Indenture of Assignment

BETWEEN

THE GOVERNMENT OF IRAQ

AND

* INTERNATIONAL BANK FOR RECONSTRUCTION

AND DEVELOPMENT

DATED JUNE 15, 1950

PREss or BYRON S. ADAMS, WASHINGTON, D. C.

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Indenture of Assignment

BETWEEN

THE GOVERNMENT OF IRAQ

AND

INTERNATIONAL BANK FOR RECONSTRUCTION

AND DEVELOPMENT

DATED JUNE 15, 1950

PRESS OF BYRON S. ADAMs, WASHINGTON, D. C.

Jnbtnturt of eignmntINDENTURE dated June 15, 1950, between THE

GOVERNMENT OF IRAQ, party of the first part, and INTERNA-

TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, partyof the second part.

WHEREAS Iraq represents and warrants that it is now en-titled and will continue to be entitled to receive paymentsof 'substantial oil royalties deriving from the exploitationof oil in its territories; and

WHEREAS by an agreement dated June 15, 1950 be-tween Iraq and the Bank (which agreement and the sched-ules therein referred to are hereinafter called the LoanAgreement) the Bank has agreed to make a loan to Iraq inthe aggregate principal amount of twelve million eighthundred thousand dollars ($12,800,000) or the equivalentthereof in other currencies, on the terms and conditions setforth in the Loan Agreement, and

WHEREAS Iraq has agreed to provide security for the pay-ment of such Loan by making certain assignments of suchoil royalties and for that purpose has agreed to executethis Indenture of Assignment with the Bank.

Now THEREFORE the parties hereto hereby agree as fol-lows:

ARTICLE I

Wherever used in this Indenture of Assignment, unlessthe context shall otherwise require, the following termsshall have the respective meanings hereinafter in this Ar-ticle set forth:

(1) the term Iraq means the Kingdom of Iraq, the partyof the first part hereto;

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(2) the term Bank means International Bank for Recon-struction and Development, the party of the second parthereto;

(3) the term Loan Agreement means the loan agreementdated June 15, 1950 between Iraq and the Bank re-ferred to in the second clause of the preamble to this Inden-ture of Assignment and all the schedules referred to insuch loan agreement;

(4) the term Loan means the loan provided for in theLoan Agreement;

(5) the term Bond means a bond executed and deliveredas provided in Article VI of the Loan Agreement;

(6) the term IPC means Iraq Petroleum Company Lim-ited, a company organized and existing under the laws ofthe United Kingdom of Great Britain and Northern Ire-land, and any successor thereof;

(7) the term BPC means Basrah Petroleum CompanyLimited, a company organized and existing under the lawsof the United Kingdom of Great Britain and Northern Ire-land, and any successor thereof;

(8) the term MPC means Mosul Petroleum CompanyLimited, a company organized and existing under the lawsof the United Kingdom of Great Britain and NorthernIreland, and any successor thereof;

(9) the term IPC Concession means the conventionsigned on March 14, 1925 between Iraq and TurkishPetroleum Company Limited (the name of which was sub-sequently altered to Iraq Petroleum Company Limited)pursuant to which Iraq is entitled to receive payments ofcertain oil royalties, and shall include all amendments andsupplements thereto and all novations thereof;

(10) the term BPC Concession means the conventionsigned on July 29, 1938 between Iraq and BPC pursuant towhich Iraq is entitled to receive payments of certain oil

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royalties, and shall include all amendments and supplc-ments thereto and all novations thereof;

(11) the term MPC Concession means the conventionsigned on April 20, 1932 between Iraq and B.O.D. CompanyLimited (the name of which was subsequently altered toMosul Petroleum Company Limited) pursuant to whichIraq is entitled to receive payments of certain oil royalties,and shall include all amendments and supplements theretoand all novations thereof.

(12) the term Concessions means the IPC Concession,the BPC Concession and the MPC Concession;

(13) the term oil royalties means all payments, taxes,fees, charges and other considerations in whatever formand however and whenever payable, which Iraq or any ofits political subdivisions or agencies shall receive or shallbe or shall become entitled to receive for or on account ofthe production, transportation, storage or sale of petroleumor for or on account of the sale, lease or licensing of anyland or interest in land used or to be used for the produc-tion, transportation, storage or sale of petroleum, or onaccount of the income derived from any of the foregoing;provided, however, that so long as Iraq shall receive underthe Concessions a royalty per ton on the substances (otherthan natural gas) comprised in Article 1 of each of theConcessions won and saved of four shillings gold plus orminus any increase or decrease in such royalty effected byan increase or decrease in such rate of four shillingsgold provided for in Article 10 of the IPC Concessionand in Article 11 of the BPC Concession and in Article 11of the MPC Concession and the amounts of such roy-alty shall in the aggregate be, after having beenconverted into currencies required for payments onaccount of the Loan and the Bonds, not less than the totalsof all amounts then due and payable, the term oil royaltiesshall mean such royalty payable at the rate of four shil-lings gold per ton plus or minus any such increase ordecrease plus any increase in such royalty effected by an

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increase in such rate whether such increase shall beeffected by amendment to such Articles of the Concessionsor other Articles of the Concessions or otherwise.

For the purpose of this Paragraph 13 any references to

particular Articles of the Concessions or to Articles of the

Concessions shall mean such Articles of the Concessions intheir form on the date of this Indenture of Assignment.

(14) the term amounts due and payable as applied to any

specific date means all amounts due and payable on accountof interest and commitment charge and service charge on

the Loan and the Bonds and on account of principal thereofin accordance with *the schedule of payments set forth in

Schedule 1 to the Loan Agreement, at the time specified;provided, however, that if (a) default shall be made in the

payment of any instalment of interest on the Loan or onany of the Bonds or any instalment of service charge or

commitment charge on the Loan when and as the sameshall become payable, or (b) default shall be made in thepayment of the principal of the Loan or of the principal of

any of the Bonds in accordance with such schedule of pay-ments or in payment of the redemption price of any of theBonds, and if by reason of any such default the principal

of the Loan and of all the Bonds then outstanding shallhave been declared by the Bank to be due and payable im-mediately, then the term amounts due and payable shallalso include such principal of, and accrued interest, com-mitment charge and service charge on the Loan and the

Bonds and the premium, if any, on the redemption of theLoan and the Bonds.

ARTICLE II

SECTION 1. As security for the due payment of the prin-cipal of, and interest and other charges on, the Loan and

the Bonds, Iraq hereby grants, conveys, assigns and trans-

fers unto the Bank any and all rights which it now has or

may hereafter acquire to receive oil royalties under the

Concessions.

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SECTON 2. Iraq will make arrangements, satisfactory tothe Bank, for the direct payment to or on the order of theBank, on demand, of the oil royalties assigned in Section 1of this Article by the person or persons from whom suchoil royalties are due and will take any action which, in theopinion of legal counsel acceptable to the Bank, is neces-sary to make this Section enforceable against such personor persons.

SECTION 3. No demand shall be made by the Bank, pur-suant to the arrangements provided for in Section 2 of thisArticle so long as all amounts then due and payable shallhave been duly paid by or on behalf of Iraq. No such de-mand shall be made by the Bank for amounts in excess ofthe amounts which, after having been converted into cur-rencies required for payments on account of the Loan andthe Bonds, shall be equivalent to the totals of all amountsthen due and payable.

SECTION 4. The exchange of currencies received pursuantto this Article II for currencies required for payments ofamounts due and payable shall constitute a first charge onall resources of the currencies required for payiments onaccount of the Loan and the Bonds and on the rights toreceive such currencies from any source which are or shallbe available to Iraq from time to time. Iraq will makearrangements satisfactory to the Bank to make effectivethe charge created in this Section.

SECTION 5. The charge on the royalties reserved and madepayable by IPC to be executed by Iraq pursuant to theagreement dated December 2, 1949 between the Govern-ment of Iraq and the Export Credits Guarantee Depart-ment shall rank pari passu with the security created by theassignment provided for in this Indenture of Assignment.

SECTION 6. Notwithstanding anything in this Indentureof Assignment contained, amounts which have been or may

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hereafter be advanced to Iraq by IPC and BPC and MPCmay be recovered by them by deduction from the aggregateof payments due by way of royalty -under the relevant Con-cessions as and when and insofar as such payments exceed£800,000 (gold) in any year.

ARTICLE III

SECTION 1. The oil royalties received by the Bank underArticle II of this Indenture or the proceeds thereof shall beapplied toward the payment of all amounts then due andpayable.

SECTION 2. If any oil royalties shall be received in anycurrency or currencies in excess of amounts needed for pay-ments of amounts due and payable in such currency or cur-rencies, the Bank may exchange such currency or curren-cies so received for the currency or currencies needed forsuch payments at an official rate or rates based on the parvalues for such currencies as determined by the Interna-tional Monetary Fund or, if no such par value shall at thattime be determined, then on the basis of the reasonable for-eign exchange value of such currencies in terms of dollarsas determined by the Bank, but the Bank shall be underno obligation to make any such exchange.

SECTION 3. The obligations of Iraq to make payments ofprincipal, interest and other charges on the Loan and prin-cipal, interest and premium on redemption, if any, on theBonds in accordance with the provisions of the Loan Agree-ment and the Bonds shall not be limited or diminished inany way by any provision of this Indenture of Assignment.

ARTICLE IV

SECTION 1. If at any time Iraq shall propose to grant,convey, assign, transfer, mortgage, pledge, charge or other-wise dispose of any of its oil royalties, it shall notify theBank thereof, and, prior to taking the proposed action, shall

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afford to the Bank a reasonable opportunity to express itsviews with regard thereto.

SECTION 2. No holder of any Bond, other than the Bank,shall by virtue of being the holder thereof be entitled toexercise any of the rights conferred upon the Bank in thisIndenture.

SECTION 3. Nothing expressed in or to be implied fromthis Indenture, is intended or shall be considered to giveto any person, firm or corporation other than the partieshereto any legal or equitable right, remedy or claim here-under or under any covenant or provision hereof, this In-denture and all the covenants and provisions hereof beingintended to be and being for the sole and exclusive benefitof the parties hereto as herein provided.

SECTION 4. The Bank shall be entitled to reimburse itself,out of any oil royalties received or the proceeds thereof, forthe reasonable cost incurred in the collection thereof, in-cluding the cost of any conversion thereof into the currencyor currencies required for payments of amounts due andpayable, prior to applying any thereof to the payment ofamounts due and payable.

ARTICLE V

SECTION 1. The respective rights and obligations of theparties hereto under this Indenture of Assignment shall bevalid and enforce ible in accordance with their terms any-thing in any statute, law or regulation of any nation or stateor political subdivision thereof to the contrary notwith-standing. Neither of such parties shall be entitled in anyproceeding to assert any claim that any provision of thisIndenture of Assignment is invalid or unenforceable be-cause of any provision of the Articles of Agreement of theBank or for any other reason.

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SECTION 2. The provisions of this Indenture of Assign-ment shall be interpreted in accordance with the law of theState of New York, United States, as at the time in effect.

ARTICLE VI

SECTION 1. Any notice, demand or request required orpermitted to be given under this Indenture of Assignmentshall be in writing and shall be deemed to have been dulygiven when it shall be delivered in writing or by telegram,cable or radiogram, to the party to which such notice, de-mand or request is required or permitted to be given at itsaddress hereinafter specified, or at such other address assuch party shall have designated by notice in writing tothe party giving or making such notice, demand or request.The addresses so specified are:

For Iraq:

Minister of Finance, Ministry of Finance, Baghdad,Iraq.

For the Bank:

International Bank for Reconstruction and Develop-ment, 1818 H Street, N. W., Washington 25, Dis-trict of Columbia, United States of America.

SECTION 2. This Indenture of Assig-nment may be execu-ted in several counterparts, each of which shall be an origi-nal and all collectively but one instrument.

SECTION 3. Any action required or permitted to be taken,and any documents required or permitted to be executed,under this Indenture of Assignment on behalf of Iraq maybe taken or executed by the Minister of Finance of Iraq orany person thereunto authorized in writing by him. Anymodification or amplification of the provisions of this In-denture of Assignment may be agreed to on behalf of Iraq

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by written instrument executed on behalf of Iraq by itsMinister of Finance or any person thereunto authorized inwriting by him.

SECTION 4. Iraq shall furnish to the Bank sufficient evi-dence of the authority of the person or persons who will,on behalf of Iraq, take any action or execute any documentsrequired or permitted to be taken or executed by Iraq pur-suant to any of the provisions of this Indenture of Assign-ment and the authenticated specimen signature of eachsuch person.

SEcTION 5. The Bank shall furnish to Iraq sufficient evi-dence of the authority of the person or persons who will,on behalf of the Bank, take any action or execute any docu-ments required or permitted to be taken or executed by theBank pursuant to any of the provisions of this Indentureof Assignment and the authenticated specimen signature ofeach such person.

ARTICLE VII

Section 1. This Indenture of Assignment shall come intoforce and effect on the day and year first above written.If pursuant to Section 3 of Article XII of the Loan Agree-ment, the Bank shall terminate the Loan Agreement, thisIndenture of Assignment and all obligations of the partieshereunder shall forthwith cease and determine.

SECTION 2. If and when the entire principal amount ofthe Loan shall have been paid (or shall have been can-celled), together with the redemption premium, if any, onthe redemption of all Bonds which shall have been calledfor redemption and all interest and other charges whichshall have accrued on the Loan and the Bonds, this Inden-ture of Assignment and all obligations of the parties here-under shall forthwith cease and determine.

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IN WITNESS WHEREOF the parties hereto have caused this

Indenture of Assignment to be signed in their respectivenames by their representatives thereunto duly authorizedas of the day and year first above written.

THE GOVERNMENT OF IRAQ

by S. HAIDERAuthorized Representative

INTERNATIONAL BANK FOR

RECONSTRUCTION AND DEVELOPMENT

by W. A. B. ITAFF

Loan Director