; (iii) furnish to the Bank each month certified statements of the Special Account; and (iv) furnish to the Bank such other information concerning the Special Account, and the audit thereof, and said records as the Bank shall from time to time reasonably request. Page 5 ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, that the contractual arrangements referred to in Section 3.01 of this Agreement and Section 2.02 of the Guarantee Agreement shall have been executed. Section 5.02. The following is specified as an additional matter, 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, namely, that the contractual arrangements referred to in Section 3.01 of this Agreement have been executed and duly authorized and are legally binding upon the parties thereto in accordance with their respective terms. Section 5.03. The date of October 29, 1987, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Director Internacional of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. 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: Direccion Internacional Nacional Financiera, S.N.C Plaza NAFINSA Insurgentes Sur 1971 Torre Sur 9