India - Second Tata Steel Project : Loan 0182 - Loan Agreement - Conformed

LOAN NUMBER 182 IN Loan Agreement (Second Tata Steel Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE TATA IRON AND STEEL COMPANY, LIMITED DATED NOVEMBER 20, 1957 LOAN NUMBER 182 IN Loan Agreement (Second Tata Steel Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE TATA IRON AND STEEL COMPANY, LIMITED DATED NOVEMBER 20, 1957 11naan Agreument AGREEMENT, dated November 20, 1957, between INTER- NATIONAL BAN K FOR RECONSTPUCTION AND DEVELOPMENT (hereinafter called the Bank) and THlE TATA IRON AND STEEL COMPANY, LIIMITED, a company duly incorporated under the Indian Companies Act (hereinafter called the Borrower). WHEREAS (A) By a loan agreement dated June 26, 1956, between the Bank and the Borrower, the Bank granted a loan to the Borrower in an amount in various currencies equivalent to $75,000,000 for the purpose of financing the modernization and expansion of the Borrower't works at Jamshedpur as more particularly described therein; (B) Said loan was guaranteed as to payment of principal, interest and other chairges by India, acting by its President (hereinafter called the Guarantor) upon the terms of a Guarantee Agreement dated -June 26, 1956; (C) By the 1957 Trust Deed (as hereinafter defined) the Borrower created as security for said loan a first specific mortgage and a first floating charge in respect of its properties and undertaking; (D) The Bank has been requested to grant a second loan to the Borrower to be similarly guaranteed by the Guar- antor upon the terms of a Guarantee Agreement of even date herewith; (E) The security constituted by the 1957 Trust Deed is to be appropriately modified, as hereinafter in Section 5.04 provided, so that the first loan and said second loan shall rank pari passu in respect of such security as so modified; (F) The Borrower by a Debenture Trust Deed dated 2nd July 1937 (as from time to time supplemented) has created a specific mortgage and a floating charge in respect 4 of its properties and undertaking securing its Mortgage Debenture Stock now maturing as to principal on July 1, 1967; (G) All said Mortgage Debenture Stock, presently out- standing 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; (H) The security constituted by said Debenture Trust Deed dated 2nd July 1937 (as supplemented) was sub- ordinated 'o the security constituted by the 1957 Trust Deed and the Borrower has agreed to cause State Bank of India and the Trustees under said Debenture Trust Deed (as supplemented) to consent to further modifications of said Debenture Trust Deed (as supplemented) so as to permit the security referred to in Recital E above to rank prior to the mortgage and charge constituted by said De- benture Trust Deed (as supplemented); (I) 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 Rs. 100,000,000 to assist in financing the Modernization and Expansion Program hereinafter described in Part I of Schedule 2 to this Agreement; (J) 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 the Borrower of part of the costs of the Two Million Ton Program hereinafter described in Part II of Schedule 2 to this Agreement; (K) The Guarantor and the Borrower have entered into an Agreement dated September 19, 1956 (hereinafter called the Third Government Agreement), setting forth the terms on which the Guarantor agreed to give its guarantee referred to in Recital B above; 5 (L) The Guarantor and the Borrower propose to enter into an Agreement (hereinafter called the Fourth Govern- mieit Agreement) setting forth the terms on which the Guarantor has agreed to give its guarantee referred to in Recital D above; (M) Certain United Slates and Canadian banks and financial institutions have agreed with the Borrower to provide finance to it and for such purpose have agreed to participate in said second loan in an aggregate amount equivalent to $15,000,000; 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 June 13, 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. 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: (a) The term "first Loan Agreement" means the Loan Agreement, dated June 26, 1956, between the Bank and the Borrower, as modified by the provisions of Article VII of this Agreement. 6 (b) The term "first loan" means the loan provided for in the first Loan Agreement as said Loan Agreement may be from time to time amended. (c) The term "Debenture Trust Deed" means the De- benture Trust Deed dated 2nd July 1937, and shall include any deeds or instruments supplemental thereto. (d) The term "1957 Trust Deed" means the Trust Deed dated May 9, 1957, made between the Borrower and Baring Brothers & Co., Limited, as trustees, and the Bank securing the first loan and the bonds issuable under the first Loan Agreement in a principal amount in various currencies equivalent to $75,000,000 and (except where the context otherwise requires) shall include any deeds or instruments supplemental thereto. (e) The term "Supplemental Indenture " means the deed or deeds and other instruments which shall be exe- cuted by the Borrower in accordance with the pro- visions of Section 5.04 of this Agreement in order to modify the security of the 1957 Trust Deed as in said Section provided. (f) The term "Trust Deed" means the 1957 Trust Deed as modified by the Supplmental Indenture and shall except where the context otherwise requires include each deed and other instrument included in the Sup- plemental Tndenture and any deed or deeds supple- mental to the 1957 Trust Deed as so modified which shall be executed and delivered in accordance with the provisions thereof. (g) The term "State Bank" means the State Bank of India. (h) The term "subsidiary" means any compaiiy which is a subsidiary of the Borrower within the meaning 7 of The Companies Act, 1956 of India (or any amend- ment thereto). (i) The term "rupees" and the letters "'Rs." mean cur- rencv of the Guarantor. 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 currenies equivalent to thirty-two million five hundred thousand dollars ($32,500,000). 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 pro- vided in, and subject to the rights of cancellation and sus- pension set forth in, this Agreement; provided, however, that, except as the Bank and the Borrower may otherwise agree: (i) until the Borrower shall have complied with the provisions of Section 5.04 of this Agreement, no more than an amount equivalent to six million dollars ($6,000,000) shall be withdrawn from the Loan Account, (ii) no more than an amount equivalent to $17,500,000 shall be with- ,rawn from the Loan Account prior to July 1, 1958, and (iii) the balance of $15,000,000 shall become available for such withdrawal only as follows: $1,672,000 shall become available for such withdrawal commencing with July 1, 1958, and $1,666,000 shall become similarly available com- mencing with the first day of each of the eight months thereafter. 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 8 Loan not so withdrawn from time to time. Such commit- ment 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 Borrower from the Loan Account as provided in Article IV of the Loan Regu- lations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrower shall pay interest at the rate of six per cent (6%/,) 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 (/2 of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able 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. 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 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 betwoen them. 9 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 exclusively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and duly de- liver Bonds 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. 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 4.03. The Borrower shall effect original issues of the Bonds only as herein provided. SECTION 4.04. 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 delivery of the Bonds and such arrangements may be in addition to or in substitution for any of the provisions of this Agreement or of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. The Borrower shall carry out and complete 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. 10 SECTION 5.02. (a) The Borrower shall furnish or cause to be furnished to the Bank, promptly upon their prepara- tion, the plans and specifications (including construction schedules) for the Project 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 opera- tions and financial condition 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, properties, equipment and operations of the Borrower and its sub- sidiaries, and to examine any relevant books, records and documents. (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 operations and financial condition of the Borrower and of its subsidiaries. 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 furnish 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 Loan and the maintenance of the service thereof. The Borrower shall 11 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 observe and perform the obligations of the Borrower hereunder to the extent to which the same may be applicable thereto as though such obligations were binding upon each such sub- sidiary. SECTION 5.04. (a) The Borrower shall execute and de- liver, and shall cause all other necessary parties to execute and deliver, all such deeds and other instruments, in such form, as the Bank may reasonably require to cause the security constituted by the 1957 Trust Deed to be so modi- fied and extended that as so modified and extended it will constitute by way of security for the principal of, interest on and premium on prepayment, if any, on the Loan, the Bonds, the first loan and the bonds issuable under the first Loan Agreement, all of which shall rank pari passu inter se in respect of such security: (1) a First Specific Mortgage upon all the properties now owned or hereafter acquired by the Borrower and expressed in the 1957 Trust Deed to be the specifically mortgaged premises thereunder or intended so to be and (2) a First Floating Charge upon all the prop- erty and assets expressed in the 1957 Trust Deed to be charged or intended so to be by the first floating charge created thereby, such Mortgage and Charge to rank in point of security prior to any other mortgage, charge or lien upon any of the properties or assets of the Borrower, now existing or hereafter created, including the Debenture Trust Deed, except mortgages, charges, liens, pledges or hypothecations permitted by the provisions of Section 5.05 of this Agreement. (b) The Borrower shall take all necessary steps and shall procure all other necessary parties to take all neces- 12 sary steps to ensure that all mortgages, charges, pledges, hypothecations and liens outstanding upon the property and assets to be mortgaged, charged or assigned by or pur- suant 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 obtain all necessary consents for the valid execution and delivery of the Supplemental Inden- ture and shall duly register, or cause to be duly registered, the Supplemental Indenture, together with such other docu- ments as may be necessary or proper in order to render the same fully effective in accordance with its terms. (d) The Borrower shall hold or acquire, to the reason- able 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 under- taking, or shall (to the like satisfaction) make effective arrangements therefor; and the Borrower shall supply to the Bank a certificate, satisfactory to the Bank, setting forth particulars of the foregoing. (e) The Borrower shall, not later than March 31, 1958, 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 (c) inclusive of this Section have been duly complied with and that, as to such. property, lands and interests in land specified in the certificate referred to in subparagraph (d) as being owned or having been acquired, the Borrower has good and market- able title thereto; that as to such licenses, consents or other 13 rights or privileges specified in said certificate as having been acquired, the Borrower has validly acquil-ed the same and that the same are valid and effective; and that, as to arrangements specified in said certificate for the ac(uisitioll of any of the foregoing, such arrangements are valid and effective. (f) The Bank and the Borrower may from tune to time agree upon modifications of the foregoing requireme-t s of this Section. SECTION 5.05. (a) The Borrower undertakes that, except as the Bank shall otherwise agree, no mortgage, hypothe- cation, 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 hall, 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 additional debt, except that the Borrower may: (i) create or maintain mortgages, hypothecations, specific charges or pledges ranking in priority to the Floating Charge created or to be created under the Trust Deed, but subject to the First Specific Mortgage, securing debts or borrowings incurred to bankers in the ordinary course of business, in an amount not exceeding in the aggregate at any one time one hundred and fifty million rupees (Rs. 150,000,000), provided, however, that the amount of such debts or borrowings (excluding demand obligations) maturing more than one year (at a time) from their respective dates shall not exceed twenty million rupees (Rs. 20,000,000); but so that no lender or other person dealing with the Bor- rower shall be entitled or concerned to see or enquire whether these limits are observed 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 aforesaid limits; S 14 (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 first loan and the Loan 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 two million five hundred thousand dollars ($2,500,000). (b) Except as the Bank shall otherwise agree: (i) no subsidiary shall at any time create any mortgage, charge or security on its undertaking, properties or assets (includ- ing uncalled capital) or any part thereof otherwise than in favor of the Borrower; (ii) all mortgages, charges or securities created by any subsidiary in favor of the Bor- rower 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 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. 15 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 and as a result thereof the consolidated unim- paired capital and surplus of the Borrower and its sub- sidiaries, would he 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 liabilities accrued liabilities to the Indian Iron and Steel Controller but not including in such liabilities obligations to bankers or in respect of deposits accepted by the Borrower) incurred in the ordinary course of business and payable on demand or 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 on demand or by their terms not more 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. 100,000,030 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 outstanding of the Government advance provided for in the First Government Agreement. (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. 16 (d) The term "consolidated indebtedness" shall mean the total amount of indebtedness of the Borrower and all its subsidiaries (if any) excluding indebtedness owed by the Borrower to any subsidiary or by any subsidiary to the Borrower or to any other sub- sidiary. (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 prop- erties and the carrying on of its undertaking. (b) The Borrower shall at all times maintain its cor- porate existence and right to carry on operations and shall, except as the Bank may otherwise agree, acquire, maintain 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 con- duct its affairs in accordance with sound business, industrial and financial practices and shall maintain, renew and repair its plants, machinery, equipment and property as required in accordance with sound engineering practices. 17 SECTION 5.08. Except as the Bank shall otherwise agree, the Borrower shall pay dividends only from current earnings. SECTION 5.09. Subject to such exemption as shall be conferred 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 impo- sitions), 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 indi- vidual 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 country 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 registra- tion 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 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- 18 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 or the Bank unless the Bank shall have expressed in writing its approval of such action or such consent. SECTION 5.13. The Borrower shall duly perform all obli- gations to be performed by it under the 1957 Trust Deed and the Trust Deed. SECTION 5.14. The Borrower shall not ameid its Memo- randum or Articles of Association without the approval of the Bank. SECTION 5.15. The Borrower shall not agree to any amendment of the First Government Agreement, the Second Government Agreement, the Third Government Agreement or the Fourth Government Agreement without the aj)proval of the Bank. 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 19 continue for a period of thirty days, or (ii) if the events specified in paragraph (j) of Section 5.02 of the Loan Reg- ulation shall occur, or (iii) if any event specified in para- graph () 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 a.t any subsequent time during the continu- ance thereof, the Bank, at its option, may declare the prin- cipal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declara- tion such principal shall become due and payable immedi- ately, anything in this Agreement, the Trust Deed or the Bonds to the contrary notwithstanding. ARTICLE VII Modifications of Loan Agreement dated June 26, 1956 SECTION 7.01. The Loan Agreement dated June 26, 1956 between the Bank and the Borrower is hereby amended as follows: (a) In Sections 3.01 and 3.02, the words "Part II of " are deleted. (b) Paragraphs (i) and (iii) of Sub-section 5.05 (a) are amended to read as follows: (i) Create or maintain mortgages, hypothecations, specific charges or pledges ranking in priority to the Floating Charge created or to be created under.the Trust Deed, but subject to the First Specific Mortgage, securing debts or borrowings incurred to bankers in the ordinary course of business, in an amount not exceeding in the aggregate at any one time one hundred and fifty million rupees (Rs. 150,000,000), provided, however, that the amount of such debts or borrowings (excluding demand obligations) maturing more than one year (at a time) from their respective dates shall not exceed twenty mil- lion rupees (Rs. 20,000,000) ; but so that io lender or S 20 other person dealing with the Borrower shall be entitled or concerned to see or enquire whether these limits are observed 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 aforesaid limits; " (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 equiva- lent of two million five hundred thousand dollars ($2,500,000)." (c) Paragraph (a) of Section 5.06 is amended by insert- ing the words "on demand or" after the word "payable" and after the word "maturing". (d) The following section is added in Article VIII: "Section 8.03. Tata Industries Private Limited and Tata Incorporated jointly are and each of them severally is hereby designated by the Borrower to sign applications provided for in Article IV of the Loan Regulations and to take any other action or execute any other documents except Bonds required or permitted to be taken or executed pursuant to the provisions of this Agreement by the Bor- rower and the Bank shall be entitled to rely exclusively on any such action or execution." (e) Schedule 2 is amended to conform to Schedule 2 of this Agreement. SECTION 7.02. For the purposes of the Loan Agreement dated June 26, 1956, between the Bank and the Borrower, paragraph (c) of Section 5.02 of Loan Regulations No. 4 of the Bank, dated February 15, 1955, as amended May 10, 1956, is hereby amended to read as follows: 21 "(c) A default shall have occurred in the performance of any other covenant or agreement on the part of the Borrower or the Guarantor under the Loan Agreement, the Guarantee Agreement, or the Bonds or under the Loan Agreement dated November 20, 1957, the Guaran- tee Agreement of even date therewith, or the bond therein provided for."; and the term "Loan Regulations" as used for the purposes of the said Loan Agreement shall mean Loan Regulations No. 4 of the Bank, dated Februa ry 15, 1955, as amended May 10, 1956, as modified by said Loan Agreement and as further amended hereby. ARTICLE VIII Effective Date; Termination SECTION 8.01. The following events are specified as ad- ditional conditions to the effectiveess of this Agreement within the meaning of Section 9.01 (a) (ii) of the Loan Regulations: (a) The State Bank and the Trustees under the Deben- ture Trust Deed shall have agreed (in form satis- factory to the Bank) to subordinate the security constituted by the Debenture Trust Deed to the secu- rity to be constituted by the Trust Deed. (b) 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 neces- sary to authorize the Directors of the Borrower val- idly to authorize or to ratify and adopt this Agree- ment on behalf of the Borrower, (ii) the Directors of the Borrower shall have validly authorized or ratified and adopted this Agreement on belialf of the Borrower and (iii) all necessary consents for the 22 valid execution, ratification and adoption of this Agreement by and on behalf of the Borrower shall have been secured. (c) The Borrower has satisfied the Bank that the Bor- rower will be able to comply with the requirements of Section 5.04 (b) of this Agreement. (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 Agree- ment. (e) The Fourth 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 8.02. 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 opiLins to be furnished to the Bank: (a) That the actions provided for in Section 8.01 (b) of this Agreement have been duly and validly taken, and that the Borrower has full power and authority to raise monies by the issuance of Bonds and other- wise as herein and in the first Loan Agreement pro- vided, and that all acts, consents and approvals neces- sary therefor have been duly and validly performed or given. (b) That the Borrower has full power and authority to construct and operate the Project and has all neces- sary rights and powers in connection therewith, that all acts, franchises, concessions, consents and ap- provals necessary therefor have been duly and valid- ly performed or given, and that, with such exceptions as the Bank may have approved, all easements, rights 23 and privileges necessary therefor have been, duly obtained. (c) That the Fourth Government Agreement is a valid and binding obligation of the parties thereto in ae- cordance with its terms. SECTION 8.03. 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 IX Miscellaneous SECTION 9.01. The Closing Date shall be September 30, 1959. SECTION 9.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: 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. For the Borrower: The Tata Iron and Steel Company, Limited Bombay House, Bruce Street Bombay No. 1 India Alternative address for cablegrams and radiograms: Ironco Bombay S 24 SECTION 9.03. Tata Industries Private Limited and Tata Incorporated jointly are and each of them severally is hereby designated by the Borrower to sign applications pro- vided for in Article IV of the Loan Regulations and to take any other action or execute any other documents except Bonds required or permitted to be taken or executed pur- suant to the provisions of this Agreement by the Borrower and the Bank shall be entitled to rely exclusively on any such action or execution. 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 as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND, EVELOPMENT By EUGENE ER. BLACK PresidentS THE TATA IRON AND STEEL COMPANY, LIMITED By E. T. WARREN Authorized Representative Countersigned: TATA INDUSTRIES PRIVATE LIMITED By E. T. WARREN Authorized Representative 25 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* October 1, 1960 $3,000,000 April l, 1961 3,000,00) October 1, 1961 3,000,000 April 1, 1962 3,000,000 October 1, 1962 3,000,000 April 1, 1963 804,000 October 1, 1963 828,000 April 1, 1964 853,000 October 1, 1964 879,000 April 1, 1965 905,000 October 1, 1965 932,00() April 1, 1966 960,000 October 1, 1966 989,000 April 1, 1967 1,019,000 October 1, 1967 1,049,000 April 1, 1968 1,081,000 October 1, 1968 1,113,000 April 1, 1969 1,147,000 October 1, 1969 1,181,000 April 1, 1970 1,216,000 October 1, 1970 1,253,000 April 1, 1971 1,291,000 * 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 this column represent dollar equivalents determined as for purposes of withdrawal. S 26 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 pursuait to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 3 years before maturity..... ./2 % More than 3 years but not more than 6 years before maturity ................. 2% More than 6 years but not more than 11 years before maturity. . . ............ 3 % More than 11 years but not more than 13 years before maturity ................ 5% More than 13 years before maturity....... .6% 27 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 designed 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 furnaces); the modernization of the blooming mill (including the installation of a new electric drive); the im- provement of the plate mill and of the 28" billet mill; the construction of a new continuous skelp mill (which started operation in March 1956); and extensions to the steam and power plants (which have been materially completed). This program is scheduled to be completed by May 31, 1958. Part II: 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 S 28 products. Engineering and other services for this part of 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: Coke 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 Power House: Expansion of the boiler and power house and the installation of two new boilers each with a capacity of 100,000 pounds of steam per hour and a 110,000 c.f.m. turboblower. 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 he-rth 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 ca- pacity 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 29 substantial expansion of storage and other facilities and of the electrical distribution, water, fuel, road, transporta- tion and communication systems. 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 steel melting shops, calcining phnits, sheet bar and billet mill, rail mill and merchant mill; construction of an ingot mould foundry; acquisition of rolling stock; colliery develop- ment; ore mine development; and housing construction at Jamshedpur. Most of these works are scheduled to be com- pleted by June 30, 1960. Part IV: Ancillary Works This part of the Project consists of improvements and additions to the Borrower's facilities not forming part of the Two Million Ton Program, including the modernization of the bottom house and 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. Part V: Renewals and Replacements This part of the Project consists of necessary renewals and replacements of existing plant and equipnient. S 30 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, are modified as follows: (1) Section 2.02 is deleted. (2) Sub-sections (c), (i) and (j) of Section 5.02 are amended to read as follows: "(c) A default shall have occurred in the perform- ance of any other covenant or agreement on the part of the Borrower or the Guarantor under the Loan Agreement, the Guarantee Agreement or the Bonds, or under the first Loan Agreement, the Guarantee Agreement dated June 26, 1956, or the bonds issuable under the first Loan Agreement. "(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 constituted a violation of any covenant contained in the Loan Agreement or the Guar- antee Agreement if the Loan Agreement and Guarantee Agreement had been effective on the date of such act or omission. "(j) If the security constituted by the 1957 Trust Deed or the Trust Deed shall become enforce- able." (3) Section 6.01 is deleted. (4) Section 6.04 is amended by substituting the words "interest (herein called the service charge) " for the words "a service charge" in the second sentence thereof. 31 (5) 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 regis- tered Bonds or coupon Bonds in such temporary or definitive form (authorized by the Trust Deed) as the Bank shall request. Registered Bonds and coupon Bonds payable in dollars and the coupons attached thereto shall be substantially in the forms respective- ly set forth in the Trust Deed. Bonds payable in any currency other than dollars shall be substantially ii 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 currency, (b) pro- vide for such place of payment as the Bank shall specify, and (c) contain such other modifications as the Bank shall reasonably request in order to con- form to the laws or to the financial usage of the place where they are payable. "(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 6.03 before the execu- tion and delivery of the Trust Deed. The provisions of Section 6.07 of Loan Regulations No. 4 of the Bank, dated Jute 15, 1956, but before modification by sub-paragraph, (a) of this Section, shall apply to the form of any such 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, currencies and ma- turities issued under the Trust Deed, the Loan AgreerrMen1t and these Regulations. All other provi- sions of the Loan Agreement, the Guarantee Agree- 32 ment and these Regulations relating or referring to Bonds shall apply mutatis miutandis to such bonds except where such application would be clearly in- consistent with the requirements of this sub-para- graph. "(c) All Bonds shall have the guarantee of the Guarantor endorsed thereon substantiallv in the form set forth in Schedule 3 to these Regulations." (6) 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." (7) The following new sub-section is added to Section 6.11: " (d) Subject to the provisions of Sections 6.05 and 6.06, Bonds payable in any currency 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 currency or cui- rencies and having the same or any other maturity or maturities. For the purposes of detetrmining the equivalent of one currency in terms of another the value of each shall be as determiniied by the Bank.'" (8) The first sentence of Section 6.12 (a) is changed to read as follows: " The Bonds shall be signed in the name and on behalf of the Borrower by its authorized representa- tive designated pursuant to the Loan Agreement for the purposes of this Section." (9) Section 6.18 is deleted. (10) In Section 7.01, after the words "Guarantee Agree- ment" where those words occur, the woirds ", the Trust Deed" are added. 33 (11) The following words of sub-section (c) of Section 7.04 are deleted: "or, if they shall not agree, by the Guarantor". (12) Sub-section (j) of Section '7.04 is amended to read as -follows: "(j) The provisions for arbitration set forth in this Section shall be in lieu of any other procedure for the determination of controversies between the parties under the Loan Agreement and Guarantee Agreement or any claim by any such party against any other such party arising thereunder provided, however, that nothing herein shall be deemed to pre- clude any of the said parties from exercising, or instituting any legal or equitable action to enforce, any right or clai arising- out of or pursuant to the Trust Deed or the Bonds, and submission to arbitra- tion herounder shall not be deemed to be a condition precedeiit or in any way to prejudice such exercise or other enforcement of any such right or claim." (13) 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." (14) Paragraph 10 of Section 10.01 is deleted and the fol- lowing new paragraph is substituted therefor: ''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." S