Uganda - Uganda Tea Growers Corporation Project : Credit 0109 - Project Agreement - Conformed

I CREDIT NUMBER 109 UG Project Agreement (Uganda Tea Growers Corporation Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND UGANDA TEA GROWERS CORPORATION DATED SEPTEMBER 15, 1967 CREDIT NUMBER 109 UG Project Agreement (Uganda Tea Growers Corporation Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND UGANDA TEA GROWERS CORPORATION DATED SEPTEMBER 15, 1967 [ gita~td Agrement AGREEMENT, dated September 15, 1967, between INTER- NATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and UGANDA TEA GROWERS CORPORATION (here- inafter called UTGC), a statutory body established by the Uganda Tea Growers Corporation Act, 1966 of the Republic of Uganda. WHEREAS by an agreement of even date herewith between the Republic of Uganda (hereinafter called the Borrower) and the Association, which agreement, the schedule thereto and Development Credit Regulations No. 1 dated June 1, 1961 as amended February 9, 1967 of the Association made applicable thereto are hereinafter called the Development Credit Agreement, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to three million four hundred thousand dollars ($3,400,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that UTGC agree to undertake certain obligations to the Asso- ciation as hereinafter provided; and WHEREAS UTGC, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations herein- after set forth; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I Defmitions SECTION 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement shall have the respective meanings therein set forth. I 4 ARTICLE II Particular Covenants of UTGC SECTION 2.01. (a) UTGC shall carry out and complete, or cause to be carried out and completed, the Project with due diligence and efficiency and in conformity with sound agricultural, engineering and financial standards and practices. (b) UTGC shall furnish to the Association, promptly upon their preparation, the plans and work schedules for the Project and any material modifications subsequently made therein, in such detail as the Association shall from time to time request. (c) UTGC shall maintain records adequate to show the expenditures of the proceeds of the Credit and to record the progress of the Project (including the cost thereof); shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of UTGC; shall enable the Association's representatives to inspect the Project and any relevant records and documents; and shall furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the pro- ceeds of the Credit, the Project and the operations and financial condition of UTGC. (d) UTGC shall have its financial statements (balance sheet and related statement of earnings and expenses) certified semi-annually by an independent accountant or accounting firm acceptable to the Association and shall promptly after their preparation and not later than three months after the close of the accounting period to which they apply transmit to the Association certified copies of such statements and a signed copy of the accountant's or accounting firm's report. SECTION 2.02. (a) The Association and UTGC shall cooperate fully to assure that the purposes of the Credit 5 will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request. (b) The Association and UTGC shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Credit. UTGC shall prompty inform the Association and the Borrower of any condition which interferes with, or threatens to inter- fere with, the accomplishment of the purposes of the Credit or the performance by UTGC of its obligations under this agreement, or the Subsidiary Loan Agreement, or which shall increase or threaten to increase materially the esti- mated cost of the Project. SECTION 2.03. UTGC shall operate and maintain its fac- tories, equipment and property, and from time to time make all necessary renewals and repairs thereof, all in accordance with sound engineering standards; and shall at all times manage its affairs, field operations and factories and maintain its financial position in accordance with sound agricultural, commercial and financial practices and under the supervision of experienced and competent management. SECTION 2.04. UTGC shall duly perform all its obliga- tions under the Subsidiary Loan Agreement. Except as the Association and UTGC shall otherwise agree, UTGC shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving any provision of the Subsidiary Loan Agreement. SECTION 2.05. Except as the Association shall other wise agree, UTGC shall incur no indebtedness for money bor- rowed other than (i) the indebtedness referred to in the Recitals of the Development Credit Agreement and (ii) short-term indebtedness up to an aggregate amount at any one time outstanding of 1,200,000 Uganda shillings. For purposes of this Section, short-term indebtedness shall be deemed to be any debt maturing on demand or by its terms AI 6 within 12 months after the date on which it is originally incurred. SECTION 2.06. Except as the Association shall otherwise agree, in scheduling or rescheduling the planting of the approximately 9,700 acres of tea to be planted under the Project UTGC shall not increase by more than 10%o in each of the calendar years 1967 and 1968 or by more than 20% in each of the calendar years 1969 and 1970 the number of acres of tea to be planted in that year as set out in the Schedule to the Development Credit Agreement. SECTION 2.07. Except as the Association shall otherwise agree, UTGC shall not sell or approve the sale of shares in tea factories constructed as part of the Project to persons other than tea growers, or cooperatives formed by tea growers, participating in the Project, CDC or companies participating in the financing or management of such factories. SECTION 2.08. UTGC shall consult the Association on the uses of any surplus funds arising from the Project. SECTION 2.09. UTGC shall consult the Association about any proposed appointment to the positions of deputy general manager, chief accounting officer and chief technical officer, however these positions may be designated, sufficiently in advance of such appointment for the Association to have adequate opportunity to comment on it. SECTION 2.10. Except as the Association shall otherwise agree, UTGC shall not, prior to the completion of the planting program set out in the Schedule to the Development Credit Agreement, undertake responsibilities for supervis- ing, managing or financing the planting of any tea not 7 included in the Project or undertake responsibilities for the recurrent provision of technical assistance with respect to such planting. SECTION 2.11. In the event that the UTGC establishes or acquires any subsidiary, UTGC shall cause such subsidiary to observe and perform the obligations of UTGC hereunder to the extent to which the same can be applied thereto, as though such obligations were binding on such subsidiary. ARTICLE III Effective Date; Termination SECTION 3.01. This Agreement shall come into force and effect on the Effective Date. If the Development Credit Agreement terminates pursuant to Section 6.03 thereof, this Project Agreement and all obligations of the parties here- under shall terminate. SECTION 3.02. This Agreement and all obligations of UTGC and of the Association hereunder shall terminate on the later of (i) the date when the Subsidiary Loan Agreement shall terminate in accordance with its terms or (ii) December 31, 1986. ARTICLE IV Miscellaneous Provisions SECTION 4.01. Any notice, demand 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 or radiogram 1 8 to the party to which it is required or permitted to be given or made at its address hereinafter specified, or at such other address as such party shall have designated by notice to the party giving such notice or making such demand or request. The addresses so specified are: For TTGC: Uganda Tea Growers Corporation P.O. Box 4957 Kampala, Uganda Cable address: Teagrow ers Kampala 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. SECTIOx 4.02. Any action required or permitted to be taken, and any documents required or permitted to be executedl, under this Agreement on behalf of UTGC may be taken or executed by the Chairman of UTGC or such other person or persons as UTGC shall designate in writing. SECTION 4.03. UTGC shall furnish to the Association sufficient evidence of the authority of the person or persons who will, on behalf of UTGC, take any action or execute any documents required or permitted to be taken or executed 9 by UTGC pursuant to any of the provisions of this Agree- ment and the authenticated specimen signature of each such person. SECTION 4.04. This Agreement may be executed in sev- eral counterparts, each of which shall be an original and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, have caused this Agreement to be executed in their respective names by their representatives thereunto duly authorized and deliv- ered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT AssoCIATION By s/ J. BuRKE KNAPP Vice President UGANDA TEA GROWERS CORPORATION By s/ ERIFASI OTEMA-ALLIMADI Authorized Representative