India - Tata Steet Project : Loan 0146 - Loan Agreement - Conformed

LOAN NUMBER 146 IN Loan Agreement (Tata Steel Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE TATA IRON AND STEEL COMPANY, LIMITED DATED JUNE 26, 1956 uInut Agurrmut AGREEMENT, dated June 26, 1956, between INTERNA- TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank) and THE TATA IRON AND STEEL COMPANY, LIMITED, a company duly incorporated under the Indian Companies Act (hereinafter called the Borrower). WHEREAS (A) The Bank has been requested to grant a loan to the Borrower; (B) The said loan is to be guaranteed as to payment of principal, interest and other charges by the Government of India upon the terms of a Guarantee Agreement of even date herewith and is to be secured as hereinafter in Section 5.04 provided, which security is to be constituted by and provided for in the Trust Deed as hereinafter defined; (C) The Borrower by a Debenture Trust Deed dated 2nd July 1937 (as supplemented by a Supplemental Debenture Trust Deed dated 1st July 1938 and as further supplemented by an Agreement dated 25th June 1943) has created a first specific mortgage and a first floating charge in respect of its properties and undertaking securing its 4% First Mort- gage Debenture Stock maturing as to principal on 1st July 1957; (D) All said 4% First Mortgage Debenture Stock, pres- ently outstanding in the aggregate principal amount of Rs. 20,000,000, has been and is now pledged to State Bank of India to secure advances in the aggregate amount of Rs. 20,000,000; (E) The Borrower has agreed to cause State Bank of India and the Trustees under said Debenture Trust Deed dated 2nd July 1937 (supplemented as hereinabove recited) to consent to modifications of said Debenture Trust Deed (as so supplemented) so as to permit the security referred to in recital (B) above to rank prior to the mortgage and 4 charge constituted by said Debenture Trust Deed (as so supplemented); (F) The Guarantor and the Borrower have entered into an Agreement dated May 24, 1954 (hereinafter called the "First Government Agreement") providing for a special advance by the Guarantor to the Borrower of Es. 100,000,000 to assist in financing the Modernization and Expansion Pro- gram hereinafter described in Part I of Schedule 2 to this Agreement; (G) The Guarantor and the Borrower have entered into an Agreement dated June 23, 1955 (hereinafter called the "Second Government Agreement") relating to the financing by tho Borrower of part of the costs of the Two Million Ton Program hereinafter described in Part II of Schedule 2 to this Agreement; (H) The Guarantor and the Borrower propose to enter into an Agreement (hereinafter called the " Third Govern- ment Agreement"), setting forth the terms on which the Guarantor has agreed to give its guarantee above recited; and WHEREAS the Bank has, upon the basis inter alia of the foregoing, agreed to make a loan to the Borrower upon the terms and conditions hereinafter set forth; Now THEREFORE, it is hereby agreed as follows: ARTICLE I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated February 15, 1955, as amended May 10, 1956, subject, however, to the modifications thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 4 as so amended and modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. 5 SECTION 1.02. Except where the context otherwise re- quires, the following terms have the following meanings wherever used in this Agreement or any Schedule thereto: (1) The term "Trust Deed" means the trust deed to be executed by the Borrower in accordance with the provisions of Section 5.04 of this Agreement and shall include any deed or instrument supplemental thereto. (2) The term "subsidiary" means any company which is a subsidiary of the Borrower within the meaning of The Companies Act, 1956, of India. (3) The term "State Bank" means the State Bank of India. (4) The term "rupees" and the letters "Rs." mean cur- rency of the Guarantor. (5) The term "Debenture Trust Deed" means the De- benture Trust Deed dated 2nd July 1937, supplemented as hereinbefore recited and shall include any deeds or instru- ments supplemental thereto. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to seventy-five million dollars ($75,000,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations; provided, however, that, until the Borrower shall have complied with the provisions of Section 5.04 of this Agreement, no more than the equiv- alent of twenty-five million dollars ($25,000,000) shall be 6 withdrawn from the Loan Account, except as the Bank may otherwise agree. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (% of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. SECTION 2.04. The Borrower shall pay interest at the rate of four and three-fourths per cent (43/4%) per annum on the principal amount of the Loan so withdrawn and out- standing from time to time. SECTION 2.05. Except as the Bank and the Borrower shall otherwise agree, the charge payable for special commit- ments entered into by the Bank at the request of the Bor- rower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (/. of 1%0) per annum on the principal amount of any such special com- mitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on June 1 and December 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall apply the proceeds of the Loan exclusively to financing the cost of goods required to carry out Part II of the Project described in Schedule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan shall be determined by agree- ment between the Bank and the Borrower, subject to modi- fication by further agreement between them. 7 SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be imported into the territories of the Guarantor and there to be used exclu- sively in carrying out Part II of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and duly de- liver Bonds (in registered or bearer form as the Bank shall request) representing the principal amount of the Loan of the form, tenor and purport prescribed in the Trust Deed and as provided thereby and in the Loan Regulations. SECTION 4.02. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall, against payment by the Bank of any amount to be withdrawn from the Loan Account pursuant to Article II of this Agreement, execute and deliver to or on the order of the Bank, Bonds in the aggregate principal amount so paid, provided that the Bank may, at its option, require the Borrower, instead, within such period not less than 60 days after the date of any request therefor as the Bank shall specify in such request, to execute and deliver to or on the order of the Bank, Bonds in the aggregate principal amount specified in such request, not exceeding, however, the aggregate principal amount of the Loan which shall have been withdrawn and shall be outstanding and unpaid at the date of such request and for which Bonds shall not theretofore have been so delivered or requested. SECTION 4.03. The Borrower shall from time to time designate and notify to the Bank an authorized representa- tive or representatives for the purposes of Section 6.12 (a) of the Loan Regulations. SECTION 4.04. The Borrower shall effect original issues of the Bonds only as herein provided. 8 SECTION 4.05. The Bank and the Borrower shall be at liberty to make such arrangements as they may from time to time mutually agree as to procedure for the issue, authen- tication and delivbry of the Bonds and such arrangements may be in addition to or in substitution for any of the pro- visions of this Agreement or of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. The Borrower shall carry out and com- plete the Project and operate its undertaking, including the Project, with due diligence and efficiency and in conformity with sound industrial, engineering, financial and business practices. SECTION 5.02. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans and specifications for the Project and the construction sched- ules, and any material modifications subsequently made therein, in such detail as the Bank shall from time to time request. (b) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (includ- ing the cost thereof) and to reflect in accordance with con- sistently maintained sound accounting practices the finan- cial condition and operations of the Borrower and of its subsidiaries. (c) The Borrower shall enable the Bank's representa- tives to inspect the goods financed out of the proceeds of the Loan, the sites, works, construction and operations in- cluded in the Project and all other plants, works, proper- ties, equipment and operations of the Borrower and its subsidiaries, and to examine any relevant books, records and documents. 9 (d) The Borrower shall furnish or cause to be furnished to the Bank all such information as the Bank shall reason- ably request concerning the expenditure of the proceeds of the Loan, the Project, the goods, and the financial condition and operations of the Borrower and of its subsidiaries. SECTION 5.03. (a) The Bank and the Borrower shall co- operate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably re- quest with regard to the general status of the Loan. (b) The Bank and the Borrower shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Borrower shall cause each subsidiary to ob- serve and perform the obligations of the Borrower here- under to the extent to which the same may be applicable thereto as though such obligations were binding upon each such subsidiary. SECTION 5.04. (a) The Borrower shall execute and de- liver and shall procure all other necessary parties to execute and deliver a Trust Deed in favor of such Trustees and in such form as the Bank may reasonably require to constitute by way of security for the Loan and the Bonds: (1) a First Specific Mortgage upon all the immovable properties, lands, interests in land, mines, minerals and mining rights, and all the collieries, factories, mills, crushers, furnaces, stoves, coke-ovens, forges, foundries, works, railways, tramways, ropeways, locomotives, wagons, erections and fixed plant, boilers, engines, generators, transformers, and buildings, and plant and machinery (whether similar to the foregoing 10 or not) which are owned at the date of this Agreement or are thereafter acquired by the Borrower, together with all grants, easements, licenses, wayleaves, concessions, rights, liberties, powers and privileges held at the date of this Agreement or thereafter acquired by the Borrower; and (2) without prejudice to the foregoing a First Floating Charge upon all the Borrower's undertaking and assets (including all uncalled capital), now owned or hereafter acquired; such Mortgage and Charge to rank in point of security prior to any other mortgage, charge or lien upon and to any pledge or hypothecation of any of the properties or assets of the Borrower, existing at the date of this Agreement or there- after created, including the Debenture Trust Deed, except mortgages, charges, liens, pledges or hypothecations per- mitted by the provisions of Section 5.05. (b) The Borrower shall take all necessary steps and shall procure all other necessary parties to take all necessary steps to ensure that all mortgages, charges, pledges, hy- pothecations and liens outstanding upon the property and assets to be mortgaged, charged or assigned by or pursuant to the Trust Deed shall be discharged or be varied to the reasonable satisfaction of the Bank so as to provide that the Mortgage and Charge constituted by the Trust Deed shall, save only as provided or permitted by Section 5.05 of this Agreement, rank first in point of security upon such property and assets. (c) The Borrower shall procure all necessary consents from all interested parties for the valid execution and de- livery of the Trust Deed. (d) The Borrower shall duly register or cause to be duly registered the Trust Deed and all other documents required by Indian law to be registered. (e) The Borrower shall hold or acquire, to the reasonable satisfaction of the Bank, all such lands and properties and all such rights of way, easements, licenses, consents, or other rights or privileges as shall be necessary or requisite to enable it to construct the Project and operate its undertak- 11 ing, or shall (to the like satisfaction) make effective ar- rangements therefor; and the Borrower shall supply to the Bank a certificate, satisfactory to the Bank, setting forth particulars of the foregoing. (f ) The Borrower shall, not later than January 31, 1957, furnish evidence, satisfactory to the Bank, that it has duly performed its obligations pursuant to the foregoing sub- paragraphs of this Section. As part of such evidence there shall be furnished an opinion or opinions satisfactory to the Bank of counsel acceptable to the Bank showing that the requirements of subparagraphs (a) to (d) inclusive of this Section have been duly complied with and that, as to such property, lands and interests in land specified in the cer- tificate referred to in subparagraph (e) as being owned or having been acquired, the Borrower has good and market- able title thereto; that as to such licenses, consents or other rights or privileges specified in said certificate as having been acquired, the Borrower has validly acquired the same and that the same are valid and effective; and that, as to arrangements specified in said certificate for the acquisition of any of the foregoing, such arrangements are valid and effective. SECTION 5.05. (a) The Borrower undertakes that, except as the Bank shall otherwise agree, no mortgage, hypotheca- tion, lien, pledge or charge which would rank prior to or pari passu with the Mortgage or Charge created or to be created by or pursuant to the Trust Deed shall, after the date of this Agreement, be created or maintained on any of its assets as security for any debt, or extended to secure any addi- tional debt, except that the Borrower may: (i) create or maintain mortgages, hypothecations, spe- cific charges or pledges ranking in priority to the Float- ing Charge created or to be created under the Trust Deed, but subject to the First Specific Mortgage, securing debts or borrowings, maturing not more than one year (at a time) from their respective dates and incurred to bankers 12 in the ordinary course of business, in an amount not exceeding in the aggregate at any one time one hundred million rupees (Rs. 100,000,000) but so that no lender or other person dealing with the Borrower shall be entitled or concerned to see or enquire whether this limit is ob- served or not provided that the lender has obtained from the Borrower a certificate certifying that the amounts borrowed and then to be borrowed are within the afore- said limit; (ii) create or maintain mortgages and charges, rank- ing in priority to the Mortgage and Charge created or to be created by or pursuant to the Trust Deed, on housing property to secure loans obtained from the Guarantor or the Government of any State within India to assist in the construction of employee housing; and (iii) issue, on such terms and conditions as shall be agreed upon between the Bank and the Borrower, for the purpose of financing or refinancing the cost of the Project, debentures or other obligations ranking pari passu with the Bonds in the security constituted or to be constituted by the Trust Deed in an aggregate principal amount not exceeding, without the consent of the Bank, the equivalent of thirteen million five hundred thousand dollars ($13,500,000). (b) Except as the Bank shall otherwise agree: (i) no sub- sidiary shall at any time create any mortgage, charge or security on its undertaking, properties or assets (including uncalled capital) or any part thereof otherwise than in favor of the Borrower; (ii) all mortgages, charges or secu- rities created by any subsidiary in favor of the Borrower shall be retained by the Borrower and shall not be sold, transferred or otherwise disposed of by it; and (iii) the Borrower shall not sell, transfer or otherwise dispose of any shares for the time being held by it in any subsidiary so that such subsidiary shall cease to be a subsidiary of the Borrower. (c) The Borrower shall from time to time at the request of the Bank specifically assign to the Trustees under the 13 Trust Deed all the interest of the Borrower in such con- tracts for the supply of coal, minerals or power as shall be specified in such request, and upon any such request the interest in the contract specified therein shall become and be deemed to be part of the property covered by the First Specific Mortgage constituted by the Trust Deed. SECTION 5.06. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur, and shall not permit any subsidiary to incur, indebtedness if at the time ant as a result thereof the consolidated unimpaired capital and surplus of the Borrower and its subsidiaries, would be less than the consolidated indebtedness of the Borrower and its subsidiaries. For the purposes of and in making any calculation pur- suant to this Section: (a) The term "indebtedness" shall not include (i) com- mercial and trade liabilities (including in such lia- bilities accrued liabilities to the Indian Iron and Steel Controller but not including in such liabilities obliga- tions to bankers or in respect of deposits accepted by the Borrower) incurred in the ordinary course of business and payable not more than one year after the date as of which such calculation is required to be made for the purposes of this Section, or (ii) other debts maturing by their terms not mor .: than one year after the date as of which such calculation is required to be made for the purposes of this Section, provided, however, that if the aggregate amount of such other debts shall be in excess of Rs. 100,000,000 the amount of such excess shall be deemed to be indebtedness for the purposes of this Section. (b) There shall be included in "capital and surplus ", and excluded from "indebtedness ", the amount then out- standing of the Government advance provided for in the First Government Agreement. 14 (c) Amounts in currency other than currency of the Guarantor shall be converted into currency of the Guarantor at the official selling rate of the Reserve Bank of India for such other currency on the date on which the Borrower proposes to incur the debt in question. (d) The term "consolidated indebtedness" shall mean the total amount of indebtedness of the Borrower and all its subsidiaries (if any) excluding indebted- ness owed by the Borrower to any subsidiary or by any subsidiary to the Borrower or to any other subsidiary. (e) The term "capital and surplus" shall mean capital and surplus determined in accordance with sound accounting procedures. (f) The term "consolidated capital and surplus" shall mean the total capital and surplus of the Borrower and all its subsidiaries after excluding such items of capital and surplus as shall represent equity interest by the Borrower or any subsidiary in the Borrower or any subsidiary. SECTION 5.07. (a) The Borrower shall at all times take all requisite steps for the acquisition, retention and renewal by it of all such lands, interests in land and properties and all such rights, powers and privileges as may be necessary or proper for the construction of the Project, the operation of the properties included therein and of its other properties and the carrying on of its undertaking. (b) The Borrower shall at all times maintain its corpo- rate existence and right to carry on operations and shall, except as the Bank may otherwise agree, acquire, main- tain and renew all rights, powers, privileges and franchises owned or held by it and necessary or useful in the conduct of its business. (c) The Borrower shall operate its undertaking and 15 conduct its affairs in accordance with sound business, indus- trial and financial practices and shall maintain, renew and repair its plants, machinery, equipment and property as required in accordance with sound engineering practices. SECTION 5.08. Except as the Bank shall otherwise agree, the Borrower shall pay dividends only from current earn- ings. SECTION 5.09. Subject to such exemption as shall be con- ferred by the provisions of Section 3.03 and Section 3.04 of the Guarantee Agreement, the Borrower shall pay or cause to be paid all taxes (including duties, fees or impositions), if any, imposed under the laws of the Guarantor or laws in effect in its territories on or in connection with the execution, issue, delivery or registration of the Loan Agreement, the Guarantee Agreement, the Trust Deed or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the provisions of this Section shall not apply to taxation of (including duties levied in respect of, or fees or impositions upon) payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 5.10. The Borrower shall pay or cause to be paid all taxes (including duties, fees and impositions), if any, imposed under the laws of the United Kingdom or the coun- try or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of the United Kingdom or such country or countries on or in connection with the execution, issue, delivery or registration of the Loan Agreement, the Guarantee Agreement, the Trust Deed or the Bonds. SECTION 5.11. (a) Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall insure or cause to be insured with responsible insurers all 16 goods financed with the proceeds of the Loan. Such insur- ance shall cover such marine, transit and other hazards incident to delivery of the goods into the territories of the Guarantor, and shall be for such amounts, as shall be con- sistent with sound commercial practice. Such insurance shall be payable in the currency in which the cost of the goods insured thereunder shall be payable. (b) The Borrower shall, in addition to the insurance pro- vided for in subparagraph (a) of this Section, take out or cause to be taken out, and maintain or cause to be main- tained, -such insurance, against such risks and in such amounts as shall be consistent with sound industrial and business practice. SECTION 5.12. The Borrower shall not consent to any action taken at any meeting of bondholders or by written instrument pursuant to the provisions of the Trust Deed which would change the terms of the Bonds or adversely affect the holders thereof unless the Bank shall have ex- pressed in writing its approval of such action or such consent. SECTION 5.13. The Borrower shall not amend its Mem- orandum or Articles of Association without the approval of the Bank. SECTION 5.14. Neither the First Government Agreement, the Second Government Agreement nor the Third Govern- ment Agreement shall be amended without the approval of the Bank. ARTIULE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a), paragraph (b), paragraph (e) or paragraph (f) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if the security 17 constituted by the Trust Deed shall become enforceable, or (iii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement, the Trust Deed or the Bonds to the contrary notwithstanding. ARTICLE VII Effective Date; Termination SECTION 7.01. The following events are specified as addi- tional conditions to the effectiveness of this Agreement within the meaning of Section 9.01 (a) (ii) of the Loan Regulations: (a) The State Bank of India and the present Trustees under the Debenture Trust Deed shall have agreed (in form satisfactory to the Bank) to subordinate the security con- stituted by the Debenture Trust Deed to the security to be constituted by the Trust Deed. (b) At least 90 per cent of the issue of 1,285,000 new ordinary shares of a par value of Rs. 75/ each of the Bor- rower shall have been subscribed and allotted. (c) Without limiting the generality of Section 9.01 (a) (i) of the Loan Regulations, (i) the shareholders of the Borrower shall have taken such action, satisfactory to the Bank, in amendment of or pursuant to the Borrower's Articles of Association, as shall be necessary to authorize the Directors of the Borrower validly to ratify and adopt this Agreement on behalf of the Borrower, (ii) the Direc- tors of the Borrower shall have validly ratified and adopted this Agreement on behalf of the Borrower and (iii) all necessary consents for the valid execution, ratification and 18 adoption of this Agreement by and on behalf of the Bor- rower shall have been secured. (d) The Borrower shall certify in writing to the Bank that, as of a date to be agreed between the Borrower and the Bank, there has been no material adverse change in its condition since the date of this Agreement. (e) Binding arrangements, satisfactory to the Bank, shall have been made for the furnishing to the Borrower of the additional electric power needed for the operation of its facilities as expanded by the Project. (f) The Third Government Agreement shall have been duly executed in form satisfactory to the Bank and shall have become fully effective and binding upon the parties thereto in accordance with its terms. SECTION 7.02. The following is specified as an additional matter, within the meaning of Section 9.02 of the Loan Reg- ulations, to be included in the opinion or opinions to be furnished to the Bank: that the First Government Agree- ment, the Second Government Agreement and the Third Government Agreement are valid and binding obligations of the parties thereto in accordance with their terms. SECTION 7.03. A date 90 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be March 31, 1959. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: 19 For the Borrower: The Tata Iron and Steel Company, Limited Bombay House, Bruce Street Bombay No. 1 India For the Bank: International Bank for Reconstruction and Development 1818 H Street, N. W. Washington 25, D. C. United States of America IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective names and delivered 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 /s/ EUGENE R. BLACK President THE TATA IRON AND STEEL COMPANY, LIMITED By /s/ E. T.WARREN Authorized Representative Countersigned: TATA INDUSTRIES PRIVATE LIMITED By /s/ E. T. WARREN Authorized Representative 20 SCHEDULE 1 Amortization Schedule Principal Payment of Amount Outstanding Principal After Each Payment Date (expressed in (expressed in Payment Due dollars) * dollars) * - $75,000,000 December 1, 1959 $2,355,000 72,645,000 June 1, 1960 2,410,000 70,235,000 December 1, 1960 2,468,000 67,767,000 June 1, 1961 2,526,000 65,241,000 December 1, 1961 2,586,000 62,655,000 June 1, 1962 2,648,000 60,007,000 December 1, 1962 2,711,000 57,296,000 June 1, 1963 2,775,000 54,521,000 December 1, 1963 2,841,000 51,680,000 June 1, 1964 2,908,000 48,772,000 December 1, 1964 2,977,000 45,795,000 June 1, 1965 3,048,000 42,747,000 December 1, 1965 3,121,000 39,626,000 June 1, 1966 3,194,000 36,432,000 December 1, 1966 3,271,000 33,161,000 June 1, 1967 3,348,000 29,813,000 December 1, 1967 3,428,000 26,385,000 June 1, 1968 3,509,000 22,876,000 December 1, 1968 3,592,000 19,284,000 June 1, 1969 3,678,000 15,606,000 December 1, 1969 3,765,000 11,841,000 June 1, 1970 3,855,000 7,986,000 December 1, 1970 3,946,000 4,040,000 June 1, 1971 4,040,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in these columns represent dollar equivalents determined as for purposes of withdrawal. 21 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 3 years before maturity..... .1/4% More than 3 years but not more than 6 years before maturity.. ............ .1% More than 6 years but not more than 11 years before maturity .............. 21/4% ,More than 11 years but not more than 13 years before maturity............... 31/% More than 13 years before maturity....... 434% 22 SCHEDULE 2 Description of Project The Project consists of the modernization and expansion of the Borrower's works at Jamshedpur, designed to in- crease their capacity to about 2,000,000 long tons of steel ingots and about 1,500,000 tons of semi-finished and finished steel products, the development of the Borrower's coal and ore mines, and related and ancillary works. The Project, subject to such additions and changes as may from time to time hereafter be agreed upon between the Bank and the Borrower, includes the following: PART I: THE MODERNIZATION AND EXPANSION PROGRAM This part of the Project was started in 1951 and was de- signed to increase the capacity of the Jamshedpur works to 930,000 tons of saleable steel products. It includes the replacement of one battery of coke ovens (completed in December 1953); the complete remodelling of the No. 3 steel melting shop (including the construction of five open hearth furnaces each of 185 tons capacity in place of three old fur- naces); the modernization of the blooming mill (including the installation of a new electric drive); the improvement of the plate mill; the construction of a new continuous skelp mill (which started operation in March 1956); and exten- sions to the steam and power plants (which have been com- pleted). This program is scheduled to be completed by March 31, 1958. PART 11: THE Two MILLION TON PROGRAM-MAJOR WORKS This part of the Project consists of the major works presently being undertaken at Jamshedpur as part of a program which, together with the Modernization and Ex- pansion Program described in Part I above, and the related works described in Part III below, will increase the capacity of the Jamshedpur plant to about 2,000,000 tons of steel ingots and 1,500,000 tons of semi-finished and finished steel products. Engineering and other services for this part of 23 the Project are to be furnished by Kaiser Engineers Divi- sion of Henry J. Kaiser Company and Kaiser Engineers Overseas Corp. This part of the Project includes: Colce Plant: The construction of a new coke oven battery and the remodelling and expansion of the existing batteries to increase plant capacity from 3,120 tons of coke per day to 4,400 tons per day. By-product recovery facilities will be expanded. Boiler and Powe- House: Expansion of the boiler and power house and Lie installation of two new boilers with a capacity of 100,000 pounds each and a 110,000 c.f.m. turbo- blower. Sintering Plant: Installation of an ore crushing plant and a new sintering plant having a daily capacity of 4,000 tons of sinter. Blast Furnace: Construction of a new blast furnace, with a daily capacity of 1,650 tons of pig iron. One existing fur- nace will be retired to stand-by status. Steel Furnaces: Expansion of No. 3 melting shop by the addition of two 200 ton open hearth furnaces and one 32 ton converter. Increasing the capacity of the two converters and three of the five open hearth furnaces included in Part I above to 32 tons each and 200 tons each respectively. Addi- tion of new ingot stripper facilities. Rolling Mills: Erection of a new 46" blooming mill, com- plete with soaking pits, with an annual capacity of about 1,750,000 tons of slabs and blooms, a new continuous sheet bar and billet mill with an annual capacity of 460,000 tons, a new medium and light structural mill with an annual capacity of 320,000 tons and a new roll shop. Other Facilities: Addition of a fourth kiln to the calcining plant, new ladle repair facilities, installation of cranes and other necessary handling equipment, and modification and substantial expansion of storage and other facilities and of the electrical distribution, water, fuel, road, transportation and communication systems. 24 The above works and facilities are scheduled to be com- pleted by May 31, 1958. PART III: Two MILLION TON PROGRAM-RELATED WORKS This part of the Project consists of those parts of the Two Million Ton Program not covered by Part II above. It is to be carried out, for the most part, departmentally by the Borrower and includes: site preparation; construction of material stockyards; remodelling and modernization of steal melting shops, calcining plant, sheet bar and billet mill, rail mill and merchant mill; construction of an ingot mould foundry; acquisition of rolling stock; colliery devel- opment; ore mine development; and housing construction at Jamshedpur. These works are scheduled to be completed by March 31, 1960. PART IV: ANCILLARY WoRs This part of the Project consists of improvements and additions to the Borrower's facilities not required for the Two Million Ton Program, including the construction of a new ferro-manganese plant, a new refractories plant, a ferro-sulphide washing plant and a plant for the recovery of scrap from slag by the Heckett process. These works are scheduled to be completed by March 31, 1960. The proceeds of the Loan are to be used to meet part of the foreign exchange costs of that part of the Two Million Ton Program described in Part II above. 25 SCHEDULE 3 Modifications of Loan Regulations No. 4 For the purposes of this Agreement, the provisions of Loan Regulations No. 4 of the Bank, dated February 15, 1955, as amended May 10, 1956, are modified as follows: (a) Sub-section (b) of Section 2.05 is amended to read as follows: "(b) The Borrower shall have the right, upon payment of all accrued charges for interest and pay- ment of the premium specified in said amortization schedule, and upon not less than 45 days' notice to the Bank, to repay in advance of maturity (i) all of the principal amount of the Loan at the time out- standing or (ii) all of the principal amount of any one or more maturities, provided that on the date of such prepayment there shall not be outstanding any part of the Loan maturing after the part to be pre- paid. However, if Bonds shall have been delivered pursuant to Article VI in respect of any part of the Loan to be prepaid, the terms and conditions of pre- payment of that part of the Loan shall be those set forth in Section 6.16 and in such Bonds." (b) The first sentence of Section 3.01 is amended to read as follows: "The Borrower shall use reasonable efforts to assure that payment for goods financed out of the proceeds of the Loan is made in the currencies of the countries from which such goods are acquired." (c) The first sentence of Section 4.01 is amended to read as follows: "The Borrower shall be entitled, subject io the pro- visions of these Regulations, to withdraw from the Loan Account (i) such amounts as shall be required by the Borrower to reimburse it for the reasonable 26 cost of goods to be financed under the Loan Agree- ment; and (ii), if the Bank shall so agree, such amounts as shall be required to meet the reasonable cost of such goods." (d) Section 4.05 is amended to read as follows: " SECTION 4.05. Sufficiency of Applications and Documents. Each application and the accompanying documents and other evidence must be sufficient in form and substance to satisfy the Bank that the Bor- rower is entitled to withdraw from the Loan Account the amount applied for and that the amount to be withdrawn from the Loan Account is to be used only for the purposes specified in the Loan Agreement." (e) Sub-section (a) of Section 5.02 is amended by insert- ing the word "Agreement" after the word "Loan". (f) Sub-sections (i) and (j) of Section 5.02 are amended to read as follows: " (i) On or after the date of the Loan Agreement and prior to the Effective Date there shall have been any act or omission to act which would have consti- tuted a violation of any covenant contained in the Loan Agreement or the Guarantee Agreement if the Loan Agreement and Guarantee Agreement had been effective on the date of such act or omission. " (j) The security constituted by the Trust Deed shall become enforceable." (g) The last sentence of Section 5.02 is amended by add- ing the words "or events" after the word "event". (h) Section 6.03 is deleted. (i) Section 6.04 is amended to read as follows: " SECTION 6.04. Interest on Bonds; Service Charge. The Bonds shall bear interest at such rate or rates as the Bank shall request, not in excess, however, of 27 the rate of interest on t] Loan. If the rate of inter- est on any Bond shall be less than the rate of interest on the Loan, the Borrower shall, in addition to the interest payable on such Bond, pay to the Bank inter- est (herein called the service charge) on the princi- pal amount of the Loan represented by such Bond at a rate equal to the difference between the interest rate on the Loan and the interest rate on such Bond. The service charge shall be payable on the dates on which and in the currency in which such interest is pay- able." (j) The words "delivered pursuant to any request under Section 6.03" and the words "in such request" are deleted from Sections 6.05, 6.06 and 6.10. (k) Section 6.07 is amended to read as follows: "SECTION 6.07. Form of Bonds. (a) The Bonds shall be fully registered bonds without coupons (hereinafter sometimes called registered Bonds) or bearer bonds with coupons for semi-annual interest attached (hereinafter sometimes called coupon Bonds). Bonds delivered to the Bank shall be reg- istered Bonds or coupon Bonds in such temporary or definitive form (authorized by the Trust Deed) as the Bank shall request. Registered Bonds and cou- pon Bonds payable in dollars and the coupons at- tached thereto shall be substantially in the forms respectively set forth in the Trust Deed. Bonds pay- able in any currency other than dollars shall be sub- stantially in the forms respectively set forth in the Trust Deed, as the case may be, except that they shall (a) provide for payment of principal, interest and premium on redemption, if any, in such other cur- rency, (b) provide for such place of payment as the Bank shall specify, and (c) contain such other modi- fications as the Bank shall reasonably request in order to conform to the laws or to the financial usage of the place where they are payable. 28 "(b) Notwithstanding any other provision of the Loan Agreement or these Regulations, if the Bank shall so require, the Borrower shall execute and de- liver bonds pursuant to Section 4.02 of ,the Loan Agre.nement before the execution and delivery of the Trust Deed. The provisions of Section 6.07 of Loan Regulations No. 4 of the Bank, dated February 15, 1955, as amended May 10, 1956, but before modifica- tion by ubparagraph (a) of this Section, shall apply to the form of any slch bonds, with appropriate changes therein satisfactory to the Bank, to provide for the exchange thereof, free of cost to the Bank, for Bonds of the same respective amounts, curren- cies and maturities issued under the Trust Deed, the Loan Agreement and these Regulations. All other provisions of the Loan Agreement, the Guarantee Agreement and these Regulations relating to Bonds shall apply imuatis mutlandis to such bonds except where such application would be clearly inconsistent with the requirements of this subparagraph. " (c) All Bonds shall have the guarantee of the Guarantor endorsed thereon substantially in the form set forth in Schedule 3 to these Regulations." (1) The following sentence is added at the beginning of Section 6.09, namely: "Except as the Bank and the Borrower shall other- wise agree, Bonds shall be dated as hereinafter in this Section provided." (m) The following new sub-section is added to Section 6.11, namely: " (d) Subject to the provisions of Sections 6.05 and 6.06 of these Regulations, Bonds payable in any cur- rency may be exchanged without charge to the Bank for Bonds of the same or an equivalent aggregate principal amount payable in the same or any other 29 currency or currencies and having the same or any other maturity or maturities. For the purposes of determining the equivalent of one currency in terms of another the value of each shall be as determined by the Bank." (n) The first sentence of Section 6.12 (a) is changed to read as follows: "The Bonds shall be signed in the name and on be- half of the Borrower by its authorized representative designated pursuant to the Loan Agreement for the purposes of this Section." (o) Section 6.18 is deleted. (p) In Section 7.01, after the words " Guarantee Agree- ment " where those words occur, the words ", the Trust Deed" are added. (q) Section 7.02 is amended by inserting the word "', power" after the word " right " and by inserting the words "or delay in asserting," after the word "assert". (r) Section 7.03 is amended to read as follows: " SECTION 7.03. 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 upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof or an acqui- escence in such default; nor shall the action of such party in respect of any default, or any acquiescence in any default, affect or impair any right, power or remedy of such party in respect of any other or sub- sequent default." (s) The following words in the fourth and fifth lines of sub-section (c) of Section 7.04 are deleted, that is to say: "or, if they shall not agree, by the Guarantor". 31 specified in the Loan Agreement as conditions to its effectiveness shall have occurred." (v) Section 9.05 is amended to read as follows: " SECTION 9.05. Termination of Loan Agreement and Guarantee Agreement on Full Payment. If and when the entire principal amount of the Loan and the Bonds and the premium, if any, on the prepayment of the Loan and on the redemption of all Bonds called for redemption (as the case may be) and all interest and other charges which shall have accrued on the Loan and the Bonds shall have been paid, the Loan Agreement and the Guarantee Agreement and all obligations of the parties thereunder shall forth- with terminate." (w) Paragraph 6 of Section 10.01 is amended to read as follows: "6. The term 'Borrower' means the party to the Loan Agreement to which the Loan is made; and the term 'Guarantor' means India, acting by its Presi- dent." (x) Paragraph 10 of Section 10.01 is amended to read as follows: "The term 'Bonds' means Bonds issued and au- thenticated pursuant to the Trust Deed (except as otherwise provided in Section 6.07 (b)), with the guarantee of the Guarantor endorsed thereon as pro- vided in the Loan Agreement and the Guarantee Agreement."