Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1317 BR Public Disclosure Authorized LOAN AGREEMENT (Second Agro-Industries Credit Project) between Public Disclosure Authorized FEDERATIVE REPUBLIC OF BRAZIL and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized Dated September 22, 1976
LOAN AGREEMENT AGREEMENT, dated September 22, 1976, between FEDERATIVE RE- PUBLIC OF BRAZIL (hereinafter called the Borrower) and INTERNATION- AL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) The Borrower has requested the Bank to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) Banco Central do Brasil (hereinafter called Banco Central) is willing to carry out said Project and the Borrower will make available to Banco Central the proceeds of the Loan; (C) the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions set forth hereinafter and in a Project Agreement of even date herewith between the Bank and Banco Central; NOW THEREFORE the parties hereto hereby agree as follows:
-2- 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 following modification thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions): the words "and the Project Agreement" are added after the words "the Loan Agreement" wherever they occur in Sections 6.06 and 10.01 of 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) the term "Project Agreement" means the agreement between the Bank and Banco Central of even date herewith, as the same may be amended from time to time, and such term includes the Schedule to the Project Agreement; (b) the term "Participating Banks" means the State Development Banks of Minas Gerais, EspTrito Santo, Rio de Janeiro, Rio Grande do Sul, Santa Catarina, Sa"o Paulo, Paranf, the State Banks of Goifs and Mato Grosso, Banco Regional de Brasflia, S.A., Banco Regional de Desenvolvimento do Extremo Sul, Banco do Brasil, S.A.
-3-- and any private investment institution approved by Banco Central to participate in carrying out the Project in accordancc the Lending Policies; ' (c) the term "Subsidiary Loan Agreement" means any of the agreements between Banco Central and a Participating Bank to reimburse such Participating Bank for sub-loans made under the Project, and such term includes (i) any amendments thereto made with the approval of the Bank and (ii) any subsidiary loan agreement as defined in Section 1.02 (c) of the First Loan Agreement* and as amended for purposes of this Loan Agreement; and the term "Subsidiary Loan" means the loan provided for in a Subsidiary Loan Agreement; 0 (d) the term "Project Account" means the account established by Banco Central pursuant to Section 2.01 (c) of the First Project Agreement; (e) the term "Project Team" means the team referred to in Section 2.08 of the First Project Agreement;** (f) the term "Lending Policies" means the policies set forth in the Schedule to the Project Agreement, as the same may be amende from time to time; * "First Loan Agreement" means the agreement between Federative Republic of Brazil and the Bank dated August 1, 1973. ** "First Project Agreement" means the agreement between the Bank and Banco Central dated August 1, 1973.
(g) the term "Lending Program" means collectively the subloans to be made by the Participating Banks under the Project; (h) the term "beneficiary" means any person, natural or juridinal, which is a recipient of a sub-loan under the Lending Program; (i) the term "sub-loan" means a loan made or proposed to be m,de by a Participating Bank to a beneficiary for an agro-industrial project and to be partially financed out of the proceeds of a Subsidiary Loan; (j) the term "agro-industrial project" means a project consisting of the construction, rehabilitation or exdansion of facilities for meat, grain, or milk processing, or for such other agro-o industrial activities as shall have been approved by the Bank, to be carried out by a beneficiary and to be partially financed by a sub-loan; (k) the term "Project Area" means the area comprising the States of Rio Grande do Sul, Santa Catarina, Paranl, Sao Paulo, Rio de Janeiro, Espirito Santo, Minas Gerais, Gois and Mato Grosso, and the Federal District of the Borrower; and (1) the term "cruzeiro" means the currency unit of the Borrover.
-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 referred to, an amount in various currencies equivalent to eighty-three million dollars ($83,000,000). 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 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 and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, the goods and services (other than services of consultants) for the Project to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions referred to in Section 2.05 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1982 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. 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.
-6- Section 2.06. The Borrower shall pay interest at the rate of eight and eighty-five hundredths per cent (8.85%) per annum on te principal amount of the Loan withdrawn and outstanding from time to time. Section 2.01. Interest and other charges shall be payable semi-annually on February 1 and August 1 in each year. Section 2.08. The Borrower shall repay the principal of the L,_-an in accordance with the amortization schedule set forth in ' edule 3 to this Agreement.
ARTICLE III Execution of the Project Section 3.01. The Borrower shall cause the Project to be carried out with due diligence and efficiency in accordance with the Lending Policies and in conformity with appropriate technical, administrative, economic and financial practices, and shall provide, or cause to be provided, promptly as needed, the funds and other resources required for the purpose. Section 3.02. The Borrower shall make available the proceeds of the Loan to Banco Central for purposes of the Project on the * same financial terms and conditions as such proceeds are lent by the Bank to the Borrower. Section 3.03. The Borrower shall ensure that the short- and medium-term finncing in cruzeiros necessary to complement the Lending Program ih order to achieve the benefits contemplated thereunder shall be made available to beneficiaries under the Lending Program. Section 3.04. The Borrower covenants that it will not take or permit any of its political subdivisions or any of its agencies or any agency of any political subdivision to take any action which would prevent or interfere with the performance by Banco Central of any of the covenants, agreements and obligations of Banco
-8- Central in the Project Agreement and in any of the Subsidiary Loan Agreements contained, or with the performance by any Participating Bank of any of the covenants, agreements and obligations of any Participating Bank in any Subsidiary Loan Agreement contained, and will take or cause to be taken all action which shall be necessary to enable Banco Central and the Participating Banks to perform such covenants, agreements and obligations.
ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, specific security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivi.- sions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property;
- 10 - and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date, (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall (a) follow such sanitary regulation policies with respect to meat processing as may be necessary to ensure access of meat products to major export markets; (b) modify its sanitary regulations from time to time as may be required for this purpose; and (c) ensure that the milk processing plants inrcded in the Project comply with the milk processing regulatiour if the Borrower.
- 11 - 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) The Borrower or any of its political subdivisions or agencies or any agency of any political subdivision of the Borrower shall have adopted measures which would adversely and materially affect the economic benefits to be obtained from the Project. (b) Any obligation of Banco Central under the Project Agreement or any Subsidiary Loan Agreement shall not have been complied with. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified, namely the event specified in paragraph (b) 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 Borrower.
-12- ARTICLE VI Effective Date: Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01(c) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of Banco Central have been duly authorized or ratified by all necessary action of Banco Central and the Borrower; (b) the Loan Agreement has been duly registered by Banco Central; and (c) at least one Subsidiary Loan Agreement shall have been executed and delivered.
-13- 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 furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Banco Central, and is legally binding upon Banco Central in accordance with its terms; (b) Banco Central; and that the Loan Agreement has been duly registered by (c) that all necessary acts, consents and approvals (including such acts, consents and approvals as are required for the purpose of making available the proceeds of the Loan to Banco Central) to be performed or given by the Borrower, its political subdivisions or agencies or by any agency of any political subdivision or otherwise to be performed or given in order to authorize the carrying out of the Project and to enable the Borrower and Banco Central, respectively, to perform all of the covenants, agreements and obligations of the Borrower in the con- Loan Agreement and of Banco Central in the Project Agreement contained, together with all necessary powers and rights in nection therewith, have been performed or given. Section 6.03. The date December 21, 1976 is hereby specified the purposes of Section 12.04 of the General Conditions.
-14- ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministerio da Fazenda Edificio Ministerio da Fazenda Esplanada dos Ministerios Brasilia, D.F., Brazil With copies to: Banco Central do Brasil Edificio Banco do Brasil S.A. Setor Bancario Sul Brasilia, D.F., Brazil Cable address: MINIFAZ Brasilia, Brazil With copies to: BANCENTRAL Brasilia, Brazil
-15 - 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. FEDERATIVE REPUBLIC OF BRAZIL By /s/ Joao Baptista Pinheiro Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is/ G.K. Wiese Acting Regional Vice President Latin America and the Caribbean
- 16 - 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) Meat processing 38,000,000 ) agro-industrial ) projects ) (2) Grain processing 16,000,000 ) 40%* of payments agro-industrial ) made to finance projects ) sub-loans for ) projects (3) Milk processing 8,ooo,ooo ) agro-industrial ) projects ) % representing the estimated foreign expenditure component.
-1T- Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (4) Miscellaneous agro-industrial ) ) projects: ) (a) food and feed 11,000,000 ) 40%* of payments processing, in- ) made to finance cluding cold ) sub-loans for storage plants ) such projects (b) manufacturing of agricul- 10,000,000 ) ) tural inputs ) TOTAL 83,000,000 % representing the estimated foreign expenditure component.
- 18 2. Notwithstanding the provisions of paragraph 1 above, except as the Bank shall otherwise agree, no withdrawals shall be made in respect of: (a) expenditures made prior to the date of this Agreement; (b) expenditures made prior to the execution and delivery of a Subsidiary Loan Agreement in respect of any portion of the Loan to be lent thereunder; (c) payments made by Banco Central to finance the first subloan made by a Participating Bank which did not participate in the First Project,* unless such sub-loan shall have been approved by the Bank; (d) payments made by Banco Central to a Participating Bank to finance a sub-loan which by itself or together with any other sub-loan made to the same beneficiary and not repaid shall exceed the equivalent of $5,000,000, or of $3,000,000 if the beneficiary is engaged in manufacturing agricultural inputs, unless such subloan shall have been approved by the Bank; and (e) payments for taxes imposed under the laws of the Borrover or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. * For purposes of this sub-paragraph the term "First Project" means the Agro-Industries Credit Project described in Schedule 2 to the Loan Agreement between the Borrower and the Bank dated August 1, 1973.
-19-3. The allocation of an amount of the Loan under any Category in paragraph 1 above may be modified by a further agreement between the Borrower acting through Banco Central and the Bank.
- 20 - SCHEDULE 2 Description of the Project The Project will provide sub-loans to (a) agricultural processing industries producing food and feed products, food packing and tanning industries and cold storage plants, and (b) to industries processing fertilizer and manufacturing agricultural inputs, including small-farm equipment and implements, in the Project Area for new plants and for the rehabilitation, modernization and expansion of existing plants, all for the purpose of increasing L.ports, and providing import substitutes.
-21- SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (exprensed in dollars)* February 1, 1981 2,305,000 August 1, 1981 2,405,000 February 1, 1982 2,515,000 August 1, 1982 2,630,000 February 1, 1983 2,740,000 August 1, 1983 2,865,000 February 1, 1984 2,990,000 August 1, 1984 3,125,000 February 1, 1985 3,260,000 August 1, 1985 3,405,000 February 1, 19A6 3,555,000 August 1, 1986 3,715,000 February 1, 1987 3,875,000 August 1, 1987 4,050,000 February 1, 1988 4,230,000 August 1, 1988 4,415,000 February 1, 1989 4.,610,000 August 1, 1989 4,815,000 February 1, 1990 5,030,000 August 1, 1990 5,250,000 February 1, 1991 5,485,000 August 1, 1991 5,730,000 * 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 equivalente determined as for purposes of withdrawal.
- 22 - 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 aeneral Conditions: Time of Prepayment Premium Not more than three years before maturity 1.75% More than three years but not more than six years before maturity 3.55% More than six years but not more than eleven years before maturity 6.50% More than eleven years but not more than thirteen years before maturity 7.65% More than thirteen years before maturity 8.85%