Papua New Guinea Loan (Asian Development Bank)

No. 19 of 1972

An Act relating to a Loan to the Administration of Papua New Guinea by the Asian Development Bank.

[Assented to 12 May 1972]

BE it enacted by the Queen’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—

Short title.

1. This Act may be cited as the Papua New Guinea Loan (Asian Development Bank) Act 1972.

Commencement.

2. This Act shall come into operation on the day on which it receives the Royal Assent.

Definitions.

3. In this Act, unless the contrary intention appears—

“the Bank” means the Asian Development Bank;

“the letter of assurances” means the letter dated the fourteenth day of December, One thousand nine hundred and seventy-one, containing proposed arrangements between the Commonwealth and the Bank, being the letter a copy of which is set out in the First Schedule to this Act;

“the Loan Agreement” means the agreement made on the twenty-first day of December, One thousand nine hundred and seventy-one, between the Territory Administration and the Bank, being the Loan Agreement referred to in the letter of assurances and a copy of which is set out in the Second Schedule to this Act;

“the Project Agreement” means the agreement made on the twenty-first day of December, One thousand nine hundred and seventy-one, between the Bank and the Papua and New Guinea Development Bank, being the Project Agreement referred to in the letter of assurances and a copy of which is set out in the Third Schedule to this Act;

“the Territory Administration” means the Administration or Government of Papua New Guinea.

Loan Regulations.

4. A copy of the Special Operations Loan Regulations applicable to loans made by the Bank from its Special Funds Resources, being the Special Operations Loan Regulations referred to in the letter of assurances and the Loan Agreement, is set out in the Fourth Schedule to this Act.

Approval of loan.

5. The Treasurer may, on behalf of the Commonwealth, notify the Bank in writing that the Commonwealth approves the terms and conditions of the Loan referred to in the letter of assurances and thereupon the arrangements contained in the letter of assurances constitute valid and binding obligations of the Commonwealth in accordance with the terms of the letter of assurances.

Appropriation.

6. Any payment by the Commonwealth under the letter of assurances is payable out of the Consolidated Revenue Fund, which is appropriated accordingly.

Moneys to be paid, and documents to be, free of tax, &c.

7. Notwithstanding anything in any law of the Commonwealth or of a State or Territory of the Commonwealth, whether passed or made before or after the commencement of this Act—

(a) all moneys payable as mentioned in paragraph 2 of the letter of assurances shall be paid without deduction for, and free from, all taxes and free from all restrictions as mentioned in that paragraph;

(b) the documents referred to in paragraph 3 of the letter of assurances shall be free from all taxes, as mentioned in that paragraph;

(c) the purchase of any currency required as mentioned in paragraph 4 of the letter of assurances shall be free from all restrictions as mentioned in that paragraph;

(d) all moneys payable as mentioned in Section 4.06 of the Loan Agreement shall be paid without deduction for, and free from, any taxes and free from all restrictions as mentioned in that Section; and

(e) the document referred to in Section 4.07 of the Loan Agreement shall be free from all taxes, as mentioned in that Section.

THE SCHEDULES

FIRST SCHEDULE Section 3.

LETTER OF ASSURANCES

COMMONWEALTH OF AUSTRALIA

TREASURER

PARLIAMENT HOUSE

CANBERRA 2600

14 DEC 1971

Dear Sirs,

Loan For Development Bank Project

Assurances By The Commonwealth of Australia

In connection with the proposed Loan by the Asian Development Bank (the Bank) to the Administration of the Territory of Papua and New Guinea (Papua New Guinea) in an amount in various currencies equivalent to US$4,500,000 for the benefit of the Papua and New Guinea Development Bank, we propose that the following arrangements should apply between the Commonwealth of Australia and the Bank, as from the date that Australia notifies the Bank in writing that it approves the terms and conditions of the Loan.

1. Until such time as Papua New Guinea assumes responsibility for its own international relations:

(a) Australia shall be responsible to the Bank for the due performance of Papua New Guinea’s obligations punctually to repay the principal of, and interest and other charges on, the Loan.

(b) Within the limits of its constitutional powers, Australia will take or cause to be taken all action necessary or appropriate on its part to empower Papua New Guinea to perform all covenants, agreements and obligations of Papua New Guinea set forth in the Loan Agreement, and will not take or permit any of its political subdivisions or agencies to take any action which might prevent or interfere with the performance by Papua New Guinea of such covenants, agreements and obligations.

(c) Australia and the Bank will from time to time, at the request of either party, and having regard to the extent of internal self-government of Papua New Guinea, exchange views through their representatives with regard to matters relating to the purposes of the Loan and maintenance of the service thereof.

2. The principal of, and interest and other charges on, the Loan shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of Australia or laws in effect in its territories.

3. The Loan Agreement and the Project Agreement shall be free from any taxes imposed under the laws of Australia or laws in effect in its territories on or in connection with the execution, delivery or registration thereof.

4. The purchase of any currency required by Papua New Guinea for the purpose of servicing the Loan shall be free from all restrictions imposed under the laws of Australia or laws in effect in its territories.

5. Australia and the Bank, together with representatives of Papua New Guinea, will consult in the event of any condition arising, including any proposed or anticipated constitutional change affecting Papua New Guinea, which might interfere with the accomplishment of the purposes of the Loan or the maintenance of the service thereof. If Papua New Guinea should achieve independence while any part of the Loan is outstanding, Australia will use its best endeavours to ensure the continuing security of the Loan and the smooth devolution of responsibility with respect thereto.

First Schedule—continued

6. The provisions of Section 6.03 of the Special Operations Loan Regulations shall be deemed to apply—

(a) to any controversy or claim relating to any obligations of Papua New Guinea in respect of the Loan for which Australia has undertaken responsibility to the Bank, as if Australia were a Guarantor, and as if this letter were a Guarantee Agreement, within the meaning of that Section, and as if this paragraph were a part of the Loan Agreement;

(b) to any controversy or claim relating to the assurances by Australia herein, as if it were a controversy between the Bank and a Guarantor or a claim arising under a Guarantee Agreement, and as if this letter were a Guarantee Agreement, within the meaning of that Section;

provided that nothing herein is intended to limit the application or effect of Article 60 of the Agreement establishing the Bank.

7. Except where the context otherwise requires, references in this letter to Papua New Guinea include the Administration for the time being of Papua New Guinea.

8. Communications to Australia in relation to the assurances set out in this letter shall be sent to:

The Treasurer

The Commonwealth of Australia

CANBERRA. A.C.T. 2600

AUSTRALIA.

(cable address: Comtreasury, Canberra)

9. Please indicate your agreement with the foregoing by signing the form of confirmation on the enclosed copy of this letter and returning it to us.

Yours truly,

THE COMMONWEALTH OF

AUSTRALIA

By B. M. Snedden

TREASURER OF THE COMMONWEALTH OF AUSTRALIA

Asian Development Bank,

Commercial Center,

P.O. Box 126,

Makati, Rizal D-708,

PHILIPPINES.

SECOND SCHEDULE Section 3.

LOAN AGREEMENT

(Special Operations)

LOAN AGREEMENT dated 21 December 1971 between the Administration of the Territory of Papua and New Guinea (hereinafter called the Borrower) and Asian Development Bank (hereinafter called the Bank)

Whereas:

(A) the Borrower has applied to the Bank for a loan for the purposes of the project described in Section 3.01 of this Loan Agreement (such project being hereinafter called the Project);

(B) the Project will be executed by the Papua and New Guinea Development Bank (PNG DB), a statutory corporation of the Borrower as hereinafter defined, and for this purpose the Borrower will make available to PNGDB the proceeds of the loan provided for herein upon terms and conditions satisfactory to the Bank; and

Whereas the Bank has agreed on the basis of the foregoing to make a loan to the Borrower from the Bank’s Special Funds resources upon the terms and conditions set forth herein and in the Project Agreement of even date herewith between the Bank and PNGDB;

Now Therefore the parties hereto agree as follows:

ARTICLE I

Loan Regulations; Special Definitions

Section 1.01. The parties to this Loan Agreement accept all the provisions of the Special Operations Loan Regulations of the Bank dated 6 May 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said Special Operations Loan Regulations as so modified being hereinafter called the Loan Regulations):

(a) the words “,the Project Agreement” are inserted immediately after the words “the Loan Agreement” in Section 5.06 and in Section 6.02 of the Loan Regulations; and

(b) the following sub-paragraph is added to Section 9.01 of the Loan Regulations:

“20. the term ‘Project Agreement’ has the meaning set forth in the Loan Agreement.”

Section 1.02. Wherever used in this Loan Agreement, unless the context otherwise requires, the several terms defined in the Loan Regulations have the respective meanings therein set forth and the following additional terms have the following meanings:

(a) “Ordinance” means the Papua and New Guinea Development Bank Ordinance 1965 (No. 2 of 1966) of the Borrower, as the same may be amended from time to time;

(b) “PNGDB” means the Papua and New Guinea Development Bank, a statutory corporation of the Borrower, established under the provisions of the Ordinance;

(c) “Project Agreement” means the agreement of even date herewith between the Bank and PNGDB, as the same may be amended from time to time with the agreement of the Borrower;

(d) “Subsidiary Loan Agreement” means the agreement between the Borrower and PNGDB referred to in Section 3.03 of this Loan Agreement;

(e) “interest” includes the service fee referred to in Section 2.03 of the Loan Regulations;

(f) “Policy Statement” means PNGDB’s Lending Policy published in July 1967, as the same may be amended from time to time;

(g) “subsidiary” means a company which would be deemed to be a subsidiary of PNGDB under Section 6 of the Companies Ordinance 1963–1968 of the Borrower or any amendment or replacement thereof if PNGDB were itself a corporation for the purposes of the said Ordinance.

ARTICLE II

The Loan

Section 2.01. The Bank agrees to lend to the Borrower an amount in various currencies equivalent to four million five hundred thousand dollars ($4,500,000).

Second Schedule—continued

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.

Section 2.03. The Borrower shall pay interest at the rate of three per cent (3%) per annum on the amount of the Loan withdrawn and outstanding from time to time.

Section 2.04. The currency of payment of the service fee is hereby specified for the purposes of Section 3.04 of the Loan Regulations as the currency in which the interest which includes such fee is payable.

Section 2.05. Except as the Borrower and the Bank shall otherwise agree, the charge payable for special commitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be payable in dollars at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of any such special commitment outstanding from time to time.

Section 2.06. Interest and other charges shall be payable semi-annually on March 1 and September 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 Loan Agreement.

ARTICLE III

Description of the Project;

Use of Proceeds of the Loan

Section 3.01. The Project for which the Loan is granted is the financing by PNGDB of development in the Territory of Papua and New Guinea through loans for productive purposes, all in accordance with the Project Agreement, the Ordinance and the Policy Statement of PNGDB and in furtherance of the corporate purposes of PNGDB.

Section 3.02. The Borrower shall cause the proceeds of the Loan to be applied, in accordance with the provisions of this Loan Agreement, to the financing of expenditures on the Project. The methods and procedures for procurement of the goods to be financed from such proceeds shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them.

Section 3.03. The Borrower shall enter into a Subsidiary Loan Agreement with PNGDB, providing inter alia for the relending of the proceeds of the Loan to PNGDB, the carrying out of the Project and the rights of the Borrower and the Bank with respect thereto. Such agreement shall be in form and on terms and conditions acceptable to the Bank, including provisions for the bearing of foreign exchange risk by the Borrower, and shall be without prejudice to and without limitation on the obligations of the Borrower under this Loan Agreement. Except as the Borrower and the Bank may otherwise agree, the Borrower shall not amend, assign, abrogate or waive any provision of the Subsidiary Loan Agreement.

Section 3.04. Notwithstanding the provisions of Section 4.01 of the Loan Regulations and except as the Borrower and the Bank may otherwise agree, withdrawals from the Loan Account shall be made only in respect of goods which

(a) are produced in such member countries of the Bank as shall have been specified by the Bank from time to time as eligible sources for procurement; and

(b) meet such other eligibility requirements as shall have been specified by the Bank from time to time.

Section 3.05. Except as the Borrower and the Bank may otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Loan to be used exclusively for the purposes of the Project.

ARTICLE IV

Particular Covenants

Section 4.01. The Borrower shall cause PNGDB to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, business and development policies and practices.

Second Schedule—continued

Section 4.02. (a) Without limitation or restriction upon any of its other obligations under this Loan Agreement, the Borrower shall cause PNGDB to perform punctually its obligations as set forth in the Project Agreement, and shall, within the limits of its powers, ensure that PNGDB is at all times run according to sound administrative, financial and business policies and practices and under qualified and experienced management satisfactory to the Borrower and the Bank.

(b) The Borrower shall promptly take all action, including the provision of funds, facilities, services and other resources, which shall be necessary on its part to enable PNGDB to perform its obligations under the Project Agreement and shall not take or permit to be taken any action which would interfere with the performance of such obligations.

Section 4.03. The Borrower and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end:

(a) The Borrower shall furnish or cause to be furnished to the Bank all such information as the Bank shall reasonably request concerning (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof; (ii) the goods financed out of the proceeds of the Loan; (iii) the Project; (iv) the management, administration, operations and financial condition of PNGDB; (v) financial and economic conditions in the territories of the Borrower and the international balance of payments position of the Borrower; and (vi) other matters relating to the purposes of the Loan.

(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, and in particular with regard to (i) the performance by the Borrower of its obligations under this Loan Agreement, (ii) the performance by the Borrower and PNGDB of their respective obligations under the Subsidiary Loan Agreement, (iii) the performance by PNGDB of its obligations under the Project Agreement, and (iv) the management, administration, operations and financial condition of PNGDB.

(c) The Borrower shall promptly inform the Bank of any condition which interferes or threatens to interfere with the accomplishment of the purposes of the Loan, the maintenance of the service thereof, or the performance by the Borrower of its obligations under this Loan Agreement, or the performance by the Borrower or PNGDB of their respective obligations under the Subsidiary Loan Agreement or the performance by PNGDB of its obligations under the Project Agreement.

Section 4.04. (a) The Borrower shall enable the Bank’s representatives to inspect the Project, the goods financed out of the proceeds of the Loan and any relevant records and documents.

(b) The Borrower shall afford all reasonable opportunity for representatives of the Bank to visit any part of the territories of the Borrower for purposes related to the Loan.

Section 4.05. 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 created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, 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; or (b) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date.

The term “assets of the Borrower” as used in this Section includes assets of the Borrower or any of its political subdivisions or of any agency of the Borrower or of any such political subdivision, including assets of a central bank of the Borrower and assets held on behalf of the Borrower by the Reserve Bank of Australia or any other institution performing the functions of a central bank for the Borrower.

Section 4.06. The principal of, and interest and other charges on, the Loan shall be paid without deduction for and free from any taxes, and free from all restrictions imposed under the laws of the Borrower or of its political subdivisions.

Second Schedule—continued

Section 4.07. This Loan Agreement shall be free from any taxes that shall be imposed under the laws of the Borrower or of its political subdivisions on or in connection with the execution, issue, delivery or registration thereof.

ARTICLE V

Remedies of the Bank

Section 5.01. If (i) any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) 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 or (iii) any event specified in Section 5.02 of this Loan Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof the Bank, at its option, may declare the principal of the Loan then outstanding, together with all interest and other charges thereon, to be due and payable immediately, and upon such declaration such principal, interest and other charges shall become due and payable immediately, anything in this Loan Agreement to the contrary notwithstanding.

Section 5.02. The following are specified as additional events for the purposes of Section 5.02 of the Loan Regulations:

(a) The Ordinance shall have been repealed, amended or modified, or the constitution of PNGDB altered, in any manner which, in the reasonable opinion of the Bank, could adversely affect the carrying out of the Project.

(b) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of PNGDB or for the suspension of its operations.

(c) Any change in or new appointments to the Board of Directors or the positions of Managing Director and Deputy Managing Director of PNGDB shall have been made without prior consultation with the Bank.

(d) The terms or conditions of the Subsidiary Loan Agreement shall have been materially amended, abrogated or waived without the prior approval of the Bank.

(e) PNGDB shall have failed to carry out any obligation under the Project Agreement or under the Subsidiary Loan Agreement and such default shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower and to PNGDB.

(f) The Policy Statement of PNGDB shall have been amended, or a subsidiary shall have been established or acquired by PNGDB, without prior consultation with the Bank.

ARTICLE VI

Effective Date; Termination

Section 6.01.  The following events are specified as additional conditions to the effectiveness of this Loan Agreement, within the meaning of Section 8.01 (d) of the Loan Regulations:

(a) the execution and delivery of the Project Agreement on behalf of PNGDB shall have been duly authorised or ratified by all necessary corporate, administrative and governmental action;

(b) the Subsidiary Loan Agreement, in form and substance satisfactory to the Bank, shall have been entered into by the Borrower and PNGDB and shall have become effective in accordance with its terms, subject only to the effectiveness of this Loan Agreement;

(c) Australia shall have notified the Bank in writing that it approves the terms and conditions of the Loan.

Section 6.02. The following are specified as additional matters, within the meaning of Section 8.02 (c) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank:

(a) that PNGDB is a legal entity duly organised and operating under the laws of the Borrower, with all rights and powers necessary to enable it to carry out the Project and to enter into, and carry out the terms and conditions of, the Project Agreement and the Subsidiary Loan Agreement;

Second Schedule—continued

(b) that the Project Agreement has been duly authorised or ratified by, and executed and delivered on behalf of, PNGDB and constitutes a valid and binding obligation of PNGDB in accordance with its terms;

(c) that the Subsidiary Loan Agreement has been duly authorised or ratified by, and executed and delivered on behalf of, the Borrower and PNGDB and constitutes a valid and binding obligation of such parties in accordance with its terms, subject only to the effectiveness of this Loan Agreement;

(d) that Australia’s approval referred to in paragraph (c) of Section 6.01 has been validly given.

Section 6.03. A date ninety days after the date of this Loan Agreement is specified for the purposes of Section 8.04 of the Loan Regulations.

ARTICLE VII

Miscellaneous

Section 7.01. A date three years after the Effective Date, or such other date as may from time to time be agreed between the Borrower and the Bank, is specified for the purposes of Section 5.03 (b) of the Loan Regulations as the closing date for withdrawals from the Loan Account.

Section 7.02. The following addresses are specified for the purposes of Section 7.01 of the Loan Regulations:

For the Borrower:

The Treasurer

Department of the Treasury

Port Moresby

Papua and New Guinea

Alternative address for cables and radiograms:

TREASURER

PORT MORESBY

For the Bank:

Asian Development Bank

Commercial Centre P.O. Box 126

Makati, Rizal D-708

Philippines

Alternative address for cables and radiograms:

ASIANBANK

MANILA

Section 7.03. The Treasurer of the Borrower is designated for the purposes of Section 7.03 of the Loan Regulations.

In Witness Whereof the parties hereto, acting through their representatives thereunto duly authorised, have caused this Loan Agreement to be signed in their respective names and to be delivered at the principal office of the Bank, as of the day and year first above written.

Administration of the Territory

of Papua and New Guinea

By O. O. Rarua

Authorised Representative

Asian Development Bank

By Takeshi Watanabe

Second Schedule—continued

SCHEDULE 1

Amortization Schedule

* To the extent that any portion of the loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in the column represent dollar equivalents determined as for purposes of withdrawal.

THIRD SCHEDULE Section 3.

PROJECT AGREEMENT

PROJECT AGREEMENT dated 21 December 1971 between Asian Development Bank (hereinafter called the Bank) and Papua and New Guinea Development Bank (hereinafter called PNGDB).

Whereas by the Loan Agreement of even date herewith between Administration of the Territory of Papua and New Guinea (hereinafter called the Borrower) and the Bank, the Bank has agreed to lend to the Borrower an amount in various currencies equivalent to four million five hundred thousand dollars ($4,500,000) on the terms and conditions set forth in the Loan Agreement, but only on condition that the proceeds of the said Loan be made available to PNGDB and that PNGDB agree to undertake certain obligations towards the Bank as hereinafter in this Project Agreement set forth; and

Whereas PNGDB, in consideration of the Bank’s entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth;

Now Therefore the parties hereto agree as follows:

ARTICLE I

Definitions

Section 1.01. Wherever used in this Project Agreement, unless the context otherwise requires, the several terms defined in the Loan Agreement and in the Loan Regulations, as so defined, have the respective meanings therein set forth and the following additional terms have the following meanings:

(a) “sub-loan” means a loan made or proposed to be made by PNGDB out of the proceeds of the Loan;

(b) “beneficiary” means any person to whom PNGDB proposes to make or has made a sub-loan.

ARTICLE II

Provisions relating to Sub-Loans and Accrued Resources

Section 2.01. (a) Except as the Bank agrees otherwise, the proceeds of the Loan shall be applied by PNGDB in accordance with the provisions of this Project Agreement and the Loan Agreement exclusively for making sub-loans for the purposes of the Project referred to in Section 3.01 of the Loan Agreement.

(b) Whenever PNGDB proposes to make a sub-loan in an amount exceeding the equivalent of $50,000, or such other sum as shall from time to time be agreed between the Bank and PNGDB, it shall submit to the Bank an application for approval of such sub-loan. Such application shall be in form satisfactory to the Bank and shall contain such information as the Bank shall reasonably request. A sub-loan shall be deemed to exceed the equivalent of the amount specified in or agreed pursuant to this sub-paragraph if the amount of such sub-loan, when added to the amount of any other sub-loan or sub-loans previously made to the same beneficiary, exceeds the equivalent of the amount so specified or agreed.

(c) Prior approval of the Bank shall not be required in respect of sub-loans not exceeding the equivalent of the amount specified in or agreed pursuant to paragraph (b) of this Section, but PNGDB shall submit to the Bank a monthly statement of such sub-loans in such detail as the Bank shall reasonably request.

Section 2.02. (a) Except as the Bank agrees otherwise, the amortization schedule applicable to each sub-loan shall provide for an appropriate period of grace, shall not extend beyond the last repayment date specified in the Subsidiary Loan Agreement and shall provide for approximately equal semi-annual or more frequent aggregate payments of principal and interest or approximately equal semi-annual or more frequent payments of principal.

(b) Each sub-loan shall carry interest at an appropriate rate and shall be made on terms whereby PNGDB shall obtain, by a written agreement with the beneficiary in form acceptable to the Bank or by other appropriate legal means, rights adequate to protect the interests of the Borrower, PNGDB and the Bank.

Third Schedule—continued

(c) PNGDB shall promptly and effectively exercise its rights in relation to each beneficiary in accordance with the standards of a prudent lender and in such manner as to protect the interests of the Borrower, PNGDB and the Bank.

Section 2.03. (a) Notwithstanding the provisions of Section 4.01 of the Loan Regulations, and except as the Bank agrees otherwise, no withdrawals shall be made from the Loan Account for expenditures incurred by a beneficiary more than 90 days prior to receipt by the Bank of the application for approval of the sub-loan under Section 2.01(b) of this Project Agreement or more than 60 days prior to receipt by PNGDB of the request for a sub-loan falling under Section 2.01(c) of this Project Agreement.

(b) To the extent possible, requests for withdrawals from the Loan Account in respect of sub-loans under Section 2.01(c) hereof shall be grouped together by PNGDB and submitted to the Bank on a monthly basis.

Section 2.04. Except as the Bank agrees otherwise, all funds accruing to PNGDB from the repayment of principal of the sub-loans shall, subject to loan service payments under the Subsidiary Loan Agreement, be used by PNGDB exclusively for its lending operations in conformity with the provisions of Section 3.01 of the Loan Agreement.

ARTICLE III

Particular Covenants

Section 3.01. PNGDB shall carry out the Project with due diligence and efficiency and shall at all times conduct its operations and affairs in accordance with sound administrative, financial, business and development policies and practices, under the supervision of qualified and experienced management satisfactory to the Borrower and the Bank, and in accordance with the Ordinance and the Policy Statement.

Section 3.02. (a) PNGDB shall maintain records adequate to record the progress of the Project and of each sub-loan project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting practices, the financial condition and operations of PNGDB, and shall enable the Bank’s representatives to inspect any sub-loan project and to examine any relevant records and documents.

(b) PNGDB shall have its financial statements (balance sheet, statement of earnings and expenses and other related statements) certified annually by independent auditors acceptable to the Bank and shall, promptly after such statements become available and not later than five months after the close of the fiscal year to which they relate, arrange the transmission to the Bank of certified copies of such statements and a signed copy of the auditors’ report thereon. PNGDB shall also furnish to the Bank such other information concerning its accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request.

Section 3.03. The Bank and PNGDB shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end:

(a) PNGDB 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 beneficiaries, the sub-loans, and the management, administration, operations and financial condition of PNGDB.

(b) The Bank and PNGDB shall from time to time, at the request of either party, exchange views through their representatives with regard to the progress of the Project, the performance by PNGDB of its obligations under this Project Agreement and the Subsidiary Loan Agreement, and the administration, operations and financial condition of PNGDB and other matters relating to the purposes of the Loan.

(c) PNGDB shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the performance by PNGDB of its obligations under this Project Agreement or the Subsidiary Loan Agreement.

Section 3.04. Except as the Bank agrees otherwise, PNGDB shall not incur or permit any subsidiary to incur any debt if, after the incurring of any such debt, the consolidated debt of PNGDB and all its subsidiaries then incurred and outstanding would be greater than three times the consolidated equity of PNGDB and all its subsidiaries.

Third Schedule—continued

For the purposes of this Section:

(a) “Debt” means any debt incurred by PNGDB or a subsidiary maturing more than one year after the date on which it is originally incurred.

(b) Debt shall be deemed to be incurred (i) under a contract or loan agreement, on the date and to the extent it is drawn down and outstanding pursuant to such contract or loan agreement and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but shall be counted only to the extent that the underlying debt is outstanding.

(c) Whenever in connection with 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 lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt.

(d) “Consolidated debt of PNGDB and its subsidiaries” means the total amount of debt of PNGDB and of all its subsidiaries, if any.

(e) “Consolidated equity of PNGDB and all its subsidiaries” means the aggregate of the total capital, surplus and reserves of PNGDB and of all its subsidiaries, if any.

Section 3.05. Except as the Bank agrees otherwise, PNGDB shall not (i) substantially amend the Policy Statement; (ii) sell, lease, transfer or otherwise dispose of its property and assets, except in the ordinary course of business; or (iii) establish or acquire any subsidiary.

Section 3.06. Except as the Bank agrees otherwise, PNGDB shall duly perform all its obligations under the Subsidiary Loan Agreement and shall not take, or concur in, any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any of the obligations of the parties thereunder.

Section 3.07. PNGDB shall cause each of its subsidiaries, if any, to observe and perform PNGDB’s obligations hereunder to the extent to which such obligations may be applicable thereto, as though such obligations were binding upon each of such subsidiaries.

Section 3.08. Except as the Bank agrees otherwise, PNGDB shall take out and maintain or cause to be taken out and maintained such insurance, against such risks and in such amounts, as shall be consistent with sound business practices.

Section 3.09. PNGDB shall, promptly as needed and except as the Bank agrees otherwise, take all steps possible and necessary to maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business.

ARTICLE IV

Effective Date; Termination

Section 4.01. This Project Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective.

Section 4.02. This Project Agreement and all obligations of the parties hereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms.

ARTICLE V

Miscellaneous Provisions

Section 5.01. Any notice or request required or permitted to be given or made under this Project Agreement and any agreement between the parties contemplated by this Project 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 making such request. The addresses so specified are:

Third Schedule—continued

For the Bank:

Asian Development Bank

Commercial Centre P.O. Box 126

Makati, Rizal D-708

Philippines

Cable Address:

ASIANBANK

MANILA

For PNGDB:

Papua and New Guinea’ Development Bank

P.O. Box 500

Port Moresby

Papua and New Guinea

Cable Address:

DEVELOPMENT

PORT MORESBY

Section 5.02. Any action required or permitted to be taken and any documents required or permitted to be executed under this Project Agreement by PNGDB, may be taken or executed by its Managing Director or such other person or persons as PNGDB shall designate in writing.

Section 5.03. PNGDB shall furnish to the Bank sufficient evidence of the authority of the person or persons who will, on behalf of PNGDB, take any action or execute any documents required or permitted to be executed by PNGDB pursuant to any of the provisions of this Project Agreement, and the authenticated specimen signature of each such person.

In Witness Whereof, the parties hereto, acting through their representatives thereunto duly authorised, have caused this Project Agreement to be signed in their respective names and delivered at the principal office of the Bank as of the day and year first above written.

Asian Development Bank

By Takeshi Watanabe

Papua and New Guinea

Development Bank

By Keith G. Crellin

Authorised Representative

—————

FOURTH SCHEDULE Section 4.

SPECIAL OPERATIONS LOAN REGULATIONS

Dated 6 May 1969

ARTICLE I

Purpose; Application to Loan Agreements and Guarantee Agreements

Section 1.01. Purpose. The purpose of these Regulations is to set forth terms and conditions generally applicable to loans made by the Bank from its Special Funds resources.

Section 1.02. Application of Regulations. Any loan agreement made with the Bank and any guarantee agreement made with the Bank relating to its Special Funds resources may provide that the parties thereto accept the provisions of these Regulations. To the extent so provided in any such agreement, these Regulations shall apply thereto and shall govern the rights and obligations thereunder of the parties thereto with the same force and effect as if they were fully set forth therein. No revocation or amendment of these Regulations shall be effective in respect of any such agreement unless the parties thereto shall so agree.

Section 1.03. Inconsistency with Loan Agreements and Guarantee Agreements.  If any provision of a loan agreement or guarantee agreement is inconsistent with a provision of these Regulations, the provision of the loan agreement or guarantee agreement, as the case may be, shall govern.

ARTICLE II

Loan Account; Interest, Service Fee and Other Charges; Repayment; Place of Payment

Section 2.01. Loan Account. The amount of the Loan shall be credited to a Loan Account which the Bank shall open on its books in the name of the Borrower. The amount of the Loan may be withdrawn from the Loan Account as provided in the Loan Agreement and in these Regulations.

Section 2.02. Interest. Where the Loan Agreement so provides, interest at the rate specified in the Loan Agreement shall be payable on the amount of the Loan withdrawn from the Loan Account and outstanding from time to time. Interest shall accrue from the respective dates on which amounts shall be so withdrawn.

Section 2.03. Service Fee. A service fee at the rate of three-fourths of one per cent (3/4 of 1 %) per annum shall be payable on the amount of the Loan withdrawn from the Loan Account and outstanding from time to time. The service fee shall accrue from the respective dates on which amounts shall be so withdrawn.

Section 2.04. Computation of Interest, Service Fee and Other Charges. Interest, service fee and other charges shall be computed on the basis of a 360-day year of twelve 30-day months.

Section 2.05. Repayment. (a) The principal amount of the Loan withdrawn from the Loan Account shall be repayable in accordance with the amortization schedule to the Loan Agreement.

(b) The Borrower shall have the right, upon payment of all accrued interest and service fee, and upon not less than 45 days’ notice to the Bank, to repay in advance of maturity (i) all of the principal amount of the Loan at the time outstanding or (ii) all of the principal amount of any one or more maturities, provided that on the date of such prepayment there shall not be outstanding any portion of the Loan maturing after the portion to be prepaid.

Section 2.06. Place of Payment. The principal of, and interest, service fee and other charges on, the Loan shall be paid at such places as the Bank shall reasonably request.

ARTICLE III

Currency Provisions

Section 3.01. Currencies in which Cost of Goods is to be Paid and Proceeds of the Loan are to be Withdrawn. (a) Except as the Bank and the Borrower shall otherwise agree, the cost of goods financed out of the proceeds of the Loan shall be paid in the respective currencies of the countries from which such goods may be acquired pursuant to the provisions of the Loan Agreement.

Fourth Schedule—continued

(b) Except as the Bank and the Borrower shall otherwise agree, withdrawals shall be made in the respective currencies in which the cost of goods has been paid, or is payable.

Section 3.02. Currency in Which Principal is Payable; Maturities. (a) The principal of the Loan shall be repayable in the several currencies withdrawn from the Loan Account and the amount repayable in each currency shall be the amount withdrawn in that currency. The foregoing provision is subject to two exceptions, namely: (i) if withdrawal shall be made in any currency which the Bank shall have purchased with another currency for the purpose of such withdrawal, the portion of the Loan so withdrawn shall be repayable in such other currency and the amount so repayable shall be the amount paid by the Bank on such purchase, and (ii) the Borrower and the Bank may agree to substitute gold or any currency determined by the Bank to be convertible as the currency of payment.

(b) Except as the Bank and the Borrower shall otherwise agree, the portion of the Loan to be repaid, under the provisions of this Section, in any particular currency shall be repayable in such instalments, not inconsistent with the instalments set forth in the amortization schedule to the Loan Agreement, as the Bank shall from time to time specify.

Section 3.03. Currency in Which Interest is Payable. Interest on any portion of the Loan shall be payable in the currency in which the principal of such portion of the Loan is repayable.

Section 3.04. Currency in Which Service Fee is Payable. The service fee shall be payable in the currency specified in the Loan Agreement.

Section 3.05. Currency in Which Special Commitment Charge is Payable. The charge for any special commitment pursuant to Section 4.02 shall be payable in the currency specified in the Loan Agreement.

Section 3.06. Purchase of Currencies. The Bank will, at the request of the Borrower and on such terms and conditions as the Bank shall determine, purchase any currency needed by the Borrower for payment of principal, interest, service fee and other charges required under the Loan Agreement upon payment by the Borrower of sufficient funds therefor in a currency or currencies to be specified by the Bank from time to time. In purchasing the currencies required the Bank shall be acting as agent of the Borrower and the Borrower shall be deemed to have made any payment required under the Loan Agreement only when and to the extent that the Bank has received such payment in the currency or currencies required.

Section 3.07. Valuation of Currencies. Whenever it shall be necessary for the purposes of the Loan Agreement to determine the value of one currency in terms of another, such value shall be as reasonably determined by the Bank.

Section 3.08. Exchange Restrictions. Any payment required under the Loan Agreement to be made to the Bank in the currency of any country shall be made in such manner, and in currency acquired in such manner, as shall be permitted under the laws of such country for the purpose of making such payment and effecting the deposit of such currency to the account of the Bank with a depository of the Bank in such country.

ARTICLE IV

Withdrawal of Proceeds of Loan

Section 4.01. Withdrawal from the Loan Account. The Borrower shall be entitled to withdraw from the Loan Account (i) such amounts as shall have been paid for the reasonable cost of goods to be financed under the Loan Agreement; and (ii) if the Bank shall so agree, such amounts as shall be required to meet payments to be made for the reasonable cost of such goods. Except as shall be otherwise agreed between the Bank and the Borrower, no withdrawals shall be made on account of (a) expenditures prior to the Effective Date or (b) expenditures in the territories of any country which is not a member of the Bank or for goods produced in (including services supplied from) such territories.

Section 4.02. Special Commitments by the Bank. Upon the Borrower’s request and upon such terms and conditions as shall be agreed upon between the Bank and the Borrower, the Bank may enter into special commitments in writing to pay amounts to the Borrower or others in respect of the cost of goods notwithstanding any subsequent suspension or cancellation.

Fourth Schedule—continued

Section 4.03. Application for Withdrawal or for Special Commitment. When the Borrower shall desire to withdraw any amount from the Loan Account or to request the Bank to enter into a special commitment pursuant to Section 4.02, the Borrower shall deliver to the Bank a written application in such form and containing such statements and agreements, as the Bank shall reasonably request. Applications for withdrawal, with the necessary documentation as hereinafter in this Article provided, shall, except as the Bank and the Borrower shall otherwise agree, be made promptly in relation to expenditures for the Project.

Section 4.04. Supporting Evidence. The Borrower shall furnish to the Bank such documents and other evidence in support of the application as the Bank shall reasonably request, whether before or after the Bank shall have permitted any withdrawal requested in the application.

Section 4.05. Sufficiency of Applications and Documents. Each application and the accompanying documents and other evidence must be sufficient in form and substance to satisfy the Bank that the Borrower is entitled to withdraw from the Loan Account the amount applied for and that the amount to be withdrawn from the Loan Account is to be used only for the purposes specified in the Loan Agreement.

Section 4.06. Payment by the Bank. Payment by the Bank of amounts which the Borrower is entitled to withdraw from the Loan Account shall be made to or on the order of the Borrower.

ARTICLE V

Cancellation and Suspension

Section 5.01. Cancellation by the Borrower. The Borrower may by notice to the Bank cancel any amount of the Loan which the Borrower shall not have withdrawn prior to the giving of such notice, except that the Borrower may not so cancel any amount of the Loan in respect of which the Bank shall have entered into a special commitment pursuant to Section 4.02.

Section 5.02. Suspension by the Bank. If any of the following events shall have happened and be continuing, the Bank may by notice to the Borrower suspend in whole or in part the right of the Borrower to make withdrawals from the Loan Account:

(a) A default shall have occurred in the payment of principal, interest or any other payment required under the Loan Agreement.

(b) A default shall have occurred in the payment of principal, interest or any other payment required under any other loan agreement or any guarantee agreement between the Borrower or Guarantor, if any, and the Bank, or under any bond delivered pursuant to any such agreement.

(c) A default shall have occurred in the performance of any other covenant or agreement on the part of the Borrower or the Guarantor, if any, under the Loan Agreement or the Guarantee Agreement, if any.

(d) An extraordinary situation shall have arisen which shall make it improbable that the Borrower or the Guarantor, if any, will be able to perform its obligations under the Loan Agreement or the Guarantee Agreement.

(e) The member in whose territory the Project is to be carried out shall have been suspended from membership in or ceased to be a member of the Bank.

(f) After the date of the Loan Agreement and prior to the Effective Date any event shall have occurred which would have entitled the Bank to suspend the Borrower’s right to make withdrawals from the Loan Account if the Loan Agreement and the Guarantee Agreement, if any, had been effective on the date such event occurred.

(g) The Borrower or the Guarantor, if any, shall have failed to fulfill an obligation to make payment of principal, interest or any other payment required under the Loan Agreement or the Guarantee Agreement, if any, under any other loan agreement or guarantee agreement between the Borrower and the Bank, or under any bond delivered pursuant to any such agreement, notwithstanding the fact that such payment is made by a third party.

(h) Where the Borrower is not a member and the Borrower shall have been unable to pay its debts as they mature or any action or proceeding shall have been taken by the Borrower or by others whereby any of the property of the Borrower shall or may be distributed among its creditors.

Fourth Schedule—continued

(i) Where the Borrower is not a member and the member in whose territory the Project is to be carried out or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of the Borrower or for the suspension of its operations.

(j) Where the Borrower is not a member and, prior to the Effective Date, any material adverse change in the condition of the Borrower, as represented or warranted to the Bank, shall have occurred.

(k) Any other event specified in the Loan Agreement for the purposes of this Section shall have occurred.

The right of the Borrower to make withdrawals from the Loan Account shall continue to be suspended in whole or in part, as the case may be, until the event or events which gave rise to such suspension shall have ceased to exist or until the Bank shall have notified the Borrower that the right to make withdrawals has been restored, whichever is the earlier; provided, however, that in the case of any such notice of restoration, the right to make withdrawals 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.

Section 5.03. Cancellation by the Bank. If (a) the right of the Borrower to make withdrawals from the Loan Account shall have been suspended with respect to any amount of the Loan for a continuous period of thirty days, or (b) by the date specified in the Loan Agreement as the closing date an amount of the Loan shall remain unwithdrawn from the Loan Account, the Bank may by notice to the Borrower terminate the right of the Borrower to make withdrawals with respect to such amount. Upon the giving of such notice, such amount of the Loan shall be cancelled.

Section 5.04. Amounts Subject to Special Commitment Not Affected by Cancellation or Suspension by the Bank. No cancellation or suspension by the Bank shall apply to amounts subject to any special commitment entered into by the Bank pursuant to Section 4.02 except as expressly provided in such commitment.

Section 5.05. Application of Cancellation to Maturities of the Loan. Except as otherwise agreed between the Bank and the Borrower, any cancellation shall be applied pro rata to the several maturities of the principal amount of the Loan as set forth in the amortization schedule to the Loan Agreement.

Section 5.06. Effectiveness of Provisions after Suspension or Cancellation. Notwithstanding any cancellation or suspension, all the provisions of these Regulations and the Loan Agreement and the Guarantee Agreement, if any, shall continue in full force and effect except as in this Article specifically provided.

ARTICLE VI

Enforceability of Loan Agreement; Failure to

Exercise Rights; Arbitration

Section 6.01. Enforceability. (a) The rights and obligations of the Bank and the Borrower under the Loan Agreement and of the Bank and the Guarantor under the Guarantee Agreement, if any, shall be valid and enforceable in accordance with their terms and, where either the Borrower or the Guarantor is a member, notwithstanding the law of any state, or political subdivision thereof, to the contrary.

(b) Neither the Bank nor the Borrower nor the Guarantor, if any, shall be entitled in any proceeding under this Article to assert any claim that any provision of these Regulations or the Loan Agreement or the Guarantee Agreement, if any, is invalid or unenforceable because of any provision of the Articles of Agreement of the Bank or for any other reason.

Section 6.02. Failure to Exercise Rights. No delay in exercising, or omission to exercise any right, power or remedy accruing to either party under the Loan Agreement or Guarantee Agreement, if any, upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof or an acquiescence in such default; nor shall the action of such party in respect of any default, or any acquiescence in any default, affect or impair any right, power or remedy of such party in respect of any other or subsequent default.

Fourth Schedule—continued

Section 6.03. Arbitration. (a) Any controversy between the parties to the Loan Agreement or the parties to the Guarantee Agreement, if any, and any claim by any such party against any other such party arising under the Loan Agreement or the Guarantee Agreement, if any, which shall not be determined by agreement of the parties shall be submitted to arbitration by an Arbitral Tribunal as hereinafter provided.

(b) The parties to such arbitration shall be the Bank on the one side and the Borrower and the Guarantor, if any, on the other side.

(c) The Arbitral Tribunal shall consist of three arbitrators appointed as follows: one arbitrator shall be appointed by the Bank; a second arbitrator shall be appointed by the Borrower and the Guarantor, if any, or where applicable, if they shall not agree, by the Guarantor; and the third arbitrator (hereinafter sometimes called the Umpire) shall be appointed by agreement of the parties or, if they shall not agree, by the President of the International Court of Justice or, failing appointment by him, by the Secretary-General of the United Nations. If either side shall fail to appoint an arbitrator, such arbitrator shall be appointed by the Umpire. In case any arbitrator appointed in accordance with this Section shall resign, die or become unable to act, a successor arbitrator shall be appointed in the same manner as herein prescribed for the 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 instituted under this Section upon notice by the party instituting such proceeding to the other party or parties. Such notice shall contain a statement setting forth the nature of the controversy or claim to be submitted to arbitration and the nature of the relief sought. Within 30 days after the giving of such notice, each side shall notify the other side of the name of the arbitrator appointed by it.

(e) If within 60 days after the giving of such notice instituting the abritration proceeding the parties shall not have agreed upon an Umpire, any party may request the appointment of an Umpire as provided in paragraph (c) of this Section.

(f) The Arbitral Tribunal shall convene at such time and place as shall be fixed by the Umpire. Thereafter, the Arbitral Tribunal shall determine where and when it shall sit.

(g) Subject to the provisions of this Section and except as the parties shall otherwise agree, the Arbitral Tribunal shall decide all questions relating to its competence and shall determine its procedure. All decisions of the Arbitral Tribunal shall be by majority vote.

(h) The Arbitral Tribunal shall afford to all parties a fair hearing and shall render its award in writing. Such award may be rendered by default. An award signed by a majority of the Arbitral Tribunal shall constitute the award of such Tribunal. A signed counterpart of the award shall be transmitted to each party. Any such award rendered in accordance with the provisions of this Section shall be final and binding upon the parties to the Loan Agreement and the Guarantee Agreement, if any. Each party shall abide by and comply with any such award rendered by the Arbitral Tribunal in accordance with the provisions of this Section.

(i) The parties shall fix the amount of the remuneration of the arbitrators and such other persons as shall be required for the conduct of the arbitration proceedings. If the parties shall not agree on such amount before the Arbitral Tribunal shall convene, the Arbitral Tribunal shall fix such amount as shall be reasonable under the circumstances. Each party shall defray its own expenses in the arbitration proceedings. The costs of the Arbitral Tribunal shall be divided between and borne equally by the Bank on the one side and the Borrower and Guarantor, if any, on the other side. Any question concerning the division of the costs of the Arbitral Tribunal or the procedure for payment of such costs shall be determined by the Arbitral Tribunal.

(j) The provisions for arbitration set forth in this Section shall be in lieu of any other procedure for the determination of controversies between the parties to the Loan Agreement and the Guarantee Agreement, if any, and any claim by either party against the other such party arising thereunder.

(k) If within 30 days after the counterparts of the award shall be delivered to the parties the award shall not be complied with, any party may enter judgment upon, or institute a proceeding to enforce, the award in any court of competent jurisdiction against any other party, and may enforce such judgment by execution or may pursue any other appropriate remedy against such other party for the enforcement of the award, the provisions of the Loan Agreement, or the Guarantee Agreement, if any. Notwithstanding the foregoing, this Section

Fourth Schedule—continued

shall not authorize any entry of judgment or enforcement of the award against any party that is a member except as such procedure may be available otherwise than by reason of the provisions of this Section.

(l) Service of any notice or process in connection with any proceeding under this Section or (to the extent that such remedy shall be available) in connection with any proceeding to enforce any award rendered pursuant to this Section may be made in the manner provided in Section 7.01. The parties to the Loan Agreement and the Guarantee Agreement, if any, waive any and all other requirements for the service of any such notice or process.

ARTICLE VII

Miscellaneous Provisions

Section 7.01. Notices and Requests. Any notice or request required or permitted to be given or made under the Loan Agreement or Guarantee Agreement, if any, and any agreement between any of the parties contemplated by the Loan Agreement or the Guarantee Agreement, if any, shall be in writing. Except as otherwise provided in Section 8.03, 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 or radiogram to the party to which it is required or permitted to be given or made at such party’s address specified in the Loan Agreement or Guarantee Agreement, if any, or at such other address as such party shall have designated by notice to the party giving such notice or making such request.

Section 7.02. Evidence of Authority. The Borrower and the Guarantor, if any, shall furnish to the Bank sufficient evidence of the authority of the person or persons who will sign the applications provided for in Article IV or who will, on behalf of the Borrower or the Guarantor, if any, take any other action or execute any other documents required or permitted to be taken or executed by the Borrower under the Loan Agreement or by the Guarantor under the Guarantee Agreement, if any, and the authenticated specimen signature of each such person.

Section 7.03. Action on Behalf of the Borrower or Guarantor. Any action required or permitted to be taken, and any documents required or permitted to be executed, under the Loan Agreement or Guarantee Agreement, if any, on behalf of the Borrower or Guarantor, as the case may be, may be taken or executed by the representative of the Borrower or Guarantor designated in the Loan Agreement or the Guarantee Agreement, if any, for the purposes of this Section or any person thereunto authorized in writing by him. Any modification or amplification of the provisions of the Loan Agreement or the Guarantee Agreement, if any, may be agreed to on behalf of the Borrower or Guarantor, as the case may be, by written instrument executed on behalf of the Borrower or the Guarantor by the representatives so designated or any person thereunto authorized in writing by him; provided that, in the opinion of such representative, such modification or amplification is reasonable in the circumstances and will not substantially increase the obligations of the Borrower under the Loan Agreement or of the Guarantor under the Guarantee Agreement, as the case may be. The Bank may accept the execution by such representative or other person of any such instrument as conclusive evidence that in the opinion of such representative any modification or amplification of the provisions of the Loan Agreement or the Guarantee Agreement, if any, effected by such instrument is reasonable in the circumstances and will not substantially increase the obligations of the Borrower thereunder.

Section 7.04. Withholding of Payments to Members on Shares. (a) If the member in whose territory the Project is to be carried out ceases to be a member of the Bank, any amount due to the member for its shares repurchased by the Bank shall be withheld so long as the member, its central bank or any of its agencies, instrumentalities or political subdivisions remain liable to the Bank, under the Loan Agreement or the Guarantee Agreement, if any, or under any other loan agreement or guarantee agreement between the Borrower and the Bank, or under any bond delivered pursuant to any such agreement, and such amount may, at the option of the Bank, be applied on any such liability as it matures.

(b) In the event of a distribution of the assets of the Bank, the member in whose territory the Project is to be carried out shall not be entitled to receive its share in such distribution until it has settled all of its obligations to the Bank including its obligations under the Loan Agreement or the Guarantee Agreement, if any, or under any other loan agreement or guarantee agreement between the Borrower and the Bank, or under any bond delivered pursuant to any such agreement.

Fourth Schedule—continued

Section 7.05. Execution in Counterparts. The Loan Agreement and the Guarantee Agreement, if any, may be executed in several counterparts, each of which shall be an original. All such counterparts shall collectively be but one instrument.

ARTICLE VIII

Effective Date; Termination

Section 8.01. Conditions Precedent to Effectiveness of Loan Agreement and Guarantee Agreement. The Loan Agreement and Guarantee Agreement, if any, shall not become effective until evidence satisfactory to the Bank shall have been furnished to the Bank that

(a) the execution and delivery of the Loan Agreement on behalf of the Borrower have been duly authorized or ratified by all necessary corporate and governmental action;

(b) where there is a Guarantee Agreement, that the execution and delivery of the Guarantee Agreement on behalf of the Guarantor have been duly authorized or ratified by all necessary governmental action;

(c) where the Borrower is not a member, if the Bank shall so request, that the condition of the Borrower, as represented and warranted to the Bank at the date of the Loan Agreement, has undergone no material adverse change between such date and the date agreed upon between the Borrower and the Bank for the purposes of this Section; and

(d) all other events specified in the Loan Agreement as conditions to its effectiveness have occurred.

Section 8.02. Legal Opinions. As part of the evidence to be furnished pursuant to Section 8.01, the Borrower shall furnish to the Bank an opinion or opinions satisfactory to the Bank of counsel acceptable to the Bank showing:

(a) on behalf of the Borrower, that the Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and constitutes a valid and binding obligation of the Borrower in accordance with its terms;

(b) on behalf of the Guarantor, if any, that the Guarantee Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Guarantor and constitutes a valid and binding obligation of the Guarantor in accordance with its terms; and

(c) such other matters as shall be specified in the Loan Agreement.

Section 8.03. Effective Date. Except as shall be otherwise agreed by the Bank and the Borrower, the Loan Agreement and the Guarantee Agreement, if any, shall come into force and effect on the date upon which the Bank dispatches to the Borrower and to the Guarantor, if any, notice of its acceptance of the evidence required by Section 8.01.

Section 8.04. Termination of Loan Agreement and Guarantee Agreement for Failure to Become Effective. If the Loan Agreement shall not have come into force and effect by the date specified in the Loan Agreement for the purposes of this Section, the Loan Agreement and the Guarantee Agreement, if any, and all obligations of the parties thereunder shall terminate, unless the Bank, after consideration of the reasons for the delay, establishes a later date for the purposes of this Section. The Bank shall promptly notify the Borrower and the Guarantor, if any, of such later date.

Section 8.05. Termination of Loan Agreement and Guarantee Agreement on Full Payment. If and when the entire principal amount of the Loan and all interest, service fee and other charges which shall have accrued on the Loan shall have been paid, the Loan Agreement and the Guarantee Agreement, if any, and all obligations of the parties thereunder shall forthwith terminate.

ARTICLE IX

Definitions; Headings

Section 9.01. Definitions. Except where the context otherwise requires, the following terms have the following meanings wherever used in these Regulations or in a loan agreement or guarantee agreement to which these Regulations have been made applicable:

1. The term “Bank” means Asian Development Bank.

2. The term “member” means a member of the Bank.

Fourth Schedule—continued

3. The term “Loan Agreement” means the particular loan agreement to which these Regulations shall have been made applicable, as amended from time to time; and such term includes these Regulations as thus made applicable, all agreements supplemental to the Loan Agreement and all schedules to the Loan Agreement.

4. The term “Loan” means the loan provided for in the Loan Agreement.

5. The term “Guarantee Agreement” means the agreement between any entity and the Bank providing for the guarantee of the Loan, as amended from time to time; and such term includes these Regulations as thus made applicable, all agreements supplemental to the Guarantee Agreement and all schedules to the Guarantee Agreement.

6. The term “Borrower” means the party to the Loan Agreement to which the Loan is made; and the term “Guarantor” means the party to the Guarantee Agreement, if any, which guarantees the Loan.

7.  The term “currency” means such coin or currency as at the time referred to is legal tender for the payment of public and private debts in the territories of the government referred to, whether or not such government is a member.

8. The term “dollars” and the sign “$” mean dollars in currency of the United States of America.

9. The term “Loan Account” means the account on the books of the Bank to which the amount of the Loan is to be credited as provided in Section 2.01.

10. The term “Project” means the project or projects or programme or programmes for which the Loan is granted, as described in the Loan Agreement and as the description thereof shall be amended from time to time by agreement between the Bank and the Borrower.

11. The term “goods” means equipment, supplies and services which are required for the Project. Wherever reference is made to the cost of any goods, such cost shall be deemed to include the cost of importing such goods into the territories of the member in whose territory the Project is to be carried out.

12. The term “external debt” means any debt payable in any medium other than currency of the member in whose territory the Project is to be carried out whether such debt is or may become payable absolutely or at the option of the creditor in such other medium.

13. The term “Effective Date” means the date on which the Loan Agreement and the Guarantee Agreement, if any, shall come into force and effect as provided in Section 8.03.

14. The term “lien” shall include mortgages, pledges, charges, privileges and priorities of any kind.

15. The term “assets” shall include revenues and property of any kind.

16. The terms “tax” and “taxes” shall include imposts, levies, fees and duties of any nature, whether in effect at the date of the Loan Agreement or Guarantee Agreement, if any, or thereafter imposed.

17. Wherever reference is made to the incurring of debt such reference shall include the assumption and guarantee of debt.

18. The term “Special Funds resources” means the resources of the Bank’s Consolidated Special Funds and includes the resources listed in Article 20 of the Articles of Agreement of the Bank.

19. The term “convertible currency” means any currency so designated by the Bank at any given time.

References in these Regulations to Articles or Sections are to Articles or Sections of these Regulations; references in a loan agreement or guarantee agreement to Articles or Sections are to Articles or Sections of such agreement.

Section 9.02. Headings. The headings of the Articles and Sections and the Table of Contents are inserted for convenience of reference only and are not a part of these Regulations.