Honduras - Second Livestock Development Project : Credit 0434 - Agreement Amending Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 434 HO (AMENDMENT) AMENDING AGREEMENT to the DEVELOPMENT CREDIT AGREEMENT (Second Livestock Development Project) dated October 29, 1973 and to the PROJECT AGREEMENT (Second Livestock Development Project) dated October 29, 1973 between REPUBLIC OF HONDURAS and INTERNATIONAL DEVELOPMENT ASSOCIATION and BANCO CENTRAL DE HONDURAS Dated May 25, 1976 AMENDING AGREEMENT TO DEVELOPMENT CREDIT AGREEMENT AND TO PROJECT AGREEMENT AGREEMENT, dated May 25, 1976, between REPUBLIC OF HONDURAS (hereinafter called the Borrower), INTERNATIONAL DEVELOPMENT ASSO- CIATION (hereinafter called the Association) and BANCO CENTRAL DE HONDURAS (hereinafter called Banco Central). WHEREAS (A) the Borrower and the Association entered into a Development Credit Agreement (Second Livestock Development Proj- ect) dated October 29, 1973 (hereinafter called the Development Credit Agreement), for the purpose of assisting in financing a livestock project described in Schedule 2 to the Development Credit Agreement (hereinafter called the Project), and the Asso- ciation and Banco Central entered into a Project Agreement (Sec- ond Livestock Development Project) of even date therewith (herein- after called the Project Agreement), whereby Banco Central agreed to carry out the Project; (B) the Borrower has requested the Association to include in the Project the rehabilitation and improvement of the infra- structure of banana farms located in the Borrower's Districts D and E of Isleta zone, Sonaguera, Col6n Department (hereinafter called Isleta), which were damaged by the Hurricane Fifi, in light of the high priority the Borrower places on carrying out the Borrower's agrarian reform program, and Banco Central has -2- agreed to carry out the new Part D of the Project (as such Part D is described in Section 2.11 of this Amending Agreement); NOW THEREFORE, the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Amending Agreement, un- less the context otherwise requires, the several terms defined in the Development Credit Agreement and in the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, have the respective meanings therein set forth and the following additional terms have the following addi- tional meanings: (a) "Fruit Exporter" means any person, natural or juridical * (including any Borrower's agency), who is engaged in the export of Fruits from the territories of the Borrower; (b) "Fruits" means bananas and other fruits, all produced within the territories of the Borrower; and S (c) "Subsidiary Loan Agreement" means the agreement dated October 29, 1973, between the Borrower and Banco Central entitled "Convenio de Prestamo Subsidiario". mw, -4- ARTICLE II Amendments to the-Credit Agreement Section 2.01. The following paragraphs are added to Section 1.02 of the Development Credit Agreement: "(j) 'COHBANA' means Corporaci6n Hondureha del Banano, a legal entity established by the Borrower's Decree 270, dated October 3, 1975 as such Decree may be amended from time to time, and includes any successor to COHBANA; (k) 'Isleta Administration Contract' means the contract between COHBANA, Banco Fomento and Banco Central, referred to in Section 2.06 bis of the Project Agreement; 'Isleta Plan' means the study for rehabilitation of Isleta made by COHBANA and the Borrower's Instituto Nacional Agrario, dated January 1976, to be financed under the Isleta Administration Contract, as such Isleta Plan may be amended from time to time in accor- dance with Section 2.17 of the Project Agreement; 'Isleta Sub- plan' means a more detailed plan approved by Banco Central, based on and consistent with the Isleta Plan; 'Isleta Sub-loan Contract' means a contract between Banco Fomento, COHBANA and the Beneficiary; and 'Isleta Sub-loan' means any sub-loan made by Banco Fomento to the Beneficiary, under the Isleta Sub-loan Contract, for the purpose of financing an Isleta Sub-plan; (1) 'Banco Fomento' means Banco Nacional de Fomento, established by the Borrower's Decree No. 71, dated February 16, 1950, and any successor to Banco Fomento; -5- (m) 'Beneficiary' means either one or more individuals or an Papjesa Asociativa de Campesinos (as defined in the Borrower's Decreto Ley 170, dated December 30, 1974, herein- after called "Agrarian Reform Law" as such Agrarian Reform Law may be amended from time to time) or any other legal en- tity, who has received or will receive an Isleta Sub-loan; (n) 'Amending Agreement' means the agreement between the Borrower, the Association and Banco Central, dated May 25, 1976, amending the Development Credit Agreement and the Proj- ect Agreement; (o) 'Marketing Agreements' means one or more agreements as referred to in Section 4.01 (b) of the Amending Agreement; (p) 'Fondo de Garantia' means the guarantee fund estab- lished by Banco Central's Board of Directors at its meeting dated August 17, 1973; and (q) 'Instituto' means the Borrower's Instituto Nacional Agrario established by the Borrower's Decree No. 69, dated March 6, 1961, and includes any successor to Instituto." Section 2.02. Section 2.02 of the Development Credit Agree- ment is amended to read as follows: "The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such schedule shall be amended from time to time, 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; provided, however, that, except as the Association shall otherwise agree, no withdrawals shall be made on account of expendi- tures in the territories of any country which is not a mem- ber of the Bank (other than Switzerland) or for goods pro- duced in, or services supplied from, such territories." Section 2.03. Paragraph (e) of Section 4.01 of the Develop- ment Credit Agreement is amended to read as follows: "(e) ensure the prompt inclusion in the Project Commis- sion's membership of a representative of COHBANA and repre- sentatives of the campesino sector in the Borrower's terri- tories and that such Project Commission's members shall par- ticipate in decisions regarding the matters related to the sectors they represent, shall maintain such Project Commission's operations at least until all disbursements under each Sub- loan Agreement, each Abbatoir Sub-loan Agreement and the Isleta Sub-loan Contract have been made, and shall at all times ensure that such Project Commission shall coordinate and supervise all aspects of the Project in accordance with sound administrative, agricultural, economic and financial practices." Section 2.04. The following paragraphs are added to Section 4.01 of the Development Credit Agreement: **' "(f) make the necessary arrangements to provide the Beneficiary, through either Banco Fomento or COHBANA, as and when needed by such Beneficiary, with the short-term working capital required for the adequate carrying out by such Bene- ficiary of the respective Isleta Sub-plan; (g) cause COHBANA and Banco Fomento to enter with Banco Central and the Beneficiary, respectively, in the Isleta Administration Contract and in the Isleta Sub-loan Contract; and (h) cause COHBANA to employ or to continue to employ, as the case may be, for purposes of Part D of the Project, qualified and experienced experts in: (i) banana plantation management (including marketing); (ii) banana production; (iii) irrigation and flood control; and (iv) pest and disease control; all such experts to be acceptable to the Association and to be employed under terms and conditions satisfactory to the Association." Section 2.05. The following Section is added after Section 4.01 of the Development Credit Agreement, as Section 4.02 thereof: "Section 4.02. The Borrower shall take, or cause Insti- tuto to take, all such action as shall be necessary to acquire, as and when needed, all such land and rights in respect of land, as shall be required for the construction and operation of the facilities included in Part D of the Project and to ensure that the Beneficiary of any Isleta Sub-loan will become an adjudicatario (as defined in the -8- Agrarian Reform Law) of such land and rights in respect of such land, and shall furnish to the Association, promptly after such acquisitions and after such Beneficiary has be- come an adjudicatario of such land and rights in respect of such land, evidence that such land and rights in respect of land are available for purposes of Part D of the Project." Section 2.06. Paragraph (a) of Section 5.01 of the Develop- ment Credit Agreement is amended to read as follows: "(a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by Banco Central of its obligations under the Project Agreement, the Subsidiary Loan Agreement and the Isleta Administration Contract, the performance by Banco Fomento and COHPANA under the Isleta Administration Contract and the Isleta Sub-loan Contract, the administration, operations, resources and expenditures of Banco Central, Banco Fomento and COHBANA in respect of the Project, and, in respect of the Project, of the department or agencies of the Borrower responsible for carrying out any part of the Project, and other matters re- lating to the purposes of the Credit; and" Section 2.07. Section 5.02 of the Development Credit Agree- ment is amended to read as follows: "Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request, in respect of the -9- Project, concerning the administration, operations, resources and expenditures of Banco Central, Banco Fomento, COHBANA and of other departments or agencies of the Borrower respon- sible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its respective obligations under the Development Credit Agreement or the performance by either Banco Central, Banco Fomento or COH- BANA, of its respective obligations under the Project Agree- ment, the Subsidiary Loan Agreement, the Isleta Administra- tion Contract and the Isleta Sub-loan Contract." Section 2.08. Section 6.02 of the Development Credit Agree- ment is amended by adding the words ", the Amending Agreement" after the words "Development Credit Agreement". Section 2.09. Paragraphs (a) and (d) of Section 7.02 of the Development Credit Agreement are amended to read as follows: "(a) the Subsidiary Loan Agreement or any Project Ad- ministration Agreement, the Isleta Administration Contract, the Isleta Sub-loan Contract, or the Marketing Agreements, shall have been amended, suspended, abrogated or waived with- out the prior approval of the Association; -10- (d) the Borrower shall have taken any action for the dissolution or disestablishment of either Banco Central or Banco Fomento or COHBANA or for the suspension of its opera- tions; and". Section 2.10. Paragraphs 1, 2 and 3 of Schedule 1 to the De- velopment Credit Agreement are replaced by paragraphs 1, 2 and 3 of Schedule 1 to this Amending Agreement. Section 2.11. The following Part D is added to the Project described in Schedule 2 to the Development Credit Agreement: "Part D. A program for rehabilitation.and improvement of Isleta including, primarily, the extension, through Banco Fomento, of sub-loans to the Beneficiary for the financing of each Isleta Sub-plan." ARTICLE III Amendments to the Project Agreement Section 3.01. Section 2.03 of the Project Agreement is amended to read as follows: "Banco Central shall open and maintain on its books a Project Account to which the proceeds of the Credit relent to Banco Central by the Borrower shall be credited and through which all payments under the Project Administration Agreements, the Isleta Administration Contract and the Abat- toir Sub-loan Agreements shall be made." Section 3.02. The following Section 2.06 bis is added between Sections 2.06 and 2.07 of the Project Agreement: "Section 2.06 bis. Banco Central shall enter with COH- BANA and Banco Fomento into an Isleta Administration Con- tract, satisfactory to the Association, under which (a) Banco Fomento shall undertake, inter alia: (i) To enter with COHBANA and the Beneficiary into a loan contract, satisfactory to the Association, for the purpose of carrying out Part D of the Project, and to provide Banco Central with certi- fied copies of such loan contract; -12- (ii) To open on its books a separate account through which all amounts withdrawn from, and to be paid into, the Project Account by Banco Fomento for the purposes of Part D of the Project shall flow, such account to:(A) identify each Isleta Sub-loan; (B) identify the goods and services financed out of each Isleta Sub-loan; and (C) reflect, in ac- cordance with consistently maintained sound account- ing practices, the administration of such account and of each Isleta Sub-loan; (iii) To cause the account referred to in the preceding paragraph (b) of this Agreement to be audited an- nually by independent auditors acceptable to the Association and Banco Central and to transmit to Banco Central, and through it, to the Association, promptly after their preparation and not later than four months after the close of Banco Fomento's fiscal year to which they relate, certified copies of the financial statements and a signed copy of the auditor's report; (iv) To process each Isleta Sub-loan pursuant to sound administrative and banking procedures and to make each such Isleta Sub-loan in accordance with sub- paragraph (x) of this Section; (v) To take such steps as may be required to ensure compliance by the Beneficiary of all obligations undertaken by such Beneficiary under the Isleta Sub-loan Contract; -13- (vi) In the event of a default by the Beneficiary under the respective Isleta Sub-loan Contract, to: (A) promptly inform the Project Director of such default; (B) unless the Project Director shall otherwise agree, take all measures required to suspend or terminate access by the defaulting Beneficiary to the use of any of the proceeds of the Credit; and (C) if the Project Director shall so agree, take such remedial action as the circumstances require, including the requiring of immediate repayment of all amounts lent to such defaulting Beneficiary out of the proceeds of the Credit, and any other measure required to be taken pursuant to the guarantee ar- rangements referred to in sub-paragraph (iv) of paragraph (c) of this Section; (vii) To furnish to Banco Central, promptly upon its request, the reports, every Isleta Sub-plan, each loan application for each applicable Isleta Sub- loan, recommendations in respect of such loan applications, specifications and procurement sched- ules in respect of goods and services to be pro- cured by the Beneficiary out of the proceeds of each Isleta Sub-loan and any material modification thereof, in such detail as Banco Central shall reasonably request; (viii) To inspect, by itself or jointly with representa- tives of the Association or Banco Central, such goods and the sites, works, plants and construc- -14-_ tions included in Part D of the Project, the oper- ation thereof, and any relevant record and docu- ment related thereto; (ix) To require the Beneficiary to take out, with responsible insurers, such insurance as shall be necessary to cover marine, transit and other haz- ards incident to the acquisition, transportation and delivery of goods imported directly and fi- nanced out of the proceeds of the Credit to the place of use or installation, any indemnity there- under to be made payable in a currency freely usable by such Beneficiary to replace or repair such go. , (x) To extend, except as the Association shall other- wise agree, each Isleta Sub-loan upon, inter alia, the following terms and conditions: (A) Every Isleta Sub-loan shall finance one hun- dred per cent (100%) of the estimated total investment of each applicable Isleta Sub- plan (other than short-term financing for working capital); (B) Every Isleta Sub-loan shall be repayable with- in a period of seven years from the date of the first disbursement under each such Isleta Sub-loan with a grace period of two years for the repayment of principal; -15 - (C) Every Isleta Sub-loan shall bear interest at the rate of eleven per cent (11%) per annum on the principal amount withdrawn and out- standing from time to time, and no other ad- ditional charges shall be payable thereon by the Beneficiary to Banco Fomento; (D) Every Isleta Sub-loan shall be made only after the approval of Banco Central to the applicable Isleta Sub-plan has been given. (b) Either Banco Famento or COHBANA will undertake to provide the Beneficiary with the necessary short-term working capital, from sources other than the proceeds of the Credit as and when required by the Beneficiary or COHBANA for purposes of carrying out each Isleta Sub-plan. (c) COHBANA shall undertake, inter alia: (i) to continue to employ the experts referred to in Section 4.01 (h) of the Development Credit Agree- ment, and to use the services thereof for Part D of the Project; (ii) to prepare with the Beneficiary every applicable Isleta Sub-plan, which will include, inter alia, evidence of availability of labor, capital equip- ment, and supplies of planting materials, fertili- zers and pesticides, and the specification of the amounts of short-term working capital required to (1. carry out such Isleta Sub-plan; and to furnish, jointly with the Beneficiary, such Isleta Sub-plan to Banco Central for approval; (iii) to provide adequate administrative and technical assistance to the Beneficiary for purposes of each Isleta Sub-plan and to supervise the carrying out of each such Sub-plan; and (iv) to guarantee to Banco Fomento, in form and sub- stance satisfactory to the Association, the repay- ment of each Isleta Sub-loan and the interest on such Isleta Sub-loan." Section 3.03. Section 2.07 of the Project Agreement is amended to read as follows: "Section 2.07. Banco Central shall furnish to the As- sociation:(i) promptly upon the execution thereof, certified copies of each Project Administration Agreement, the Isleta Administration Contract and of the Isleta Sub-loan Contract; and (ii) upon the Association's request, copies of each Abattoir Sub-loan Agreement, of each Isleta Sub-plan and of each Sub-loan Agreement." Section 3.04. Section 2.09 of the Project Agreement is amended to read as follows: "Section 2.09. (a) Except as the Association shall other- wise agree, Banco Central shall cause Banco Fomento and each -17- Participating Bank to pay interest at the rate of five per cent (5%) per annum on the amounts withdrawn from time to time from the Project Account by Banco Fomento and each such Parti- cipating Bank under, respectively, the Isleta Administration Contract and each respective Project Administration Agreement, and outstanding from time to time; no other additional charges shall be payable on such principal by Banco Fomento and each Participating Bank. (b) Interest under the Isleta Administration Contract and each Project Administration Agreement shall:(i) accrue from the respective dates on which each amount of principal lent under the Isleta Administration Contract or each re- spective Project Administration Agreement is withdrawn by Banco Fomento or each respective Participating Bank from the Project Account; (ii) be payable on the dates specified in the Isleta Administration Contract and on each Project Administration Agreement; and (iii) be computed on the basis of a 360-day year of twelve 30-day months." Section 3.05. Section 2.10 of the Project Agreement is amended to read as follows: "Section 2.10. Except as the Association shall other- wise agree, Banco Central shall cause Banco Fomento and each Participating Bank, to repay the aggregate amounts withdrawn from the Project Account in such number of installments pay- able on such dates as shall be specified, respectively, in the Isleta Administration Contract and each respective Proj- ect Administration Agreement, the date of maturity of the -18 - last of such installments to coincide with the last repay- ment of principal scheduled for the Beneficiary and for each borrowing farmer under, respectively, the Isleta Sub- loan Contract and the applicable Sub-loan Agreement." Section 3.06. Section 2.11 of the Project Agreement is amended to read as follows: "Section 2.11. Banco Central shall discount:(a) to Banco Fomento, one hundred per cent (100%) of each Isleta Sub-loan; (b) to each Participating Bank:(i) ninety per cent (90%) of each sub-loan under Part A (1) of the Project made by such Participating Bank; and (ii) seventy-five per cent (75%) of each sub-loan under Part A (2) of the Project made by such Participating Bank; and (c) to Banco Fomento and each Par- ticipating Bank, if requested to do so by Banco Fomento and such Participating Bank, each working capital loan referred to, respectively, in Sections 2.06 (k) and 2.06 bis (b) of this Agreement, at the prevailing rediscount rate applicable, from time to time, to agriculture and livestock loans made by Banco Central." Section 3.07. Section 2.12 of the Project Agreement is amended to read as follows: "Section 2.12. Banco Central shall ensure that all funds, including repayments of principal and payments of interest, received from Banco Fomento, each Participating Bank and each municipality in accordance with, respectively, the Isleta Administration Contract, each respective Project -19- Administration Agreement and each Abattoir Sub-loan Agree- ment, less (i) any interest paid and principal repaid to the Borrower in accordance with the Subsidiary Loan Agree- ment, and (ii) Banco Central's direct operating expenses attributable to the administration of the Project, shall accrue to the Project Account for twenty years from the date of this Agreement, to be used for further lending in Isleta and in the livestock subsector of the Borrover, in such pro- portion as to be determined, from time to time, in agreement by the Borrower, the Association and Banco Central." Section 3.08. Section 2.13 of the Project Agreement is amended by deleting the words "Parts A and B of the Project" and substitut- ing the words "Parts A, B and D of the Project" therefor. Section 3.09. The following Section is added after Section 2.16 of the Project Agreement, as Section 2.17 thereof: "Section 2.17. In case the Isleta Plan is modified, Banco Central undertakes not to approve thereafter any Isleta Sub-plan furnished to Banco Central for approval un- less: (i) Banco Central shall have furnished the Association with such modifications to the Isleta Plan; and (ii) the Association shall have notified Banco Central of the approval of the Association to such modifications." Section 3.10. Sentence (iii) of Section 3.02 of the Project Agreement is amended by adding the words ", Banco Fomento" after the words "Banco Central". -20-Ida Section 3.11. The following Part III is added to Schedule 1 to the Project Agreement: "III. Isleta The following procurement procedures shall be used for awarding contracts for the carrying out of Part D of the Project: 1. Except as provided in paragraph 3 hereof, contracts for the acquisition of equipment, machinery and vehicles for Part D of the Project shall be awarded in accordance with procedures consistent with those set forth in Part A of the 'Guidelines for Procurement under World Bank Loans and IDA Credits' published by the Bank in August 1975 (hereinafter called the Guidelines), on the basis of international compe- titive bidding. 2. Equipment, machinery and vehicles for the Project shall be so grouped so as to permit such bulk procurement as shall be consistent with appropriate technical and procurement prac- tices. Whenever possible each bid package for such items shall be for not less than the equivalent of $35,000. 3. Equipment, machinery and vehicles which cannot be grouped in bid packages estimated to cost the equivalent of $35,000 or more may be procured in accordance with Borrower's pro- cedures acceptable to the Association, provided that the aggregate cost of the equipment, machinery and vehicles so procured shall not exceed the equivalent of $150,000. w -21 - 4. Roview of invitations to bid and of proposed awards and final contracts: With respect to all contracts referred to in paragraph 1 hereof for the acquisition of equipment, machinery and vehicles estimated to cost the equivalent of $75,000 or more: (a) Before bids are invited, Banco Central shall fur- nish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modi- fication to the bidding documents shall require the Associa- tion's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, Banco Central shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report by the Project Director, on the evaluation and comparison of the bids received, together with the rec- ommendations for award of the said Project Director and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform Banco Central and state the reasons for such determination. -22- (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be fur- nished to the Association promptly after its execution and before delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 5. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, Banco Central shall furnish to the Association, promptly after its execution and before delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analy- sis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform Banco Central and state the reasons for such determination." a -23- ARTICLE IV Effective Date; Termination Section 4.01. This Amending Agreement shall not become effec- tive until evidence satisfactory to the Association shall have been furnished to the Association that: (a) the execution and delivery of this Amending Agreement on behalf of the Borrower and Banco Central have been duly autho- rized or ratified by all necessary governmental and corporate action; (b) one or more marketing agreements, satisfactory to the Association, have been concluded between the Borrower or any of the Borrower's agencies (including COHBANA) and a Fruit Exporter, for the purpose of selling Fruit in markets other than the Borrower's market; (c) experts in (i) banana plantation management, (includ- ing marketing), (ii) banana production, (iii) irrigation and flood control and (iv) disease and pest control, whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association, have been employed by COHBANA; and (d) the Borrower and Banco Central shall have executed and delivered an addendum, satisfactory to the Association, to the Subsidiary Loan Agreement, including this Amending Agreement un- der the terms and conditions of the Subsidiary Loan Agreement. -24- Section 4.02. As part of the evidence to be furnished pursuant to Section 4.01 of this Amending Agreement, there shall be fur- nished to the Association an opinion or opinions satisfactory to the Association of counsel acceptable to the Association showing: (a) on behalf of the Borrower, that this Amending Agreement has been duly authorized or ratified by, and executed and delivered on behalf of the Borrower, and that this Amending Agreement, the Development Credit Agreement as amended by this Amending Agreement, and the addendum to the Subsidiary Loan Agreement referred to in Section 4.01 (d) of this Amending Agveement,constitute valid and binding obligations of the Borrower in accordance with their terms; (b) on behalf of Banco Central that this Amending Agreement has been duly authorized or ratified by, and executed and deli- vered on behalf of Banco Central and that this Amending Agree- ment, the Project Agreement as amended by this Amending Agreement, and the addendum to the Subsidiary Loan Agreement referred to in Section 4.01 (d) of this Amending Agreement,constitute valid and binding obligations of Banco Central in accordance with their terms; and (c) on behalf of each party to the Marketing Agreements referred to in Section 4.01 (b) of this Amending Agreement, that such agreement or agreements have been duly authorized or rati- fied by, and executed and delivered on behalf of each such party and constitute a valid and binding obligation of each such party in accordance with their respective terms. -25- Section 4.03. This Amending Agreement shall come into force and effect on the date upon which the Association dispatches to the Borrower and Banco Central notice of the Association's accep- tance of the evidence required by Section 4.01 of this Amending Agreement. Section 4.04. If this Amending Agreement shall not have come into force and effect by July 27, 1976, this Amending Agreement and all obligations of the parties thereunder shall terminate un- less the Association, after consideration of the reasons for the delay, establishes a later date for the purposes of this Section. The Association shall promptly notify the Borrower and Banco Cen- tral of such later date. If this Amending Agreement shall termin- ate under the provisions of this Section, the Development Credit Agreement and the Project Agreement shall continue in full force and effect as if this Amending Agreement had not been executed. -26- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Amend- ing Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By Is/ E. Lerdau Acting Regional Vice President Latin America and the Caribbean REPUBLIC OF HONDURAS By /s/ R. Lazarus Authorized Representative BANCO CENTRAL DE HONDURAS By /s/ R. Lazarus Authorized Representative -27- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be fi- nanced out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of ex- penditures for items so to be financed in each Category: Amount of the Credit Allocated (Expressed in % of Category Dollar Equivalent) Financing (1) Sub-loans under 500,000 90% of amounts Part A (1) of disbursed under the Project the Sub-loans (2) Sub-loans under 4,100,000 75% of amounts Part A (2) of disbursed under the Project the Sub-loans (3) Abattoir Sub-loans 700,000 75% of amounts under Part B of disbursed under the Project the Abattoir sub-loans (4) Training and tech- 300,000 100% of foreign nical services under expenditures Part C of the Proj- ect (5) Isleta Sub-loans 1,000,000 100% of amounts disbursed under the Isleta Sub- loans TOTAL 6,600,000 ~28- 2. For the purposes of this Schedule, the term "foreign expen- ditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. Notwithstanding the provisions of paragraph I above, no with- drawals shall be made in respect of: (a) expenditures under Categories (1) through (4) prior to the date of this Agreement; (b) expenditures under Category (5) prior to the date of the Amending Agreement except that withdrawals in an aggregate amount not exceeding the equivalent of $250,000 may be made in respect of such Category (5) on account of payments made for such expenditures before that date but after March 10, 1976; (c) a sub-loan by a Participating Bank under Categories (1) or (2), unless the Project Administration Agreement under which such sub-loan will be provided has been entered into and has be- come effective; (d) amounts under Categories (2) and (3) in respect of a sub-loan or an Abattoir sub-loan exceeding the equivalent of seventy-five thousand dollars ($75,000) unless such sub-loan or Abattoir sub-loan shall have received the prior approval of the Association; and - 29 - (e) amounts under Category (5), (i) unless the Isleta Admin- istration Contract and the Isleta Sub-loan Contract shall have been executed and delivered, and (ii), in respect of each Isleta Sub-loan, unless such Isleta Sub-loan shall have received the prior approval of Banco Central and the Association shall have been duly notified by the Project Director of such approval.