LOAN NUMBER /2 / IN

PUNJAB PROJECT AGREEMENT

(National Seed Project)

between

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

and

THE STATE OF PUNJAB

Dated 1976

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PUNJAB PROJECT AGREEMENT

AGREEMENT, dated (_L /6 , 1976, between INTER-

NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter

called the Bank) and THE STATE OF PUNJAB (hereinafter called

Punjab).

WHEREAS by the Loan Agreement of even date herevith between

India, acting by its President (hereinafter called the Borrover)

and the Bank, the Bank has agreed to make available to the Bor-

rover an amount in various currencies equivalent to twenty-five

million dollars ($25,000,000), on the terms and conditions set

forth in the Loan Agreement, but only on condition that Punjab

agrees to undertake such obligations toward the Bank as are herein-

after set forth; and

WHEREAS Punjab, in consideration of the Bank's entering into

the Loan Agreement with the Borrover, has agreed to undertake the

obligations hereinafter set forth;

NOW THEREFORE the parties hereto hereby agree as follovs:

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ARTICLE I

Definitions

Section 1.01. Wherever used in this Agreement, unless thecontext shall othervise require, the several terms defined inthe General Conditions (as so defined) have the respective mean-ins therein set forth.

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ARTICLE II

Execution of the Project

Section 2.01. Punjab shall carry out or cause to be carriedout in the State of Punjab the Project described in Schedule 2 to

the Loan Agreement with due diligence and efficiency and in con-

formity with appropriate administrative, financial, agriculturaland engineering practices, and shall provide, or cause to be pro-

vided, promptly as needed, the funds, facilities services and

other resources required for the purpose.

Section 2.02. Punjab shall cause its SSC to enter into an

agreement with NSC satisfactory to the Bank. The said agreementshall, inter alia, set out the respective responsibilities of NSC

and the SSC in the carrying out of the Project.

Section 2.03. Punjab shall with respect to supplies of

foundation seed, quality control services and such other matters

as may be agreed between the Borrower and the Bank extend the

same treatment to all persons involved in the seed industry.

Section 2.04. Except as the Bank may otherwise agree, Punjab

shall support the establishment of an interdisciplinary cooperative

program among relevant departments of Punjab Agricultural Univer-

sity to undertake applied seed technology research.

Section 2.05. Punjab shall not make, or permit to be made,

any change in the articles of association or other instrument

governing its SSC without prior consultation with the Borrower

and the Bank.

Section 2.06. (a) Punjab shall cause its SSC to manage its

affairs, maintain its financial position, plan its future expan-

sion and carry on its operations in accordance with sound busi-

ness, financial and personnel practices under the supervision of

experienced and competent staff in adequate number.

(b) Punjab shall by the Effective Date purchase for cash

equity shares of its SSC in an amount of net less than five hun-

dred thousand rupees (Rs500,000).

Section 2.07. Punjab shall review crop credit limits and

adjust them as necessary for seed production.

Section 2.08. (a) Punjab shall permit its SSC to appoint

such dealers in seed as the SSC may in the interest of efficiency

consider necessary.

(b) Punjab shall take action satisfactory to the Bank to

designate and enforce in its cotton seed producing areas the

one-variety cotton comunities and gins permitted in those areas.

Section 2.09. Punjab shall, for the purpose of enforcing

minimum seed quality standards under the applicable laws, cause

to be inspected annually not less than one half of all dealers

handling certified or truthfully labelled seeds in Punjab.

Section 2.10. Punjab shall transfer to Punjab Agricultural

University land which satisfies the Bank as suitable for seed

production.

Section. 2.11. Except as the Bank may otherwise agree, the

goods and works for the Project to be financed out of the pro-

ceeds of the Loan shall be procured in accordance with Schedule

4 to the Loan Agreement.

Section 2.12. (a) Punjab undertakes to insure, or make ade-

quate provision for the insurance of, any imported goods to be

financed out of the proceeds of the Loan made available to it by

the Borrower against hazards incident to the acquisition, trans-

portation and delivery thereof to the place of use or installation,

and for such insurance any indemnity shall be payable in a cur-

rency freely usable by Punjab to replace or repair such goods.

(b) Except as the Bank may otherwise agree, Punjab shall

cause all goods and services financed out of the proceeds of the

Loan made available to it by the Borrower to be used exclusively

for the Project.

Section 2.13. (a) Except as the Bank may otherwise agree,

Punjab shall furnish to the Bank promptly upon their preparation,

the plans, specifications, reports, contract documents and work

and procurement schedules for the Project, and any material modi-

fications thereof or additions thereto, in such detail as the

Bank shall reasonably request.

(b) Punjab: (i) shall maintain or cause to be maintained

records adequate to record the progress of the Project (including

the cost thereof) and to identify the goods and services financed

out of the proceeds of the Loan made available to it by the Bor-

rower, and to disclose the use thereof in the Project; (ii) shall

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enable the Bank's representatives to visit the facilities and

construction sites included in the Project, and to examine the

goods financed out of such proceeds and any relevant records and

documents; and (iii) shall furnish to the Bank all such informa-

tion as the Bank shall reasonably request concerning the P.1ect,

the expenditure of the proceeds of the Loan so made available to

it and the goods and services financed out of such proceeds.

Section 2.14. (a) Punjab shall, at the request of the Bank,

exchange views with the Bank with regard to the progress of the

Project in Punjab, the performance of its obligations under this

Agreement and other matters relating to the purposes of the Loan.

(b) Punjab shall promptly inform the Bank of any condition

which interferes, or threatens to interfere, with the progress of

the Project in Punjab, the accomplishment of the purposes of the

Loan, or the performance by Punjab of its obligations under this

Agreement.

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ARTICLE III

Other Covenants

Section 3.01. Punjab shall maintain, and cause its SSC, SSCA

and Punjab Agricultural University to maintain, records adequate

to reflect in accordance with consistently maintained appropriate

accounting practices their respective operations and financial

conditions.

Section 3.02. Punjab shall: (i) have its own accounts and

financial statements for the Project (balance sheets, if any,

statements of income and expenses and related statements) and

those of its SSC, SSCA and Punjab Agricultural University, for

each fiscal year audited, in accordance with sound auditing

principles consistently applied, by independent auditors accept-

able to the Bank; (ii) cause its SSC, SSCA and Punjab Agricul-

tural University to 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 their respective 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, and

cause its SSC, SSCA and Punjab Agricultural University to furnish,

to the Bank such other information concerning the accounts and fi-

nancial statements of Punjab, its SSC, SSCA or Punjab Agricultural

University (as the case may be) and the audits thereof as the Bank

shall from time to time reasonably request.

Section 3.03. Punjab shall at all times cause the facilities,

plant, equipment and machinery required for the Project to be

operated, maintained, renewed and repaired in accordance with

appropriate engineering and management practices.

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ARTICLE IV

Effective Date; Termination;Cancellation and Suspension

Section 4.01. This Agreement shall come into force and ef-

fect on the date upon which the Loan Agreement becomes effective.

Section 4.02. (a) This Agreement and all obligations of the

Bank and of Punjab thereunder shall terminate on the earlier of

the following two dates:

(i) the date on which the Loan Agreement shall

terminate in accordance with its terms; or

(ii) a date twenty years after the date of this

Agreement.

(b) If the Loan Agreement terminates in accordance with

its terms before the date specified in paragrrph (a) (ii) of

this Section, the Bank shall promptly notify Punjab of this

event.

Section 4.03. All the provisions of this Agreement shall

continue in full force and effect notwithstanding any partial

cancellation or suspension under the Loan Agreement.

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ARTICLE V

Miscellaneous Provisions

Section 5.01. Any notice or request required or permitted

to be given or made under this Agreement and any agreement be-

tween 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 address as such party shall

have designated by notice to the party giving such notice or mak-

ing such request. The addresses so specified are:

For the Bank:

International Bank forReconstruction and Development

1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address:

INTBAFRADWashington, D.C.

For Punjab:

Secretary -o the GovernmentPNnj ab Agricultural DepartmentChandigarh, India

Cable address:

AGRISEC, PunjabChandigarh, India

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Section 5.02. Any action reqiired or permitted to be taken,and any documents required or permitted to be executed, underthis Agreement on behalf of Punjab may be taken or executed bythe Secretary to the Government of Punjab (Agriculture Depart-ment) or such other person or persons as Punjab shall designatein writing.

Section 5.03. Punjab shall furnish to the Bank sufficientevidence of the authority and the authenticated specimen signa-ture of the person or persons who will, on behalf of Punjab, takeany action or execute any documents required or permitted to betaken or executed by Punjab pursuant to any of the provisions ofthis Agreement.

Section 5.04. This Agreement may be executed in severalcounterparts, each of which shall be an original, and all col-lectively but one instrument.

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IN WITNESS WHEREOF, the parties hereto, acting through their

representatives thereunto duly authorized, have caused this Agree-

ment to be signed in their respective names in the District of

Columbia, United States of America, as of the day and year first

above written.

INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT

BY

Regional Vice PresidentSouth Asia

THE STATE OF PUNJAB

By / 11J .242,,Authorized Representative

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

CERTIFICATE

I hereby certify that the foregoing is a true

copy of the original in the archives of the Interna-

tional Bank for Reconstruction and Develop-

ment.

In witness whereof I have signed this Certifi-

cate and affixed the Seal of the Bank thereunto

this L -day of 1974.

FOR SECRETARY