Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1524 ME Public Disclosure Authorized Loan Agreement (Tourism Development Project) Public Disclosure Authorized between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NACIONAL FINANCIERA, S. A. Public Disclosure Authorized Dated March 21, 1978
LOAN NUMBER 1524 ME LOAN AGREEMENT AGREEMENT, dated March 21, 1978, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hnreinafter 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 2 to thls 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) "FONATUR" means Fondo Nacional de Fomento al Turismo, established by the Ley Federal de Fomento al Turismo of the Guarantor published in the Diario Oficial on January 28, 1974 and of which the Borrower is the trustee pursuant to a Contrato de Fideicomiso between the Guarantor and the Borrower dated March 24, 1974; and such term includes the technical and administrative organization, resources, staff and facilities used or to be used by the Borrower to operate FONATUR. (b) "Participating Institution" means: (i) any public or private financial institution approved by the Technical Committee of FONATUR; (ii) the Borrower or the Borrower as Trustee for FONATUR when acting as a Participating Institution; and (iii) any joint venture, for purposes of the Project, of two or more of such Participating Institutions. (c) "Investment Enterprise" means an enterprise to which a Participating Institution proposes to make or has made a Sub-loan or in which the Borrower as Trustee for FONATUR proposes to make or has made an Investment.
-2- (d) "Sub-loan" means: (i) a medium- or long-term loan made by a Participating Institution to an Investment Enterprise for assisting the latter in the financing of a Sub-project and to be partially financed out of the proceeds of a Subsidiary Loan, and (ii) a medium- or long-term loan made by the Borrower or the Borrower as Trustee for FONATUR to an Investment Enterprise for assisting the latter in the financing of a Sub-project and to be partially financed out of the proceeds of the Loan. (e) "Free-limit Sub-loan" means a Sub-loan, as so defined in Sub-section (d) above, which qualifies as a Free-limit Subloan pursuant to the provisions of Section 2.02 (b) of this Agreement. (f) "Investment" means an investment, other than a Sub-loan, made or proposed to be made by the Borrower as Trustee for FONATUR, in an Investment Enterprise, for a Sub-project, and to be partially financed out of the proceeds of the Loan. (g) "Subsidiary Loan" means a loan made by the Borrower to a Participating Institution to assist the latter in the financing of a Sub-project and to be partially financed out of the proceeds of the Loan; and "Subsidiary Loan Agreement" means any agreement providing for a Subsidiary Loan. (h) "Sub-project" means a specific tourism project financed or to be financed in part by means of a Sub-loan or an Investment, and to be carried out by an Investment Enterprise. (i) "Operating Regulations" means the Reglas de Operaci6n of FONATUR issued by the Guarantor under Article 49 of the Ley de Turismo and published in the Diario Oficial of the Guarantor on January 28, 1974 and the Statement of Policy approved by the TEhnical Committee of FONATUR in respect of the operations of FONATUR on January 25, 1978. 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 fifty million dollars ($50,000,000).
-3- Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account for 40% of the amounts paid by the Borrower under a Sub-loan made by the Borrower or the Borrower as Trustee for FONATUR or under an Investment or 40% of the amounts paid by the Borrower to a Participating Institution under a Subsidiary Loan to assist in the financing of the reasonable cost of goods and services required for the Sub-project in respect of which the withdrawal from the Loan Account is requested; provided, however, that no withdrawal shall be made in respect of a Sub-loan or Investment unless the Sub-loan or Investment shall have been approved by the Bank, or the Sub-loan shall be a Free-limit Sub-loan for which the Bank shall have authorized withdrawals from the Loan Account. (b) Except as the Bank and the Borrower shall otherwise agree, a Free-limit Sub-loan shall be a Sub-loan for a Subproject in an amount to be financed out of the proceeds of the Loan which shall not exceed the sum of $700,000 equivalent, when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the Loan for such Subproject. (c) Except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made on account of expenditures made by an Investment Enterprise (i) before the date of this Agreement or (ii) in respect of: (1) an Investment or a Sub-loan made by the Borrower acting on its own capacity or as Trustee for F3NATUR if such expenditures when added to all other expenditures in respect of Investments and such Sub-loans financed out of the proceeds of the Loan exceed $12,000,000 equivalent of the proceeds of the Loan; or (2) an Investment or a Sub-loan for a Sub-project which is a non-accommodation Sub-project if such expenditures when added to all other expenditures in respect of Investments or Sub-loans for nonaccommodation Sub-projects financed out of the proceeds of the Loan exceed $4,500,000 equivalent of the proceeds of the Loan; or (3) a Sub-loan or Investment if such expenditures when added to any other expenditures by such Investment
-4- Enterprise financed out of the proceeds of the Loan exceed thirty per cent (30%) of the cost of the Sub-project concerned; or (4) a Sub-loan subject to the Bank's approval or an Investment if such expenditures shall have been made more than one hundred and eighty (180) days prior to the date on which the Bank shall have received in respect of such Sub-loan or Investment the application and information required by Section 2.03 (a) of this Agreement, or in respect of a Free-limit Sub-loan, more than one hundred and eighty (180) days prior to the date on which the Bank shall have received in respect of such Freelimit Sub-loan the request and information required by Section 2.03 (b) of this Agreement; or (5) Sub-loans made before the first adjustment date, as defined in Section 3.02 (c) of this Agreement, if such expenditures when added to all other expenditures in respect of such Sub-loans financed out of the pr ceeds of the Loan exceed $10,000,000 equivalent of the proceeds of the Loan. Section 2.03. (a) When presenting a Sub-loan (other than a Free-limit Sub-loan) or an Investment to the Bank for approval, the Borrower shall furnish to the Bank an application, in form satisfactory to the Bank, together with (i) a description of the Investment Enterprise and an appraisal of the Sub-project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the proposed terms and conditions of the Sub-loan or Investment; and (iii) such other information as the Bank shall reasonably request. (b) Each request by the Borrower for authorization to make withdrawals from the Loan Account in respect of a Free-limit Sub-loan shall contain (i) a summary description of the Investment Enterprise and the Sub-project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the terms and conditions of the Sub-loan; and (iii) such other information as the Bank shall reasonably request. (c) Except as the Bank and the Borrower shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (a) and (b) of this Section shall be presented to the Bank on or before December 31, 1980.
- 5 - Section 2.04. The Closing Date shall be December 31, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.05. 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. Section 2.06. The Borrower shall pay interest at the rate of seven and forty-five hundredths per cent (7.45%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on April 1 and October 1 in each year. Section 2.08. 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 The Project; Management and Operations of the Borrower Section 3.01. (a) Unless the context otherwise requires, all references to the Borrower contained in this Article shall be references to the Borrower as Trustee for FONATUR. (b) The purpose of the Project is to assist the Borrower in financing the construction or expansion of such productive tourism-related facilities in Mexico as will contribute to the economic and social development of the country. The Project consists in the financing of specific Sub-projects through Sub-loans to, and Investments in, Investment Enterprises. (c) The Borrower shall carry out the Project and conduct its operations and affairs in accordance with sound financial standards and practices, with adequate management and personnel, and in accordance with the Operating Regulations, and shall, at all times, make available, promptly as needed, such funds and other resources as shall be required for the purpose.
-6- (d) The Borrower shall, upon withdrawal, credit to the accounts of FONATUR, for purposes of the Project, the proceeds of the Loan withdrawn from the Loan Account. Section 3.02. Except as the Bank and the Borrower shall otherwise agree: (a) Interest on the peso portion of Subsidiary Loans and Sub-loans made before the first adjustment date shall be payable at the rates approved by the Technical Committee of FONATUR on June 30, 1977 and on January 25, 1978. (b) Interest on the peso portion of Subsidiary Loans and Sub-loans made thereafter shall be payable: (i) in the case of Subsidiary Loans, at variable rates reflecting, on the average, the average cost of borrowed funds to financieras operating 'A Mexico, as calculated monthly by Banco de Mexico, S.A., such rates to be promptly adjusted whenever the average cost of such funds to such financieras so calculated changes a quarter of one percentage point or more; and (ii) in the case of Sub-loans, at variable rates reflecting the rates of interest on Subsidiary Loans so adjusted plus, on the avertge, two percentage points. (c) For purposes of this Section: (i) "first adjustment date" means a date not later than September 1, 1978 on which the Technical Committee of FONATUR will adjust the rates referred to in paragraph (a) of this Section to reflect: (A) in the case of Subsidiary Loans, on the average, the average cost of borrowed funds to financieras operating in Mexico, as calculated by Banco de Mexico, S.A., two months before such date, and (B) in the case of Sub-loans the rates of interest on Subsidiary Loans so adjusted plus, on the average, two percentage points; and (ii) "peso" means the currency unit of the Guarantor. Section 3.03. The Borrower shall require that if a Sub-loan or any part thereof shall be repaid to a Participating Institution in advance of maturity, or if a Sub-loan shall be sold, transferred, assigned or otherwise disposed of for value by a Participating Institution, such Participating Institution shall repay
-7- promptly the Borrower the amounts of the Subsidiary Loan corresponding to such Sub-loan or parts thereof so repaid in advance or disposed of for value. Section 3.04. (a) The Borrower undertakes that, unless the Bank shall otherwise agree, any Sub-loan or Investment will be made on terms whereby a Participating Institution or the Borrower shall obtain, by written contract with an Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Borrower and the Participating Institution, including, in the case of any Sub-loan and to the extent that it shall be appropriate in the case of any Investment the right to: (i) require the Investment Enterprise to carry out and operate the Sub-project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) require that (A) the goods and services to be financed out of the proceeds of the Sub-loan or Investment shall oe purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them and (B) such goods and services shall be used exclusively in the carrying out of the Sub-project; (iii) inspect, by itself or jointly with representatives of the Bank, if the Bank shall so request, and the Borrower, such goods and the sites, works, plants and construction included in the Sub-project, the operation thereof, and any relevant records and documents; (iv) require that the Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and that such insurdnce cover marine, transit and other hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Loan to the place of use or installation, and that any indemnity thereunder be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) obtain all such information as the Borrower or the Participating Institution shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Sub-loan or Investment upon failure by such Investment Enterprise to perform any of its obligations under its contract with the Participating Institution or the Borrower.
-8- (b). The Borrower shall exercise its rights, and cause each Participating Institution to exercise its rights, in relation to each Sub-project in such manner as to: (i) protect the interests of the Bank, the Borrower and the Participating Institution; (ii) comply with its obligations under the Subsidiary Loan Agreement; and (iii) achieve the purposes of the Project. Section 3.05. (a) The Borrower shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the Investment Enterprises, the Sub-projects, and the Sub-loans and Investments. (b) The Borrower: (i) shall maintain or cause to be maintained records and procedures adequate to record and monitor the progress of the Project to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; and (ii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than one year after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank and the Borrower shall agree, on the execution and operation of the Project, its cost and benefits, the performance by the Borrower as Trustee for FONATUR, the Participating Institutions, and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. Section 3.06. The Borrower shall pay itself out of FONATUR's accounts such amounts as shall be equivalent to the amounts paid by the Borrower to the Bank on account of repayment of principal of, and payments of interest and other charges on, the Loan. Section 3.07. The Borrower shall not later than June 30, 1979, carry out: (i) a study to determine the demand for trained hotel personnel and to make recommendations for a sectoral training program, including training curricula; and
-9- (ii) a study to identify means by which employment opportunities for less skilled persons can be increased through the design and execution of tourism projects. The Borrower shall afford the Bank a reasonable opportunity to comment on the terms of reference for, and recommendations made in, such studies. ARTICLE IV Financial Covenants Section 4.01. The Borrower, as Trustee for FONATUR, shall maintain or cause to be maintained records adequate to record the progress of the Project and of each Sub-project and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of FONATUR. Section 4.02. The Borrower, as Trustee for FONATUR, shall: (i) make or cause to be made an annual audit satisfactory to the Bank of FONATUR's accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited in accordance with sound auditing principles consistently applied, by independent and qualified auditors; (ii) furnish to the Bank, as soon as available but in any case not later than five months af ter the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of FONATUR and the audit thereof as the Bank shall from time to time reasonably request. Section 4.03. (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 or the assets of FONATUR as security for any debt, except as otherwise stated to the Bank in writing. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any external debt or the assets of FONATUR as security for any debt, such lien will ipso facto equally and ratably secure the payment of the principal of,
-10- and interest and other charges on, the Loan, and in the crealtion of any such lien express provision will be made to that effect:, at no cost to the Bank; provided, however, that the foregoing pirovisions of this paragraph shall not apply to: (A) any lien cre.ated on property, at the time of purchase thereof, solely as secirity for the payment of the purchase price of such property; or (B) any lien arising in the ordinary course of banking transact:ions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 4.04. The Borrower shall enable the Bank's representatives to inspect the records referred to in Section 4.01 of this Agreement and any relevant documents. 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: (a) a change shall have been made in any legal instrument under which FONATUR has been established which would materially and adversely affect the carrying out of the Project or the financial condition of FONATUR; (b) a change shall have been made in the Operating Regulations which would materially and adversely affect the carrying out of the Project; and (c) a resolution shall have been passed for the dissolution or liquidation of FONATUR. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified, namely, any of the events specified in Section 5.01 of this Agreement shall have occurred. ARTICLE VI Miscellaneous Section 6.01. 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
- 11 - furnished to the Bank, namely, 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 otherwise to be performed or given in order to authorize the carrying out of the Project and to enable the Borrower to perform all of the covenants, agreements and obligations of the Borrower in the Loan 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 of May 22, 1978 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.03. 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: INTBAFRAD Washington, D.C. Telex: 440098 (ITT), 248423 (RCA) or 64145 (WUI) For the Borrower: Nacional Financiera, S.A. Isabel la Cat6lica 51 M6xico 1, D.F. M6xico Cable address: Telex: NAFIN NAFIN 383-1775765 Mexico City Mexico City
- 12 - 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 Is/ Adalbert Krieger Regional Vice President Latin America and the Caribbean NACIONAL FINANCIERA, S. A. By /s/ Jorge Espinosa de los Reyes Authorized Representative
- 13 - SCHEDULE 1 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars)* On each April 1 and October 1 beginning October 1, 1982 1,925,000 through October 1, 1994 On April 1, 1995 1,875,000 * 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.
- 14 - 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 4.80% More than eleven years but not more than fifteen years before maturity 6.55% More than fifteen years before maturity 7.45%
- 15 - SCHEDULE 2 Modifications of the General Conditions For the purposes of the Loan Agreement, the provisions of the General Conditions are modified as follows: (1) The words "and Sub-projects" is added after the words "the Project" at the end of Section 5.03. (2) Section 6.03 is deleted and replaced by the following new Section: "Section 6.03. Cancellation by the Bank. If (a) the right of the Borrower to make withdrawals from the Loan Account shall have been suspended with respect to any amount of the Loan for a continuous period of thirty days, or (b) by the date specified in paragraph (c) of Section 2.03 of the Loan Agreement, no applications or requests permitted under paragraph (a) or paragraph (b) of such Section shall have been received by the Bank in respect of any portion of the Loan, or having been so received, shall have been denied, or (c) after the Closing Date an amount of the Loan shall remain unwithdrawn from the Loan Account, or (d) the Bank shall have received notice from the Guarantor pursuant to Section 6.07 with respect to an amount of the Loan, the Bank may by notice to the Borrower terminate the right of the Borrower to submit such applications or requests or to make withdrawals from the Loan Account, as the case may be, with respect to such amount or portion of the Loan. Upon the giving of such notice such amount or portion of the Loan shall be cancelled."