India - Eighth Telecommunications Project : Credit 1112 - Project Agreement - Conformed

CREDIT NUMBER 1112 IN , DOCUMNTS Project Agreement (Eighth Telecommunications Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and INDIAN TELEPHONE INDUSTRIES, LIMITED and HINDUSTAN CABLES, LIMITED and HINDUSTAN TELEPRINTERS, LIMITED Dated A 4 , 1981 CREDIT NUMBER 1112 IN PROJECT AGREEMENT AGREEMENT, dated fa " 214, 1981, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association), of the one part, and INDIAN TELEPHONE INDUSTRIES, LIMITED (herein- after called ITI), HINDUSTAN CABLES, LIMITED (hereinafter called HCL), and HINDUSTAN TELEPRINTERS, LIMITED (hereinafter called HTL), of the other part. WHEREAS (A) by the Development Credit Agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to two hundred fifty-two million four hundred thousand Special Drawing Rights (SDR 252,400,000), on the terms and coiditions set forth in the Development Credit Agreement, but only on condition that ITI, HCL and HTL agree to undertake such obligations toward the Association as are hereinafter set forth; (B) by subsidiary loan agreements to be entered into between the Borrower and each of ITI, HCL and HTL, the proceeds of the Credit provided for under the Development Credit Agreement will be made available to ITI, HCL and HTL on the terms and conditions therein set forth; and WHEREAS ITI, HCL and HTL, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. ITI shall carry out Part B of the Project, HCL shall carry out Part C of the Project and HTL shall carry -2- out Part D of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be governed by the provisions set forth or referred to in Section 2.03 of the Development Credit Agreement. Section 2.03. (a) ITI, HCL and HTL each undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by it to replace or repair such goods. (b) Except as the Association may otherwise agree, ITI, HCL and HTL shall each cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclusively for its Part of the Project. Section 2.04. (a) ITI, HCL and HTL shall each furnish to the Association, promptly upon their preparation, the plans, specifi- cations, reports, contract documents and work and procurement schedules for its Part of the Project, and any material modi- fications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) ITI, HCL and HTL shall each: (i) maintain records and procedures adequate to record and monitor the progress of its Part of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the portion of the Credit made available to it by the Borrower, and to disclose their use in said Part of the Project; (ii) enable the Association's accredited representatives to visit the facilities and construction sites included in said Part of the Project and to examine the goods financed out of the proceeds of said portion of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning said Part of the Project, its cost and, where -3- appropriate, the benefits to be derived from it, the expenditure of the proceeds of said portion of the Credit and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as the Association may agree, ITI, HCL and HTL shall each prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of its Part of the Project, its cost and the benefits derived and to be derived from it, the performance by the Association and ITI, HCL and HTL, as the case may be, of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (d) ITI, HCL and HTL shall each enable the Association's representatives to examine all its plants, installations, sites, works, buildings, property and equipment and any relevant records and documents. Section 2.05. ITI, HCL and HTL shall each duly perform all its obligations under its Subsidiary Loan Agreement. Except as the Association shall otherwise agree, ITI, HCL and HTL shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving such Subsidiary Loan Agreement or any provision thereof. Section 2.06. ITI, HCL and HTL shall each: (a) at the request of the Association, exchange views with the Association with regard to the progress of its respective Part of the Project, the performance of its obligations under this Agreement and under its Subsidiary Loan Agreement, and other matters relating to the purposes of the portion of the Credit relent to it by the Bor- rower; and (b) promptly inform the Association of any condition which interferes or threatens to interfere with the progress of its Part of the Project, the accomplishment of the purposes of said portion of the Credit, or the performance of its obligations under this Agreement and under its Subsidiary Loan Agreement. ARTICLE III Management and Operations of ITI, HCL and HTL Section 3.01. ITI, HCL and HTL shall each at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with sound business, financial, administrative and engineering practices and under the supervision of experienced and competent management assisted by adequate and competent staff. Section 3.02. (a) ITI, HCL and HTL shall each at all times maintain its corporate existence and the right to carry on its operations and to acquire and retain ownership of all lands and maintain and renew all interests in land and other properties, and take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. (b) ITI, HCL and HTL shall at all times operate and maintain its projects, machinery, equipment and other property, and make all necessary repairs and renewals thereof, in accordance with sound engineering practices. (c) Except as the Association shall otherwise agree, ITI, HCL and HTL shall not sell, lease, transfer or otherwise dispose of any of its property or assets required for the efficient operation of the Project, except in the normal course of business. Section 3.03. ITI, HCL and HTL shall each take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. ITI, HCL and HTL shall each maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. ITI, HCL and HTL shall each: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each - 5 - such year, (A) certified copies of its financial statements for such year as so audited-and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Associa- tion such other information concerning the accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of ITI, HCL and HTL thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, -the Association shall promptly notify ITI, HCL and HTL of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or -6- permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have des- ignated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For ITI: Indian Telephone Industries, Limited Dooravani Nagar Bangalore - 560016 Karnataka, India Cable address: Telex: PHONINDUSTRY 043 - 222 Bangalore For HCL: Hindustan Cables, Limited P.O. Hindustan Cables Dist. Burdwan 713335 West Bengal, India Cable address: Telex: HICABLES 065 - 240 Rupnarainpur For HTL: Hindustan Teleprinters, Limited G.S.T. Road Guindy, Madras 600032 India Cable address: Telex: TELEHIND 041 - 477 Madras -7- Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of ITI, HCL or HTL may be taken or executed by its respective Managing Director or such other person or persons as it shall designate in writing, and ITI, HCL and HTL shall each furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By/X& Al i Regional Vice President South Asia INDIAN TELEPHONE INDUSTRIES, LIMITED Authorized Representative HINDUSTAN CABLES, LIMITED Authorized Representative HINDUSTAN TELEPRINTERS, LIMITED Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the 02 day of 198F R. FOR SECRETARY