Conformed Copy - L3022 - Tianjin Light Industry Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3022-CHA (Tianjin Light Industry Project) between PEOPLE'S REPUBLIC OF CHINA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated September 8, 1989 LOAN NUMBER 3022-CHA LOAN AGREEMENT AGREEMENT, dated September 8, 1989, between PEOPLE'S REPUBLIC OF CHINA (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project; (B) Tianjin Municipality has adopted a Development Program and Strategy for the Textile Dyeing and Finishing, Pulp and Paper and Packaging Sub-sectors; and (C) Part B.1 of the Project will be carried out by Tianjin Municipality and Parts A and B.2 of the Project will be carried out by China Investment Bank (CIB), all with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Tianjin Municipality the proceeds of the Loan as provided in this Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement and in the Tianjin Project Agreement and CIB Project Agreement of even date herewith between the Bank and Tianjin Municipality and CIB, respectively; Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth in Schedule 5 to this Agreement (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Charter" means the Charter of China Investment Bank approved by the Borrower's State Council on December 4, 1981; (b) "CIB" means China Investment Bank, a state enterprise established pursuant to its Charter; (c) "CIB Project Agreement" means the agreement of even date herewith between the Bank and CIB, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the CIB Project Agreement; (d) "eligible industrial sub-sector" means a light industrial sub-sector agreed between the Bank and Tianjin Municipality pursuant to paragraph 5 of Schedule 2 to the Tianjin Project Agreement; (e) "foreign currency" means any currency other than the currency of the Borrower; (f) "free-limit Sub-loan" means a Sub-loan which qualifies as a free-limit Sub-loan pursuant to the provisions of paragraph 2 (b) of Schedule 1 to the CIB Project Agreement; (g) "Investment Enterprise" means an enterprise to which CIB proposes to make or has made a Sub-loan; (h) "Investment Project" means a specific technological restructuring project in an eligible industrial sub-sector to be carried out by an Investment Enterprise utilizing the proceeds of a Sub-loan; (i) "Lending Procedures" means the Lending Procedures (on a Trial Basis) of CIB, approved by the Borrower's Ministry of Finance on April 2, 1983; (j) "Prior Sub-loan" means a Sub-loan as defined in Section 1.02 (e) (i) of the Development Credit Agreement, dated December 28, 1982, Section 1.02 (e) of the Development Credit Agreement, dated June 25, 1984, Section 1.02 (f) of the Development Credit Agreement, dated April 16, 1986, and Section 1.02 (f) of Development Credit Agreement, dated March 16, 1987, between the Borrower and the Association for the Industrial Credit Project, Second Industrial Credit Project, Third Industrial Credit Project and Fourth Industrial Credit Project, respectively; (k) "Renminbi" means the currency of the Borrower; (l) "Statement of Operating and Financial Policies" and "Statement of Development Strategy" mean the Statement of Operating and Financial Policies and Development Strategy Statement of CIB, respectively, as approved by its Board of Directors in July 1986 and as revised thereafter with the Bank's concurrence; (m) "Subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by CIB or by any one or more Subsidiaries of CIB or by CIB and one or more of its Page 3 Subsidiaries; (n) "Subsidiary Loan Agreement" means the agreement to be entered into between Tianjin Municipality and CIB pursuant to Section 2.02 (a) of the Tianjin Project Agreement, as the same may be amended from time to time, and such term includes all schedules supplemental to the Subsidiary Loan Agreement; (o) "Sub-loan" means a loan made or proposed to be made by CIB to an Investment Enterprise for an Investment Project out of the equivalent of the proceeds of the Loan relent or made available to CIB under the Subsidiary Loan Agreement; (p) "Supplementary Regulations" means the "Regulations Supplementary to the Charter of China Investment Bank," approved by CIB's Board of Directors on October 6, 1982; (q) "Tianjin Project Agreement" means the agreement between the Bank and Tianjin Municipality of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Tianjin Project Agreement; and (r) "Tianjin Special Account" and "CIB Special Account" mean the accounts referred to in Section 2.02 (b) of this Agreement, "Special Accounts" means the Tianjin Special Account and the CIB Special Account, collectively, and "Special Account" means either of the Special Accounts. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount in various currencies equivalent to one hundred fifty-four million dollars ($154,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for: (i) amounts paid (or if the Bank shall so agree, amounts to be paid) by CIB on account of withdrawals made by an Investment Enterprise under a Sub-loan to meet the reasonable cost of goods and services required for the Investment Project in respect of which the withdrawal from the Loan Account is requested; (ii) amounts in respect of interest during construction payable in foreign currency by an Investment Enterprise under a Sub-loan; and (iii) expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for Part B of the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower shall, for the purposes of: (i) Part B.1 of the Project; and (ii) Parts A and B.2 of the Project, respectively, open and maintain in dollars two separate special accounts in banks and on terms and conditions satisfactory to the Bank, to be known as the Tianjin Special Account and the CIB Special Account, respectively. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1995 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Page 4 Interest Period, calculated at the rate applicable during such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the preceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter." "(c) (iii) `Quarter' means a three-month period commencing on January 1, April 1, July 1 or October 1 in a calendar year." (e) Notwithstanding the provisions of paragraph (a) of this Section, the interest rate for the Interest Period commencing in the first Semester of 1989 shall be seven and sixty-five hundredths percent (7.65%). Section 2.06. Interest and other charges shall be payable semi-annually on April 1 and October 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restriction upon any of its other obligations under the Loan Agreement, shall: (i) cause Tianjin Municipality and CIB to perform in accordance with the provisions of the Tianjin Project Agreement and the CIB Project Agreement, respectively, all the obligations of Tianjin Municipality and CIB therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable Tianjin Municipality and CIB to perform such obligations, and shall not take or permit to be taken any Page 5 action which would prevent or interfere with such performance; and (ii) cause Tianjin Municipality to enable Investment Enterprises to convert sufficient amounts of Renminbi to foreign currency as and when needed to make payments to CIB under their Sub-loans. (b) The Borrower shall make the proceeds of the Loan available to Tianjin Municipality on terms and conditions satisfactory to the Bank. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods and services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 2 to the Tianjin Project Agreement and the CIB Project Agreement. Section 3.03. The Bank and the Borrower hereby agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively): (a) in respect of Part B.1 of the Project, shall be carried out by Tianjin Municipality pursuant to Section 2.04 of the Tianjin Project Agreement; and (b) in respect of Parts A and B.2 of the Project, shall be carried out by CIB pursuant to Section 2.04 of the CIB Project Agreement. ARTICLE IV Financial and Other Covenants Section 4.01. (a) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made; and (iii) enable the Bank's representatives to examine such records. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) (i) of this Section and those for the Special Accounts for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested, including a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. Section 4.02. The Borrower shall, from time to time, at the request of any one of them, exchange views with the Bank and CIB on the interest rates to be charged by CIB in its lending operations in light of CIB's cost of funds and profitability and interest and inflation rates in China and internationally. Page 6 ARTICLE V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional events are specified: (a) Tianjin Municipality or CIB shall have failed to perform any of its obligations under the Tianjin Project Agreement or CIB Project Agreement, respectively. (b) As a result of events which have occurred after the date of the Loan Agreement, an extraordinary situation shall have arisen which shall make it improbable that Tianjin Municipality or CIB will be able to perform its obligations under the Tianjin Project Agreement or CIB Project Agreement, respectively. (c) The Charter, Supplementary Regulations or Lending Procedures shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of CIB to perform any of its obligations under the CIB Project Agreement. (d) A change shall have been made in CIB's Statement of Operating and Financial Policies or Statement of Development Strategy without the Bank's concurrence. (e) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of CIB or for the suspension of its operations. Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified: (a) any event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraphs (c), (d) or (e) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the Borrower's State Council has approved the Loan Agreement; and (b) the Subsidiary Loan Agreement has been executed on behalf of Tianjin Municipality and CIB. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Tianjin Project Agreement has been duly authorized or ratified by Tianjin Municipality, and is legally binding upon Tianjin Municipality in accordance with its terms; (b) that the CIB Project Agreement has been duly authorized or ratified by CIB, and is legally binding upon CIB in accordance with its terms; and (c) that the Subsidiary Loan Agreement has been duly authorized or ratified by Tianjin Municipality and CIB and is legally binding upon Tianjin Municipality and CIB in accordance with its terms. Page 7 Section 6.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Sanlihe Beijing 100820 People's Republic of China Cable address: Telex: FINANMIN 22486 MFPRC CN Beijing For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement 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. PEOPLE'S REPUBLIC OF CHINA By /s/ Zhao Xixin Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ A. Karaosmanoglu Regional Vice President Asia SCHEDULE 1 Page 8 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Sub-loans 141,200,000 100% of amounts disbursed by CIB for foreign expenditures (including interest during construction) and for local expendi- tures (ex- factory) (2) Goods for 10,490,000 100% of foreign Part B.1 of expenditures, the Project 100% of local expenditures (ex-factory cost) and 75% of local ex- penditures for other items pro- cured locally (3) Consultants' 2,260,000 100% services and overseas training for Part B.1 of the Project (4) Overseas 50,000 100% training for Part B.2 of the Project ___________ TOTAL 154,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower which, for purposes of Category (1) only, shall have been procured in accordance with paragraph 1 of Schedule 2 to the CIB Project Agreement. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement except that withdrawals, in an aggregate amount not exceeding the equivalent of $8,000,000 may be made in respect of Categories (1) and (2) on account of payments made for expenditures before that date but after December 1, 1988; or Page 9 (b) a Sub-loan unless the Sub-loan has been made in accordance with the procedures and on the terms and conditions set forth or referred to in Schedule 1 to the CIB Project Agreement. SCHEDULE 2 Description of the Project The objective of the Project is to assist the Borrower and Tianjin Municipality in the restructuring of light industry, by supporting the implementation of Tianjin Municipality's Development Program and Strategy for the Textile Dyeing and Finishing, Pulp and Paper and Packaging Subsectors. In particular, the Project aims to assist Tianjin Municipality in: (a) accelerating policy and system reforms in industry; (b) modernizing and restructuring enterprises based on economic criteria; (c) strengthening technological infrastructure; and (d) improving internal enterprise management systems. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A Financial Assistance Financing of specific technological restructuring projects through Sub-loans to enterprises in the light industrial sector in Tianjin. Part B Institutional Support Strengthening the institutions in Tianjin which support light industrial development and assisting Tianjin Municipality in the development and implementation of its light industrial strategy, through provision of equipment (including computer hardware and software), consultants' services and staff training in such areas as: 1. (a) Strengthening of support institutions for technological infrastructure, including sub-sectoral design and research institutes and vocational training schools; (b) preparing an overall industrial strategy for Tianjin; (c) analyzing and recommending efficiency improvements in internal enterprise management systems in textile and pulp and paper subsectors; and (d) analyzing the efficiency of enterprise operations in the pulp and paper subsector, and making recommendations on the restructuring of the subsector, including prefeasibility of centralized pulping and waste paper processing plants. 2. Upgrading of CIB staff at the Tianjin branch. * * * The Project is expected to be completed by December 31, 1994. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (Expressed in dollars)* October 1, 1994 2,840,000 April 1, 1995 2,950,000 October 1, 1995 3,060,000 April 1, 1996 3,175,000 October 1, 1996 3,300,000 April 1, 1997 3,425,000 October 1, 1997 3,555,000 April 1, 1998 3,690,000 October 1, 1998 3,825,000 April 1, 1999 3,975,000 October 1, 1999 4,125,000 April 1, 2000 4,280,000 Page 10 October 1, 2000 4,440,000 April 1, 2001 4,610,000 October 1, 2001 4,785,000 April 1, 2002 4,970,000 October 1, 2002 5,155,000 April 1, 2003 5,350,000 October 1, 2003 5,555,000 April 1, 2004 5,765,000 October 1, 2004 5,985,000 April 1, 2005 6,210,000 October 1, 2005 6,445,000 April 1, 2006 6,690,000 October 1, 2006 6,945,000 April 1, 2007 7,210,000 October 1, 2007 7,485,000 April 1, 2008 7,765,000 October 1, 2008 8,060,000 April 1, 2009 8,375,000 ___________________ * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment The following premiums are specified for the purposes of Section 3.04 (b) of the General Conditions: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment multiplied by: Not more than three years 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than 11 years before maturity More than 11 years but not 0.80 more than 16 years before maturity More than 16 years but not 0.90 more than 18 years before maturity More than 18 years before 1.00 maturity SCHEDULE 4 Special Accounts 1. For the purposes of this Schedule: (a) the term "eligible Categories" means, for the Tianjin Special Account, Categories (2) and (3) and, for the CIB Special Account, Categories (1) and (4), as Page 11 set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; (c) the term "Authorized Allocation" means an amount equivalent to, for the Tianjin Special Account, $800,000, and for the CIB Special Account, $8,000,000, to be withdrawn from the Loan Account and deposited into the respective Special Account pursuant to paragraph 3 (a) of this Schedule; and (d) for the CIB Special Account, notwithstanding the provisions of paragraph 2 (b) of Schedule 1 to the CIB Project Agreement, payments for expenditures to be financed out of the proceeds of free-limit Sub-loans may be made out of the CIB Special Account before the Bank shall have authorized withdrawals from the Loan Account in respect thereof. Such expenditures, however, shall qualify as eligible expenditures only if the Bank shall subsequently authorize such withdrawals. 2. Except as the Bank shall otherwise agree, payments out of the Special Accounts shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that a Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish said Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation for said Special Account, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into said Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Bank requests for replenishment of said Special Account at such intervals as the Bank shall specify. On the basis of such requests, the Bank shall withdraw from the Loan Account and deposit into said Special Account such amounts as shall be required to replenish said Special Account with amounts not exceeding the amount of payments made out of said Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of a Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into a Special Account shall be made by the Bank when either of the following situations first arises: (i) the Bank shall have determined that all further withdrawals in respect of the respective Parts of the Project should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Loan allocated to the eligible Categories for said Special Account, minus the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the respective Part of the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation for said Special Page 12 Account. (b) Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories for the respective Parts of the Project shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in said Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of a Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may reasonably request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that any amount outstanding in a Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount for crediting to the Loan Account. SCHEDULE 5 Modifications of the General Conditions For purposes of this Agreement, the provisions of the General Conditions are modified as follows: 1. The last sentence of Section 3.02 is deleted. 2. The following sub-paragraph is added to Section 2.01: "21. The term 'CIB Project Agreement' has the meaning set forth in paragraph (c) of Section 1.02 of the Loan Agreement." 3. The words "the Bank may, by notice to the Borrower and the Guarantor, 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" set forth at the end of Section 6.03 are deleted and the following is substituted therefor: "or (f) by the date specified in sub-paragraph 3 (c) of Schedule 1 to the CIB Project Agreement, the Bank shall, in respect of any portion of the Loan: (i) have received no applications or requests permitted under sub-paragraphs (a) or (b) of said paragraph; or (ii) have denied any such applications or requests, the Bank may, by notice to the Borrower and the Guarantor, terminate the right to submit such applications or approvals or to make withdrawals from the Loan Account, as the case may be, with respect to such amount or portion of the Loan. Upon the giving of such notice, such amount or portion of the Loan shall be cancelled."