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CONFORMED COPY
LOAN NUMBER 4478 IN
TNUDF Project Agreement
(Second Tamil Nadu Urban Development Project)
between
INTERNATIONAL BANK FOR RECONSTRUCTION  AND DEVELOPMENT
and
TAMIL NADU URBAN INFRASTRUCTURE TRUSTEE COMPANY LIMITED 
ACTING AS TRUSTEE FOR TAMIL NADU URBAN DEVELOPMENT FUND
Dated July 14, 1999
LOAN NUMBER 4478 IN
TNUDF PROJECT AGREEMENT
AGREEMENT, dated July 14, 1999, between INTERNATIONAL BANK FOR RECONSTRUCTION 
AND DEVELOPMENT (the Bank) and TAMIL NADU URBAN INFRASTRUCTURE TRUSTEE COMPANY LIMITED 
acting as trustee for Tamil Nadu Urban Development Fund (TNUDF).
WHEREAS (A) by the Loan Agreement of even date herewith between India, acting by 
its President (the Borrower) and the Bank, the Bank has agreed to lend to the Borrower 
an amount of one hundred five million dollars ($105,000,000), on the terms and 
conditions set forth in the Loan Agreement, but only on condition that TNUDF agree to 
undertake such obligations toward the Bank as are set forth in this Agreement; 
(B)
by the Tamil Nadu Project Agreement of even date herewith between the 
Bank and the State of Tamil Nadu (Tamil Nadu), Tamil Nadu has undertaken certain 
obligations towards the Bank as set forth in the Tamil Nadu Project Agreement;
(C)
by the Subsidiary Loan Agreement to be entered into between Tamil Nadu 
and TNUDF, a portion of the proceeds of the loan provided for under the Loan Agreement 
and made available to Tamil Nadu will be relent to TNUDF on the terms and conditions 
set forth in said Subsidiary Loan Agreement; and
WHEREAS TNUDF, in consideration of the Bank’s entering into the Loan Agreement 
with the Borrower, has agreed to undertake the obligations set forth in this 
Agreement;
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NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I 
Definitions
Section 1.01. Unless the context otherwise requires, the several terms defined 
in the Loan Agreement and in the General Conditions (as so defined) have the 
respective meanings therein set forth.
ARTICLE II
Execution of the Project
Section 2.01. TNUDF declares its commitment to the objectives of the Project as 
set forth in Schedule 2 to the Loan Agreement, and, to this end, shall carry out Part 
A of the Project with due diligence and efficiency and in conformity with appropriate 
administrative, financial, engineering, and technical practices, and shall provide, or 
cause to be provided, promptly as needed, the funds, facilities, services and other 
resources required for Part A of the Project.
Section 2.02. (a) TNUDF undertakes that, unless the Bank shall otherwise agree, 
Subloans shall be made in accordance with procedures and on the terms and conditions 
set forth or referred to in the Schedule to this Agreement.
(b)
TNUDF shall exercise its rights in relation to each Subproject in such 
manner as to:
(i)
protect the interests of the Bank, Tamil Nadu and TNUDF; 
(ii) 
comply with its obligations under this Agreement; and
(iii)  achieve the purposes of the Project.
Section 2.03. Except as the Bank shall otherwise agree, procurement of the 
consultants’ services required for the Project and to be financed out of the proceeds 
of the Loan shall be governed by the provisions of Schedule 4 to the Loan Agreement.
Section 2.04. (a) TNUDF shall carry out the obligations set forth in Sections 
9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to 
insurance, use of goods and services, plans and schedules, records and reports, 
maintenance and land acquisition) in respect of Part A of the Project.
(b)
For the purposes of Section 9.07 of the General Conditions and without 
limitation thereto, TNUDF shall:
(i)
prepare, on the basis of guidelines acceptable to the Bank, and 
furnish to the 
Bank not later than six (6) months after the Closing 
Date or such later date 
as may be agreed for this purpose between the 
Bank and TNUDF, a plan for the 
future operation of Part A of the 
Project; and
(ii)
afford the Bank a reasonable opportunity to exchange views with 
TNUDF on the 
said plan.
Section 2.05. TNUDF shall duly perform all its obligations under the Subsidiary 
Loan Agreement. Except as the Bank shall otherwise agree, TNUDF shall not take or 
concur in any action which would have the effect of assigning, amending, abrogating or 
waiving the Subsidiary Loan Agreement or any provision thereof.
Section 2.06. TNUDF shall: (a) maintain policies and procedures adequate to 
enable it to monitor and evaluate on an ongoing basis, in accordance with indicators 
satisfactory to the Bank, the carrying out of the Project and the achievement of the 
objectives thereof;
(b)
prepare, under terms of reference satisfactory to the Bank, and furnish 
to the Bank, on or about March 31, 2001, a report integrating the results of the 
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monitoring and evaluation activities performed pursuant to paragraph (a) of this 
Section, on the progress achieved in the carrying out of the Project during the period 
preceding the date of said report and setting out the measures recommended to ensure 
the efficient carrying out of the Project and the achievement of the objectives 
thereof during the period following such date; and
(c)
review with the Bank, by June 30, 2001, or such later date as the Bank 
shall request, the report referred to in paragraph (b) of this Section, and, 
thereafter, take all measures required to ensure the efficient completion of the 
Project and the achievement of the objectives thereof, based on the conclusions and 
recommendations of the said report and the Bank’s views on the matter.
Section 2.07. (a) TNUDF shall, at the request of the Bank, exchange views with 
the Bank with regard to the progress of the Project, the performance of its 
obligations under this Agreement and under the Subsidiary Loan Agreement, and other 
matters relating to the purposes of the Loan.
(b)
TNUDF shall promptly inform the Bank and the Borrower of any condition 
which interferes or threatens to interfere with the progress of the Project, the 
accomplishment of the purposes of the Loan, or the performance by TNUDF of its 
obligations under this Agreement and under the Subsidiary Loan Agreement.
ARTICLE III
Management and Operations of TNUDF
Section 3.01. TNUDF shall carry on its operations and conduct its affairs in 
accordance with sound administrative and financial practices under the supervision of 
qualified and experienced management assisted by competent staff in adequate numbers. 
ARTICLE IV
Financial Covenants
Section 4.01. (a) TNUDF shall maintain records and accounts adequate to reflect 
in accordance with sound accounting practices its operations and financial condition 
and to register separately the operations, resources and expenditures in respect of 
Part A of the Project.
(b)
TNUDF shall:
(i)
have the said records, accounts and financial statements (balance 
sheets, 
statements of income and expenses and related 
statements) for each fiscal year 
audited, in accordance with appropriate 
auditing principles consistently 
applied, by independent auditors 
acceptable to the Bank;
(ii)
furnish to the Bank, as soon as available but in any case not 
later than six 
months after the end of each such year, (A) certified 
copies of its financial 
statements for such year as so audited and (B) 
the report of such audit by 
said auditors, of such scope and 
in such detail as the Bank shall have 
reasonably requested; and
(iii)
furnish to the Bank such other information concerning said 
records, accounts 
and financial statements as well as the audit thereof 
as the Bank shall from 
time to time reasonably request.
Section 4.02. (a) Except as the Bank shall otherwise agree TNUDF shall not:
(i) 
incur any debt, unless a reasonable forecast of the revenues and 
expenditures 
of TNUDF shows that the estimated net revenues of TNUDF for 
each Fiscal Year 
beginning with 1999/2000 shall be at least 1.2 times 
the estimated debt 
service requirements of TNUDF in such year on 
all debt of TNUDF, including the 
debt to be incurred; and
(ii) 
incur any debt, if after the incurrence of such debt the ratio of 
debt to 
equity shall be greater than 4 to 1.
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(b)
For the purposes of this Section:
(i)
The term “debt” means any indebtedness of TNUDF maturing by its 
terms more 
than one year after the date on which it is 
originally incurred.
(ii)
Debt shall be deemed to be incurred:  (A) under a loan contract or 
agreement 
or other instrument providing for such debt or for the 
modification of its 
terms of payment on the date of such 
contract, agreement or instrument; and 
(B) under a guarantee agreement, 
on the date the agreement providing for such 
guarantee has been entered 
into.
(iii)
The term “net revenues” means the difference between: (A) the sum 
of revenues 
from all sources related to operations and net non-operating 
income; and (B) 
the sum of all expenses related to operations 
including administration, 
adequate maintenance, taxes and payments 
in lieu of taxes, but excluding 
provision for depreciation, other 
non-cash operating charges and interest and 
other charges on debt.
(iv)
The term “net non-operating income” means the difference between: 
(A) revenues 
from all sources other than those related to operations; and 
(B) expenses, 
including taxes and payments in lieu of taxes, 
incurred in the generation of 
revenues in (A) above.
(v)
The term “debt service requirements” means the aggregate amount of 
repayments 
(including sinking fund payments and lease payments, if any) 
of, and interest 
and other charges on debt.
(vi)
The term “reasonable forecast” means a forecast prepared by TNUDF 
not earlier 
than twelve months prior to the incurrence of the debt in 
question, which both 
the Bank and TNUDF, may accept as reasonable 
and as to which the Bank has 
notified TNUDF of its 
acceptability, provided that no event has occurred since 
such 
notification which has, or may reasonably be expected in the future to 
have, a material adverse effect on the financial condition or future operating 
results of TNUDF.
(vii)
Whenever for the purposes of this Section, it shall be necessary 
to value, in 
terms of the currency of the Borrower, debt payable in 
another currency, such 
valuation shall be made on the basis of the 
prevailing official rate of 
exchange at which such other 
currency is, at the time of such valuation, 
obtainable for the 
purposes of servicing such debt, or, in the absence of such 
rate, 
on the basis of a rate of exchange acceptable to the Bank.
(viii) The term “interest and other charges on debt” means and includes 
all interest 
accrued on debt, excluding interest charges which are 
incurred in financing 
capital expenditures during construction, if 
such charges are capitalized, and 
any other charges payable on 
debt.
(ix)
The term “equity” means the sum of contributions, retained 
earnings and 
reserves of TNUDF not allocated to cover specific 
liabilities.
Section 4.03. TNUDF shall:
(a)
by March 31, 2000, draw down Contribution of not less than the aggregate 
of Rs. 38.6 crores from the Participating Financial Institutions in addition to 
Contributions made as of the date of this Agreement in accordance with the provisions 
of the Contribution Agreement; and
(b)
by such date that the aggregate of withdrawals from the proceeds of the 
Loan under Category 1 set out in Schedule 1 to the Loan Agreement shall have reached:
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(i)
$40,000,000, mobilize an aggregate of at least $25,000,000 for its 
Subproject 
financing operations whether by issuing financing 
instruments underwritten or 
guaranteed by the Participating 
Financial Institutions or supported by other 
risk participation 
mechanisms acceptable to the Bank, through cofinancing 
arrangements with Participating Financial Institutions or through receipt of 
additional Contributions, without taking into account the Contribution drawn 
down pursuant to paragraph (a) of this Section and any portion of the 
proceeds 
of the Loan made available to TNUDF for financing 
Subprojects, provided, 
however, that in the case of 
cofinancing, the amount included in the executed 
cofinancing 
agreements shall be taken into account for calculating the amount 
of 
resource mobilization achieved; and
(ii)
$60,000,000, mobilize an aggregate of at least $50,000,000 for its 
Subproject 
financing operations whether by issuing financing 
instruments, underwritten or 
guaranteed by the Participating 
Financial Institutions or supported by other 
risk participation 
mechanisms acceptable to the Bank, through cofinancing 
arrangements with Participating Financial Institutions or through receipt of 
additional Contributions, without taking into account the Contribution drawn 
down pursuant to paragraph (a) of this Section and any portion of the 
proceeds 
of the Loan made available to TNUDF for financing 
Subprojects, provided, 
however, that at least $25,000,000 of 
such mobilization shall be through 
cofinancing from 
Participating Financial Institutions and/or additional 
Contributions, and, in the case of cofinancing, the Participating Financial 
Institutions shall have disbursed at least 50% of the committed amounts. 
(c)
For the purpose of paragraph (b) of this Section, the exchange rate to be 
used for calculating the amount of resource mobilization during each Fiscal Year shall 
be the spot exchange rate quote by the Reserve Bank of India (“RBI”) as it appears on 
RBIB page or any other page that may be designated by RBI for this purpose at around 
12 noon or any other time that may be decided by RBI on the first working date of each 
Fiscal Year.  RBIB page means the screen page designated “RBIB” (or the equivalent 
successor to such page) published or reported by Reuters monitor screen.
Section 4.04. TNUDF shall prepare, in accordance with guidelines acceptable to 
the Bank, and furnish to the Bank, not later than 45 days after the end of each 
calendar quarter, a Project Management Report for such period in respect of Part A of 
the Project that:
(a)
(i)
sets forth actual sources and applications of funds both 
cumulatively and for 
the period covered by said report, and 
projected sources and applications of 
funds for the six-month period 
following the period covered by said report; 
and
(ii) 
shows separately expenditures financed out of the proceeds of the 
Loan during 
the period covered by said report and expenditures proposed 
to be financed out 
of the proceeds of the Loan during the six-month 
period following the period 
covered by said report;
(b)
(i)
describes progress in Project implementation, both cumulatively 
and for the 
period covered by said report; and
(ii) 
explains variances between the actual and previously forecast 
implementation targets; 
and
(c)
sets forth the status of procurement under the Project and expenditures 
under contracts financed out of the proceeds of the Loan, as at the end of the period 
covered by said report.
ARTICLE V
Effective Date; Termination
Cancellation and Suspension
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Section 5.01. This Agreement shall come into force and effect on the date upon 
which the Loan Agreement becomes effective.
Section 5.02. This Agreement and all obligations of the Bank and of TNUDF 
thereunder shall terminate on the date on which the Loan Agreement shall terminate in 
accordance with its terms, and the Bank shall promptly notify TNUDF thereof.
Section 5.03. All the provisions of this Agreement shall continue in full force 
and effect notwithstanding any cancellation or suspension under the General 
Conditions.
ARTICLE VI
Miscellaneous Provisions
Section 6.01. Any notice or request required or permitted to be given or made 
under this Agreement and any agreement between the parties contemplated by this 
Agreement shall be in writing. Such notice or request shall be deemed to have been 
duly given or made when it shall be delivered by hand or by mail, telegram, cable, 
telex or radiogram to the party to which it is required or permitted to be given or 
made at such party’s address hereinafter specified or at such other addresses as such 
party shall have designated by notice to the party giving such notice or making such 
request.  The addresses so specified are:
For the Bank:
International Bank for 
   Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
INTBAFRAD
248423 (MCI) or
Washington, D.C.
 64145 (MCI)
For TNUDF:
TNITS C/O
Tamil Nadu Urban Infrastructure Financial Services Limited
Vairam Complex, 1st Floor, 112, Theyagaraya Road,
T. Nagar, Chennai – 600 017
India
Section 6.02. Any action required or permitted to be taken, and any documents 
required or permitted to be executed, under this Agreement on behalf of TNUDF may be 
taken or executed by its Chairman of the Trust Companies or by such other person or 
persons as the Trust Companies shall designate in writing, and the Trust Companies 
shall furnish to the Bank sufficient evidence of the authority and the authenticated 
specimen signature of each such person.
Section 6.03. This Agreement may be executed in several counterparts, each of 
which shall be an original, and all collectively but one instrument.
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
New Delhi, India, as of the day and year first above written.
INTERNATIONAL BANK FOR RECONSTRUCTION
  AND DEVELOPMENT
By /s/ Edwin R. Lim
Country Director 
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India
TAMIL NADU URBAN INFRASTRUCTURE TRUST
COMPANY LIMITED ACTING AS TRUSTEE FOR
TAMIL NADU URBAN DEVELOPMENT FUND
By /s/ K. Rajivan
Authorized Representative
SCHEDULE
Procedures for and Terms and Conditions of Subloans
Lending Terms
1.
Except as the Bank shall otherwise agree, the lending terms of each Subloan 
shall be as follows:
(a)
Currency: Subloans shall be denominated in Rupees.
(b)
Interest: Interest shall be payable on the principal amount of the 
Subloan withdrawn and outstanding from time to time at a rate equivalent to the 
TNUDF’s borrowing rate plus a spread to be determined in accordance with the Lending 
Policies and Procedures provided, however, that the Subloan for a Subborrower from the 
private sector shall be at a market determined rate.
(c)
Amortization: The maximum amortization period for a Subloan shall be 20 
years and may include a grace period not exceeding 5 years. The precise maturity and 
grace period for a Subloan shall be determined considering each Subproject’s cost 
recovery period and risk features.
Eligibility Criteria for Subprojects and Subborrowers
2.
Except as the Bank shall otherwise agree, a Subproject and a Subborrower that 
sponsors such a Subproject and in respect of which a Subloan application or request is 
made to the Bank pursuant to the provisions of paragraph 6 of this Schedule meet the 
following eligibility criteria:
(a)
The Subproject supports water supply, sanitation, solid waste management, 
roads, bridges, transportation, sites and services, area development, and other 
remunerative and non-remunerative urban infrastructure contributing to the improvement 
of the living standard of the urban populations, excluding power and 
telecommunications.
(b)
The Subloan does not exceed 90% of the cost of the Subproject carried out 
by a municipality, urban local body or statutory board or authority that qualify as a 
Subborrower and does not exceed 75% of the cost of the Subproject carried out by other 
Subborrowers.
(c)
The Subproject is technically, economically and/or financially viable. \0c
(d)
The appropriate governmental authorities of the Borrower and Tamil Nadu have 
provided all required clearances/approvals including environmental clearances for 
implementing the Subproject and these are documented in the project evaluation 
reports.
(e)
The economic rate of return for Subprojects meeting criteria set forth in 
the Lending Policies and Procedures is at least 12%.
(f)
The financial viability is confirmed in accordance with the provision set 
forth in the Lending Policies and Procedures.
(g)
Eligible Subborrowers shall be Urban Local Bodies (ULBs), Statutory 
Boards or Authorities (SBs/SAs) and private sector entities.  In the case of ULBs and 
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SBs, the following norms as defined and calculated in accordance with methodology set 
out in the Lending Policies and Procedures shall be required in order for them to be 
eligible to receive Subloans:
(i)
the ratio of total expenditures to total revenue shall be less 
than 1;
(ii)
payment of interest, principal and other charges on debt shall be 
less than 
30% of total revenue, but where this criteria is not met and 
the financial 
ratio of return exceeds 14%, TNUDF shall 
require acceptable credit enhancing 
mechanisms to be in place;
(iii)
they have adequate capacity to implement, supervise and maintain 
Subprojects, 
and adequate accounting and financial management system or 
an agreed 
time-bound action plan to establish such capacity and 
system; and
(iv)
they have adequate procurement and contract management system or 
an agreed 
time-bound action plan to establish such system.
In the case of private sector entities:
(i)
they must have a ratio of debt to equity of less than 1.5;
(ii)
their net fixed assets must be at least 1.5 times their total 
debt;
(iii)
their gross profit must be at least 1.5 times their interest 
payment; and
(iv)
they must have adequate capacity to implement, supervise and 
maintain the 
Subproject and adequate accounting and financial 
management system or an 
agreed time-bound action plan to 
establish such capacity or system. Appraisal, 
Approval and Supervision 
of Subprojects
3.
(a)
TNUDF shall use the Lending Policies and Procedures for the appraisal, 
approval and supervision of Subprojects.
(b)
With respect to each Subproject, TNUDF shall, in accordance with the 
Lending Policies and Procedures:
(i)
prepare a detailed project evaluation report of the Subproject 
covering 
matters including: 
(aa) suitability of site; (bb) 
availability of inputs; 
(cc) appropriateness of, and proven experience 
with, the technology offered; 
(dd) project design; (ee) arrangements 
for detailed engineering; (ff) cost 
estimates; (gg) 
construction and procurement arrangements; (hh) arrangements 
for 
operation and maintenance; (ii) arrangements for compliance with 
environmental, resettlement and social standards as set forth in paragraph 4 
of this Schedule; (jj) financial viability of the Subproject; (kk) adequacy of 
the proposed financing; (ll) the corporate and capital structure of the 
Subborrower; and (mm) the eligibility criteria for Subprojects and 
Subborrowers; and
(ii)
furnish to the Bank for its review and approval, pursuant to 
paragraph 6 (a) 
of this Schedule, such project evaluation report on 
the Subproject.
Environmental, Resettlement and Social Standards for Subprojects
4.
Each Subproject shall comply with the environmental, resettlement and social 
standards set forth in the Environmental and Social Report. To that end, TNUDF shall:
(a)
Require each Subborrower applying for a Subloan to furnish evidence 
satisfactory to TNUDF showing that the Subproject, in respect of which the application 
has been made, has been prepared in accordance with such standards, such evidence to 
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include an environmental impact assessment and an environmental mitigation plan, and 
where applicable, a resettlement and rehabilitation plan and an indigenous peoples 
development plan for adversely affected and/or displaced populations, for such 
Subproject.
(b)
In respect of each Subproject, include in the contractual arrangements 
referred to in paragraph 7 of this Schedule suitable provisions obligating the 
Subborrower sponsoring such Subproject to ensure compliance with such standards.
\0cProcedures for Approving Subloans for Subprojects
5.
No expenditures for goods or services required for a Sub-project shall be 
eligible for financing out of the proceeds of the Loan unless:
(a)
the Subloan for such Subproject shall have been approved by the Bank and 
such expenditures shall have been made not earlier than ninety days prior to the date 
on which the Bank shall have received the application and information required under 
paragraph 6 (a) of this Schedule in respect of such Subloan; or
(b)
the Subloan for the Subproject does not exceed the equivalent of $5 
million or the total cost of the Subproject does not exceed the equivalent of $20 
million, for which the Bank has authorized withdrawals from the Loan Account, except 
that the first three Subloans irrespective of value shall be submitted to the Bank for 
prior review, and such expenditures shall have been made not earlier than sixty days 
prior to the date on which the Bank shall have received the request and information 
required under paragraph 6 (b) of this Schedule.
6.
(a)
When presenting a Subloan to the Bank for approval, TNUDF shall furnish 
to the Bank an application, in form satisfactory to the Bank, together with:
(i)
a description of the Subborrower and an appraisal of the 
Subproject carried 
out in accordance with the provisions of paragraph 3 
of this Schedule, 
including a description of the financing 
arrangements for the Subproject and 
the expenditures proposed to be 
financed out of the proceeds of the Subloan;
(ii)
evidence that the Subproject and the Subborrower sponsoring such 
Subproject 
meet the eligibility criteria set forth in paragraph 2 of 
this Schedule;
(iii)
the proposed terms and conditions of the Subloan, including the 
schedule of 
amortization of the Subloan;
(iv)
the proposed contractual arrangement with the Subborrower; and
(v)
such other information as the Bank shall reasonably request.
(b)
Each request by TNUDF for authorization to make withdrawals from the Loan 
Account in respect of a Subloan not exceeding the equivalent of $5 million or in 
respect of a Sub-loan for a Sub-project costing less than the equivalent of $20 
million shall contain:
(i)
a summary description of the Subborrower and the Subproject, 
including a 
description of the expenditures proposed to be 
financed out of the proceeds of 
the Loan; and
(ii)
the terms and conditions of the Subloan, including the schedule of 
amortization therefor.
(c)
Notwithstanding any other provisions of this Schedule, each Sub-loan for 
a Subproject which is classified as Environment Impact category E1 and each Subloans 
for Subprojects which is classified as Social Impact Category S1 under the 
Environmental and Social Report, shall be submitted to the Bank for approval.
(d)
Applications and requests made pursuant to the provisions of 
subparagraphs (a) and (b) and of this paragraph 6 shall be presented to the Bank on or 
before April 30, 2004.
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7.
Subloans shall be made on terms whereby TNUDF shall obtain by written contract 
with the Subborrowers or by other appropriate legal means, rights adequate to protect 
the interests of the Bank and the Borrower, including the right to:
(a)
Require the Subborrower to carry out and operate the Subproject with due 
diligence and efficiency and in accordance with sound technical, financial and 
managerial standards and to maintain adequate records.
(b)
Require that:
(i)
the goods and services to be financed out of the proceeds of the 
Loan shall be 
procured in accordance with the provisions of 
Schedule 4 to the Loan 
Agreement; and
(ii)
such goods and services shall be used exclusively in the carrying 
out of the 
Subproject.
(c)
Require the Subborrower to ensure compliance with the environmental, 
resettlement and social standards referred to in paragraph 4 of this Schedule.
(d)
Require the Subborrower to prepare and provide periodic reports setting 
forth the actual sources and application of funds, maintain adequate records and 
accounts, and provide periodic audit reports.
(e)
Inspect, by itself or jointly with representatives of the Bank if the 
Bank shall so request, such goods and the sites, works, plants and construction 
included in the Subproject, the operation thereof, and any relevant records and 
documents.
(f)
Require that:
(i)
the Subborrower shall take out and maintain with responsible 
insurers such 
insurance, against such risks and in such 
amounts, as shall be consistent with 
sound business practice; and
(ii)
without any limitation upon the foregoing, such insurance shall 
cover hazards 
incident to the acquisition, transportation and 
delivery of goods financed out 
of the proceeds of the Loan to the place 
of use or installation, any indemnity 
thereunder to be made payable in 
a currency freely usable by the Subborrower 
to replace or repair such 
goods.
(g)
Obtain all such information as the Bank or the Borrower shall reasonably 
request relating to the foregoing and to the administration, operations and financial 
condition of the Subborrower and to the benefits to be derived from the Subproject.
(h)
Suspend or terminate the right of the Subborrower to the use of the 
proceeds of the Loan upon:
(i)
failure by such Subborrower to perform its obligations under its 
contract with 
TNUDF, or upon notice by the Bank to the Borrower 
that it intends to exercise 
any of its remedies under Sections 6.02 
and 7.01 of the General Conditions and 
Article V of the Loan Agreement; 
or
(ii)
notice by the Subborrower that it intends to terminate its 
contract with 
TNUDF, or upon the actual termination of any 
such contract, whichever occurs 
first.