India - Third Indian Iron And Steel Project : Loan 0307 - Loan Agreement - Conformed

LOAN NUMBER 307 IN Loan Agreement (Third Indian Iron and Steel Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INDIAN IRON AND STEEL COMPANY, LIMITED DATED DECEMBER 22, 1961 LOAN NUMBER 307 IN Loan Agreement (Third Indian Iron and Steel Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INDIAN IRON AND STEEL COMPANY, LIMITED DATED DECEMBER 22, 1961 AGREEMENT, dated December 22, 1961, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and THE INDIAN IRON AND STEEL COMPANY, LIMITED, a company duly incorporated under the laws of India (hereinafter called the Borrower). WHEREAS (A) By a loan agreement dated December 18, 1952, between the Bank and the Borrower, the Bank agreed to make a loan (hereinafter called the first loan) to the Borrower of $31,500,000, or the equivalent thereof in cur- rencies other than dollars, for the purpose of financing a project for the expansion and modernization of its pro- duction facilities; (B) By a loan agreement dated December 19, 1956, between the Bank and the Borrower, the Bank agreed to make a further loan (hereinafter called the second loan) to the Borrower of $20,000,000, or the equivalent thereof in currencies other than dollars, for the further expansion and modernization of its production facilities (hereinafter called the second project); (C) The first loan and the second loan were guaranteed as to payment of principal, interest and other charges by the Guarantor; (D) By the 1958 Trust Deed (as hereinafter defined) the Borrower created, as security for the first loan and the second loan, a first fixed mortgage upon the immovable properties to which it then was or might thereafter become beneficially entitled and a first floating charge upon the remainder of its undert, king and assets, including uncalled capital; 4 (E) The Bank has been requested to make a third loan to the Borrower to be similarly guaranteed by the Guar- antor upon the terms of a Guarantee Agreement of even date herewith; (F) The security constituted by the 1958 Trust Deed is to be appropriately modified and extended, as hereinafter in Section 5.03 provided, so that the first loan, the second loan and such third loan shall rank pari passu in respect of such security as so modified; and (G) By various instruments the Borrower has created in favor of the President of India and the State Bank of India certain mortgages and charges all of which rank subsequent to the security created by the 1958 Trust Deed and it is intended that such securities be varied so as to permit the security for the said third loan also to rank in priority thereto; WHEREAS the Bank has agreed to make a loan to the Borrower upon the terms and the 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 February 15, 1961, 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 "1954 Trust Deed" means the Trust Deed dated 28th September, 1954 made between the Borrower 5 and others, and Baring Brothers & Co., Limited (here- inafter called Barings), as trustees, and the Bank, secur- ing mortgage bonds of the first loan in the principal amount of $31,500,000, or the equivalent in various cur- rencies, and (except where the context otherwise requires) shall include any deed or instrument supplemental thereto. (b) The term "1958 Trust Deed" means the 1954 Trust Deed as modified and supplemented by the Supplemental Trust Deed dated 29th April, 1958 made also between the Borrower and others, and Barings, as trustees, and the Bank, securing the first loan, the second loan, and the bonds issuable in respect thereof, all in the aggregate principal amount of $51,500,000, or the equivalent in other currencies, and (except where the context otherwise re- quires) shall include any deed or instrument supplemental thereto. (c) The term "Supplemental Indenture" means the deed or deeds and other instruments which shall be exe- cuted by the Borrower in accordance with the provisions of Section 5.03 of this Agreement in order to modify and extend the security of the 1958 Trust Deed as in said Sec- tion provided. (d) The term "Trust Deed" means the 1958 Trust Deed as modified by the Supplemental Indenture and shall, except where the context otherwise requires, include each deed and other instrument included in the Supplemental Indenture and any deed or deeds supplemental to the 1958 Trust Deed as so modified which shall be executed and delivered in accordance with the provisions thereof. (e) The term "subsidiary" means any company which is a subsidiary of the Borrower within the meaning of the Companies Act, 1956 of India (or any amendment thereof). (f) The term "rupees" and the letters "Rs." mean currency of the Guarantor. 6 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 nineteen million, five hundred thousand dollars ($19,500,000). 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 provided in, and subject to the rights of cancellation and suspension set forth in, this Loan Agreement; provided, however, that, until the Borrower shall have complied with the provisions of Sections 5.03 and 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, except as the Bank may otherwise agree. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 17o) per annum on the principal amount of the Loan not so withdrawn from time to time. SECTION 2.04. The Borrower shall pay interest at the rate of five and three-fourths per cent (53/4%) 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 Regula- tions shall be at the rate of one-half of one percent (1/2 of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. 7 SECTION 2.06. Interest and other charges shall be pay- able semi-annually on February 1 and August 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 and the methods and proce- dures for procurement of such goods shall be determined by agreement between the Bank and the Borrower, subject to modification by furi-her agreement between them. 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 deliver Bonds (in registered or bearer form as the Bank shall request) 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. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall, against pay- ment by the Bank of any amount to be withdrawn from 8 the Loan Account pursuant to Article II of this Agree- ment, execute and deliver to or on the order of the Bank, Bonds in the aggregate principal amount so paid, provided that the Bank may, at its option, require the Borrower, instead, within such period not less than 60 days after the date of any request therefor as the Bank shall specify in such request, to execute and deliver to or on the order of the Bank, Bonds in the aggregate principal amount specified in such request, not exceeding, however, the aggregate principal amount of the Loan which shall have been withdrawn and shall be outstanding and unpaid at the date of such request and for which Bonds shall not theretofore have been so delivered or requested. SECTION 4.03. Any one of the Directors for the time being of the Borrower and such other person or persons (acting jointly or severally as may be specified) as it may appoint in writing are designated as authorized repre- sentatives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. The signature of any such authorized representative shall be countersigned by the Managing Agents of the Borrower so long as the Articles of Association of the Borrower shall so require. SECTION 4.04. The Borrower shall effect original issues of the Bonds only as iin this Loan Agreement provided. SECTION 4.05. 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, authentication and delivery of Bonds and such arr-ange- ments 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. (a) The Borrower shall carry out the Project with due diligence and efficiency and in con- formity with sound engineering and financial practices. 9 (b) Upon request from time to time by the Bank, the Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications and construction schedules for the Project and any material modifications subsequently made therein, in such detail as the Bank shall request. (c) The Borrower shall maintain 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 (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower; shall enable the Bank's representatives to inspect the Project, the goods, all other plants, works, properties, equipment and operations of the Borrower and its subsidiaries, and any relevant books, records and docu- ments; and shall furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the goods, and the operations and financial condition of the Borrower. 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 rea- sonably 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 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 of its subsidiaries (if any) to observe and perform the obligations of the 10 Borrower hereunder to the extent to which the same may be applicable thereto as though such obligations were bind- ing upon each of such subsidiaries. SECTION 5.03. (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 1958 Trust Deed to be so modified 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 in respect thereof and the second loan and the bonds issuable in respect thereof, all of which shall rank pari passu inter se in respect of such security: (1) a first fixed mortgage upon all the properties now owned or hereafter acquired by the Borrower and expressed in the 1958 Trust Deed to be the specifically mortgaged prem- ises thereunder and (2) a first floating charge upon all the property and assets expressed in the 1958 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 Bor- rower, now existing or hereafter created, provided, how- ever, that the Trust Deed shall empower the Borrower to create or allow to remain outstanding mortgages or charges (specific or floating) ranking in priority to the floating charge existing, or to be created, under or pursuant to the Trust Deed and securing any indebtedness towards bankers incurred in the ordinary course of business and maturing on demand or not more than one year after the date upon which it is originally incurred, the aggre- gate amount of such indebtedness not to exceed fifty mil- lion rupees (Rs. 50,000,000) in principal amount at any one time outstanding. (b) Subject as aforesaid, the Borrower shall take all necessary steps and shall cause all necessary parties to 11 take all necessary steps to ensure that all liens outstanding upon the property and assets to which it is beneficially entitled shall be discharged or be varied to the reasonable satisfaction of the Bank, and of the trustees under the Trust Deed, so as to ensure that full effect may be given to the foregoing provisions of this Section. (c) The Borrower shall obtain all necessary consents for the valid execution and delivery of the Supplemental Indenture and shall duly register, or cause to be duly registered, the Supplemental Indenture and the Trust Deed, together with such other documents as may be necessary or proper in order to render the same fully effective in accordance with its terms. SECTION 5.04. The Borrower shall., within six weeks after the completion of all action required to be taken pursuant to the provisions of the last preceding Section, furnish evidence thereof satisfactory to the Bank. As part of such evidence there shall be furnished an opinion or opin- ions satisfactory to the Bank of counsel acceptable to the Bank showing (a) in respect to all immovable property or interests therein which by the terms of the Trust Deed is charged or is intended to be charged under the first fixed mortgage, that the Borrower and all other necessary parties for the purpose of effecting such charge have a good and marketable title to such property; (b) that the Supplemental Indenture has been duly authorized and executed and delivered on behalf of the Borrower and all other necessary parties thereto, that the Trust Deed con- stitutes a valid and effective mortgage and charge securing the Loan, the Bonds, the first loan and the bonds issuable in respect thereof and the second loan and the bonds issu- able in respect thereof and enjoying priority in accord- ance with its terms, and that no prior or pari passu secu- rity (other than as mentioned in the last preceding Sec- tion) exists on any part of the properties or assets to which the Borrower is then beneficially entitled. 12 SECION 5.05. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur, and shall niot permit any subsidiary to incur, indebtedness if at the time and as a result thereof the consolidated un- impaired capital and surplus of the Borrower and its subsidiaries would be less than the consolidated indebted- ness of the Borrower and its subsidiaries. For the purposes of and in making any calculation pursuant to this Section: (a) The term "indebtedness" shall not include commer- cial and trade liabilities (including in such liabilities accrued liabilities to the Indian Iron and Steel Con- troller but not including in such liabilities obliga- tions to bankers or in respect of deposits accepted by the Borrower) incurred in the ordinary course of business and payable not more than one year after the date as of which such calculation is re- quired to be made 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 Agreement dated July 15, 1953, between the President of India and the Borrower. (c) Amounts in currency other than currency of the Guarantor shall be converted into currency of the Guarantor at such rate as the Bank may determine for such other currency on the date on which the Borrower proposes to incur the debt in question. (d) The term "consolidated indebtedness" shall mean the total amount of indebtedness of the Borrower and all its subsidiaries (if any) excluding indebt- edness owed by the Borrower to any subsidiary or by any subsidiary to the Borrower or to any other subsidiary. (e) The term "capital and surplus" shall mean capital and surplus determined in accordance with sound accounting procedures. 13 (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 of the Borrower as shall represent equity interest of the Borrower in any subsidiary and after excluding such items of capital and surplus of any subsidiary as shall represent equity interest of that subsidiary in the Borrower or any other subsidiary. SECTION 5.06. (a) The Borrower shall at all times take all steps necessary to maintain its corporate existence and right to carry on operations and shall, except as the Bank may otherwise agree, take all steps necessary to acquire such land, interests in land and properties and to acquire, maintain and renew such rights, powers, priv- ileges and franchises, as may be necessary or proper for the construction and operation of the Project and the conduct of its busiress. (b) The Borrower shall carry on its operations and conduct its affairs in accordance with sound business, industrial and financial practices and shall operate, main- tain, renew and repair its plants, machinery, equipment and property as required in accordance with sound engi- neering practices. SECTION 5.07. Subject to such exemption as shall be conferred by the provisions of Sections 3.03 and 3.04 of the Guarantee Agreement, the Borrower shall pay or cause to be paid all taxes, if any, imposed under the laws of the Guarantor or laws in effect in the territories of the Guar- antor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agree- ment, 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 14 holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 5.08. The Borrower shall pay or cause to be paid all taxes, if any, imposed under the laws of the United Kingdom or under the laws of the country or countries in whose currency the Loan and the Bonds are payable or imposed under laws in effect in the territories either of the United Kingdom or of such country or countries on or in connection with the exedution, issue, delivery or registration of the Loan Agreement, the Guarantee Agreement, the Trust Deed or the Bonds. SECTION 5.09. Except as shall be otherwise agreed be- tween the Bank 2nd the Borrower, the Borrower shall insure or cause to be insured the goods financed out of the proceeds of the Loan against risks incident to their purchase and importation into the territories of the Guar- antor. Such insurance shall be consistent with sound commercial practice and shall be payable in dollars or in the currency in which the cost of the goods insured there- under shall be payable. SECTION 5.10. The Borrower shall not consent to any action taken at any meeting of bondholders or by written instrument pursuant to the provisions of the 1958 Trust Deed or of the Supplemental Indenture which would change the terms of the Bonds or adversely affect the holders thereof unless the Bank shall have expressed in writing its approval of such action or such consent. SECTION 5.11. Except as the Bank and the Borrower shall otherwise reasonably agree the Borrower shall not until the completion of the Project undertake, or make any investment in, any additions to, or expansion. of, its exist- ing facilities (other than the Project and the second 15 project), or any new venture, project or enterprise, if the total aggregate estimated cost of all the foregoing would exceed Rs. 10,000,000, or its equivalent, except in accordance with a financial plan approved in advance by the Bank. This limitation shall not apply to normal replacement and repairs of existing facilities. 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 Sec- tion 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 (j) of Section 5.02 of the Loan Regulations shall occur, or (iii) 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 out- standing to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement, the Trust Deed or the Bonds to the contrary notwithstanding. SECTION 6.02. The following are hereby specified as additional events for the purposes of Section 5.02 (j) of the Loan Regulations: (i) The Agreement dated July 15, 1953, between the Guarantor and the Borrower shall be amended or can- celled without the consent of the Bank. (ii) Any lien securing any loan from the Bank to the Borrower, or securing any bonds issued or issuable there- under, shall become enforceable. 16 ARTICLE VII Modifications of Loan Agreement dated December 18, 1952 and of Loan Agreement dated December 19, 1956 SECTION 7.01. For the purposes of the Loan Agreement dated December 18, 1952, between the Bank and the Bor- rower, paragraph (c) of Section 5.02 of Loan Regulations No. 4 of the Bank, dated October 15, 1952 is amended to read: " (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 Agree- ment, the Guarantee Agreement or the Bonds, or under the Loan Agreement dated December 22, 1961, the Guarantee Agreement of even date therewith, or the bonds therein provided for."; and the term "Loan Regulations" as used for the pur- poses of the said Loan Agreement shall mean Loan Regu- lations No. 4 of the Bank, dated October 15, 1952, as amended by said Loan Agreement and as further amended hereby. SECTION 7.02. For the purposes of the Loan Agreement dated December 19, 1956, between the Bank and the Bor- rower, paragraph (c) of Section 5.02 of Loan Regulations No. 4 of the Bank, dated June 15, 1956 is amended to read: " (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 Agree- ment, the Guarantee Agreement or the Bonds, or under the Loan Agreement dated December 22, 1961, the Guar- antee Agreement of even date therewith, or the bonds therein provided for.''; and the term "Loan Regulations" as used for the pur- poses of the said Loan Agreement shall mean Loan Regu- lations No. 4 of the Bank, dated June 15, 1956, as amended by said Loan Agreement and as further amended hereby. 17 ARTICLE VIII Effective Date; Termination SECTION 8.01. The following events are specified as addi- tional conditions to the effectiveness of this Agreement within the meaning of Section 9.01 (c) of the Loan Regu- lations: (a) the President of India and the State Bank of India shall have agreed (in form satisfactory to the Bank) to subordinate the securities held by them respec- tively to the security to be constituted by the Trust Deed or intended so to be; (b) 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 Agreement; (c) the Borrower has satisfied the Bank that the Bor- rower will be able to acquire all land, interests in land, properties, adequate electric power supply and all such rights, privileges and franchises as shall be necessary for the diligent carrying out of the Project and for its operation. SECTION 8.02. The following is specified as an additional matter, within the meaning of Section 9.02 (c) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: that the Borrower has full power and authority to construct and operate the Project and that all corporate and governmental acts, consents and approvals necessary therefor have been duly and validly performed or given. 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. 18 ARTICLE IX Miscellaneous SECTION 9.01. The Closing Date shall be January 31, 1967, or such other date as shall be agreed upon by the Borrower and the Bank. 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 Indian Iron and Steel Company, Limited 12 Mission Row Calcutta, 1, India Alternative address for cablegrams and radiograms: Inisco Calcutta IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective 19 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 J. BuRKE KNAPP Vice President THE INDIAN IRON AND STEEL COMPANY, LIMITED By A. D. VICKERS Authorized Representative 20 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* February 1, 1967 1,060,000 August 1, 1967 1,090,000 February 1, 1968 1,120,000 August 1, 1968 1,150,000 February 1, 1969 1,185,000 August 1, 1969 1,220,000 February 1, 1970 1,255,000 August 1, 1970 1,290,000 February 1, 1971 1,330,000 August 1, 1971 1,365,000 February 1, 1972 1,405,000 August 1, 1972 1,445,000 February 1, 1973 1,485,000 August 1, 1973 1,530,000 February 1, 1974 1,570,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.03), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 21 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 pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 2 years before maturity '/2% More than 2 years but not more than 4 years before maturity .............. y2% More than 4 years but not more than 8 years before maturity .............. 3/% More than 8 years but not more than 10 years before maturity .............. 43/4% More than 10 years before maturity .... 53/% 22 SCHEDULE 2 Description of Project The project consists of a program to increase the Bor- rower's coal production capacity from about 300,000 tons to about 2,200,000 tons per annum and to install a ropeway system for coal transportation. It is intended to satisfy the bulk of the Borrower's coal requirements without de- pendence on purchased coal or rail transport. The project includes: (i) Development of the Chasnalla coal property and modernization and improvement of the Jitpur and Ramnagore collieries. Annual output at full ca- pacity of individual mines is estimated as follows: Chasnalla: Opencast Up to 660,000 tons No. 2 West 450,000 tons No. 4 East 600,000 tons Jitpur: 450,000 tons Ramnagore: 300,000 tons (ii) Installation and improvement of facilities for gathering sand and transporting it by ropeway to mines for stowing; (iii) Installation of a coal washing plant at Chasnalla with a capacity to handle about 550 tons of raw coal per hour; (iv) Installation of ropeways to transport coal from Jitpur to Chasnalla (about 6 miles long) and from Chasnalla to Burnpur (about 32 miles long) with a capacity of about 200 and about 500 tons per hour respectively. The project is expected to be completed by March 31, 1967. 23 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 February 15, 1961, shall be deemed to be modified as follows: (a) By the deletion of Section 6.01. (b) By the deletion of Section 6.03. (c) By the deletion in Sections 6.05, 6.06 and 6.10 of the words "under Section 6.03 or". (d) 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 in- terest attached (hereinafter sometimes called cou- pon Bonds). Bonds delivered to the Bank shall be registered 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 respectively set forth in the Trust Deed. Bonds payable in any currency other than dollars shall be substantially in the forms respee- tively set forth in the Trust Deed, as the case may be, except that they shall (i) provide for payment of principal, interest and premium on redemption, if any, in such other currency, (ii) provide for such place of payment as the Bank shall specify, and (iii) contain such other modifica- tions as the Bank shall reasonably request in order to conform to the laws or to the financial usage of the place where they are payable. 24 (b) Notwithstanding any other provision of the Loan Agreement or these Regulations, if the Bank shall so require, the Borrower shall execute and deliver bonds pursuant to Section 4.02 of the Loan Agreement before the execution and delivery of the Supplemental Indenture. The provisions of Section 6.07 of Loan Regulations No. 4 of the Bank, dated February 15, 1961, but before modifi- cation by subparagraph (a) of this Section, shall apply to the form of any such bonds, with appro- priate 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 maturities issued under the Trust Deed, the Loan Agreement and these Regulations. All other provisions of the Loan Agreement, the Guarantee Agreement and these Regulations relating or referring to Bonds shall apply mutatis mutandis to such bonds except where such application would be clearly incon- sistent with the requirements of this subpara- graph. " (c) All Bonds shall have the guarantee of the Guarantor endorsed thereon substantially in the form set forth in Schedule 3 to these Regulations." (e) By the addition at the beginning of Section 6.09 of the words following, namely: "Except as the Bank and the Borrower shall otherwise agree, Bonds shall be dated as herein- after in this Section provided." (f) By the deletion in Section 6.11 of paragraph (c) thereof and the substitution of the following new para- graph (c) therefor: "(c) Subject to the provisions of Sections 6.05 and 6.06 of these Regulations, Bonds payable in any currency may be exchanged for Bonds of the 25 same or an equivalent aggregate principal amount payable in the same or any other currency or cur- rencies and having the same or any other maturity or maturities. For the purposes of determining the equivalent of one currency in terms of another the value of each shall be as determined by the Bank." (g) By the deletion of Section 6.18. (h) By the addition in Section 7.01, after the words "Guarantee Agreement" where those words occur, of the words ", the Trust Deed". (i) By the deletion of subparagraphs (b) to (f) in- clusive and (j) of Section 7.04 and the substitution there- for of the following subparagraphs, namely: "(b) The parties to such arbitration shall be the Bank, the Borrower and the Guarantor. " (c) The Arbitral Tribunal shall consist of three arbitrators, each to be agreed upon by the parties or, if and to the extent to which they shall not agree, to be appointed by the President of the International Court of Justice or, failing appoint- iment by him, by the Secretary-General of the United Nations. In case any arbitrator shall re- sign, die or become unable to act, a successor arbi- trator shall be selected or appointed in the same manner as herein prescribed for the selection or appointment of the original arbitrator and such successor shall have all the powers and duties of such original arbitrator. " (d) An arbitration proceeding may be insti- tuted under this Settion upon notice by the party instituting such proceeding to the other parties. Such notice shall contain a statement setting forth the nature of the controversy or claim to be sub- mitted to arbitration and the nature of the relief sought. 26 "(e) If, within 60 days after the giving of such notice instituting the arbitration proceeding, the parties shall not have agreed upon the three arbi- trators, any party may request such appointment as is provided for in paragraph (c) of this Section. " (f) The Ar)itral Tribunal shall determine where and when ;.t shall convene and sit. " (j) The provisions for arbitration set forth in this Section shall be in lieu of any other pro- cedure for the determination of controversies be- tween the parties under the Loan Agreement and Guarantue Agreement or any claim by any such party against any other such party arising there- under provided, however, that nothing herein shall be deemed to preclude any of the said parties from exercising, or instituting any legal or equitable action to enforce, any right or claim arising out of or pursuant to the Trust Deed or the Bonds, and submission to arbitration here- under shall not be deemed to be a condition pre- cedent or in any way to prejudice such exercise or other enforcement of any such right or claim." (j) By the deletion in Section 7.04 (i) of the words "Bank on the one side and the Borrower and Guarantor on the other.", and the substitution therefor of the words "parties.". (k) By the deletion in Section 9.02 of part (ii) of para- graph (a). (1) By the deletion of paragraph 6 of Section 10.01 and the substitution therefor of the following new para- graph, namely: "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 President." 27 (m) By the deletion of paragraph 9 of Section 10.01 and the substitution therefor of the following new para- graph, namely: "9. The term 'Bonds' means Bonds issued and authenticated pursuant to the Trust Deed (except as otherwise provided in Section 6.07 (b)), with the guarantee of the Guarantor endorsed thereon as provided in the Loan Agreement and the Guar- antee Agreement."