CONFORMED COPY

LOAN NUMBER 1214 MA

PROJECT AGREEMENT

(Second Kuala Lumpur Urban Transport Project)

between

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

and

THE CITY OF KUALA LUMPURand

THE URBAN DEVELOPMENT AUTHORITY

Dated March 11, 1976

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PROJECT AGREEMENT

AGREEMENT, dated March 11, 1976, between INTERNATIONAL BAINK

FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank)

and THE CITY OF KUALA LUMPUR (hereinafter called KLC) and THE

URBAN DEVELOPMENT AUTHORITY (hereinafter called UDA).

WHEREAS by the Loan Agreement of even date herewith between

Malaysia (hereinafter called the Borrower) and the Bank, the Bank

has agreed to make available to the Borrower an amount in various

currencies equivalent to twenty-six million dollars ($26,000,000),

on the terms and conditions set forth in the Loan Agreement, but

only on condition that KLC and UDA agree to undertake such obliga-

tions toward the Bank as hereinafter set forth; and

WHEREAS KLC and UDA, in consideration of the Bank's entering

into the Loan Agreement with the Borrower, have agreed to undertake

the obligations hereinafter set forth;

NOW THEREFORE the parties hereto hereby agree as follows:

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ARTICLE I

Definitions

Section 1.01. Wherever used in this Agreement, unless the

context shall otherwise require, the several terms defined in the

Loan Agreement and the General Conditions (as so defined) have

the respective meanings therein set forth.

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ARTICLE II

Execution of the Project

Section 2.01. KLC shall together with the Borrower carry out

Part A of the Project, together with the Borrower and UDA carry

out Part C(i)(a) of the Project, and carry out Parts B(ii) and

(iii) and C(ii)(a) of the Project described in Schedule 2 to the

Loan Agreement and UDA shall together with the Borrower and KLC

carry out Part C(i)(a) of such Project and carry out Part B(iv)

and (v) of such Project with due diligence and efficiency and in

conformity with appropriate administrative, financial and engi-

neering practices, and shall provide, or cause to be provided,

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

resources required for the purpose.

Section 2.02. In order to assist KLC and UDA in carrying out

the engineering design for and in implementing the Project KLC

and UDA shall employ engineering consultants and advisors whose

qualifications, experience and terms and conditions of employment

shall be satisfactory to the Bank and KLC or UDA or both, as the

case may be.

Section 2.03. Except as the Bank shall otherwise agree, the

goods, works and services (other than consultants' services) for

the Project to be financed out of the proceeds of the Loan, shall

be procured in accordance with the provisions of Schedule 4 to the

Loan Agreement.

Section 2.04. (a) KLC and UDA undertake to insure, or make

adequate provision for the insurance of, the imported goods to

be financed out of the proceeds of the Loan made available to them

by the Borrower against hazards incident to the acquisition, trans-

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

and for such insurance any indemnity shall be payable in a currency

freely usable by KLC and UDA to replace or repair such goods.

(b) Except as the Bank may otherwise agree, KLC and UDA shall

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

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

for the Project.

Section 2.05. (a) KLC and UDA shall furnish to the Bank,

promptly upon their preparation, the plans, specifications, reports,

contract documents and work and procurement schedules for the Proj-

ect, and any substantial modifications thereof or additions thereto,

in such detail as the Bank shall reasonably request.

(b) KLC and UDA: (i) shall maintain records adequate to rec-

ord the progress of the Project (including the cost thereof) and

to identify the goods and services financed out of the proceeds

of the Loan made available to them by the Borrower, and to disclose

the use thereof in the Project; (ii) shall enable the Bank's repre-

sentatives to visit the facilities and construction sites included

in the Project and to examine the goods financed out of such proceeds

and any relevant records and documents; and (iii) shall furnish to

the Bank all such information as the Bank shall reasonably request

concerning the Project, the expenditure of the proceeds of the

Loan so made available to them and the goods and services financed

out of such proceeds.

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Section 2.06. (a) KLC and UDA shall, at the request of the

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

the Project, the performance of its obligations under this Agree-

ment, and other matters relating to the purposes of the Loan.

(b) KLC and UDA shall promptly inform the Bank of any con-

dition which interferes or threatens to interfere with, the pro-

gress of the Project, the accomplishment of the purposes of the

Loan, or the performance by KLC and UDA of their obligations under

this Agreement.

Section 2.07. KLC shall implement a program acceptable to the

Bank for introducing, not later than July 1, 1977 or such other

date as may be agreed between the Bank and KLC, area road pricing

in the area under its jurisdiction.

Section 2.08. (a) KLC and UDA shall monitor and evaluate the

progress of Part B(iv) of the Project in accordance with the per-

formance indicators and targets set forth in Part 2 of Schedule 5

of the Loan Agreement and any additional indicators and targets

established after exchanging views with the Bank.

(b) KLC shall, in cooperation with the Borrower, monitor

and evaluate the progress of Parts A and B(i), (ii) and (iii) of

the Project in accordance with the performance indicators and tar-

gets set forth in Part 1 of Schedule 5 of the Loan Agreement.

Section 2.09. (a) KLC shall ensure that plots of land shall

be sold for the purposes of Part B(iv) of the Project on terms

and conditions established after exchanging views with the Bank.

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(b) KLC and UDA shall select settlers as beneficiaries of

Part B(iv) of the Project according to criteria acceptable to the

Bank.

Section 2.10. KLC shall implement as part of the Project,

lanes, routes and priorities for high-occupancy vehicles, and shall

not substantially modify them without a prior exchange of views

with the Bank.

Section 2.11. KLC and UDA shall ensure that:

(a) site selections for the third phase referred to in Part

B(iv) of the Project shall be made after exchanging views with the

Bank on alternative sites evaluated according to criteria to be

established in agreement with the Bank;

(b) site layouts and engineering designs for the second

and third phases referred to in Part B(iv) of the Project shall be

established in agreement with the Bank; and

(c) design standards for the second and third phases referred

to in Part B(iv) of the Project shall be no higher than those for

the first phase.

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ARTICLE III

Management and Operations of KLC and UDA

Section 3.01. KLC shall ensure that its Traffic Management

Department at all times manages its affairs, plans its future

expansion and carries on its operations, all in accordance with

sound traffic management practices and under the supervision

of experienced and competent management assisted by adequate,

experienced and competent staff.

Sect. 1 3.02. UDA shall ensure that its Sites and Services

and Resettlement Section at all times manages its affairs, plans

its future expansion and carries on its operations, all in accord-

ance with sound administrative and management practices and under

the supervision of experienced and competent management assisted

by adequate, experienced and competent staff.

Section 3.03. KLC and UDA shall cooperate with the Borrower

for the purpose of carrying out Section 4.02 of the Loan Agreement.

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ARTICLE IV

Financial Covenants

Section 4.01. KLC and UDA shall maintain records adequate to

reflect in accordance with consistently maintained appropriate

accounting practices their operations and financial condition in

relation to the Project.

Section 4.02. KLC and UDA shall: (i) have the accounts and

financial statements (balance sheets, statements of income and

expenses and related statements) for each fiscal year relating to

the Project audited, in accordance with appropriate auditing

principles consistently applied, by the Auditor General of Malaysia

or other independent auditors acceptable to the Bank; (ii) furnish

to the Bank through HP & PTU as soon as available, but in any case

not later than nine months after the end of each such year, (A)

certified copies of its financial statements for such year as so

audited and (B) the report of such audit by said auditors, of such

scope and in such detail as the Bank shall have reasonably requested;

and (iii) furnish to the Bank through HP and PTU such other informa-

tion concerning such accounts and financial statements and the

audit thereof as the Bank shall from time to time reasonably request.

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ARTICLE V

Effective Date; Termination;Cancellation and Suspension

Section 5.01. This Agreement shall come into force and effect

on the date upon which the Loan Agreement becomes effective.

Section 5.02. (a) This Agreement and all obligations of the

Bank and of KLC and UDA thereunder shall terminate on the earlier

of the following two dates:

(i) the date on which the Loan Agreement shall

terminate in accordance with its terms; or

(ii) a date 20 years after the date 3f this Agreement.

(b) If the Loan Agreement terminates in accordance with its

terms before the date specified in paragraph (a)(ii) of this Sec-

tion, the Bank shall promptly notify KLC and UDA of this event.

Section 5.03. All the provisions of this Agreement shall

continue in full force and effect notwithstanding any cancellation

or suspension under the Loan Agreement.

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ARTICLE VI

Miscellaneous P:ovisions

Section 6.01. Any notice or request required or permitted to

be given or made under this Agreement and any agreement between

the parties contemplated by this Agreement shall be in writing.

Such notice or request shall be deemed to have been duly given or

made when it shall be delivered by hand or by mail, telegram, cable,

telex or radiogram to the party to which it is required or permitted

to be given or made at such party's address hereinafter specified

or at such other address as such party shall have designated by

notice to the party giving such notice or making such request.

The addresses so specified are:

For the Bank:

International Bank forReconstruction and Development

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

Cable address:

INTBAFRADWashington, D.C.

For KLC:

City Hall, Kuala LumpurTunku Abdul Rahman RoadKuala LumpurMalaysia

Cable address:

DATUKBANDARKuala Lumpur

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For UDA:

126 Jalan Bukit BintangKuala LumpurMalaysia

Cable address:

BANDARKuala Lumpur

Section 6.02. (a) Any action required or permitted to be taken,

and any documents required or permitted to be executed, under this

Agreement on behalf of KLC may be taken or executed by the Chief

Administrator of KLC or such other person or persons as the Chief

Administrator of KLC shall designate in writing.

(b) Any action required or permitted to be taken, and any

documents required or permitted to be executed, under this Agreement

on behalf of UDA may be taken or executed by the Chairman of UDA

or such other person or persons as the Chairman of UDA shall de-

signate in writing.

Section 6.03. (a) KLC shall furnish to the Bank sufficient

evidence of the authority and the authenticated specimen signature

of the person or persons who will, on behalf of KLC, take any

action or execute any documents required or permitted to be taken

or executed by KLC pursuant to any of the provisions of this

Agreement.

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IN WITNESS WHEREOF, the parties hereto, acting through their

representatives thereunto duly authorized, have caused this Agree-

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

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

above written.

INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT

By /s/ Gregory B. VotawActing Regional Vice President

East Asia and Pacific

THE CITY OF KUALA LUMPUR

By /s/ Anaitullah KarimA :horized Representative

THE URBAN DEVELOPMENT AUTHORITY

By /s/ Anaitullah KarimAuthorized Representative