India - Second Industrial Credit And Investment Project : Loan 0232 - Loan Agreement - Conformed

LOAN NUMBER 232 IN Loan Agreement (Second Industrial Credit and Investment Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED DATED JULY 15, 1959 LOAN NUMBER 232 IN Loan Agreement (Second Industrial Credit and Investment Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED DATED JULY 15, 1959 ILXäan Agrenrut AGREEMENT, dated July 15, 1939, between INTERNA- TIONAL BANK FoR RECONSTTCTION AND DEsvELormENT (here- inafter called the Bank) and TiHE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION oF INIA IMITED, a eompany duly incorporated under the Indian Companies Act 1913 (here- inafter called the Borrower). IEREAS by a loan agreement dated March 14, 1955, between the Bank and the Borrower, the Bank ia(de a loan to the Borrower in an amount in various currencies equiv- alent to ten million dollars ($10,000,000), to finance part of the Borrower's program of providing credits to, and mak- ing other productive inlvestments in, private enterprises in India; ÄVHEREAS pursuant to the First Government Agreement (as hereinafter defined) the Guarantor made an advance to the Borrower of seventy-five million rupees (Rs. 75,000,000) to assist the Borrower in said programi; WY1EREAS the Governiment of India has agreed to further assist the Borrower by making availa ble to the Borrower one hundred million rupees (Rs. 100,000,000) as a loan pursuant to the Second Governmient Agreement as hereiin- after defined; and W1TEIEAS the Borrower has requested the Bank to make a further loan for said program; Now THLEIEFoRE the parties liereto here>y agrec as follows: ARTICLE I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loa Agreement accept all the provisions of Loan Rieguations No. 4 of tbe Bank dated June 1D, 1936, subject, however, to the modifications thereof set forth in Sehedule 2 to this Agrement (said Loan Regulations No. 4 as so nodified being hereinafter 4 called the Loan Regulations), with the same force and effect as if they were fully sef forth herein. SECTION 1.02. The following terms as used herein shall have the following meanings unless the context otherwise requires: (a) The term "Guarantor" means India acting by its President. (1b) The term "First Government Agreement" means the agreement dated January 29, 1935, entered into by the Guarantor and the Borrower providing for an advance by the Guarantor to the Borrower of seventy-five million rupees (Ps. 75,000,000), and shall include such changes in said agreement as may from time to time be agreed by the parties thereto and the Bank. (c) The term "Second Government Agreement" means the agreement to be entered into by the Guarantor and the Borrower providing for a loan by the Guarantor to the Borrower of one hundred million rupees (Rs. 100,000,000), and shall include such changes in said agreement as may from time to time be agreed by the parties thereto and by the Bank. (d) The term "subsidiary" means a subsidiary of the Borrower within the meaning of the Indian Companies Act 1913 (or any amendment thereof). (e) The term "rupees" and the letters "Rs." mean cur- rency of the Guarantor. Words importing the singular number include the plural number and vice versa. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to ten million dollars ($10,000,000). 5 SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower. The amount of the Loan shall be credited to the Loan Account as follows: (a) When any investment project shall be approved by the Bank as in Section 3.02 provided, there shall be so (re(dited an amount equal to the estimated foreign currency cost thereof as approved by the Bank. Except as the Bank and the Borrower shall otherwise agree, no amount shall be credited to the Loan Account pursuant to this sub-para- graph (a) for any investment project in respect of which any amount has been credited or withdrawn pursuant to subi-paragraph (b) of this Section. (b) There shall be credited to the Loan Account such amounts not exceeding $100,000 in respect of any one invest- m)ent project as the Borrower shall from time to time re- quest and such amounts may be withdrawn by the Borrower for expenditures on such investment project. Each request by the Borrower for credit to the Loan Account pursuant to this sub-paragraph (b) shall state the investment project for which the amount to be credited is requested. Except as the Bank and the Borrower shall otherwise agree, the amounts credited to the Loan Account pursuant to this sub- paragraph (b) shall not exceed in the aggregate $1,000,000. No credit shall be made to the Loan Account, and no with- drawal shall be made therefrom, pursuant to this sub-para- graph (b) for any investment p)roject in respect of which a credit has been made pursuant to sub-paragraph (a) of this Section. (c) The Loan Account may, by agreement between the Bank and the Borrower, be reduced by any amount credited thereto pursuant to sub-paragraph (a) of this Section which will not be required for the investment project in respect of which it was so credited. By like agreement amounts credited or to be credited to the Loan Account pursuant to sub-paragraph (b) of this Section may be re- duced. No such reduction shall be deemed ipso facto to be a cancellation of any part of the Loan. 스． ..MEN.. 7 nlitments entered into by the Bank at 'he request of the Borrower pursuant to Sectioii 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (11,L, of 1 o) per annuin on the principal amomit of any such special coniiiiitments outsta,-ndiiig from time to time. SECTION 2.06. Interest aiid othei- charges shall be pay- able semi-annually oil April 1 and Oetobei- I in each year. Su,rioN 2.0-. The Borrower shall repay the 1?i-iiicipal amount of each pai.-t OF the 1,oan withdrawn from the Loan Account in proporti.mi to, and in accordance with, the sev- eral maturities of the amm-tization sehedule set forth in Schedtile 1 to this Agreemeiit; provided, howevet-, that the M.ink and the Bort-ower may auree, ,it the thne when ali amount is credited to the Loan Account pursuant to sub- p.ara(),-i-aph (a) of Section 2.02 of this A()-reement, to exteild the amoi-tization sebodule for not moi-e thmi, foui- -Vears in respect of the amomit so credited to the Lotaii Aecount. ARTICLE III Description of the Project; Use, of Proceeds of the Loan SECTION3.01. The Project for which the Loan is granted is a program to contribute to the industrial development of India by providing- credits for productive purposes to enterprises in India which, ai-e or will be controlled by pri- vate capital, and by making othei. , productive inves till ell ts in such enterprises, foi.- specific development pi-ojects, all iii accordance with the Memoraiiduin and Articles of Associa- tion of the Borrower, as amended froni time to time, and in furtherance of the corporate purpose,.-,- of the Borrower as therein set forth. (Such enterprises are herein called "i-n- vestment enterprises" and such specific development proj- ects are herein called "investment projects"). SECTION 3.02. (a) The proceeds of the Loan shall be applied exclusively to the cost of goods required to carry 8 out such investment projects as shall from time tq time be approved in writing by the Bank or in respect of which amounts have been credited to the Loan Account pursuant to the provisions of sub-paragraph (b) of Section 2.02 of this Agreement. Notwithstanding the provisions of Section 4.01 of the Loan Regulations, except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made on account of expenditures made for any such invest- ment project more than 90 days prior to the submission of the investment project to the Bank for approval or, in the case of credits to the Loan Account pursuant to sub-para- graph (b) of Section 2.02, prior to the request for credit to the Loan Account. (b) Any amount credited to the Loan Account pursuant to sub-paragraph (a) of Section 2.02 of this Agreement shall be withdrawn by the Borrower and applied exclusively for credits for, or investments in the investment project in respect of which such amount was credited to the Loan Account. (c) Any amount credited to the Loan Account pursuant - to sub-paragraph (b) of Section 2.02 of this Agreement shall be withdrawn by the Borrower and applied exclusively for loans for the investment project in respect of whili such amount was credited to the Loan Account. (d) Except as the Bank and the Borrower shall other- wise agree, requests for approval of investment projects pursuant to sub-paragraph (a) of Section 2.02 of this Agreement and for credits to the Loan Account pursuant to sub-paragraph (b) of said Section shall be submitted on or before December 31, 1961. SECTION 3.03. (a) Whenever the Borrower shall desire to submit an investment project to the Bank for approval the Borrower shall submit to the Bank an application in such form as shall be agreed between the Bank and the Borrower. Such application shall contain a description of such investment project and such other information as the Bank shall reasonably request. 9 (b) Whenever the Borrower shall have requested an amount to be credited to the Loan Account in respect of an investment project pursuant to sub-pa ragraph (b) of Sec- tion 2.02 of this Agreement, the Borrower shall submit to the Bank, within 30 days from the date on which such amount was credited to the Loan Account, a brief descrip- tion, in form satisfactory to the Bank, of such investment project and of the terms and conditions upon which credit has been granted by the Borrower for such investment project in respect of the amount so credited to the Loan Account. SECTION 3.04. Any credit granted by the Borrower to, or other investment made by the Borrower in, an investment enterprise for an investment project to be financed out of the proceeds of the Loan, shall be granted or made on terms whereby the Borrower shall obtain, by the written agree- Iment of such investment enterprise or other appropriate legal means, rights adequate to protect the interests of the Borrower and the Bank, including the right to require such investment enterprise to carry out and operate the invest- ment project with due diligence and efficiency and in accord- ance with sound engineering and financial standards, in- cluding the maintenance of adequate records; the right to require that the goods to be financed with the proceeds of the Loan shall be used exclusively in the carrying out of such investment project; the right of the Bank and the Borrower to inspect such goods and the sites, works and construction included in such investment project, the opera- tion thereof and any relevant records and documents; the right to require that such investment enterprise shall take out and maintain such insurance, against such risks and in such amounts, as shall be consistent with sound business lpractice, and that, except as the Bank may otherwise agree, insurance covering marine and transit hazards on the goods financed out of the proceeds of the Loan shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable; and the right to obtain 10 all such information as the Bank and the Borrower shall reasoiably request relating to the foregoing and to tHie fihiancial condition and operations of such investment enter- prise. Such rights shall include appropriate provision whereby further access by such enterprise to use of the proceeds of the Loan may be suspended or terminated by the Borrower upon failure by such investment enterprise to carry out the terms of such credit or other investment. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. Any two Directoirs for the time being of the Borrower are hereby designated as authorized repre- sentatives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. The foregoing shall be in addition to any other designation by the Borrower for such pirpose. ARTICLE V Particular Covenants SECTION 5.01. The Borrower shall carry out the Project adl([ conduct its ol)erations and affairs in accordance with sound financial and investment stan(dards and practices, under the supervision of qualified and experienced manage- mWnt and in accordance with its femorandum and Articles of Association, as amended froui time to time. SECTION 5.02. (a) The Borrower shall exercise its rights in relation to each investment project financed in whole or in part out of the proceeds of the Loan in such manner as to protect the interests of the Borrower and the Bank. (b) The Borrower shall furnish to the Bank all such information as the Bank shall reasonably request concern- 11 ing the expenditure of the proceeds of the Loan, the Project, the investment enterprises, the investment projects and the financial condition and operations of the Borrower. (c) The Borrower shall maintain records adequate to record the progress of the Project and of each investment project (including the cost thereof) and to reflect in accordance with consistently maintained sound account- ing practices the financial condition and operations of the Borrower. The Borrower shall enaible the Baniik's repre- sentatives to examine such records. 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 promptly inform the Bank of any condition of substantial importance which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. SECTION 5.04. The Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any debt, such lien will ipso facto equally and ratably secure the 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; pro- vided, however, that the foregoing provisions of this Sec- tion 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; (ii) any lien on commercial goods to secure a debt maturing not 12 more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the, ordinary course of banking transactions to secure a debt maturing not more than one year after its date. SECTION 5.05. The Borrower shall pay or cause to be paid all taxes (including duties, fees or impositions), if any, imposed under the laws of the Guarantor or laws in effect in the territories of the Guarantor on or in connection with the execution, issue, delivery or registration of this Loan Agreement, the Guarantee Agreement 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 taxes (including duties, fees or impositions) on payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 5.06. The Borrower shall pay or cause to be paid all taxes (including duties, fees and impositions), 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 regis- tration of this Loan Agreement, the Guarantee Agreemtent or the Bonds. SECTION 5.07. The Borrower shall not amend its Mem- orandum or Articles of Association or abrogate, waive, or amend, or agree to the amendment of any provision of the First Government Agreement or the Second Government Agreement without the approval of the Bank. SECTION 5.08. Without the approval of the Bank no pay- ment shall be made to the Guarantor in respect of the advance under the First Government Agreement or of the loan under the Second Government Agreement, except at the times and in the amounts therein provided. 13 SECTION 5.09. The Borrower shall procure that each of its subsidiaries (if any) shall observe and perform the obli- gations of the Borrower hereunder to the extent to which the same may be applicable thereto as though such obliga- tions were binding upon each of such subsidiaries. SECTION 5.10. The Borrower shall duly perform all obli- gations to be performed by it under the First Government Agreement and the Second Government A greement. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a), paragraph (b), paragraph (e), paragraph (f) or para- graph (j) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such deelaration such principal shall become due and payable immediately, anything in this Loan Agreement or in the Bonds to the contrary notwithstanding. ARTICLE VII Modification of Loan Agreement Dated March 14, 1955 SECTION 7.01. For the purposes of the Loan Agreement dated March 14, 1955, paragraph (c) of Section 5.02 of Loan Regulations No. 4 of the Bank, dated October 15, 1952, is hereby amended to read as follows: "(c) A default shall have occurred in the performance of any other covenant or agreement on the part of the 14 Borrower or the Guarantor under the Loan Agreement, the Guarantee Agreement or the Bonds, or under the loan agreement dated July15 , 1959, between the Bank and the Borrower, the guarantee agreement of even date therewith or the bonds 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 October 15, 1952, as modified by Schedule 2 to said Loan Agreement and as further amended hereby. ARTICLE VIII Effective Date; Termination SECTION 8.01. The following event is specified as an additional condition to the effectiveness of this Loan Agree- ment within the meaning of Section 9.01 (a) (ii) of the Loan Regulations: The Second Government Agreement in form and sub- stance satisfactory to the Bank shall have been duly executed by the parties thereto. SECTION 8.02. The following is specified as an additional matter 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, namely that the Second Government Agreement has been duly and validly executed and consti- tutes a valid and binding obligation of the parties thereto in accordance with its terms. SECTION 8.03. A date 90 days after the date of this Loan Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. 15 ARTICLE IX Miscellaneous SECTION 9.01. The Closing Date shall be September 30, 1962. 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 Industrial Credit and Investment Corporation of India Limited Union Bank Building Apollo Street Bombay 1 India Alternative address for cablegrams and radiograms: Credcorp Bombay, India IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective 16 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 /s/ EUGENE R. BLACK President THE INDUSTRIAL CREDIT AND INVEST- MENT CORPORATION OF INDIA LIMITED By /s/ H. 1. PAREKH Authorized Representative