Conformed Copy - C1878 - Forests Management and Protection Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 1878 MAG (Forests Management and Protection Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and FANALAMANGA Dated March 23, 1988 CREDIT NUMBER 1878 MAG PROJECT AGREEMENT AGREEMENT, dated March 23, 1988, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and FANALAMANGA. WHEREAS (A) by the Development Credit Agreement of even date herewith between the Democratic Republic of Madagascar (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to five million one hundred thousand Special Drawing Rights (SDR 5,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Fanalamanga 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 Fanalamanga, a part of the proceeds of the credit provided for under the Development Credit Agreement will be made available to Fanalamanga on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS Fanalamanga, 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 Page 2 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. Fanalamanga 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 and forestry practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the carrying out of Part C of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 4 to the Development Credit Agreement. Section 2.03. Fanalamanga 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 C of the Project. Section 2.04. Fanalamanga shall duly perform all its obliga- tions under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, Fanalamanga shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) Fanalamanga 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 Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b)Fanalamanga 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 Fanalamanga of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.06. Fanalamanga shall: (a) by February 1 of each year, furnish to the Association for preliminary review and comment the annual work program of Fanalamanga; and (b) by May 15 of each year, furnish to the Association for final approval such annual work program. ARTICLE III Management and Operations of Fanalamanga Section 3.01. Fanalamanga shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, and forestry practices under the supervision of Page 3 qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. Fanalamanga 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 forestry practices. Section 3.03. Fanalamanga 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) Fanalamanga shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) Fanalamanga shall: (i)have its records, accounts and financial state- ments (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by in- dependent 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 Fanalamanga thereunder shall terminate on the earlier of the following two dates: (i)the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii)the date fifteen 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 Fanalamanga 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. Page 4 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 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For Fanalamanga: Fanalamanga B.P. 4127 Antananarivo Madagascar Telex: 22508 Antananarivo 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 Fanalamanga, may be taken or executed by the Directeur G