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CONFORMED COPY
CREDIT NUMBER 3388 TJ
Development Credit Agreement
(Lake Sarez Risk Mitigation Project)
between
REPUBLIC OF TAJIKISTAN
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated July 6, 2000
CREDIT NUMBER 3388 TJ
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated July 6, 2000, between the REPUBLIC OF TAJIKISTAN 
(the Borrower) and 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 Borrower intends to contract from the State Secretariat 
for Economic Affairs (SECO) of the Government of Switzerland a grant (the 
Swiss-Tajik Grant) in an amount equivalent to $1,200,000 to assist in 
financing Parts A and C of the Project on the terms and conditions set 
forth in an agreement (the Swiss-Tajik Intergovernmental Agreement) to be 
entered into between the Borrower and SECO; 
(C)
the Borrower intends to contract from the Aga Khan 
Development Network (AKDN) a grant (the AKDN Grant) in an amount 
equivalent to $750,000 to assist in financing Part B of the Project on 
the terms and conditions set forth in an agreement (the AKDN Grant 
Agreement) to be entered into between the Borrower and AKDN; 
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(D)
the Borrower intends to contract from the SECO a grant (the 
Swiss Grant) in an amount equivalent to $1,700,000 to assist in financing 
Part A of the Project on the terms and conditions set forth in an 
agreement (the Swiss Grant Agreement) to be entered into between the 
Borrower and the Association as the Administrator on behalf of the SECO; 
and
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
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Development 
Credit Agreements” of the Association, dated January 1, 1985 (as amended 
through October 6, 1999) (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)
“PIP” means the Project Implementation Plan for carrying out 
of the Project, adopted by the Borrower, as the same may be amended from 
time to time with the agreement of the Association;
(b)
“Project Account” means the account referred to in Section 
6.01 (e) of this Agreement;
(c)
“Sarez Agency” means the governmental agency within the 
Ministry of Emergency Situations and Civil Defense of the Borrower, 
established on October 15, 1999, through Government Resolution No. 419, 
responsible for the Project implementation; and
(d)
“Special Account” means the account referred to in Section 
2.02(b) of  this Agreement.
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 four 
hundred thousand Special Drawing Rights (SDR 400,000).
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 goods and 
services required for the Project 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 or 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, 2005 or such 
later date as the Association shall establish. The Association shall 
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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.
(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 January 15 and July 15 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 January 15 and July 15 commencing July 15, 
2010 and ending January 15, 2040. Each installment to and including the 
installment payable on January 15, 2020 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 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 
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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 Sarez Agency with 
due diligence and efficiency and in conformity with appropriate 
administrative, financial, environmental, engineering and technical 
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 carry out the Project in accordance 
with the Implementation Program set forth in Schedule 4 to this 
Agreement.
Section 3.02. Except as the Association shall otherwise agree, 
procurement of the goods and 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 9.06 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
Financial Covenants
Section 4.01. (a) The Borrower shall establish and maintain a 
financial management system, including records and accounts, and prepare 
financial statements in a format acceptable to the Association, adequate 
to reflect the operations, resources and expenditures related to the 
Project.
(b)
The Borrower shall:
(i)
have the records, accounts and financial statements 
referred to in paragraph 
(a) of this Section and the 
records and accounts for the Special Account for 
each fiscal year audited, in accordance with auditing standards 
acceptable to 
the Association, consistently applied, 
by independent auditors acceptable to 
the Association;
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(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: (A) certified copies of the 
financial statements referred to in paragraph (a) of this Section 
for such 
year as so audited; and (B) an opinion 
on such statements, records and 
accounts and 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 such records and 
accounts, and the audit 
thereof, and concerning said auditors, as the 
Association may 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 
separate 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 related withdrawals.
Section 4.02. (a) Without limitation upon the provisions of Section 
4.01 of this Agreement, the Borrower shall carry out a time-bound action 
plan acceptable to the Association for the strengthening of the financial 
management system referred to in paragraph (a) of said Section 4.01 in 
order to enable the Borrower, not later than June 30, 2002, or such later 
date as the Association shall agree, to prepare quarterly Project 
Management Reports, acceptable to the Association, each of which:
(i) 
(A) sets forth actual sources and applications of 
funds for the Project, both 
cumulatively and for the 
period covered by said report, and projected sources 
and applications of funds for the Project for the six-month period 
following 
the period covered by said report; and (B) 
shows separately expenditures 
financed out of the 
proceeds of the Credit during the period covered by said 
report and expenditures proposed to be financed out of the 
proceeds of the 
Credit during the six-month 
period following the period covered by said 
report;
(ii)
(A) describes physical progress in Project 
implementation, both cumulatively 
and for the period 
covered by said report; and (B) explains variances between 
the actual and previously forecast implementation targets; 
and
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(iii)  sets forth the status of procurement under the 
Project and expenditures under 
contracts financed out of 
the proceeds of the Credit, as at the end of the 
period covered by said report.
(b)
Upon the completion of the action plan referred to in 
paragraph (a) of this Section, the Borrower shall prepare, in accordance 
with guidelines acceptable to the Association, and furnish to the 
Association not later than 45 days after the end of each calendar quarter 
a Project Management Report for such period.
ARTICLE V
Effective Date; Termination
Section 5.01. The following events are specified as additional 
conditions to the effectiveness of the Development Credit Agreement 
within the meaning of Section 12.01 (b) of the General Conditions: 
(a)
the Swiss Grant, AKDN Grant and Swiss-Tajik 
Intergovernmental Agreements have been executed and delivered and all 
conditions precedent to the effectiveness thereof or to the right of the 
Borrower to make withdrawals thereunder, except only the effectiveness of 
the Credit Agreement have been fulfilled;
(b)
an auditor, acceptable to the Association, has been 
appointed; 
(c)
counterpart funds of $15,000 have been deposited in the 
Project Account; and
(d)
the agreement with regard to the implementation of Part B of 
the Project between the Borrower and Focus Humanitarian Assistance has 
been signed.
Section 5.02. 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 VI
Representative of the Borrower; Addresses
Section 6.01. 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 6.02. The following addresses are specified for the 
purposes of Section 11.01 of the General Conditions:
For the Borrower:
Minister of Finance
3, Akademic Rajobovkho Street
Dushanbe, 734025
Republic of Tajikistan
Facsimile:
(992-372) 213329
For the Association:
International Development Association
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1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INDEVAS
248423 (MCI) or
(202) 
477-6391
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.
REPUBLIC OF TAJIKISTAN
By /s/ Sadriddin Akramov
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Shigeo Katsu
Acting Regional Vice President
Europe and Central Asia
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
(Expressed in
Expenditures
Category
SDR Equivalent)
to be Financed
(1)
Goods
80,000
100% of foreign
expenditures,
100% of local
expenditures 
(ex-factory cost) 
and 
80% of local
expenditures for 
other
items procured 
locally
(2)
Consultants’ Services
68,000
100%
(3)
Incremental Operating Costs
(a)
Project Management
80,000
100% through 
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June 30, 2002
(b)
Monitoring and Early       120,000
75% 
from July 1, 2002
Warning Systems
until June 30, 2003, 
50% until June 30, 
2004
25% thereafter
(4)
Unallocated
52,000
TOTAL
      400,000
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;
(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; and
(c)
the term “incremental operating costs” means the incremental 
expenses incurred on account of Project implementation, management and 
monitoring, including salaries of additional staff and experts, workshops 
and seminar expenses, vehicle maintenance, office supplies, access path 
maintenance, communications and transportation.
3.
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.
4.
The Association may require withdrawals from the Credit Account to 
be made on the basis of statements of expenditure for expenditures for: 
(i) goods under contracts costing less than $100,000 equivalent; (ii) 
consulting services for firms costing less than $20,000 equivalent each; 
(iii) consulting services for individuals costing less than $10,000 
equivalent each; and (iv) incremental operating costs, under such terms 
and conditions as the Association shall specify by notice to the 
Borrower.
SCHEDULE 2
Description of the Project
The objective of the Project is to support the Borrower in its 
efforts to build capacity to manage and implement disaster mitigation 
measures for Lake Sarez.  
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:
Monitoring and Early Warning Systems
Design, installation and operational assistance of a monitoring 
system and an early warning system, through provision of consultants’ 
services and goods.  
Part B:
Social Training and Safety-Related Supplies
Conducting training at regional and village level on community 
participation, evacuation, maintenance and operation of early warning 
systems, and establishment and development of temporary evacuation areas 
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for communities in remote mountain valleys through provision of goods and 
consultants’ services. 
Part C:
Study for Long-term Solutions
Preparation of a study to review and integrate past studies and set 
priorities for possible disaster future prevention measures, through 
provision of consultants’ services.
Part D:
Institutional Strengthening 
Provision of consultants’ services, incremental operating cost and 
equipment to strengthen the capacity of the institutions of the Borrower 
that are implementing the Project. 
* * *
The Project is expected to be completed by June 30, 2005.
SCHEDULE 3
Procurement and Consultants’ Services
Section I
Procurement of Goods
Part A:
General
Goods shall be procured in accordance with (a) the provisions of 
Section I of the "Guidelines for Procurement under IBRD Loans and IDA 
Credits” published by the Bank in January 1995 and revised in January and 
August 1996, September 1997 and January 1999, subject to the 
modifications thereto set forth in paragraph 2 of this Part A (the 
Guidelines); and (b) the provisions of the following Parts of this 
Section I.
Part B:
Procurement Procedure
1.
International Shopping
Goods estimated to cost less than $50,000 equivalent per contract, 
up to an aggregate amount not to exceed $100,000 equivalent, may be 
procured under contracts awarded on the basis of international shopping 
procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of 
the Guidelines.
2.
National Shopping
Goods estimated to cost less than $15,000 equivalent per contract, 
up to an aggregate amount not to exceed $15,000 equivalent, may be 
procured under contracts awarded on the basis of national shopping 
procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of 
the Guidelines.
Part C:
Review by the Association of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the 
proposed procurement plan for 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 Guidelines. Procurement of 
all goods shall be undertaken in accordance with such procurement plan as 
shall have been approved by the Association, and with the provisions of 
said paragraph 1.
2.
Prior Review
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With respect to each contract for Parts B.1 and 2 of this Section, 
the following procedures shall apply:
(i)
prior to the execution of any contract under shopping 
procedures, the Borrower 
shall provide to the Association 
a report on the comparison and evaluation of 
quotations received;
(ii)
prior to the execution of any contract procured under 
shopping procedures, the 
Borrower shall provide to the 
Association a copy of the specifications and the 
draft contract; and
(iii)
the procedures set forth in paragraphs 2(f), 2(g) and 
3 of Appendix 1 to the 
Guidelines shall apply.
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 
Guidelines shall apply.
Section II.
Employment of Consultants
Part A:
General
Consultants’ services shall be procured in accordance with: (a) the 
provisions of the Introduction and Section IV of the “Guidelines:  
Selection and Employment of Consultants by World Bank Borrowers” 
published by the Association in January 1997 and revised in September 
1997 and January 1999, subject to the modifications thereto set forth in 
paragraph 2 of this Part A (the Consultant Guidelines); and (b) the 
provisions of the following Parts of this Section II.
Part B:
Procedures for the Selection of Consultants 
1.
Least-cost Selection
Services for audits estimated to cost less than $35,000 equivalent 
in aggregate may be procured under contracts awarded in accordance with 
the provisions of paragraphs 3.1 and 3.6 of the Consultant Guidelines.
2.
Single Source Selection
Services for procurement and financial management support under 
Part D of the Project which are estimated to cost less than $20,000 
equivalent per contract, may, with the Association's prior agreement, be 
procured in accordance with the provisions of paragraphs 3.8 through 3.11 
of the Consultant Guidelines.
3.
Individual Consultants
Services for operation and maintenance of the monitoring and early 
warning systems under Part D of the Project 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 C:
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 
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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 for audits estimated to cost the equivalent of $20,000 
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 estimated to cost less than 
$20,000 equivalent, 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 $10,000 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 
the 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.
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to 
monitor and evaluate on an ongoing basis, in accordance with indicators 
satisfactory to 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 June 30 and December 31 
of each year, 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 February 28 and August 31 of 
each year, or such later date as the Association shall request, the 
report referred to in paragraph (b) of this Section, 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’s 
views on the matter.
2.
The Borrower shall retain a panel of experts, whose terms of 
reference are acceptable to the Association, in order to benefit from an 
independent review and advice on the implementation of the Project.
3.
The Borrower shall carry out the PIP with due diligence, and shall 
provide, promptly as needed, the funds and other resources required 
therefor.
SCHEDULE 5
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Special Account
1.
For the purposes of this Schedule:
(a)
the term “eligible Category” means Categories (1), (2) and 
(3) 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 Credit allocated 
from time to time to the eligible Categories in accordance with the 
provisions of Schedule 1 to this Agreement; and
(c)
the term “Authorized Allocation” means an amount equivalent 
to $40,000 to be withdrawn from the Credit Account and deposited into the 
Special Account pursuant to paragraph 3(a) of this Schedule.
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 Categories, and in the 
respective equivalent amounts, 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 
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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 Account;
(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 Categories, 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 Categories 
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 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.