India - Air India Project : Loan 0161 - Loan Agreement - Conformed

LOAN NUMBER 161 IN Loan Agreement (Air-India Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND AIR-INDIA INTERNATIONAL CORPORATION DATED MARCH 5, 1957 LOAN NUMBER 161 IN Loan Agreement (Air-India Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND AIR-INDIA INTERNATIONAL CORPORATION DATED MARCH 5, 1957 AGREEMENT, dated March 5, 1957, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank) and AIR-INDIA INTERNA- TIONAL CORPORATION (hereinafter called the Borrower), a corporation organized under The Air Corporations Act, 1953 of India. WHEREAS the Borrower has entered, or proposes to enter, into contracts for the purchase of three four-engine Boeing long-range jet aircraft, spare engines, a flight simulator, ancillary equipment, and spare parts, estimated to involve expenditures amounting to the equivalent of approximately $23,000,000; 0 WHEREAS the Borrower in order to raise a part of the funds required for this purpose has entered into the Credit Agreement (as hereinafter defined) providing for loans to the Borrower in an aggregate principal amount not exceed- ing $11,200,000; and WHEREAS the Bank has agreed to supply an additional amount of the funds required by the Borrower for this purpose by making the loan provided for herein; Now THEREFORE, it is hereby agreed as follows: ARTICLE I Loan Regulations; Definitions SECTION 1.01. The parties to this Loan Agreement accept all Lhe provisions of Loan Regulations No. 4 of the Bank dated June 15, 1956, subject, however, to the modifications thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. 4 SECTION 1.02. Wherever used in this Agreement or the Loan Regulations the following terms shall have the follow- ing meanings: The term "Credit Agreementl' means the Agreement dated Jafuary 31, 1957, between the Borrower and The First National City Bank of New York (for itself and as agent), Bank of America National Trust and Savings Asso- ciation, The Chase Manhattan Bank, Irving Trust Company, and The First National Bank of Boston severally, providing for loans to the Borrower in an aggregate principal amount not exceeding $11,200,000. The term "Institutions" means the banking institutions named in Section 1.01 of the Credit Agreement or any of them as the context may require. The term "notes" means the notes as defined in Section 1.02 of the Credit Agreement. 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 five million six hundred thousand dollars ($5,600,000). 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. SECTION 2.03. 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 so withdrawn from time to time. Notwithstand- ing the provisions of Section 2.02 of the Loan Regulations, 5 such commitment charge shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Bor- rower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrower shall pay interest at the rate of five and one-half per cent (51,4%) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Except as the Bank and the Borrower shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Subject to the provisions of Section 2.07, interest and other charges shall be payable semi-annually on April 1 and October 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, provided that if the Borrower shall have fully discharged its indebtedness to the Institutions before March 31, 1965, it shall, unless the Bank shall otherwise agree, repay the Loan in four semi- annual installments corresponding in amount to the install- ments set forth in the amortization schedule and beginning on the first day of the month next following that in which such indebtedness shall have been fully discharged as afore- said; provided further that in no event shall any such installment he paid later than the applicable date set forth in said amortization schedule. 6 In the event that by reason of the foregoing provisions of this Section any semi-annual installment shall be paid on a date other than April 1 or October 1, then, unless the Bank and the Borrower shall otherwise agree, interest and other charges shall be payable on such other date. ARTICLE III Use of Proceeds of the Lobas SECTION 3.01. The Borrower shall apply the proceeds of the Loan exclusively to financing the cost of goods required to carry out 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 agreement between the Bank and the Borrower, subject to modifica- tion by further agreement between them. SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be used for the purposes of civil air transport services conducted under the Indian flag in the ordinary course of the business of the Borrower. ARTICLE IV Bond,; SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The General Manager for the time being of the Borrower and such other person or persons (acting jointly or severally as may be specified) as the Borrower may appoint in writing are designated as authorized repre- sentatives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. 7 ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in donformity with sound financial practices. (b) The Borrower shall maintain records adequate to identify the goods financed out of the proceeds of the Loan; shall enable the Bank's representatives to inspect the goods and any relevant records and documents; and shall furnish 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 operations and financial condition of the Borrower. SECTION 5.02. Except as the Bank and the Borrower shall otherwise agree or as otherwise provided herein, the Borrower shall duly perform and observe all of the cove- nants contained in Article IV of the Credit Agreement as if such covenants were fully set forth herein and expressed mutatis muttandis as covenants made by the Borrower to the Bank. For the purposes of this Section the terms defined in the Credit Agreement shall have the same mean- ings as if such definitions were fully set forth herein. SECTION 5.03. (a) The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall fur- nish to the other all such information as it shall reasonably request 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 Lean 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- 8 ment of the purposes of the Loan or the maintenance of the service thereof. SECTION 5.04. The Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, howeveir, that the foregoing provisions of this Section shall not apply to: (i) any lien created on property (other than property financed out of the proceeds of the Loan), at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lion arising in the ordinary course of banking transactions and securing a debt matur- ing not more than one year after its date. SECTION 5.05. The Borrower shall pay or cause to be paid all taxes or fees, if any, imposed under the laws of the Guarantor or laws in effect in the territories of the Guaran- tor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agree- ment or the Ponds, or the payment of principal, interest or other charges thereunder; provided, however, that the pro- visions of this Section shall not apply to taxation of, or fees 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 5.06. The Borrower shall pay or cause to be paid all taxes and fees, if any, imposed under the laws of 9 the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. ARTICLE 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 any event specified in paragraph (j), paragraph (k) or paragraph (1) of Section 5.02 of the Loan Regulations shall occur, 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 or in the Bonds to the contrary notwithstanding. ARTICLE VII Effective Date; Termination SECTION 7.01. The following events are specified as ad- ditional conditions to the effectiveness of this Agreement within the meaning of Section 9.01 (a) (ii) and Section 9.01 (b) (ii) of the Loan Regulations: (a) The conditions precedent set forth in subsections (a), (b), (c.), (d), (e), (f), (g), (h) and (j) of Section 3.01 of the Credit Agreenment have been fulfilled or are readily capable of fNlfillnient at the due time, all iipon terms satisfacto to the Bank; 10 (b) all of the Borrower's 4%o Debentures due May 31, 1959 have been duly paid off and the security therefor discharged (or arrangements satisfactory to the Bank made therefor). SECTION 7.02. The following are specified as additional matters, within the meaning of Section 9.02 (e) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: (a) that all of the Borrower's 4o Debentures due May 31, 1959 have been fully paid off and the secu- rity therefor discharged (or due provision made therefor); (b) that the Credit Agreement has been duly authorized or ratified by, and executed and delivered on behalf of the Borrower and constitutes a valid and binding obligation of the Borrower in accordance with its terms. SECTION 7.03. A date 9G 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 December 31, 1959. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Air-India International Corporation Mahatma Gandhi Road Bombay, India 11 Alternative address for cablegrams and radiograms: Airindia Bombay India For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D.C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D.C. 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 BAN K FOR RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President AiR-INDIA INTERNATIONAL CORPORATION By EDWIN TAYLOR WARREN Authorized Representative 12 SCHEDULE 1 Amortization Schedule Principal Payment of Amount Outstanding Principal After Each Payment (expressed (expressed Date Payment Due* in dollars) * in dollars) ** October 1, 1964 - $5,600,000 April 1, 1965 $ 560,000 5,040,000 October 1, 1965 1,680,000 3,360,000 April 1, 1966 1,680,000 1,680,000 October 1, 1966 1,680,000 *These dates are subject to variation in accordance with the provisions of Section 2.07 of this Agreement. **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 cJimns represent dollar equivalents determined as for purposes of withdra ial. 13 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 6.1.6 of the Loan Regulations: Time of Prepayment or Redemption Premiu Not more than 2 years before maturity. 1/2% More than 2 years but not more than 4 years before maturity . . - . ...... 2% More than 4 years but not more than 6 years before maturity..... 3% More than 6 years but not more than 8 years before maturity. .. .. . ..... 41/% More than 8 years before maturity. 51/ % 14 SCHEDULE 2 Description of Project The Project consists of the acquisition by the Borrower of three fully equipped four-engine Boeing long-range jet aircraft, nine spare engines, a flight simulator, ancillary equipment, including overhaul facilities and a test cell, and initial spare parts and stores. 15 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 June 15, 1956, shall be deemed to be modified as follows: (a) By the deletion of subparagraph (j) of Section 5.02 and the substitution therefor of the following sub- paragraph, namely: " (j) If, pursuant to Section 5.01 of the Credit Agreement, any of the Institutions shall terminate its commitment thereunder or if any of the notes shall be declared to be due and payable." (b) By the addition in Section 5.02 of the following new subsections, namely: " (k) If, without the prior agreement of the Bank, any provision of the Credit Agreement shall be amended, assigned or abrogated or a waiver granted in respect of any such provision. (1) If any Institution shall fail to make all or any of the loans provided for in the Credit Agreement by reason of the inability of the Borrower to fur- nish the documents provided for in Section 3.01 of the Credit Agreement, the certificate provided for in Section 3.02 thereof or the evidence referred to in Section 3.03 thereof." (c) By the addition in Section 6.11 of the following new subparagraph, namely: " (d) Bonds bearing one date may be exchanged for Bonds bearing any other date and Bonds pro- viding for any particular semi-annual interest pay- ment dates may be exchanged for Bonds providing for other semi-annual interest payment dates, if the same shall be required in order to give full effect to the provisions of Section 2.07 of the Loan Agreement."