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CONFORMED COPY
CREDIT NUMBER 2987-UG
Development Credit Agreement
(Road Sector Institutional Support Technical Assistance Project)
between
THE REPUBLIC OF UGANDA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated March 9, 1998
CREDIT NUMBER 2987-UG
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated March 8, 1998, between THE REPUBLIC OF 
UGANDA (the Borrower) and the INTERNATIONAL DEVELOPMENT ASSOCIATION 
(the Association).
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 Association to assist in the 
financing of the Project;
(B) the Association has received a letter dated July 16, 
1997 from the Borrower describing a program of actions, objectives 
and policies on the transport sector of its economy (the Program); 
and declaring the Borrower’s commitment to the execution of the 
Program;
WHEREAS the Association has agreed, on the basis, inter 
alia, of the foregoing, to extend the Credit to the Borrower upon 
the terms and conditions set forth in this Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
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General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to 
Development Credit Agreements” of the Association, dated January 1, 
1985, with the modifications set forth below (the General 
Conditions) constitute an integral part of this Agreement:
(a)
The last sentence of Section 3.02 is deleted.
(b)
The second sentence of Section 5.01 is modified to 
read:
“Except as the Association and the Borrower shall 
otherwise agree, no withdrawals shall be made: (a) on 
account of expenditures in the territories of any 
country which is not a member of the Bank or for 
goods produced in, or services supplied from, such 
territories; or (b) for the purpose of any payment to 
persons or entities, or for any import of goods, if 
such payment or import, to the knowledge of the 
Association, is prohibited by a decision of the 
United Nations Security Council taken under Chapter 
VII of the Charter of the United Nations.”
(c)
Section 6.03 is modified to read:
“Section 6.03.  Cancellation by the 
Association.  If (a) the right of the Borrower to 
make withdrawals from the Credit Account shall have 
been suspended with respect to any amount of the 
Credit for a continuous period of thirty days, or (b) 
at any time, the Association determines, after 
consultation with the Borrower, that an amount of the 
Credit will not be required to finance the Project’s 
costs to be financed out of the proceeds of the 
Credit, or (c) at any time, the Association 
determines, with respect to any contract to be 
financed out of the proceeds of the Credit, that 
corrupt or fraudulent practices were engaged in by 
representatives of the Borrower or of a beneficiary 
of the Credit during the procurement or the execution 
of such contract, without the Borrower having taken 
timely and appropriate action satisfactory to the 
Association to remedy the situation, and establishes 
the amount of expenditures in respect of such 
contract which would otherwise have been eligible for 
financing out of the proceeds of the Credit, or (d) 
at any time, the Association determines that the 
procurement of any contract to be financed out of the 
proceeds of the Credit is inconsistent with the 
procedures set forth or referred to in the 
Development Credit Agreement and establishes the 
amount of expenditures in respect of such contract 
which would otherwise have been eligible for 
financing out of the proceeds of the Credit, or (e) 
after the Closing Date, an amount of the Credit shall 
remain unwithdrawn from the Credit Account, the 
Association 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 Credit shall be canceled.”
Section 1.02. Unless the context otherwise requires, the 
several terms defined in the General Conditions have the respective 
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meanings therein set forth and the following additional terms have 
the following meanings:
(a)
“MOWTC” means the Borrower’s Ministry of Works, 
Transport and communications; 
(b)
“Special Account” means the account referred to in 
Section 2.02 (b) of this Agreement;
(c)
“Project Implementation Plan” and “PIP” mean the 
comprehensive plan for the implementation of the project referred 
to in Section 3.01 of this Agreement;
(d)
“RAFU” means the Road Agency Formation Unit referred 
to in Part A (1) of Schedule 2 to this Agreement;
(e)
“Road Agency” means the agency which the Borrower 
proposes to establish under the Program and the TAERA Study, as 
hereinafter defined; and
(f)
“TAERA Study” means the study commissioned by the 
Borrower on the transitional arrangements for the establishment of 
a Road Agency.
ARTICLE II
The Credit
Section 2.01. The Association agrees to lend to the 
Borrower, on the terms and conditions set forth or referred to in 
the Development Credit Agreement, an amount in various currencies 
equivalent to twenty one million six hundred thousand Special 
Drawing Rights (SDR 21,600,000).
Section 2.02. (a) The amount of the Credit may be withdrawn 
from the Credit Account in accordance with the provisions of 
Schedule 1 to this Agreement for expenditures made (or, if the 
Association shall so agree, to be made) in respect of the 
reasonable cost of services required for the Project described in 
Schedule 2 to this Agreement and to be financed out of the proceeds 
of the Credit.
(b)
The Borrower may, for the purposes of the Project, 
open and maintain in Dollars a special deposit account in a 
commercial bank on terms and conditions satisfactory to the 
Association including appropriate protection against set-off, 
seizure and attachment.  Deposits into, and payments out of, the 
Special Account shall be made in accordance with the provisions of 
Schedule 5 to this Agreement.
Section 2.03. The Closing Date shall be December 31, 2000 or 
such later date as the Association shall establish.  The 
Association shall promptly notify the Borrower of such later date.
Section 2.04. (a) The Borrower shall pay to the Association 
a commitment charge on the principal amount of the Credit not 
withdrawn from time to time at a rate to be set by the Association 
as of June 30 of each year, but not to exceed the rate of one-half 
of one percent (1/2 of 1%) per annum.
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(b)
The commitment charge shall accrue: (i) from the date 
sixty days after the date of this Agreement (the accrual date) to 
the respective dates on which amounts shall be withdrawn by the 
Borrower from the Credit Account or canceled; and (ii) at the rate 
set as of the June 30 immediately preceding the accrual date and at 
such other rates as may be set from time to time thereafter 
pursuant to paragraph (a) above. The rate set as of June 30 in each 
year shall be applied from the next date in that year specified in 
Section 2.06 of this Agreement.
(c)
The commitment charge shall be paid: (i) at such 
places as the Association shall reasonably request; (ii) without 
restrictions of any kind imposed by, or in the territory of, the 
Borrower; and (iii) in the currency specified in this Agreement for 
the purposes of Section 4.02 of the General Conditions or in such 
other eligible currency or currencies as may from time to time be 
designated or selected pursuant to the provisions of that Section.
Section 2.05. The Borrower shall pay to the Association a 
service charge at the rate of three-fourths of one percent (3/4 of 
1%) per annum on the principal amount of the Credit withdrawn and 
outstanding from time to time.
Section 2.06. Commitment charges and service charges shall 
be payable semiannually on March 1 and September 1 in each year.
Section 2.07. (a) Subject to paragraphs (b), (c) and (d) 
below, the Borrower shall repay the principal amount of the Credit 
in semiannual installments payable on each March 1 and September 1 
commencing March 1, 2008 and ending September 1, 2037.  Each 
installment to and including the installment payable on September 
1, 2017 shall be one percent (1%) of such principal amount, and 
each installment thereafter shall be two percent (2%) of such 
principal amount.
(b)
Whenever (i) the Borrower's per capita gross national 
product (GNP), as determined by the Association, shall have 
exceeded for three consecutive years  the level established 
annually by the Association for determining eligibility to access 
the Association's resources; and (ii) the Bank shall consider the 
Borrower creditworthy for Bank lending, the Association may, 
subsequent to the review and approval thereof by the Executive 
Directors of the Association and after due consideration by them of 
the development of the Borrower's economy, modify the repayment of 
installments under paragraph (a) above by:
(A)
requiring the Borrower to repay twice the amount of 
each such installment not yet due until the principal 
amount of the Credit shall have been repaid; and
(B)
requiring the Borrower to commence repayment of the 
principal amount of the Credit as of the first 
semiannual payment date referred to in paragraph (a) 
above falling six months or more after the date on 
which the Association notifies the Borrower that the 
events set out in this paragraph (b) have occurred,   
provided, however, that there shall be a grace period 
of a minimum of five years on such repayment of 
principal.
(c)
If so requested by the Borrower, the Association may 
revise the modification referred to in paragraph (b) above to 
include, in lieu of some or all of the increase in the amounts of 
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such installments, the payment of interest at an annual rate agreed 
with the Association on the principal amount of the Credit 
withdrawn and outstanding from time to time, provided that, in the 
judgment of the Association, such revision shall not change the 
grant element obtained under the above-mentioned repayment 
modification.
(d)
If, at any time after a modification of terms 
pursuant to paragraph (b) above, the Association determines that 
the Borrower's economic condition has deteriorated significantly, 
the Association may, if so requested by the Borrower, further 
modify the terms of repayment to conform to the schedule of 
installments as provided in paragraph (a) above.
Section 2.08. The currency of the United States of America 
is hereby specified for the purposes of Section 4.02 of the General 
Conditions.
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, shall carry out the Project through 
MOWTC with due diligence and efficiency and in conformity with 
appropriate technical, administrative and engineering practices and 
shall provide, promptly as needed, the funds, facilities, services 
and other resources required for the Project.
(b)
Without limitation upon the provisions of paragraph 
(a) of this Section and except as the Borrower and the Association 
shall otherwise agree, the Borrower shall (i) carry out the Project 
in accordance with the Project Implementation Plan and the 
Implementation Program set forth in Schedule 4 to this Agreement; 
(ii) make adequate allocation in its annual budget to cover the 
counterpart funds required for the carrying out of the Project; and 
(iii) review with the Association the results of the studies 
referred to under Parts A, B and C of the Project not later than 
sixty days after the completion of each  such study .
Section 3.02. Except as the Association shall otherwise 
agree, procurement of the consultants' services required for the 
Project and to be financed out of the proceeds of the Credit shall 
be governed by the provisions of Schedule 3 to this Agreement.
Section 3.03. For the purposes of Section 9.07 of the 
General Conditions and without limitation thereto, the Borrower 
shall:
(a)
prepare, on the basis of guidelines acceptable to the 
Association and furnish to the Association not later than six (6) 
months after the Closing Date or such later date as may be agreed 
for this purpose between the Borrower and the Association, a plan 
for the future operation of the Project; and
(b)
afford the Association a reasonable opportunity to 
exchange views with the Borrower on said plan.
ARTICLE IV
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Financial Covenants
Section 4.01. (a) The Borrower shall maintain, or cause to 
be maintained, records and accounts adequate to reflect in 
accordance with sound accounting practices the operations, 
resources and expenditures in respect of the Project of the 
departments or agencies of the Borrower responsible for carrying 
out the Project or any part thereof.
(b)
The Borrower shall:
(i)
have the records and accounts referred to in 
paragraph (a) of this Section including those 
for the Special Account for each fiscal year 
audited, in accordance with appropriate 
auditing principles consistently applied, by 
independent auditors acceptable to the 
Association; 
(ii)
furnish to the Association 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 Association 
shall have reasonably requested; and
(iii)
furnish to the Association such other 
information concerning said records and 
accounts and the audit thereof as the 
Association shall from time to time reasonably 
request.
(c)
For all expenditures with respect to which 
withdrawals from the Credit Account were made on the basis of 
statements of expenditure, the Borrower shall:
(i)
maintain, or cause to be maintained, in 
accordance with paragraph (a) of this Section, 
records and accounts reflecting such 
expenditures;
(ii)
retain, until at least one year after the 
Association has received the audit report for 
the fiscal year in which the last withdrawal 
from the Credit Account was made, all records 
(contracts, orders, invoices, bills, receipts 
and other documents) evidencing such 
expenditures;
(iii)
enable the Association’s representatives to 
examine such records; and
(iv)
ensure that such records and accounts are 
included in the annual audit referred to in 
paragraph (b) of this Section and that the 
report of such audit contains 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 
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related withdrawals.
ARTICLE V
Remedies of the Association
Section 5.01 Pursuant to Section 6.02 of the General 
Conditions, the following additional event is specified, namely, 
that a situation has arisen which shall make it improbable that the 
Program, or a significant part thereof, will be carried out.
ARTICLE VI
Effective Date; Termination
Section 6.01. The following events are specified as 
additional conditions to the effectiveness of this Agreement within 
the meaning of Section 12.01 (b) of the General Conditions:
(a)
the Borrower has: (i) drawn up the terms and 
conditions of employment of the staff of RAFU as 
recommended under the TAERA Study; and (ii) selected 
the key staff of RAFU in accordance with the 
provisions of Schedule 3 to this Agreement;
(b)
the Borrower has approved an action plan, 
satisfactory to the Association, for the 
implementation of the recommendations made under the 
TAERA Study;
(c)
the Borrower has selected consultants who will carry 
out Part B of the Project in accordance with the 
provisions of Schedule 3 to this Agreement;
(d)
the Borrower has furnished to the Association 
evidence of the establishment of a satisfactory 
budgeting, accounting and auditing system for the 
Project; and
(e)
the Borrower has selected and appointed the Head of 
RAFU in accordance with the provisions of Schedule 3 
to this Agreement.
Section 6.02. 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:
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Ministry of Finance
P. O. Box 8147
Kampala
Uganda
Cable address: 
Telex:
FINSEC
61170
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D. C. 20433
United States of America
Cable address: 
Telex:
INDEVAS
248423 (MCI) or
Washington, D. C.
 64145 (MCI)
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.
THE REPUBLIC OF UGANDA
By /s/ Edith Sampala
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Mahmood A. Ayub
Acting Regional Vice President
Africa
SCHEDULE 1
Withdrawal of the Proceeds of the Credit 
1.
The table below sets forth the Categories of items to be 
financed out of the proceeds of the Credit, the allocation of the 
amounts of the Credit to each Category and the percentage of 
expenditures for items so to be financed in each Category:
Amount of the
Credit Allocated
   % of
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(Expressed in
Expenditures
Category
SDR Equivalent)
to be 
Financed
(1)
Consultants' services:
(a) Under Part A of
  10,060,000
90%
the Project
(b) Under Part B of
   1,450,000
90%
the Project
(c) Under Part C of
   8,560,000
90%
the Project
(d) Under Part D of
      80,000
90%
the Project
(2)
Unallocated
   1,450,000
TOTAL
  21,600,000
2.
Notwithstanding the provisions of paragraph 1 above, no 
withdrawals shall be made in respect of payments made for 
expenditures prior to the date of this Agreement.
3.
The Association may require withdrawals from the Credit 
Account to be made on the basis of statements of expenditure for 
expenditures under contracts for the employment of (a) consulting 
firms not exceeding $100,000 equivalent and (b) individual 
consultants not exceeding $50,000 under such terms and conditions 
as the Association shall specify by notice to the Borrower.
SCHEDULE 2
Description of the Project
The objectives of the Project are to (a) strengthen the 
Borrower’s road sector management capability through spinning off 
of road administration and execution of activities under MOWTC and 
the creation of an autonomous performance-based Road Agency; (b) 
improve sector policy and management through the redefinition of 
the role of MOWTC to that of a regulatory and planning body; and 
(c) prepare physical infrastructure components to be included in a 
future road sector program which would support market integration 
and an improved access to social services.
The Project consists of the following parts, subject to such 
modifications thereof as the Borrower and the Association may agree 
upon from time to time to achieve such objectives:
Part A:
Institutional Developmental and Capacity Building
Strengthening the borrower’s road sector management 
capability through provision of technical advisory services by :
(1)
staffing RAFU as the nucleus for the proposed Road 
Agency; and
(2)
establishing and staffing a new environmental liaison 
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unit in MOWTC.
Part B:
Sector Policy and Management Studies
Improvement of the Borrower’s road sector policy and 
management through provision of technical advisory services for:
(a)
carrying out studies on:
(i)
an autonomous Road Agency;
(ii)
road safety audit and regulations; and 
(iii)
road network management policy; and
(b)
carrying out studies for, and development of, a 
management information system.
Part C:
Infrastructure Preparation Studies
Preparation of the physical infrastructure components of a 
proposed multi-year roads rehabilitation and improvement program 
through:
(a)
the carrying out of (i) feasibility studies and (ii) 
if feasible, the detailed engineering design and environmental 
assessment of about 680 km of main roads; and
(b)
(i) preparation of a national feeder roads study and 
(ii) detailed engineering designs for about 500 km of feeder roads.
Part D:
External Auditing
Provision of technical advisory services for the auditing of 
accounts under the Project.
* * *
The Project is expected to be completed by June 30, 2000.
SCHEDULE 3
Procurement
Part A:
General
Consultants’ services shall be procured in accordance with 
the provisions of the Introduction and Section IV of the 
“Guidelines:  Selection and Employment of Consultants by World Bank 
Borrowers” published by the Bank in January 1997 (the Consultant 
Guidelines) and the following provisions of this Schedule.
Part B:
Quality- and Cost-based Selection
Except as otherwise provided in Part C of this Section, 
consultants’ services shall be procured under contracts awarded in 
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accordance with the provisions of Section II of the Consultant 
Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, 
and the provisions of paragraphs 3.13 through 3.18 thereof 
applicable to quality- and cost-based selection of consultants.
Part C:
Other Procedures for the Selection of Consultants
Individual Consultants Services for tasks that meet the 
requirements set forth in paragraph 5.01 of the Consultant 
Guidelines shall be procured under contracts awarded to individual 
consultants in accordance with the provisions of paragraphs 5.1 
through 5.3 of the Consultant Guidelines.
Part D:
Review by the Association of the Selection of 
Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for 
proposals, the proposed plan for the selection of consultants under 
the Project shall be furnished to the Association for its review 
and approval, in accordance with the provisions of paragraph 1 of 
Appendix 1 to the Consultant Guidelines.  Selection of all 
consultants’ services shall be undertaken in accordance with such 
selection plan as shall have been approved by the Association, and 
with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of 
consulting firms estimated to cost the equivalent of $200,000 or 
more, the procedures set forth in paragraphs 1, 2 (other than the 
third subparagraph of paragraph 2(a)) and 5 of Appendix 1 to the 
Consultant Guidelines shall apply.
(b)
With respect to each contract for the employment of 
consulting firms estimated to cost the equivalent of $100,000 or 
more, but less than the equivalent of $200,000, the procedures set 
forth in paragraphs 1, 2 (other than the second subparagraph of 
paragraph 2 (a)) and 5 of Appendix 1 to the Consultant Guidelines 
shall apply.
(c)
With respect to each contract for the employment of 
individual consultants estimated to cost the equivalent of $50,000 
or more, the qualifications, experience, terms of reference and 
terms of employment of the consultants shall be furnished to the 
Association for its prior review and approval. The contract shall 
be awarded only after said approval shall have been given.
3.
Post Review
With respect to each contract not governed by paragraph 2 of 
this Part, the procedures set forth in paragraph 4 of Appendix 1 to 
the Consultant Guidelines shall apply.
SCHEDULE 4
Implementation Program
1.
MOWTC shall have overall responsibility for the 
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implementation of all components of the Project.  To this end, 
MOWTC shall set up RAFU with staffing and terms of reference 
satisfactory to the Association. RAFU, through the management 
division(s) identified under the TAERA Study, will take over direct 
responsibility for implementation of the Project.
2.
The Borrower shall:
(a)
maintain policies and procedures adequate to enable 
it to monitor and evaluate on an ongoing basis, in accordance with 
the indicators agreed upon between the Borrower and the Association 
the carrying out of the Project and the achievement of the 
objectives thereof;
(b)
prepare, under terms of reference satisfactory to the 
Association, and furnish to the Association, on or about six months 
after the Effective Date, a report integrating the results of the 
monitoring and evaluation activities performed pursuant to 
paragraph (a) of this Section, on the progress achieved in the 
carrying out of the Project during the period preceding the date of 
said report and setting out the measures recommended to ensure the 
efficient carrying out of the Project and the achievement of the 
objectives thereof during the period following such date; and
(c)
review with the Association, by not later than thirty 
days after the date of such report, or such later date as the 
Association shall request, the report referred to in subparagraph 
(b) of this paragraph, and, thereafter, take all measures required 
to ensure the efficient completion of the Project and the 
achievement of the objectives thereof, based on the conclusions and 
recommendations of the said report and the Association views on the 
matter.
3.
Not later than January 1, 1999, the Borrower shall carry out 
jointly with the Association, a comprehensive mid-term review to 
assess the progress achieved in the execution of the Project.
(a)
Without any limitation to the generality of the 
foregoing, the review shall cover the implementation and management 
aspects of the Project, including the performance and use of the 
technical assistance personnel, the role of national counterpart 
staff, the status and results of training, reporting, accounting 
and audit performance, disbursement and procurement procedures, the 
progress achieved in building local capacity and the overall 
sustainability of the Project.
(b)
Not later than thirty (30) days prior to the said 
mid-term review, the Borrower shall furnish to the Association, for 
its comments, a report in such detail as the Association shall 
reasonably request, including an evaluation of the progress 
achieved in implementing the various components of the Project, and 
a draft action plan containing proposals for remedying identified 
deficiencies.
(c)
The Borrower shall, promptly thereafter:  (i) prepare 
and adopt an action plan, acceptable to the Association, based on 
the recommendations stemming from the aforementioned review; and 
(ii) thereafter, carry out the said action plan for the remaining 
period of Project implementation.
SCHEDULE 5
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Special Account
1.
For the purposes of this Schedule:
(a)
the term “eligible Category” means Category (1) 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 services required for  the 
Project and to be financed out of the proceeds of the Credit 
allocated from time to time to the eligible Category in accordance 
with the provisions of Schedule 1 to this Agreement; and
(c)
the term "Authorized Allocation" means an amount 
equivalent to $ 1,000,000 to be withdrawn from the Credit Account 
and deposited into the Special Account pursuant to paragraph 3 (a) 
of this Schedule, provided, however, that unless the Association 
shall otherwise agree, the Authorized Allocation shall be limited 
to an amount equivalent to $500,000 until the aggregate amount of 
withdrawals from the Credit Account plus the total amount of all 
outstanding special commitments entered into by the Association 
pursuant to Section 5.02 of the General Conditions shall be equal 
to or exceed the equivalent of SDR 3,750,000.
2.
Payments out of the Special Account shall be made 
exclusively for eligible expenditures in accordance with the 
provisions of this Schedule.
3.
After the Association has received evidence satisfactory to 
it that the Special Account has been duly opened, withdrawals of 
the Authorized Allocation and subsequent withdrawals to replenish 
the Special Account shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the 
Borrower shall furnish to the Association a request or requests for 
deposit into the Special Account of an amount or amounts which do 
not exceed the aggregate amount of the Authorized Allocation. On 
the basis of such request or requests, the Association shall, on 
behalf of the Borrower, withdraw from the Credit Account and 
deposit into the Special Account such amount or amounts as the 
Borrower shall have requested.
(b)
(i)
For replenishment of the Special Account, the 
Borrower shall furnish to 
the Association requests 
for deposits into the Special Account at such 
intervals as the Association shall specify.
(ii)
Prior to, or at the time of, each such request, 
the Borrower shall 
furnish to the Association 
the documents and other evidence required 
pursuant to paragraph 4 of this Schedule for the payment or 
payments in 
respect of which replenishment is 
requested. On the basis of each such 
request, the 
Association shall, on behalf of the Borrower, withdraw 
from the Credit Account and deposit into the Special 
Account such 
amount as the Borrower shall have 
requested and as shall have been 
shown by said 
documents and other evidence to have been paid out of the 
Special Account for eligible expenditures. All such deposits 
shall be 
withdrawn by the Association from the 
Credit Account under the 
respective eligible 
Category, and in the respective equivalent amounts, 
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as shall have been justified by said documents and other evidence.
4.
For each payment made by the Borrower out of the Special 
Account, the Borrower shall, at such time as the Association shall 
reasonably request, furnish to the Association such documents and 
other evidence showing that such payment was made exclusively for 
eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this 
Schedule, the Association shall not be required to make further 
deposits into the Special Account:
(a)
if, at any time, the Association shall have 
determined that all further withdrawals should be made by the 
Borrower directly from the Credit Account in accordance with the 
provisions of Article V of the General Conditions and paragraph (a) 
of Section 2.02 of this Agreement;
(b)
if the Borrower shall have failed to furnish to the 
Association, within the period of time specified in Section 4.01 
(b) (ii) of this Agreement, any of the audit reports required to be 
furnished to the Association pursuant to said Section in respect of 
the audit of the records and accounts for the Special Accounts;
(c)
if, at any time, the Association shall have notified 
the Borrower of its intention to suspend in whole or in part the 
right of the Borrower to make withdrawals from the Credit Account 
pursuant to the provisions of Section 6.02 of the General 
Conditions; or
(d)
once the total unwithdrawn amount of the Credit 
allocated to the eligible Category, minus the total amount of all 
outstanding special commitments entered into by the Association 
pursuant to Section 5.02 of the General Conditions with respect to 
the Project, shall equal the equivalent of twice the amount of the 
Authorized Allocation.  Thereafter, withdrawal from the Credit 
Account of the remaining unwithdrawn amount of the Credit allocated 
to the eligible Category shall follow such procedures as the 
Association shall specify by notice to the Borrower.  Such further 
withdrawals shall be made only after and to the extent that the 
Association shall have been satisfied that all such amounts 
remaining on deposit in the Special Account as of the date of such 
notice will be utilized in making payments for eligible 
expenditures.
6.
(a)
If the Association shall have determined at any time 
that any payment out of the Special Account: (i) was made for an 
expenditure or in an amount not eligible pursuant to paragraph 2 of 
this Schedule; or (ii) was not justified by the evidence furnished 
to the Association, the Borrower shall, promptly upon notice from 
the Association: (A) provide such additional evidence as the 
Association may request; or (B) deposit into the Special Account 
(or, if the Association shall so request, refund to the 
Association) an amount equal to the amount of such payment or the 
portion thereof not so eligible or justified. Unless the 
Association shall otherwise agree, no further deposit by the 
Association 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 Association shall have determined at any time 
that any amount outstanding in the Special Account will not be 
required to cover further payments for eligible expenditures, the 
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Borrower shall, promptly upon notice from the Association, refund 
to the Association such outstanding amount.
(c)
The Borrower may, upon notice to the Association, 
refund to the Association all or any portion of the funds on 
deposit in the Special Account.
(d)
Refunds to the Association made pursuant to 
paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to 
the Credit Account for subsequent withdrawal or for cancellation in 
accordance with the relevant provisions of this Agreement, 
including the General Conditions.