Public Disclosure Authorized CONFORMED COPY GEF TRUST FUND GRANT NUMBER TF050612 Public Disclosure Authorized Global Environment Facility Trust Fund Grant Agreement (Regional Integrated Silvopastoral Approaches to Ecosystem Management Project) Public Disclosure Authorized between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT acting as an Implementing Agency of the Global Environment Facility and CENTRO AGRONOMICO TROPICAL DE INVESTIGACION Y ENSEÑANZA Public Disclosure Authorized Dated May 20, 2002GEF TRUST FUND GRANT NUMBER TF050612 GLOBAL ENVIRONMENT FACILITY TRUST FUND GRANT AGREEMENT AGREEMENT, dated May 20, 2002 between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) acting as an implementing agency of the Global Environment Facility (GEF) in respect of grant funds provided to the GEF Trust Fund by certain members of the Bank as participants of the GEF, and CENTRO AGRONOMICO TROPICAL DE INVESTIGACION Y ENSEÑANZA (the Recipient).
WHEREAS (A) the Bank, pursuant to Resolution No. 91-5 of March 14, 1991 of the Executive Directors of the Bank, established the GEF to assist in the protection of the global environment and promote thereby environmentally sound and sustainable economic development; (B) following the restructuring of the GEF, such arrangements continued in place on the basis set forth in Resolution No. 94-2 of May 24, 1994, of the Executive Directors of the Bank which, inter alia, established the GEF Trust Fund and appointed the Bank as trustee of the GEF Trust Fund (Resolution No. 94-2); (C) the second replenishment of the GEF Trust Fund was approved on the basis set forth in Resolution No. 98-2 of July 14, 1998, of the Executive Directors of the Bank (Resolution No. 98-2); (D) the Recipient, having satisfied itself as to the feasibility and priority of the project described in Schedule 2 to this Agreement (the Project), has requested assistance from the resources of the GEF Trust Fund for funding the Project, and said request having been approved in accordance with the provisions of the Instrument for the Establishment of the Restructured Global Environment Facility approved under Resolution 94-2, and to be funded from the resources of the GEF Trust Fund; (E) the Recipient intends to contract from the Food and Agriculture Organization of the United Nations (FAO) a grant in an amount equivalent to $350,000 (the FAO Grant) to assist in financing Parts C and D.3 of the Project on the terms and conditions set forth in an agreement to be entered into between the Recipient and FAO (the FAO Grant Agreement); and (F) the Republics of Colombia, Costa Rica and Nicaragua through letters to the Bank dated April 2001, December 7, 2001 and December 6, 2001 from the corresponding GEF s operational focal points for said Republics, respectively, have requested that the grant provided in Article II of this Agreement (the Grant) be made to the Recipient, and that a portion of the Grant proceeds be transferred to CIPAV (as defined below) and UCA (as defined below), as set forth in Sections 3.06 (a) and 3.07 (a) of this Agreement, respectively, to enable said entities to carry out the Project activities under their responsibility referred to therein; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Grant to the Recipient upon the terms and conditions set forth in this Agreement; NOW THEREFORE, the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01 (a) The following provisions of the General Conditions Applicable to Loan and Guarantee Agreements for Single Currency Loans of the Bank, dated May 30, 1995 (as
amended through October 6, 1999), with the modifications set forth in paragraph (b) of this Section (the General Conditions) constitute an integral part of this Agreement: (i) Article I; (ii) Sections 2.01 (1), (2), (3), (4), (5), (7), (8), (14), (15), (16), (18) and (21), 2.02 and 2.03; (iii) Section 3.01; (iv) Section 4.01 and 4.06; (v) Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.06, 5.07 and 5.09; (vi) Sections 6.01, 6.02 (c), (e), (f), (g), (h), (i), (l), (m), (n), (o) and (p), 6.03, 6.04 and 6.06; (vii) Section 8.01 (b); (viii) Sections 9.01 (a), 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09; (ix) the second sentence of Section 10.01, and 10.03; (x) Article XI; and (xi) Sections 12.01, 12.02, 12.03 and 12.04. (b) The General Conditions shall be modified as follows: (i) A new paragraph shall be added to the end of Section 2.01 to read as follows: the term Special Drawing Rights and the symbol SDR mean special drawing rights as valued by the International Monetary Fund in accordance with its Articles of Agreement ; (ii) the term Bank, wherever used in the General Conditions, other than in Sections 5.01 (a) and 6.02 (f) thereof, means the Bank acting as an implementing agency of the GEF; (iii) the term Borrower, wherever used in the General Conditions, means the Recipient, except in Sections 6.02 (f) and 8.01 (b) where the term shall mean the Republic of Costa Rica or the Republic of Colombia or
the Republic of Nicaragua, as the case may be; (iv) the term Loan Agreement, wherever used in the General Conditions, means this Agreement; (v) the term Loan, wherever used in the General Conditions, means the Grant; (vi) the term Loan Account, wherever used in the General Conditions, means the Grant Account, the account opened by the Bank on its books in the name of the Recipient to which the amount of the Grant is credited; (vii) Section 4.01 of the General Conditions is hereby amended to read as follows: Except as the Bank and the Recipient shall otherwise agree, withdrawals from the Grant Account shall be made in the respective currencies in which the expenditures to be financed out of the proceeds of the Grant have been paid or are payable. ; and (viii) a new paragraph (q) is added to Section 6.02 of the General Conditions, as follows: (q) An extraordinary situation shall have arisen in which any further disbursement under the Grant would exceed the resources available for disbursement from the GEF.. Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Recitals to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) CIPAV means Centro para la Investigacion en Sistemas Sostenibles de Produccion Agropecuaria (the Center for Research on Sustainable Agricultural Production Systems), a non government entity vested with legal personality and authorized to operate in the Republic of Colombia; (b) Agreement; CIPAV Agreement means the agreement referred to in Section 3.06 (a) of this (c) Colombia ES Contract means any of the agreements referred to in Section 3.06 (a) (v) of this Agreement; (d) Colombia Project Area means: (i) a portion of the rural areas of the Cartago, Alcala and Ulloa s municipalities located in the northern part of the department of the Valle del Cauca; and (ii) a portion of the area located in the foothills of the Central Andes in the department of Quindio, both areas covered by the La Vieja river watershed and within the
territory of the Republic of Colombia; (e) Costa Rica ES Contract means any of the agreements referred to in Section 3.05 (a) (ii) of this Agreement; (f) Costa Rica Project Area means the area covered by the watersheds of Rio Barranca, Rio Jesus Maria and Rio Guacamal, all within the Esparza area located in the Central Pacific region of the territory of the Republic of Costa Rica; (g) Eligible Farmer means an individual farmer who meets the eligibility criteria set forth in the Operational Manual to carry out a Silvopastoral Systems Subproject; (h) ES Contract means any of the Colombia ES Contracts, the Costa Rica ES Contracts and/or the Nicaragua ES Contracts; (i) FMR means each financial monitoring report prepared in accordance with Section 4.02 (a) of this Agreement; (j) FONAFIFO means Fondo Nacional de Financiamiento Forestal, the Republic of Costa Rica s National Forestry Financing Fund; (k) FONAFIFO Agreement means the agreement referred to in Section 3.05 (a) of this Agreement; (l) Implementation Letter means the letter of even date herewith from the Recipient to the Bank setting forth the Project indicators; (m) Nicaragua ES Contract means any of the agreements referred to in Section 3.07 (a) (v) of this Agreement; (n) Nicaragua Project Area means the area covered by the watersheds of Rio Paiguas and Rio Bulbul, both within the department of Matagalpa located in the territory of the Republic of Nicaragua; (o) Agreement; Operational Manual means the manual referred to in Section 3.04 (a) of this (p) Project Area means the Colombia Project Area, the Costa Rica Project Area and/or the Nicaragua Project Area; (q) Silvopastoral Systems Subproject means the provision of any of the environmental services referred to in Part C of the Project;
(r) Agreement; Special Account means the account referred to in Section 2.02 (b) of this (s) Technical Services means services that will be quoted and contracted on the basis of performance of a measurable physical output; (t) UCA means Universidad de Centro America (the University of Central America), an entity vested with legal personality and authorized to operate in the Republic of Nicaragua; and (u) Agreement. UCA Agreement means the agreement referred to in Section 3.07 (a) of this ARTICLE II The GEF Trust Fund Grant Section 2.01. The Bank agrees to make available to the Recipient, on the terms and conditions set forth or referred to in this Agreement, the Grant in an amount in various currencies equivalent to three million seven hundred thousand Special Drawing Rights (SDR 3,700,000). Section 2.02. (a) The amount of the Grant may be withdrawn from the Grant Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods, Technical Services and other services (including environmental services) required for carrying out the Project and to be financed out of the proceeds of the Grant. (b) The Recipient may, for the purposes of the Project, open and maintain in Dollars a separate special deposit account in a commercial bank on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure and attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. The Closing Date shall be January 31, 2008 or such later date as the Bank shall establish. The Bank shall promptly notify the Recipient of such later date. ARTICLE III Execution of the Project Section 3.01. The Recipient declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, shall:
(a) carry out: (i) the Project activities under its responsibility referred to in Parts B.2, C and E.1 of the Project in the Costa Rica Project Area; and (ii) the Project activities under its responsibility referred to in Parts A, B.1, B.4 (a), D, E.2 and E.3 of the Project within the territory of the Republic of Costa Rica, all with due diligence and efficiency and in conformity with appropriate administrative, financial, technical, social, ecological and environmental standards and practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for said Project activities; (b) (i) cause CIPAV to carry out: (A) the Project activities under its responsibility referred to in Parts B.2, B.3 (b), C and E.1 of the Project in the Colombia Project Area; and (B) the Project activities under its responsibility referred to in Parts A, B.3 (a), B.4, D.1, D.2, D.3 and E.2 of the Project within the territory of the Republic of Colombia (all as set forth in the CIPAV Agreement), all with due diligence and efficiency and in conformity with appropriate administrative, financial, technical, social, ecological and environmental standards and practices and in accordance with said agreement, the provisions of the Operational Manual and the corresponding action plan referred to in Section 3.10 (a) of this Agreement; (ii) take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable CIPAV to perform said Project activities under CIPAV s responsibility; and (iii) not take or permit to be taken any action which would prevent or interfere with the carrying out of said Project activities; and (c) (i) cause UCA to carry out: (A) the Project activities under its responsibility referred to in Parts B.2, C and E.1 of the Project in the Nicaragua Project Area; and (B) the Project activities under its responsibility referred to in Parts A, B.4 (a), D.1, D.2, D.3 and E.2 of the Project within the territory of the Republic of Nicaragua (all as set forth in the UCA Agreement), all with due diligence and efficiency and in conformity with appropriate administrative, financial, technical, social, ecological and environmental standards and practices and in accordance with said agreement, the provisions of the Operational Manual and the corresponding action plan referred to in Section 3.10 (a) of this Agreement; (ii) take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable UCA to perform said Project activities under UCA s responsibility; and (iii) not take or permit to be taken any action which would prevent or interfere with the carrying out of said Project activities. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods, Technical Services and other services required for the Project and to be financed out of the proceeds of the Grant shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. For the purposes of Section 9.08 of the General Conditions and without limitation thereto, the Recipient shall: (a) Prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Recipient and the Bank, a plan for the future operation of the Project; and (b) afford the Bank a reasonable opportunity to exchange views with the Recipient
on said plan. Section 3.04. (a) Without limitation to the provisions of Section 3.01 of this Agreement, the Recipient shall, and shall cause CIPAV and UCA to, carry out the Project activities under their responsibility in accordance with a manual (the Operational Manual), acceptable to the Bank, said manual to include, inter alia: (i) the criteria for selecting Eligible Farmers; (ii) the procedures and criteria for approving Silvopastoral Systems Subprojects; (iii) the cut-off date for approving Silvopastoral Systems Subprojects; (iv) the payment options under ES Contracts; (v) the land use index which will measure the changes in land use and assign a value to the total environmental services provided under each Silvopastoral Systems Subproject; (vi) the guidelines and procedures for certifying of changes in land use as a result of the carrying out of Silvopastoral Systems Subprojects; (vii) the terms and conditions of an ES Contract; (viii) the procedures and methods for the procurement of goods, Technical Services and consultants services under the Project; (ix) the annual plan for the year 2002 (said plan to include, inter alia, the Project activities to be carried out by the Recipient, CIPAV and UCA during said year); and (x) the financial management action plan for the Project. (b) In case of any conflict between the terms of the Operational Manual and those of this Agreement, the terms of this Agreement shall prevail. Section 3.05. (a) For purposes of carrying out Part C of the Project in the Costa Rica Project Area, the Recipient shall transfer from time to time, and on a grant basis, a portion of the Grant proceeds allocated under Category (1) (a) set forth in the table in paragraph 1 of Schedule 1 to this Agreement that are required to cover no more than those eligible expenditures under said Category (1) (a) expected to be incurred during the thirty consecutive calendar days immediately after each said transfer to FONAFIFO pursuant to an agreement (the FONAFIFO Agreement) to be entered into between the Recipient and FONAFIFO on terms and conditions satisfactory to the Bank, including, inter alia, the obligation of FONAFIFO, on behalf of the Recipient, to: (i) maintain records and accounts, in a manner acceptable to the Bank (including any other information and/or documentation as the Bank may request from time to time) to enable the Recipient to comply with its obligations under Sections 4.01 and 4.02 of this Agreement; and (ii) upon approval of a Silvopastoral Systems Subproject by the Recipient, enter into an agreement (the Costa Rica ES Contract) with the corresponding Eligible Farmer on terms and conditions, acceptable to the Bank, which shall include, inter alia, the obligation of : (A) FONAFIFO to: (1) administer the Grant funds referred to in (a) herein in a manner acceptable to the Bank and as provided in said paragraph; and (2) make payment to the corresponding Eligible Farmer in accordance with the terms of the Operational Manual and the corresponding ES Contract; and (B) said Eligible Farmer to carry out said Silvopastoral Systems Subproject with due diligence and efficiency and in conformity with appropriate administrative, financial, technical, social, ecological and environmental standards and practices. (b) (i) The Recipient shall exercise its rights and carry out its obligations under
the FONAFIFO Agreement in such manner as to protect the interests of the Recipient and the Bank and to accomplish the purposes of the Grant; and (ii) except as the Bank shall otherwise agree, the Recipient shall not assign, amend, abrogate, terminate, waive or fail to enforce the FONAFIFO Agreement or any provision thereof. (c) In case of any conflict among the terms of the FONAFIFO Agreement, the Operational Manual and those of this Agreement, the terms of this Agreement shall prevail. Section 3.06. (a) For purposes of carrying out the Project activities referred to in Section 3.01 (b) (i) of this Agreement, the Recipient shall transfer from time to time, and on a grant basis, a portion of the Grant proceeds allocated under Categories (1) (b), (2) (b), (3) (b), (4) (b), (5) (b) and (6) (b) set forth in the table in paragraph 1 of Schedule 1 to this Agreement that are required to cover no more than those eligible expenditures under said Categories expected to be incurred during the thirty consecutive calendar days immediately after each said transfer to CIPAV pursuant to an agreement (the CIPAV Agreement) to be entered into between the Recipient and CIPAV on terms and conditions satisfactory to the Bank, including, inter alia, the obligation of CIPAV to: (i) Administer the Grant funds referred to in paragraph (a) herein in a manner acceptable to the Bank and as provided in said paragraph; (ii) maintain a financial management system (including records and accounts and any other information and/or documentation as the Bank may request from time to time), and prepare financial statements, all in accordance with accounting standards acceptable to the Bank consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the carrying out of said Project activities so as to enable the Recipient to comply with its obligations under Sections 4.01 and 4.02 of this Agreement; (iii) participate in the review referred to in Section 3.08 (c) of this Agreement; (iv) comply with the obligations set forth in Section 3.09 and Article V of this Agreement; and (v) upon approval of a Silvopastoral Systems Subproject by the Recipient, enter into an agreement (the Colombia ES Contract) with the corresponding Eligible Farmer on terms and conditions, acceptable to the Bank, which shall include, inter alia, the obligation of: (A) CIPAV to make payment to said Eligible Farmer in accordance with the terms of the Operational Manual and the corresponding
ES Contract; and (B) said Eligible Farmer to carry out said Silvopastoral Systems Subproject with due diligence and efficiency and in conformity with appropriate administrative, financial, technical, social, ecological and environmental standards and practices. (b) (i) The Recipient shall exercise its rights and carry out its obligations under the CIPAV Agreement in such manner as to protect the interests of the Recipient and the Bank and to accomplish the purposes of the Grant; and (ii) except as the Bank shall otherwise agree, the Recipient shall not assign, amend, abrogate, terminate, waive or fail to enforce the CIPAV Agreement or any provision thereof. (c) In case of any conflict among the terms of the CIPAV Agreement, the Operational Manual and those of this Agreement, the terms of this Agreement shall prevail. Section 3.07. (a) For purposes of carrying out the Project activities referred to in Section 3.01 (c) (i) of this Agreement, the Recipient shall transfer from time to time, and on a grant basis, a portion of the Grant proceeds allocated under Categories (1) (c), (2) (c), (3) (c), (4) (c), (5) (c) and (6) (c) set forth in the table in paragraph 1 of Schedule 1 to this Agreement that are required to cover no more than those eligible expenditures under said Categories expected to be incurred during the thirty consecutive calendar days immediately after each said transfer to UCA pursuant to an agreement (the UCA Agreement) to be entered into between the Recipient and UCA on terms and conditions satisfactory to the Bank, including, inter alia, the obligation of UCA to: (i) Administer the Grant funds referred to in (a) herein in a manner acceptable to the Bank and as provided in said paragraph; (ii) maintain a financial management system (including records and accounts and any other information and/or documentation as the Bank may request from time to time), and prepare financial statements, all in accordance with accounting standards acceptable to the Bank consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the carrying out of said Project activities so as to enable the Recipient to comply with its obligations under Sections 4.01 and 4.02 of this Agreement; (iii) participate in the review referred to in Section 3.08 (c) of this Agreement; (iv) comply with the obligations set forth in Section 3.09 and Article V of this Agreement; and (v) upon approval of a Silvopastoral Systems Subproject by the Recipient,
enter into an agreement (the Nicaragua ES Contract) with the corresponding Eligible Farmer on terms and conditions, acceptable to the Bank, which shall include, inter alia, the obligation of : (A) UCA to make payment to said Eligible Farmer in accordance with the terms of the Operational Manual and the corresponding ES Contract; and (B) said Eligible Farmer to carry out said Silvopastoral System Subproject with due diligence and efficiency and in conformity with appropriate administrative, financial, technical, social, ecological and environmental standards and practices. (b) (i) The Recipient shall exercise its rights and carry out its obligations under the UCA Agreement in such manner as to protect the interests of the Recipient and the Bank and to accomplish the purposes of the Grant; and (ii) except as the Bank shall otherwise agree, the Recipient shall not assign, amend, abrogate, terminate, waive or fail to enforce the UCA Agreement or any provision thereof. (c) In case of any conflict among the terms of the UCA Agreement, the Operational Manual and those of this Agreement, the terms of this Agreement shall prevail. Section 3.08. The Recipient shall: (a) maintain or cause to be maintained policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with the indicators set forth in the Implementation Letter, the carrying out of the Project and the achievement of the objective thereof; (b) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, each February 15 and August 15 during Project implementation, starting with the report due not later than February 15, 2003, a report integrating the results of the monitoring and evaluation activities performed pursuant to paragraph (a) of this Section, on the progress achieved in the carrying out of the Project during the calendar semester preceding the date of presentation of the report and setting out the measures recommended to ensure the efficient carrying out of the Project and the achievement of the objective thereof during the following calendar semester; and (c) review with the Bank, CIPAV and UCA, by March 31, 2005, or such later date as the Bank shall request, the pertinent reports referred to in paragraph (b) of this Section, and, thereafter, take, or cause to be taken, all measures required to ensure the efficient completion of the Project and the achievement of the objective thereof, based on the conclusions and recommendations of said reports and the Bank s views on the matter. Section 3.09. The Recipient and the Bank hereby agree that the obligations set forth in
Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 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 activities to be carried out by CIPAV and UCA, shall in fact be carried out by CIPAV and UCA pursuant to the provisions of the CIPAV Agreement and the UCA Agreement, respectively. Section 3.10. The Recipient shall: (a) not later than November 30 of each year of Project implementation, starting in the year 2002, prepare and furnish to the Bank an action plan, acceptable to the Bank, said plan to include, inter alia, the Project activities to be carried out by the Recipient, CIPAV and UCA during the calendar year following the date of presentation of said plan; and (b) thereafter carry out, or cause to be carried out, said plan in accordance with its terms. ARTICLE IV Financial Conditions Section 4.01. (a) The Recipient shall maintain a financial management system, including records and accounts, and prepare financial statements, all in accordance with accounting standards acceptable to the Bank consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the Project. (b) The Recipient shall: (i) have: (A) the records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) referred to in paragraph (a) above; (B) the records and accounts for the Special Account; and (C) the records, accounts and financial statements referred to in Sections 3.06 (a) (ii) and 3.07 (a) (ii) of this Agreement, for each fiscal year audited, in accordance with auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year as so audited; and (B) an opinion on such statements, records and accounts and report of such audit, by said auditors, of such scope and in such detail as the Bank shall have reasonably requested, including as part of the information to be provided in each said report, a management letter concerning the Recipient s internal controls; and (iii) furnish to the Bank such other information concerning said records and accounts, and the audit thereof, as the Bank may from time to time
reasonably request. (c) For all expenditures with respect to which withdrawals from the Grant Account were made on the basis of statements of expenditure, the Recipient shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank s representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.02. (a) Without limitation upon the Recipient s progress reporting obligations set out in Section 3.08 of this Agreement, the Recipient shall prepare in accordance with guidelines acceptable to the Bank and furnish to the Bank a financial monitoring report, in form and substance acceptable to the Bank, which: (i) sets forth sources and uses of funds for the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the Grant, and explains variances between the planned and actual uses of such funds; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and planned implementation ; and (iii) sets forth the status of procurement under the Project, as at the end of the period covered by said report. (b) The first FMR shall be furnished to the Bank not later than 45 days after the end of the first calendar semester after the Effective Date, and shall cover the period from the incurrence of the first expenditure under the Project through the end of such first calendar semester; and thereafter, each FMR shall be furnished to the Bank not later than 45 days after
each subsequent calendar semester, and shall cover such calendar semester. ARTICLE V Other Covenants Section 5.01. The Recipient shall cause CIPAV and UCA: (a) to carry on their operations and conduct their affairs in accordance with sound administrative, financial, technical, social, ecological and environmental practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers; and (b) at all times to operate and to maintain their equipment and other property, and from time to time, promptly as needed, to make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, technical, engineering, social, ecological and environmental practices. ARTICLE VI Remedies of the Bank Section 6.01. Pursuant to Section 6.02 (p) of the General Conditions, the following additional events are specified: (a) FONAFIFO shall have failed to comply with any of its obligations under the FONAFIFO Agreement. (b) Agreement. CIPAV shall have failed to comply with any of its obligations under the CIPAV (c) Agreement. UCA shall have failed to comply with any of its obligations under the UCA (d) As a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that CIPAV and/or UCA will be able to perform their obligations under the CIPAV Agreement and/or the UCA Agreement, respectively. (e) The Republic of Costa Rica, or any other authority having jurisdiction, shall have taken any action, including the enactment or issuance of legislation or regulations, which, in the opinion of the Bank, may adversely affect the carrying out of the Project activities under the responsibility of the Recipient (as referred to in Section 3.01 (a) of this Agreement) or the
performance by the Recipient of any of its obligations under this Agreement. (f) The Republic of Colombia, or any other authority having jurisdiction, shall have taken any action, including the enactment or issuance of legislation or regulations, which, in the opinion of the Bank, may adversely affect the carrying out of the Project activities under the responsibility of CIPAV (as referred to in Section 3.01 (b) (i) of this Agreement) or the performance by CIPAV of any of its obligations under the CIPAV Agreement. (g) The Republic of Nicaragua, or any other authority having jurisdiction, shall have taken any action, including the enactment or issuance of legislation or regulations, which, in the opinion of the Bank, may adversely affect the carrying out of the Project activities under the responsibility of UCA (as referred to in Section 3.01 (c) (i) of this Agreement) or the performance by UCA of any of its obligations under the UCA Agreement. (h) The Republic of Costa Rica shall have failed to afford a reasonable opportunity for representatives of the Bank to visit any part of its territory for purposes related to the Project. (i) The Republic of Colombia shall have failed to afford a reasonable opportunity for representatives of the Bank to visit any part of its territory for purposes related to the Project. (j) The Republic of Nicaragua shall have failed to afford a reasonable opportunity for representatives of the Bank to visit any part of its territory for purposes related to the Project. (k) The FAO Grant Agreement shall have failed to become effective by December 31, 2002, or such later date as the Bank may agree; provided, however, that the provisions of this paragraph shall not apply if the Recipient establishes to the satisfaction of the Bank that adequate funds for Parts C and D.3 of the Project are available to the Recipient from other sources on terms and conditions consistent with the obligations of the Recipient under this Agreement. (l) (i) Subject to subparagraph (ii) of this paragraph, the right of the Recipient to withdraw the proceeds of the FAO Grant shall have been suspended, canceled or terminated in whole or in part, pursuant to the terms of the FAO Grant Agreement providing therefor. (ii) Subparagraph (i) of this paragraph shall not apply if the Recipient establishes to the satisfaction of the Bank that: (A) such suspension, cancellation or termination is not caused by the failure of the Recipient to perform any of its obligations under such agreement; and (B) adequate funds for Parts C and D.3 of the Project are available to the Recipient from other sources on terms and conditions consistent with the obligations of the Recipient under this
Agreement. ARTICLE VII Arbitration Section 7.01. Any dispute arising out of or relating to this Agreement which is not settled by agreement of the parties shall be finally settled by arbitration in accordance with the UNCITRAL Arbitration Rules in force on the date of this Agreement. The place of arbitration shall be Washington, D.C., United States of America. In the event of a conflict between the UNCITRAL Arbitration Rules and the terms of this Agreement, the terms of this Agreement shall govern. ARTICLE VIII Effectiveness; Termination Section 8.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the Operational Manual has been approved by the Bank; (b) the CIPAV Agreement has been executed by the parties thereto; and (c) the UCA Agreement has been executed by the parties thereto. Section 8.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the CIPAV Agreement has been duly authorized or ratified by the Recipient and CIPAV and is legally binding upon the Recipient and CIPAV in accordance with its terms; and (b) that the UCA Agreement has been duly authorized or ratified by the Recipient and UCA and is legally binding upon the Recipient and UCA in accordance with its terms. Section 8.03. The date August 19, 2002 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 8.04. This Agreement shall continue in effect until the Grant has been fully
disbursed and the parties to this Agreement have fulfilled their obligations hereunder. ARTICLE IX Representative of the Recipient; Addresses Section 9.01. The Director General of the Recipient is designated as representative of the Recipient for the purposes of Section 11.03 of the General Conditions. Section 9.02 The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Recipient: CATIE- 7170 Turrialba Costa Rica Facsimile: (506) 556-6166
For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: Facsimile: INTBAFRAD 248423 (MCI) (202) 477-6391 Washington, D.C. 64145 (MCI) 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT as an implementing agency of the Global Environment Facility By /s/mark Cackler Acting Regional Vice President Latin America and the Caribbean CENTRO AGRONOMICO TROPICAL DE INVESTIGACION Y ENSEÑANZA By /s/muhammad Ibrahim Authorized Representative SCHEDULE 1 Withdrawal of the Proceeds of the Grant
1. The table below sets forth the Categories of items to be financed out of the proceeds of the Grant, the allocation of the amounts of the Grant to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Grant Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Silvopastoral Systems Subprojects: (a) in the Costa Rica Project Area 200,000) 100% of amounts ) disbursed for (b) in the Colombia Project Area 330,000) environmental services ) under the corresponding (c) in the Nicaragua Project Area 330,000) ES Contract (2) Goods: (a) for the Recipient s Project 68,000) 100% activities under Parts A, ) B.1, B.2, D.1 and E.2 of ) the Project ) ) (b) for CIPAV s Project 37,000) activities under Parts A, ) B.2, B.3, D.1 and E.2 of ) the Project ) ) (c) for UCA s Project 68,000) activities under Parts A, ) B.2, D.1 and E.2 of the ) Project ) (3) Technical Services: (a) for the Recipient s Project 22,000) 100% activities under Parts B.1 ) and B.2 of the Project ) ) (b) for CIPAV s Project 28,000) activities under Parts B.2 ) and B.3 of the Project ) ) (c) for UCA s Project 22,000) activities under Part B.2 ) of the Project ) (4) Consultants services:
(a) for the Recipient s Project 935,000) 100% activities under Parts A, B.1, ) B.2, D.1, D.2, D.4, E.1 and ) E.2 of the Project ) ) (b) for CIPAV s Project 349,000) activities under Parts A, ) B.2, B.3, D.1, D.2, E.1 and ) E.2 of the Project ) ) (c) for UCA s Project 310,000) activities under Parts A, ) B.2, D.1, D.2, E.1 and ) E.2 of the Project ) (5) Training: (a) for the Recipient s Project 80,000) 100% activities under Parts A, ) B.4 (a), D.3 and E.2 of the ) Project ) ) (b) for CIPAV s Project 91,000) activities under Parts A, ) B.4, D.3 and E.2 of the ) Project ) ) (c) for UCA s Project 40,000) activities under Parts A, ) B.4 (a), D.3 and E.2 of the ) Project ) (6) Incremental Operating Costs: (a) for the Recipient s Project 350,000) 100% activities under Part E.2 ) of the Project ) ) (b) for CIPAV s Project 140,000) activities under Part E.2 ) of the Project ) ) (c) for UCA s Project 120,000) activities under Part E.2 ) of the Project ) (7) Audits under Part E.3 of the 10,000 100% Project (8) Unallocated 170,000
TOTAL 3,700,000 2. For purposes of this Schedule: (a) The term Training means expenditures (other than those for consultants services) incurred by the Recipient, CIPAV and/or UCA, as the case may be, to finance reasonable transportation costs and per-diem of trainees and rental of training facilities, equipment and materials for the carrying out of the Project activities under their responsibility; and (b) the term Incremental Operating Costs means reasonable recurrent expenditures that would not have been incurred by the Recipient, CIPAV or UCA, as the case may be, absent the Project, such as for: (i) salaries of the Project s managers and support staff; (ii) operation and maintenance (including spare parts) of vehicles and computer equipment financed with the proceeds of the Grant; (iii) rental of office facilities and the related utility costs; (iv) non-durable goods; (v) transportation and per-diem costs of said entities professional staff; and (vi) administrative fees to be paid to FONAFIFO for administering the Grant funds as referred to in Section 3.05 (a) (ii) (A) of this Agreement, all for purposes of carrying out and supervising the Project activities under their responsibility. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) payments made for expenditures under Category (1) (a) set forth in paragraph 1 of this Part in respect of a Silvopastoral Systems Subproject unless: (a) the FONAFIFO Agreement has been executed by the parties thereto; (b) a legal opinion, acceptable to the Bank, of counsel acceptable to the Bank, has been furnished to the Bank indicating that the FONAFIFO Agreement has been duly authorized or ratified by the Recipient and FONAFIFO and is legally binding upon the Recipient and FONAFIFO in accordance with its terms; and (c) the corresponding Costa Rica ES Contract has been executed by the parties thereto; (c) payments made for expenditures under Category (1) (b) set forth in paragraph 1 of this Part in respect of a Silvopastoral Systems Subproject unless the corresponding Colombia ES Contract has been executed by the parties thereto; and (d) payments made for expenditures under Category (1) (c) set forth in paragraph 1 of this Part in respect of a Silvopastoral Systems Subproject unless the corresponding Nicaragua ES Contract has been executed by the parties thereto. 4. The Bank may require withdrawals from the Grant Account to be made on the basis of statements of expenditure for expenditures under: (a) contracts for goods with the exception of the first contract for goods to be procured under Part B.1 of Section I of Schedule 3 to this Agreement; (b) contracts for Technical Services with the exception of the first contract for
Technical Services to be procured under Part B.2 of Section I of Schedule 3 to this Agreement; (c) contracts for the employment of consulting firms costing less than $50,000 equivalent; (d) contracts for the employment of individual consultants costing less than $50,000 equivalent; (e) ES Contracts; and (f) Training and Incremental Operating Costs set forth in Categories (5) and (6) of the table in paragraph 1 of this Schedule, respectively, all under such terms and conditions as the Bank shall specify by notice to the Recipient. 5. If the Bank shall have determined at any time that any payment made from the Grant Account was used for any expenditure not consistent with the provisions of this Agreement, the Recipient shall, promptly upon notice from the Bank, refund to the Bank for deposit into the Grant Account, an amount equal to the amount so used or the portion thereof as specified by the Bank. SCHEDULE 2 Description of the Project The objective of the Project is to demonstrate and measure: (a) the effects of payment incentives to carry out Silvopastoral Systems Subprojects in degraded pasture lands in the Project Area; and (b) the improvements in the functioning of ecosystems and the global environmental and local socio-economic benefits resulting from the carrying out of said subprojects. The Project consists of the following parts, subject to such modifications thereof as the Recipient and the Bank may agree upon from time to time to achieve such objectives. Part A: Ecosystems Enhancement and Capacity Building Carrying out of a program which consists of, inter alia: (a) The strengthening of local development organizations, through the provision of technical assistance and training and the acquisition and utilization of goods, for purposes of, inter alia, assisting potential Eligible Farmers in: (i) the carrying out of Silvopastoral Systems Subprojects (including assistance in the production of inputs such as seed and seedlings needed for the implementation of said subprojects); and (ii) the management of sustainable livestock production and the enhancement of the functioning of ecosystems ; and (b) the strengthening of the institutional capacity of national and local farmer organizations, through the provision of technical assistance and training and the acquisition and utilization of goods, for purposes of, inter alia, developing sustainable livestock production systems. Part B: Monitoring of Environmental Services 1. Design of a system for the Project Area that will: (a) monitor the changes in land use and
the increase in biodiversity and carbon sequestration as a result of the carrying out of Silvopastoral Systems Subprojects in said area; and (b) provide information with respect to the global environmental and local socio-economic benefits resulting from the carrying out of said subprojects. 2. Implementation of the system referred to in Part B.1 above in the Project Area. 3. (a) Design of a system for the Colombia Project Area that will monitor the changes in water quality as a result of the carrying out of Silvopastoral Systems Subprojects; and (b) implementation of the system referred to in (a) herein in the Colombia Project Area. 4. Carrying out of a training program concerning monitoring techniques for purposes of assisting: (a) the Recipient, CIPAV and UCA in the implementation of the system referred to in Part B.1 above; and (b) CIPAV in the implementation of the system referred to in Part B.3 above. Part C: Eco-services Payment Provision of demand-driven environmental services on Eligible Farmers plots of land located in the Project Area, which services consist of establishment and maintenance of complex arrays of planted trees, shrubs and grass species through the adoption of an integrated farming system that will result in the change of land use on said plots of land, all for purposes of sustaining productive animals, improving soil and water quality, increasing biodiversity and carbon sequestration and providing economic sustenance to said farmers. Part D: Policy Formulation and Dissemination 1. Carrying out of socio-economic assessments of Silvopastoral Systems Subprojects for purposes of evaluating: (a) the payment incentives to carry out said subprojects; (b) the Eligible Farmers access to credit; (c) land characteristics (such as size, production and location); (d) barriers to markets (such as lack of roads to transport products from the plot of land on which said subprojects are carried out to local markets); and (e) the economic impact of the carrying out of said subprojects. 2. Based on the results of the evaluation referred to in Part D.1 above, formulate policy recommendations to the Republics of Colombia, Costa Rica and Nicaragua, as the case may be. 3. Carrying out of annual workshops to disseminate the results of Project activities to stakeholders, including, inter alia, public officials of the ministries of agriculture and the environment of the Republics of Colombia, Costa Rica and Nicaragua. 4. Carrying out of studies to promote the carrying out of Silvopastoral Systems Subprojects outside the Project Area, as approved by the Bank.
Part E: Project Management 1. Carrying out of bi-annual technical evaluations of Silvopastoral Systems Subprojects to determine if the process which certifies the changes in land use as a result of the carrying out of said subprojects is being carried out in accordance with the guidelines and procedures set forth in the Operational Manual. 2. Strengthening of the institutional capacity of the Recipient, CIPAV and UCA, through the provision of technical assistance and training, acquisition and utilization of goods and financing of incremental operating costs, to carry out the Project activities under their responsibility. 3. Carrying out of Project audits as referred to in Section 4.01 (b) (i) of this Agreement. * * * The Project is expected to be completed by July 31, 2007. SCHEDULE 3 Procurement and Consultants Services Section I. Procurement of Goods Part A: General Goods shall be procured in accordance with the provisions of Section I of the Guidelines for Procurement under IBRD Loans and IDA Credits published by the Bank in January 1995 and revised in January and August 1996, September 1997 and January 1999 (the Guidelines) and the following provisions of Section I of this Schedule. Part B: Procurement Procedures 1. Shopping Goods shall be procured under contracts awarded on the basis of international or national shopping procedures, at the option of the Recipient, CIPAV or UCA, as the case may be, in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 2. Procurement of Technical Services Technical Services shall be procured under lump-sum, fixed-price contracts awarded on