Sri Lanka - Tree Crop Rehabilitation (Tea) Project : Credit 0818 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 818 CE Project Agreement (Tree Crop Rehabilitation (Tea) Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and SRI LANKA STATE PLANTATIONS CORPORATION and THE JANATHA ESTATES DEVELOPMENT BOARD Dated July 12, 1978 CREDIT NUMBER 818 CE PROJECT AGREEMENT AGREEMENT, dated July 12, 1978, between INTERNATIONAL DEVEL- OPMENT ASSOCIATION (hereinafter called the Association) and the SRI LANKA STATE PLANTATIONS CORPORATION (hereinafter called SPC) and the JANATHA ESTATES. DEVELOPMENT BOARD (hereinafter called JEDB). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Sri Lanka (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twenty-one million dollars ($21,000,000), on the terms and conditions set forth in the Development Credit Agree- ment, but only on condition that SPC and JEDB agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and the Bank of Ceylon, a part of the pro- ceeds of the credit provided for under the Development Credit Agreement will be made available through the Bank of Ceylon to SPC and JEDB on the terms and conditions therein set forth; and WHEREAS SPC and JEDB, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, have agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. SPC and JEDB shall carry out Part A of the Project described in Schedule 2 to the Development Credit -2- Agreement with due diligence and efficiency and in conformity with appropriate administrative, agricultural, financial and engineer- ing practices. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.03. (a) SPC and JEDB undertake to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to each of them by th, Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency treely usable by SPC and JEDB to replace or repair such goodo. (b) Except as the Association may otherwise agree, SPC and JEDB shall cause all goods and services financed out of the proceeds of the Credit made available to each of them by the Borrower to be used exclusively for the Project. Section 2.04. (a) SPC and JEDB shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) SPC and JEDB: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit made available to each of them by the Borrower, and to disclose the use thereof in the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditures of the proceeds of the Credit so made available to each of them and the goods and services financed out of such proceeds. -3- (c) SPC and JEDB shall afford reasonable opportunity for the Association's representatives to examine all plants, installa- tions, sites, works, buildings, property and equipment of SPC and JEDB and any relevant records and documents, for purposes related to the Credit and this Agreement. Section 2.05. (a) SPC and JEDB shall at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of their obligations under this Agreement, and other matters relating to the purposes of the Credit. (b) SPC and JEDB shall promptly inform the Association of any condition which affects or threatens to affect, the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by SPC and JEDB of their obligations under this Agreement. Section 2.06. SPC and JEDB shall, until the completion of the Project, continue to maintain the present visiting agent system in the Project Area. Section 2.07. SPC and JEDB shall at all times until the completion of the Project ensure that the positions of Hatton Regional Managers in their respective institutions are filled by persons with qualifications and experience satisfactory to the Association. ARTICLE III Management and Operations of SPC and JEDB Section 3.01. SPC and JEDB shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.02. SPC and JEDB shall at all times manage their affairs, plan the development of their properties and facilities and maintain their financial position in accordance with appro- priate administrative, agricultural, engineering and financial practices under the supervision of experienced and competent management; and shall cause their plant, equipment, properties and facilities to be maintained and all necessary renewals and repairs thereto to be made, all in accordance with appropriate administrative, agricultural, engineering and financial practices. -4- Section 3.03. (a) SPC and JEDB shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of their operations; (b) Except in the normal course of business, SPC and JEDB shall not, without the prior approval of the Association, sell, transfer, distribute or otherwise dispose of any of its property or assets, which shall be required for its efficient operation, or the sale, transfer, distribution or disposal of which would adversely affect SPC's and JEDB's ability to carry out its obliga- tions under this Agreement. Section 3.04. SPC and JEDB shall complete the rehabilitation of houses in the Project Area by December 31, 1988. Section 3.05. SPC and JEDB shall, by December 31, 1978, introduce and maintain a standard format for their estates' monthly reports satisfactory to the Association. Section 3.06. SPC and JEDB shall, by December 31, 1979, review with the Association the adequacy of their current policies regarding the terms and conditions of service of tea industry personnel. ARTICLE IV Financial Covenants Section 4.01. (a) SPC and JEDB shall maintain records ade- quate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial conditions. (b) SPC and JEDB shall maintain separate accounts for the Project. Section 4.02. (a) SPC shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year prior to 1978 brought up to date by December 31, 1978 and 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, -5- (A) certified copies of its financial statements for such year as so audited and (B) 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 the accounts and financial statements of SPC and the audit thereof as the Association shall from time to time reasonably request. (b) The audit of the separate accounts referred to in Section 4.01 (b) of this Agreement shall, include, inter alia, a statement that funds disbursed against statements of expenditure have been used for the purpose for which they had been provided. Section 4.03. (a) JEDB shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) 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, (A) certified copies of its financial statements for such year as so audited and (B) 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 Associ- ation such other information concerning the accounts and financial statements of JEDB and the audit thereof as the Association shall from time to time reasonably request. (b) The audit of the separate accounts referred to in Section 4.01 (b) of this Agreement shall include, inter alia, a statement that funds disbursed against statements of expenditure have been used for the purpose for which they had been provided. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of SPC and JEDB thereunder shall terminate on the earlier of the following two dates: -6- (i) the date on which the Development Credit Agree- ment shall terminate in accordance with its terms; or (ii) a date 20 years after the date of this Agree- ment. (b) If the Development Credit Agreement terminates in accor- dance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify SPC and JEDB of this event. Section 5.03. All the provisions of this Agreement shall con- tinue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have des- ignated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. -7- For SPC: Sri Lanka Plantations Corporation 18 Gregory's Road Colombo 7 Sri Lanka Cable address: STATEPLACO Colombo For JEDB: Janatha Estates Development Board 55/75 Vauxhall Lane Colombo 2 Sri Lanka Cable address: Telex: 1276 JANAWASAMA Colombo Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of SPC may be taken or executed by the Chairman of the Board of SPC or such other person or persons as such Chairman shall designate in writing, and SPC shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of JEDB may be taken or executed by the Chairman of JEDB or such other person or persons as such Chairman shall designate in writing, and JEDB shall furnish to the Associa- tion sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.04. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. -8- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By Is/ Manfred G. Blobel Acting Regional Vice President South Asia SRI LANKA STATE PLANTATIONS CORPORATION By /s/ Wijesinghe Sugathadasa Karunaratne Authorized Representative THE JANATHA ESTATES DEVELOPMENT BOARD By /s/ Wijesinghe Sugathadasa Karunaratne Authorized Representative