Japan - Second Kawasaki Project : Loan 0188 - Loan Agreement - Conformed

LOAN NUMBER 188 JA Loan Agreement (Second Kawasaki Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT THE JAPAN DEVELOPMENT BANK DATED JANUARY 29, 1958 LOAN NUMBER 188 JA Loan Agreement (Second Kawasaki Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE JAPAN DEVELOPMENT BANK DATED JANUARY 29, 1958 Vaan Agrerment AGREEMENT, dated January 29, 1958, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and THE JAPAN DEVELOPMENT BANK (hereinafter called the Borrower). WHEREAS (A) By a Loan Agreement (hereinafter called the First Loan Agreement) dated December 19, 1956, made between the Bank and the Borrower, the Bank agreed to lend to the Borrower an amount in various currencies equiv- alen-t to twenty million dollars ($20,000,000), which amount was agreed to be relent by the Borrower to Kawasaki Steel Corporation (hereinafter called Kawasaki) upon the terms of an Agreement dated February 8, 1957 and made between the Borrower and Kawasaki; and by a Guarantee Agree- ment (hereinafter called the First Guarantee Agreement) also dated December 19, 1956, made between the Guarantor and the Bank, the Guarantor agreed to guarantee the obli- gations of the Borrower in respect of such loan as therein provided; (B) In accordance with the provisions of the First Loan Agreement, Kawasaki entered into certain agreements with its present long-term creditors and with Daiichi Bank Lim- ited (hereinafter called Daiichi), such agreements being defined in the First Loan Agreement as the creditors agree- ments, the paramount agreement and the Daiichi agree- ment respectively; (C) With the agreement of the Guarantor, the Bank and the Borrower, Kawasaki proposes now to terminate the paramount agreement and to enter into supplemental agree- ments with each of its present long-term creditors each substantially in the terms of a draft which has been agreed between them; and Kawasaki proposes now to enter into a new agreement with Daiichi substantially in the terms of a draft which has been agreed upon between them. (D) The Bank has been requested to grant a loan to the Borrower, the proceeds of which the Borrower intends to relend to Kawasaki for the purposes of the Project; 4 (E) The Guarantor has agreed to guarantee the obliga- tinns of the Borrower as provided in a Guarantee Agree- ment of even date made between the Guarantor and the Bank; (F) The Bank has, on the basis of the foregoing, agreed to make a loan to the Borrower upon the terms and condi- tions hereinafter set forth; Now THEREFOPE the parties hereto hereby agree as fol- lows: 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 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. SECTION 1.02. Unless the context shall otherwise require, the following terms shall have the following meanings: (a) The term "mortgage debentures" means mortgage debentures of Kawasaki secured upon immovable property. (b) The term "housing loans" means loans contracted by Kawasaki for housing purposes from public corporations or public authorities in Japan. (c) The term "long-term debt" means debt maturing on a date not less than one year from the date upon which it is originally incurred, except debt evidenced by mortgage debentures and by housing loans; and the term "present long-term creditor " means any creditor to whom Kawasaki at present owes any long-term debt except (i) the Borrower in respect of any monies borrowed by it from the Bank and relent by it to Kawasaki; and (ii) -the Borrower, The 5 Long-Term Credit Bank of Japan and the Industrial Bank of Japan in respect of monies aggregating four billion yen (Y4,000,000,000) lent by them to Kawasaki under agree- ments all dated February 8, 1957. (d) The term "short-term debt" means debt maturing on a date less than one year after the date upon which it is originally incurred other than trade and commercial liabili- ties incurred in the ordinary course of business. (e) The term "creditors agreements" means any and all the supplemental agreements proposed to be entered into between Kawasaki and each of the present long-term cred- itors as hereinbefore recited. (f) The term "Daiichi agreement" means the new agree- ment proposed to be entered into between Daiichi and Kawasaki as hereinbefore recited. (g) The term "second subsidiary loan agreement" means the agreement between the Borrower and Kawasaki re- ferred to in Section 5.06 of this Loan Agreement. (h) The term "Yen" and the sign "Y" mean yen in the currency of Japan. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in thic Agreement set forth or referred to, an amount in various currencies equivalent to eight million dollars ($8,000,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. 6 SECTION 2.03. The Borrower shall be entitled, subject to the provisions of this Agreement and the Loan Regulations, to withdraw from the Loan Account, in such currencies and at such times as shall be agreed upon between the Bank and the Borrower, amounts expended or to be expended on the Project after April 30, 1957. SECTION 2.04. 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. 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 Regulations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.05. The Borrower shall pay interest at the rate of five and five-eighths per cent (55/8 o) per annum on the principal amount of the Loan so withdrawn and out- standing from time to time. SECTION 2.06. Interest and other charges shall be payable semi-annually on May 15 and November 15 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 cause the equivalent of the proceeds of the Loan to be applied exclusively to expenditures on the Project. 7 ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan a, provided in the Loan Regulations. SECTION 4.02. The President of the Borrower and such person or persons as he shall appoint in writing are desig- nated as authorized representatives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall carry on its oper- ations and conduct its affairs in accordance with sound business and financial practices. (b) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound engineering and financial practices. (c) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans, speci- fications and construction schedules for the Project and any material modifications subsequently made therein, in such detail as the Bank shall from time to time request. (d) The Borrower shall maintain or cause to be main- tained records adequate to show the application of the proceeds of the Loan, to record the progress of the Project (including the total expenditures incurred thereon) and to reflect in accordance with consistently maintained sound accounting practices all transactions between the Borrower and Kawasaki and the operations and financial condition of the Borrower and of Kawasaki; shall enable or take such steps as may be necessary to enable the Bank 'f repre- sentatives to inspect the Project and all facilities 6perated by Kawasaki and any relevant records and documents; and 8 shall furnish, or cause to be furnished to the Bank all such information as the Bank shall reasonably request concern- ing the expenditure of the proceeds of the Loan, the Project and all facilities operated by Kawasaki, all transactions between the Borrower and Kawasaki and the operations and financial condition of the Borrower and of Kawasaki. SECTION 5.02. (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 re- quest with regard to the general status of the Loan. (b) The Bank and the Borrower shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. SECTION 5.03. 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 pay- ment 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, however, that the foregoing provisions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. SECTION 5.04. 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 Guar- 9 antor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agree- ment or the Bonds, 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 beneficiallv owned by an individual or corporate resident of the Guarantor. SECTION 5.05. The Borrower shall pay or cause to be paid all taxes and fees, if any, imposed under the laws of 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. SECTION 5.06. All moneys withdrawn from the Loan Ac- count shall be lent by the Borrower to Kawasaki. Such loan shall be made upon terms which shall be satisfactory to the Bank and be embodied in a loan agreement between the Borrower and Kawasaki. This second subsidiary loan agreement shall provide (inter alia) that the Borrower shall receive from Kawasaki, as security for its advances to Kawasaki thereunder, such lien or liens as may be con- sistent with the Borrower's established practices. SECTION 5.07. Except as the Bank shall otherwise agree, the Borrower shall exercise its rights under the second sub- sidiary loan agreement in such manner as to protect the interests of the Borrower and the Bank; and (except as aforesaid) the Borrower shall not amend, assign, abrogate or waive any provision of the second subsidiary loan agree- ment; provided, however, that the agreement of the Bank shall not be required to tOe amendment, assignment, abro- gation or waiver of any provision of the second subsidiary loan agreement relating to (i) damages for non-perform- ance or (ii) any guarantor, thereunder. 10 SECTION 5.08. It is the mutual intention of the Borrower and the Bank that to the extent that Kawasaki shall prepay the Borrower its indebtedness under the second subsidiary loan agreement, the Borrower shall to a correspondingly proportionate extent prepay the Bank under this Loan Agreement. Accordingly, unless otherwise agreed between the Borrower and the Bank, if Kawasaki shall repay in advance of maturity any part of its indebtedness to the Borrower under the second subsidiary loan agreement, then the Borrower shall thereupon repay to tb-, Bank, in ad- vance of maturity, an amount being such py )portion of the principal amount of the Loan then outstanding as the amount so repaid to the Borrower by Kawasaki bears to the total principal amount owing by Kawasaki under the second subsidiary loan agreement immediately prior to such repayment; provided that, in computing any such total principal amounts, there shall be deducted any amount paid, contemporaneously with such repaymaent, in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. To any repayment by the Borrower in accordance with this Section, all the provisions of the Loan Regulations relating to repayment in advance of maturity shall be applicable. 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 either of the events specified in Section 6.02 of this Agreement shall occur and shall continue for a period of thirty days; or (ii) 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, 11 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 the Bonds to the contrary notwithstanding. SECTION 6.02. For the purposes of Se.etion 5.02 (j) of the Loan Regulations, the following additional events are specified: (a) If there shall have occurred any event specified or referred to in Section 6.01 of the First Loan Agree- ment. (b) If there shall have occurred any event specified in Article 27 of the second subsidiary loan agreement as an event of default. 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) of the Loan Regulations: (a) that the second subsidiary loan agreement, the cred- itors agreements and the Daiichi agreement, all in form and substance satisfactory to the Bank, shall have been duly executed and delivered by the respective parties thereto, and shall have been duly authorized or ratified, and that all acts, consents, validations and approvals necessary there- for shall have been duly performed or given; (b) that Kawasaki shall have entered into agreements, in form and substance satisfactory to the Bank, with The Industrial Bank of Japan, Ltd., The Long-Term Credit Bank of Japan, Ltd., Nippon Life Insurance Co., Asahi Mutual Life Insurance Co. and The Chiyoda Mutual Life Insurance Co. for the borrowing by Kawasaki of not less than nine hundred million yen (Y900,000,000) aggregate 12 amount of long-term debt; and that such agreements shall have been duly executed and delivered by the respective parties, and shall have been duly authorized or ratified, and that all acts, consents, validations and approvals necessary therefor shall have been duly performed or given. 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 Kawasaki has full power and authority to con- struct and operate the Project and has all necessary rights and powers in connection therewith and that all acts, con- sents, validations and approvals necessary therefor have been duly and validly performed or given; (b) that the second subsidiary loan agreement, the cred- itors agreements and the Daiichi agreement have been duly authorized or ratified by, and executed and delivered on behalf of, the respective parties thereto, that all ants, con- sents, validations and approvals necessary under the laws of Japan to render said agreements valid and effective have been duly performed or given, and that the said agreements constitute valid and binding obligations of such parties in accordance with their respective terms; (c) that the agreements referred to in Section 7.01 (b) have been duly authorized or ratified by, and executed and delivered on behalf of, the parties thereto respectively, that all acts, consents, validations and approvals necessary under the laws of Japan to render said agreements valid and effective have been duly performed or given and that said agreements constitute valid and binding obligations of such parties in accordance with the terms of such agree- ments. SECTION 7.03. A date 90 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. 13 ARTICLE VIII Miscellaneous SEOTION 8.01. The Closing Date shall be October 31, 1959. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: The Japan Development Bank 8, 1-chome Marunou,hi Chiyoda-ku Tokyo, Japan Alternative address for cablegrams and radiograms: Devebank, Tokyo 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 respec- 14 tive names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President THE JAPAN DEVELOPMENT BANK By YOSHIMARU KANNO Authorized Representative