CREDIT NUMBER 71 HO Development Credit Agreement (North Road Project) BETWEEN REPUBLIC OF HONDURAS AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED FEBRUARY 2, 1965 CREDIT NUMBER 71 HO Development Credit Agreement (North Road Project) BETWEEN REPUBLIC OF HONDURAS AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED FEBRUARY 2, 1965 ÿþAGREEMENT, dated February 2, 1965, between RE- PUBLIC 0F HONDURAS (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT AssOCIATIoN (hereinafter called the Association). WHEREAS the Association has agreed, on the basis of the financing arrangements described in the Recitals to the agreement of even date herewith (hereinafter called the Loan Agreement) between the Borrower and the Interna- tional Bank for Reconstruction and Development (herein- after called the Bank), to make a credit to the Borrower in an amount in various currencies equivalent to three million five hundred thousand dollars ($3,500,000) on the terms and conditions hereinafter set forth; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I Credit Regulations; Special Definition SECTION 1.01. The parties to this Agreement accept all. the provisions of Development Credit Regulations No. I of the Association dated June 1, 1961, with the same force and effect as if they were fully set forth herein subject, however, to the following modifications thereof (said De- velopment Credit Regulations No. I as so modified being hereinafter called the Regulations): (a) The second sentence of Section 2.02 is deleted. (b) Section 3.01 is deleted and the following new section is substituted therefor: "Section 3.01. Currencies in which Cost of Goods is to be Paid and Proceeds of the Credit are to be Withdrawn. 4 (a) Except as the Borrower and the Association shall otherwise agree, the cost of goods financed out of the proceeds of the Credit shall be paid in the respective currencies of the countries from which such goods are acquired. (b) The proceeds of the Credit shall be withdrawn from the Credit Account: (i) on account of expenditures in the currency of the Borrower or for goods produced in (including services supplied from) the ter- ritories of the Borrower, in such currency or currencies as the Association shall from time to time reasonably select; (ii) in all other cases, in the currency in which the cost of the goods financed out of such proceeds has been paid or is payable. (c) The Borrower and the Association may from time to time agree on any other currency in which withdrawals shall be made." (c) A new Section 3.04 is inserted after Section 3.03 as follows: "Section 3.04. Purchase of Currency of Withdrawal with Other Currency. If withdrawal shall be made in any currency which the Association shall have purchased with another cur- rency for the purpose of such withdrawal, the portion of the Credit so withdrawn shall be deemed to have been withdrawn from the Credit Account in such other currency for the purposes of Section 3.03." (d) Section 3.04 is renumbered as Section 3.05. SECTION 1.02. Except where the context otherwise re- quires, the terms defined in the Loan Agreement shall have the same meanings as in such Loan Agreement wherever used in the Development Credit Agreement. 5 SECTION 1.03. Except where the context otherwise requires, the torm "Project" wherever used in the Develop- ment Credit Agreement means the project for which the Credit is made as described in Schedule 2 of the Loan Agreement and as the description thereof shall be amended from time to time by agreement among the Borrower, the Inter-American Development Bank, the Association and the Bank. ARTICLE II The Credit SECTION 2.01. The Association agrees to make available to the Borrower, on the terms and conditions in the Develop- ment Credit Agreement set forth or referred to, a develop- ment credit in an amount in various currencies equivalent to three million five hundred thousand dollars ($3,500,000). SECTION 2.02. The Association shall open a Credit Ac- count on its books in the name of the Borrower and shall credit to such Credit Account the amount of the Credit. The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Development Credit Agreement. SECTION 2.03. Except as the Borrower and the Associa- tion shall otherwise agree, the Borrower shall be entitled, subject to the provisions of the Development Credit Agree- ment, to withdraw from the Credit Account: (a) the equivalent of a percentage or percentages to be established from time to time by agreement between the Borrower and the Association of such amounts as shall have been expended for the reasonable cost of goods required for carrying out the Project; and (b) if the Association shall so agree, such amounts as shall be required by the Borrower to meet payments under subsection (a) hereof; 6 provided, however, that withdrawals shall not be made on account of expenditures prior to the date of this Agree- ment; and provided, further, that withdrawals shall not be made with respect to any part of the Project until consultants are em- ployed in accordance with Section 4.01 of this Agreement to provide the engineering services referred to in Part C of the Project. SECTION 2.04. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. The Borrower shall also pay to the Association a service charge at the rate of one-half of one per cent (1/2 of 1%) on the principal amount of any special commitment entered into by the Association pursuant to Section 4.02 of the Regulations and outstanding from time to time. SECTION 2.05. Service charges shall be payable semi- annually on April 1 and October 1 in each year. SECTION 2.06. The Borrower shall repay the principal amount of the Credit in semi-annual instalments payable on each April 1 and October 1 commencing April 1, 1975 and ending October 1, 2014, each instalment to and including the instalment payable on October 1, 1984 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each instalment thereafter to be one and one-half per cent (1 %) of such principal amount. ARTICLE III Use of Proceeds of the Credit SECTION 3.01. The Borrower shall cause the proceeds of the Credit to be applied exclusively to financing the cost of 7 goods required to carry out the Project. The specific goods to be financed out of the proceeds of the Credit and the methods and procedures for procurement of such goods shall be determined by agreement between the Borrower and the Association, subject to modification by further agreement between them. SECTION 3.02. Except as the Borrower and the Associa- tion shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Credit to be used in the territories of the Borrower exclusively in the carrying out of the Project. ARTICLE IV' Particular Covenants SECTION 4.01. (a) Sections 5.01, 5.02, 5.03, 5.04, 5.05 and 5.06 of the Loan Agreement are hereby incorporated into this Agreement with the same force and effect as if they were fully set forth herein, provided, however, that: (i) all references to the Bank in such Sections or any of them shall be deemed to be references to the Association; (ii) all references in such Sections or any of them to the Loan shall be deemed to be references to the Credit; and (iii) all references to the Credit in such Sections or any of them shall be deemed to be references to the Loan. (b) Until the Loan provided for under the Loan Agree- ment or the Bonds executed and delivered pursuant to pro- visions of Article IV of such Loan Agreement shall have been repaid or cancelled, all action taken, including ap- provals given, by the Bank pursuant to Sections 5.01, 5.02, 5.03, 5.04, 5.05 and 5.06 of the Loan Agreement shall be deemed to be taken or given in the name and on behalf of both the Bank and the Association; and all information furnished by the Borrower to the Bank, pursuant to the provisions of such Sections, shall be deemed to be furnished to both the Bank and the Association. 8 SEcTION 4.02. The provisions of the Sections of the Loan Agreement enumerated in paragraph (a) of Section 4.01 of this Agreement (except Sections 5.03, 5.05 and 5.06) and the obligations thereunder shall terminate on April 1, 1990 or on the date when the Loan Agreement and all the obliga- tions thereunder shall terminate, whichever is the later. SECTION 4.03. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories and free from all restric- tions imposed under the laws of the Borrower or laws in effect in its territories. SECTION 4.04. This Agreement shall be free from any taxes that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof. ARTICLE V Remedies of the Association SECTION 5.01. (i) If any event specified in paragraph (c) of Section 5.02 of this Agreement shall occur, or (ii) if any event specified in paragraph8 (a) or (c) of Section 5.02 of the Credit Regulations shall occur and shall continue for a period of thirty days, or (iii) if any event specified in para- graph (b) of Section 5.02 of the Credit Regulations or in paragraphs (a) or (d) of Section 5.02 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower, then at any subsequent time the Associa- tion, at its option, may declare the principal of the Credit then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement to the contrary notwithstanding. 9 SECTION 5.02. The following additional events are speci- fied for the purposes of paragraph (j) of Section 5.02 of the Regulations: (a) Subject to the provisions of paragraph (c) of this Section, the IADB Loan Agreements or the Loan Agree- ment shall have been, in any material respect, amended, assigned, waived or terminated (otherwise than after full repayment at the agreed maturity or repayment made at the option of the Borrower prior to such maturity) with- out the agreement of the Association; (b) Any event shall have operated to suspend the right of the Borrower to withdraw amounts under the IADB Loan Agreements or the Loan Agreement; (c) The Bank or IADB respectively, shall, in accordance with the terms of the Bank Loan or the IADB Loans, de- mand payment from the Borrower of moneys lent to the Borrower prior to the agreed maturity thereof; and (d) A default shall have occurred in the performance of any covenant or agreement on the part of the Borrower under the Loan Agreement. ARTICLE VI Effective Date; Termination SECTIoN 6.01. The following events are specified as addi- tional conditions to the effectiveness of this Agreement within the meaning of Section 8.01(b) of the Regulations: (a) the IADB shall have given notice to the Association that all conditions precedent to initial disbursement of the IADB Loans have been fulfilled; and (b) the Loan Agreement shall have been declared effective. SECTION 6.02. A date 120 days after the date of this Agreement is hereby specified for the purposes of Section 8.04 of the Regulations. 10 ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1968, or such other date as may from time to time be agreed between the Borrower and the Association. SECTION 7.02. The following addresses are specified for the purposes of Section 7.01 of the Regulations: For the Borrower: Ministerio de Economia y Hacienda Tegucigalpa Honduras For the Association: International Development Association 1818 H Street, N.W. Washington, D. C. 20433 Unite - St -es of America Alternative address for cablegrams and radiograms: Indevas Washington, D. C. SECTION 7.03. The Ministro de Comunicaciones y Obras Publicas is designated for the purposes of Section 7.03 of the Regulations. IN WITNESS WHEREOF, the parties hereto acting through their representatives thereunto duly authorized, have caused this Development Credit Agreement to be signed 11 in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF HONDURAS By /s/ R. MIDENCE SOTO Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. BURKE KNAPP Vice President