China - Second Industrial Credit Project : Loan 2434 - Loan Agreement - Conformed

LOAN NUMBER 2434 CHA DoCMNT Loan Agreement (Second Industrial Credit Project) between PEOPLE'S REPUBLIC OF GRINA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated LA , 1984 LOAN NUMBER 2434 CHA LOAN AGREEMENT AGREEMENT, dated , 1984, between PEOPLE'S REPUBLIC OF CHINA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank). WHEREAS: (A) the Borrower has requested the Bank to assist in the financing of the Project described in Section 3.01 (a) of the Development Credit Agreement of even date herewith between the Borrower and the International Development Association (the Association) (hereinafter called the Development Credit Agree- ment), by making the Loan as hereinafter provided; (B) the Borrower has also requested the Association to pro- vide additional financial assistance towards the financing of the Project and by the Development Credit Agreement the Association is agreeing to provide such assistance in an aggregate principal amount equivalent to sixty-five million eight hundred thousand Special Drawing Rights (SDR 65,800,000) (hereinafter called the Credit); (C) the Borrower and the Bank intend, to the extent practi- cable, that the proceeds of the Credit provided for in the Devel- opment Credit Agreement be disbursed on account of expenditures on the Project before disbursements of the proceeds of the Loan provided for in this Agreement are made; (D) the Project will be carried out by China Investment Bank (hereinafter called CIB) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to CIB the proceeds of the Loan as hereinafter provided and the pro- ceeds of the Credit as provided in the Development Credit Agree- ment; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set forth hereinafter and in the Project Agreement of even date herewith among the Association, the Bank and CIB; 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 Gua- rantee Agreements of the Bank, dated October 27, 1980, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Sche- dule 2 to this 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, in the Development Credit Agreement and in the General Conditions applicable thereto have the respective meanings therein set forth, and the term "Development Credit Agreement" means the agreement of even date herewith between the Borrower and the Association for the purpose of the Project, as such agreement may be amended from time to time, such term in- cludes the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, as made applicable to such agreement, all agreements supplemental to the Development Credit Agreement, and all schedules to the Develop- ment Credit Agreement. 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 one hundred five million dollars ($105,000,000). Section 2.02. CIB, on behalf of the Borrower pursuant to Section 2.09 of this Agreement, may withdraw the amount of the Loan from the Loan Account for amounts paid (or, if the Bank shall so agree, for amounts to be paid) by CIB on account of withdrawals made by an Investment Enterprise under a Sub-loan to meet 100% of the reasonable foreign currency cost and 100% of the reasonable local currency cost (ex-factory) of goods and services required for the Investment Project in respect of which the withdrawal from the Loan Account is requested; provided, however, - 3 - thac no witt1drawa shall be made in respect of such a Sub-loan .less: (a) the Sub-loan has been approved by the Bank; or (b) r-ae Sub-loan is a free-limit Sub-loan for which the Bank has authorized withdrawals from the Loan Account. Section 2.03. The Closing Date shall be June 30, 1989 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Bank a fee equivalent to two hundred sixty-two thousand five hundred dollars ($262,500). (b) Prior to the dispatch by the Bank of the notice referred to in paragraph (a) of Section 12.03 of the General Conditions, the Borrower shall pay to the Bank the amount of said fee in such currency or curencies as the Bank shall specify. Section 2.05. The Borrower shall pay to the Bank a commit- ment 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. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one half per cent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) For purposes of this Section: (i) "Interest Period" means the six-month period com- mencing on each date specified in Section 2.07 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost" of Qualified Borrowings means the cost, expressed as a percentage per annum, as reasonably determined by the Bank, provided that the amount of $8,520.5 million referred to in (iii) (B) here- under shall be reckoned at a cost of 10.93% per annum, (iii) "Qualified Borrowings" means (A) outstanding borrowings of the Bank drawn down after June 30, -4- 1982; and (B) until July 1, 1985, the amount of $8,520.5 million (representing borrowings of the Bank between July 1, 1981 and June 30, 1982) less any part thereof repaid earlier than July 1, 1985. (iv) "Semester" means the first six months or the second six months of a calendar year. (c) As soon as practicable after the end of each Semester the Bank shall notify the Borrower of the Cost of Qualified Borrowings for such Semester. Section 2.07. Interest and other charges shall be payable semiannually on June 15 and December 15 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. Section 2.09. CIB is designated as representative of the Borrower for the purposes of taking any action required or per- mitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Subject to paragraph (b) of this Section, Section 2.02 (b) and (c) and Article III of the Development Credit Agreement are incorporated in, and made a part of, the Loan Agreement, provided that the term "Association" in said Section 2.02 (b) and (c) and in Article III shall be read as "Bank," and the term "Credit" in said Section 3.02 (b) shall be read as "Loan". (b) As long as the Bank has not given notice to the con- trary to the Borrower and so long as the Development Credit Agreement shall have not terminated prior to the termination of this Agreement: (i) the obligations of the Borrower to consult with and to furnish or cause to be furnished, information, docu- ments, reports, records and statements to the Bank shall be satisfied to the extent performance in respect of such obliga- tions is rendered to the Association; (ii) the obligations of the Bank to consult with and to furnish information to the Borrower - 5 - shall be satisfied to the extent such obligations are fulfilled by the Association; and (iii) all actions taken (including the giving of approvals or the granting of waivers) by the Associa- tion pursuant to the Development Credit Agreement shall be deemed to be taken pursuant to both the Development Credit Agreement and the Loan Agreement and in the name and on behalf of both the Association and the Bank. Section 3.02. (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, special 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 subdivisions, 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; 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 sub- division 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 foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Bor- rower. - 6 - ARTICLE IV Remedies of the Bank Section 4.01. For the purposes of Section 6.02 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (k) thereof, namely, the events set out in Section 4.01 of the Development Credit Agreement, provided, how- ever, that the term "Association" wherever it appears in such Section shall be read as "Bank". Section 4.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely, the events set out in Section 4.02 of the Development Credit Agreement, provided, how- ever, that the term "Association" wherever it appears in such Section shall be read as "Bank". ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Condi- tions: (a) the Borrower's State Council has approved this Agree- ment; and (b) all conditions precedent to the effectiveness of the Development Credit Agreement have been fulfilled, except for the effectiveness of this Agreement. Section 5.02. The date t , is hereby specified for the purposes of Section 12.04 of the General Condi- tions. Section 5.03. If the Development Credit Agreement terminates prior to the termination of this Agreement, the provisions of the Development Credit Agreement referred to in this Agreement shall continue in full force and effect between the Borrower and the Bank. - 7 - ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. Except as provided in Section 2.09 of this Agreement, 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 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions. For the Borrower: Ministry of Finance Sanlihe Beijing People's Republic of China Cable address: Telex: FINANMIN 22486 MFPRC CN Beijing For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) -8- 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. PEOPLE'S REPUBLIC OF CHINA By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President East Asia and Pacific -9-- SCHEDULE 1 AmDrtization Schedule Payment of Principal Date Payment Due (Expressed in dollars)* On each June 15 and December 15 beginning December 15, 1989 through June 15, 2004 3,500,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 10 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 3.04 (b) of the General Conditions: Time of Prepayment Premium The interest rate (expressed) as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment multiplied by: Not more than three years before maturity 0.15 More than three years but not more than six years before maturity 0.30 More than six years but not more than eleven years before maturity 0.55 More than eleven years but not more than sixteen years before maturity 0.80 More than sixteen years but not more than eighteen before maturity 0.90 More than eighteen years before maturity 1.00 - 11 - 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) Paragraph 11 of Section 2.01 is deleted and the follow- ing substituted therefor: "11. The term "Project" means the Second Industrial Credit Project, as described in Section 3.01 (a) of the Development Credit Agreement (Second Industrial Credit Project) between the Borrower and the Association of even date with the Loan Agreement and as the description thereof may be amended from time to time by agreement among the Borrower, the Bank, and the Association." (2) The following subparagraph is added to Section 2.01: "20. The term "Project Agreement" has the meaning set forth in paragraph (b) of Section 1.02 of the Development Credit Agreement (Second Industrial Credit Project) between the Borrower and the Association of even date with the Loan Agreement." (3) The words "Investment Projects" are substituted for the words "the Project" at the end of Section 5.03. (4) 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; (b) by the date specified in Section 2.02 (d) of the Project Agreement no applications for approval or requests for authorization to withdraw from the Loan Account permitted under paragraph (b) or paragraph (c) of such Section, res- pectively, 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, the Bank may by notice to the Borrower terminate - 12 - the right to request such approvals and authorizations 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." INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day of Z,198/. FOR SECRETARY