Conformed Copy - C2190 - Agricultural Sector Adjustment Credit - Project Agreement 1

Page 1 CONFORMED COPY CREDIT NUMBER 2190 UG Project Agreement (Agricultural Sector Adjustment Credit) between INTERNATIONAL DEVELOPMENT ASSOCIATION and UGANDA COFFEE DEVELOPMENT AUTHORITY Dated May 11, 1995 CREDIT NUMBER 2190 UG PROJECT AGREEMENT AGREEMENT, dated May 11, 1995, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and UGANDA COFFEE DEVELOPMENT AUTHORITY (UCDA). WHEREAS (A) by the Development Credit Agreement (Credit 2190-UG) dated December 19, 1990, as amended in an exchange of letters dated July 20, 1994 and August 8, 1994 between the Republic of Uganda (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to sixty-nine million five hundred thousand Special Drawing Rights (SDR 69,500,000), on the terms and conditions set forth in the Development Credit Agreement; (B) by a subsidiary grant agreement to be entered into between the Borrower and UCDA, part of the proceeds of the credit provided for under the Development Credit Agreement will be made available to UCDA on the terms and conditions set forth in said Subsidiary Grant Agreement; and WHEREAS UCDA, in consideration of the Association's Page 2 entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this 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. UCDA declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, shall carry out Part D.2 of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for Part D.2 of the Project. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works 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 the Development Credit Agreement. Section 2.03. UCDA shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement and Part D.2 of the Project. Section 2.04. UCDA shall duly perform all its obligations under the UCDA Subsidiary Grant Agreement. Except as the Association shall otherwise agree, UCDA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the UCDA Subsidiary Grant Agreement or any provision thereof. Section 2.05. (a) UCDA shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the UCDA Subsidiary Grant Agreement, and other matters relating to the purposes of the Credit. (b) UCDA shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by UCDA of its obligations under this Agreement and under the UCDA Subsidiary Grant Agreement. ARTICLE III Management and Operations of UCDA Section 3.01. UCDA shall carry on its operations and conduct its affairs in accordance with sound administrative and financial practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. UCDA shall at all times operate and maintain its plant, machinery, equipment and other property, and from Page 3 time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering and financial practices. Section 3.03. UCDA shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) UCDA shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) UCDA shall: (i) have its records, 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 Association such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Association shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall not become effective until (a) the UCDA Subsidiary Grant Agreement shall have been duly executed by the Borrower and UCDA and (b) evidence satisfactory to the Association shall have been furnished to the Association that the execution and delivery of this Agreement and the UCDA Subsidiary Grant Agreement on behalf of UCDA have been duly authorized or ratified by UCDA's Board. Section 5.02. As part of the evidence to be furnished pursuant to Section 5.01 of this Agreement, there shall be furnished to the Association an opinion or opinions satisfactory to the Association of counsel acceptable to the Association showing, on behalf of UCDA, that this Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, UCDA and is legally binding upon UCDA in accordance with its terms. Section 5.03. This Agreement shall come into force and effect on the date upon which the Association shall dispatch to UCDA notice of its acceptance of the evidence required by Section 5.01 of this Agreement. Section 5.04. (a) This Agreement and all obligations of the Association and of UCDA thereunder shall terminate on the earlier of the following two dates: Page 4 (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date ten years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify UCDA of this event. Section 5.05. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. 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 designated 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: Telex: INDEVAS 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) For Uganda Coffee Development Authority: Uganda Coffee Development Authority P.O. Box 7267 Kampala, Uganda Telex: 61412 COFEDEV 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 UCDA may be taken or executed by the Managing Director or such other person or persons as the Managing Director shall designate in writing, and UCDA shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 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 Page 5 and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Stephen Denning Acting Regional Vice President Africa UGANDA COFFEE DEVELOPMENT AUTHORITY By /s/ Dr. Israel Kibirige Sebunya Chairman By /s/ Tress N. Bucyanayandi, Managing Director Authorized Representative