Cancellation; Suspension; Grant Refund

Article IV. Cancellation; Suspension; Grant Refund

Section 4.01 Cancellation by the Republic of Indonesia

(a) The Republic of Indonesia may, by notice to the Commonwealth, cancel any amount of the Unwithdrawn Grant Balance, except that the Republic of Indonesia may not cancel any such amount that is subject to a Special Commitment.

Section 4.02 Suspension by the Commonwealth

(a) If any of the events specified in sub-paragraphs (i) through (vii) of this Section occurs and is continuing, after consulting the Republic of Indonesia, the Commonwealth may, by notice to the Republic of Indonesia, suspend in whole or in part the right of the Republic of Indonesia to apply for further Withdrawals from the Grant Account or for Special Commitments. Such suspension shall continue until the event (or events) which gave rise to suspension has (or have) ceased to exist, unless the Commonwealth has notified the Republic of Indonesia that such right to apply for Withdrawals or Special Commitments has been restored.

(i) Performance Failure. The Republic of Indonesia has failed to perform any obligation under the Grant Agreement.

(ii) Cross Suspension . The Commonwealth has suspended in whole or in part the right of the Republic of Indonesia to apply for Withdrawals under any other Grant Agreement with the Commonwealth because of a failure by the Republic of Indonesia to perform any of its obligations under such agreement.

(iii) Extraordinary Situation. As a result of events which have occurred after the date of the Grant Agreement, an extraordinary situation has arisen which makes it improbable that the Initiative can be carried out in accordance with the Grant Agreement or that the Republic of Indonesia will be able to perform its obligations under the Grant Agreement.

(iv) Event prior to Effectiveness. The Commonwealth has determined after the Effective Date that prior to such date but after the date of the Grant Agreement, an event has occurred which would have entitled the Commonwealth to suspend the Republic of Indonesia's right to apply for Withdrawals from the Grant Account if the Grant Agreement had been effective on the date such event occurred.

(v) Misrepresentation. A representation made by the Republic of Indonesia in or pursuant to the Grant Agreement, or any representation, document or statement furnished by the Republic of Indonesia and intended to be relied upon by the Commonwealth, in making the Grant or any Withdrawal, was incorrect in any material respect.

(vi) Assignment of Obligations; Disposition of Assets. The Republic of Indonesia (or any other entity responsible for implementing any part of the Initiative), has, without the consent of the Commonwealth:

1) assigned or transferred, in whole or in part, any of its obligations arising under or entered into pursuant to the Grant Agreement; or

2) sold, leased, transferred, assigned, or otherwise disposed of any property or assets financed wholly or in part out of the proceeds of the Grant;

provided, however, that this paragraph (vi) shall not apply with respect to transactions in the ordinary course of business, which, in the opinion of the Commonwealth:

3) do not materially and adversely affect the ability of the Republic of Indonesia (or such other entity) to perform any of its obligations arising under or entered into pursuant to the Grant Agreement or to achieve the objectives of the Initiative; and

4) do not materially and adversely affect the financial condition or operation of such other entity.

(vii) Additional Event. Any other event specified in the Grant Agreement for the purposes of this Section has occurred ("Additional Event of Suspension").

Section 4.03 Cancellation by the Commonwealth

(a) If any of the events specified in paragraphs (i) through (vii) of this Section occurs with respect to an amount of the Unwithdrawn Grant Balance, the Commonwealth may, by notice to the Republic of Indonesia, terminate the right of the Republic of Indonesia to apply for further Withdrawals with respect to such amount. Upon the giving of such notice, such amount of the Grant shall be cancelled.

(i) Suspension. The right of the Republic of Indonesia to apply for Withdrawals from the Grant Account has been suspended with respect to any amount of the Grant for a continuous period of thirty days.

(ii) Amounts not required. At any time, the Commonwealth determines, after consultation with the Republic of Indonesia, that an amount of the Grant will not be required to finance Eligible Expenses.

(iii) Fraud; Corruption; Collusion; Coercion. At any time, the Commonwealth: 1)

determines, with respect to any contract financed or to be financed out of the proceeds of the Grant, that corrupt, fraudulent, collusive or coercive practices were engaged in by representatives of the Republic of Indonesia or any recipient of the Grant proceeds during the procurement or the execution of such contract, without the Republic of Indonesia or recipient of the Grant proceeds having taken timely and appropriate action satisfactory to the Commonwealth to remedy the situation; and

2) establishes the amount of expenses under such contract which would otherwise have been eligible for financing out of the proceeds of the Grant.

(iv) Misprocurement. At any time, the Commonwealth: 1)

determines that the procurement of any contract financed or to be financed out of the proceeds of the Grant was or is inconsistent with the procedures set forth or referred to in the Grant Agreement; and

2) establishes the amount of expenses under such contract which would otherwise have been eligible for financing out of the proceeds of the Grant.

(v) Illegality. If at any time it is or will become unlawful or contrary to any Binding Law for the Commonwealth to:

1) allow all or part of a Grant to remain outstanding; 2)

make or fund a Grant or make or fund or allow to be outstanding all or part of any Unwithdrawn Grant Balance; or

3) carry out all or any of its other obligations under this Agreement or any Grant Agreement.

(vi) Closing Date. After the Closing Date, there remains an Unwithdrawn Grant Balance.

(vii) Cancellation of the grant’s Initiative. At any time the Commonwealth determines at its discretion that no further Withdrawals should be made in relation to the Grant.

Section 4.04 Amounts Subject to Special Commitment not Affected by Cancellation or Suspension by the Commonwealth

(a) No cancellation or suspension by the Commonwealth shall apply to amounts subject to any Special Commitment except as expressly provided in the Special Commitment.

Section 4.05 Effectiveness of Provisions after Cancellation or Suspension

(a) Notwithstanding any cancellation or suspension under this Article, all the Grant Agreement shall continue in full force and effect except as specifically provided in these General Conditions.

Section 4.06 Grant Refund

(a) If the Commonwealth determines that an amount of the Withdrawn Grant Balance has been used in a manner inconsistent with the Grant Agreement, the Republic of Indonesia shall, upon notice by the Commonwealth to the Republic of Indonesia, promptly refund such amount to the Commonwealth. Such inconsistent use shall include use of such amount to:

(i) make a payment for an expense that is not an Eligible Expense; or (ii) finance a contract during the procurement or execution of which corrupt,

fraudulent, collusive or coercive practices were engaged in by representatives of the Republic of Indonesia (or other recipient of such amount of the Withdrawn Grant Balance), without the Republic of Indonesia (or other such recipient) having taken timely and appropriate action satisfactory to the Commonwealth to remedy the situation.

(b) If the Commonwealth has issued a notice under any Grant Agreement requiring the immediate repayment of an amount of the Withdrawn Grant Balance under that Grant Agreement, the Commonwealth may issue a notice requiring the refund of an amount of the Withdrawn Grant Balance. Upon the receipt of such notice, the Republic of Indonesia shall promptly refund such amount to the Commonwealth.

(c) Except as the Commonwealth may otherwise determine, the Commonwealth shall cancel all amounts refunded pursuant to this Section.