Conformed Copy - C2180 - Agricultural Diversification Project - Project Agreement 1

Page 1 CONFORMED COPY CREDIT NUMBER 2180 GH GREL Project Agreement (Agricultural Diversification Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and GHANA RUBBER ESTATES LIMITED Dated December 21, 1990 CREDIT NUMBER 2180 GH GREL PROJECT AGREEMENT AGREEMENT, dated December 21, 1990, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and GHANA RUBBER ESTATES LIMITED (GREL). WHEREAS (A) by the Development Credit Agreement of even date herewith between the Republic of Ghana (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twelve million five hundred thousand Special Drawing Rights (SDR 12,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that GREL agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and GREL, part of the proceeds of the credit provided for under the Development Credit Agreement will be made available to GREL on the terms and conditions acceptable to the Association; and WHEREAS GREL, in consideration of the Association's 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: Page 2 ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, in 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. GREL 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 C of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, agricultural and environmental practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for Part C of the Project. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for Part C of 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. GREL 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 GREL Project Agreement and Part C of the Project Section 2.04. GREL shall duly perform all its obligations under the GREL Subsidiary Loan Agreement. Except as the Association shall otherwise agree, GREL shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the GREL Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) GREL shall, at the request of the Association, exchange views with the Association with regard to the progress of Part C of the Project, the performance of its obligations under this Agreement and under the GREL Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) GREL shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of Part C of the Project, the accomplishment of the purposes of the Credit, or the performance by GREL of its obligations under this Agreement and under the GREL Subsidiary Loan Agreement. Section 2.06. GREL shall: (a) purchase the rubber from entrepreneurs at a price based on a margin for costs worked back from the prices determined as in paragraph (b) below; and (b) sell its rubber at market determined prices. Section 2.07. (a) GREL shall furnish to the Association, not later than June 30, 1991, an implementation plan and management program for the rubber outgrower schemes satisfactory to the Association and shall not modify such plan and program thereafter without prior consultation with the Association. (b) GREL shall furnish to the Association, not later than December 31, 1991, a model outgrower service and input supply agreement satisfactory to the Association. Page 3 Section 2.08. In providing extension advice to outgrowers, GREL shall follow sound environmental practices, pay particular attention to erosion control and shall, in the provision of inputs, avoid the use of toxic chemicals. ARTICLE III Management and Operations of GREL Section 3.01. GREL shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, agricultural and environmental practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. GREL shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and agricultural practices. Section 3.03. GREL 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) GREL shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) GREL 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 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 GREL thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Page 4 Agreement shall terminate in accordance with its terms; or (ii) the date 30 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 GREL of this event. Section 5.03. 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 or telex 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 GREL: Ghana Rubber Estates Limited P.O. Box 228 Takoradi, Ghana Telex: 2656 GREL GH 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 GREL may be taken or executed by the Managing Director or such other person or persons as GREL shall designate in writing, and GREL 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 and year first above written. Page 5 INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Edward V.K. Jaycox Regional Vice President Africa GHANA RUBBER ESTATES LIMITED By /s/ Joseph L. S. Abbey Authorized Representative