LOAN NUMBER 233 IN Loan Agreement (Fourth Railway Project) BETWEEN INDIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JULY 15, 1959 LOAN NUMBER 233 IN Loan Agreement (Fourth Railway Project) BETWEEN INDIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JULY 15, 1959 I Iihan Airgreemet AGREEMENT, dated July 15, 1959, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVEL- OPMENT (hereinafter called the Bank). ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 3 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. 3 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. 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 fifty million dollars ($50,000,000.00). 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 The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. 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charge at the rate of three-fourths of one per cent (% of 1%) per annum on the principal amount of the 4 Loan not so withdrawn from time to time.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shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Reg- ulations or shall be cancelled pursuant to Article V of the Loan Regulations.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 The Borrower shall pay interest at the rate of six per cent (6%0) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Except as the Borrower and the Bank 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 (1/2 of 17) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shad be pay- able semi-annually on January 15 and July 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 proceeds of the Loan to be applied exclusively to financing the cost of goods required to carry out the Project described in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan and the methods and pro- cedures for procurement of such goods shall be determined 5 by agreement between the Borrower and the Bank, subject to modification by further agreement between them. SECTION 3.02. Except as the Borrower and the Bank shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Loan to be used in the territories of the Borrower exclusively in the carrying out of the Project. 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. A Secretary to the Government of India in the Ministry of Finance is designated as the authorized representative of the Borrower for the purposes of Section 6.12 of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out, and the operations of the Railways owned and operated by it to be conducted, with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans and spec- ifications for the Project and any material modifications subsequently made therein, in such detail as the Bank shall from time to time request. (c) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out Is 6 of the proceeds of the Loan, to disclose the use thereof in the Project, and to record the progress of the Project (in- cluding the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial, condition of the agency or agencies of the Borrower responsible for the construction or opera- tion of the Project or any part thereof; shall enable the Bank's representatives to inspect the Project, the goods, the railway property and equipment owned or operated by the Borrower and any relevant records and documents; 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, and the goods, and the operations and financial condition of the agency or agencies of the Borrower i.esponsible for fhe construction or opera- tion of the Project or any part thereof. SECTION 5.02. (a) The Borrower and the Bank shall cooperate fully to assure that the purposes of the Loan will be aecomplished. 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. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the ter- ritories of the Borrower and the international balance of payments position of the Borrower. (b) The Borrower and the Bank 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 afford all reasonabil opportun- ity for accredited representatives of the Bank to visit any 7 part of the territories of the Borrower for purposes related to the Loan. BrE,CTION 5.03. It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be cre- ated on any assets of the Borrower or of any of its political subdivisions or of any agency of the Borrower or of any such political subdivision as security for any external 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: (a) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (b) any pledge of commercial goods to secure debt maturing not more than one year after its date and to be paid out of the proceeds of sale of such commercial goods; or (c) any pledge by the Reserve Bank of India of any of its assets in the ordinary course of its banking business to secure any indebtedness maturing not more than one year after its date. SECTION 5.04. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes (including duties, fees or impositions) imposed under the laws of the Bor- rower or laws in effect in its territories; provided, however, that the provisions of this Section shall not apply to taxa- tion of, or duties or fees or impositions levied upon, pay- ments under any Bond to -a holder thereof other than the Bank when such Bond is beneficially owned by an individ- ual or corporate resident of the Borrower. I 8 jECTION5.05, The Loan Agreemeit and the Bonds shal be free from any taxes (including duties, fees or imposi- tions) that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof and the Borrower shall pay all such taxes (including duties, fees or impositions), if. any, imposed under the laws of the coun- try or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries. SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regula- tions shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Sec- tion 3.02 of the Loan Regulations shall occur and shall con- tinue 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 im- mediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwith- standing. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be June 30, 1960. U 9 SECTION 7.02. A date sixty days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SECTION 7.03. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: The Secretary to the Government of India Ministry of Finance New Delhi, India Alternative address for cablegrams and radiograms: Finance Ministry New Delhi 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. SECTION 7.04. A Secretary to the Government of India in the Ministry of Finance is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective I 10 names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ M. C. CHAGLA Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ EUGENE R. BLACK President 11 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* January 15, 1963 $866,000 July 15, 1963 892,000 January 15, 1964 919,000 July 15, 1964 946,000 January 15, 1965 975,000 July 15, 1965 1,004,000 January 15, 1966 1,034,000 July 15, 1966 1,065,000 January 15, 1967 1,097,000 July 15, 1967 1,130,000 January 15, 1968 1,1.64,000 July 15, 1968 1,199,000 January 15, 1969 1,235,000 July 15, 1969 1,272,000 January 15, 1970 1,310,000 July 15, 1970 1,349,000 January 15, 1971 1,390,000 July 15, 1971 1,432,000 January 15, 1972 1,475,000 July 15, 1972 1,519,000 January 15, 1973 1,564,000 July 15, 1973 1,611,000 January 15, 1974 1,660,000 July 15, 1974 1,709,000 January 15, 1975 1,761,000 July 15, 1975 1,813,000 January 15, 1976 1,868,000 July 15, 1976 1,924,000 January 15, 1977 1,982,000 July 15, 1977 2,041,000 January 15, 1978 2,102,000 July 15, 1978 2,165,000 January 15, 1979 2,230,000 July 15, 1979 2,297,000 * 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. 12 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 3 years before maturity ......................... / of 1% More than 3 years but not more than 6 years before maturity .............. 11/% More than 6 years but not more than 11 years before maturity............... 2 % More than 11 years but not more than 16 years before maturity..... ......... 31/2% More than 16 years but not more than 18 years before maturity .............. 5% More than 18 years before maturity .... 6% 13 SCHEDULE 2 Description of Project The Project is the Program, which is included in the Borrower's Second Five-Year Plan, for the rehabilitation, modernization, expansion and increase in the capacity of, and more effective utilization of, the Railways owned and operated by the Borrower. The part of the Project to be financed with the proceeds of the Loan is the acquisition, for use by the Borrower on its Railways, of locomotives, rolling stock, spare parts and other railway materials and equipment and services connected therewith, with the prime object of increasing, and improving the utilization of, the Borrow-r', alilway frAight haulage capacity. I 14 SCHEDULE 3 Modifications of Loan Regulations No. 3 For the purposes of this Agreement the provisions of Loan Regulations No. 3 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: (a) Section 2.02 shall be deleted. (b) The first five lines of Section 5.02 shall read as f ollows : "Section 5.02. Suspension by the Bank. If any of the following events shall have happened and be con- tinuing, the Bank may at any time or from time to time by notice to the Borrower suspend in whole or in part the right of the Borrower to make with- drawals from the Loan Account:" (c) The last paragraph of Section 5.02 shall read as follows: "The right of the Borrower to make withdrawals from the Loan Account shall continue to be sus- pended in whole or in part, as the case may be, until the event or events which gave rise to such suspen- sion shall have ceased to exist or until the Bank shall have notified the Borrower that the right to make withdrawals has been restored, w1nichever is the earlier; provided, however, that in the case of any such notice of restoration, the right to make with- drawals shall be restored only to the extent and subject to the conditions specified in such notice, and no such notice shall affect or impair any right, power or remedy of the Bank in respect of any other or subsequent event described in this Section." (d) Section 9.03 shall read as follows: "Section 9.03. Effective Date. Notwithstanding the provisions of Section 8.01, except as shall be other- wise agreed by the Borrower and the Bank, the U 15 Loan Agreement shall come into force and effect on the date upon which the Bank dispatches to the Bor- rower notice of its acceptance of the evidence re- quired by Section 9.01." (e) Paragraph 5 of Section 10.01 shall read as follows: "5. The term 'Borrower' means India, acting by its President." (f) Paragraph 13 of Section 10.01 shall read as follows: "13. The term 'external debt' means any debt pay- able in any medium other than currency of the Borrower, whether such debt is or may become payable absolutely or at the option of the cred- itor in such other medium."