South Africa - Escom Project : Loan 0041 - Guarantee Agreement - Conformed

LOAN NUMBER 41 SA Guarantee Agreement BETWEEN THE UNION OF SOUTH AFRICA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JANUARY 23, 1951 PRESS OF BYRON S. ADAMS. WASHINGTON @uarantee Tgreement AGREEMENT, dated January 23, 1951, between THE UNION OF SOUTH AFRICA (hereinafter called the Guaran- tor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAs by an agreement between the Bank and Elec- tricity Supply Commission (hereinafter called the Bor- rower) (which agreement and the schedules therein re- ferred to are hereinafter called the Loan Agreement) exe- cuted and delivered simultaneously with the execution and delivery of this Agreement and bearing even date herewith, the Bank has agreed to make to the Borrower a loan in the aggregate principal amount of thirty million dollars ($30,000,000), or the equivalent thereof in other currencies, on the terms and conditions set forth in the Loan Agree- ment, but only on condition that the Guarantor agree to guarantee such loan as herein provided; and WHEREAS in the Loan Agreement the Bank and the Bor- rower have agreed to accept all the provisions of Loan Regulations No. 4, dated August 15, 1950, a copy of which is attached hereto as Annex A (hereinafter called the Loan Regulations); and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower has agreed to guarantee such loan as herein provided; Now THEREFORE the parties hereto hereby agree as fol- lows: ARTICLE I SECTION 1.01. The parties hereto hereby accept all the provisions of the Loan Regulations with the same force and effect as if fully set forth herein. Each of the parties hereto agrees to perform all the obligations on its part to be performed under the Loan Regulations. 4 ARTICLE II SECTION 2.01. Without limitation or restriction upon any of the other covenants on its part in this Guarantee Agreement contained, the Guarantor hereby uncondi- tionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the punc- tual performance of all the covenants and agreements of the Borrower, all as set forth in the Loan Agreement and in the Bonds. ARTICLE III SECTION 3.01. (a) The Guarantor shall furnish to the Bank such information as it shall reasonably request with respect to financial and economic conditions in the terri- tories of the Guarantor and the international balance of payments position of the Guarantor. The Guarantor will promptly inform the Bank of any condition of substantial importance in the territories of the Guarantor that shall interfere with, or threaten to interfere with, the perform- ance by the Guarantor of its obligations hereunder. (b) If the Guarantor or any Province or other political subdivision of the Guarantor or any agency of any of them (including local governing authorities) shall propose to incur any substantial external debt, the Guarantor shall inform the Bank of such proposal and, before the proposed action is taken, shall afford the Bank all opportunity which is rea- sonably practicable in the circumstances to exchange views with the Guarantor with respect thereto; provided, how- ever, that the foregoing provisions of this sentence shall not apply to: (i) the incurring of additional external debt through utilization, in accordance with the terms of any credit established prior to the date of this Agreement, of any unused amounts available under such credit; (ii) the entering into international payments or similar agreements the term of which is not more than one year and under 5 which the transactions on each side are expected to balance over the period of the agreement; or (iii) the incurring by the South African Reserve Bank in the ordinary course o' its business of any indebtedness maturing not more than two years after its date. (c) The Guarantor shall afford all reasonable opportun- ity for accredited representatives of the Bank to visit any part of the territories of the Guarantor for purposes re- lated to the Loan. SECTION 3.02. It is the mutual intention of the Guaran- tor and the Bank that no other external public debt shall enjoy any priority over the Loan by way of a lien on pub- lic assets. To that end the Guarantor specifically under- takes that except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor or any Province or other political subdivision of the Guarantor or any agency of any of them (including local governing authorities) as security for any external debt, such lien shall ipso facto equally and ratably secure the payment of the principal of and interest and other charges on the Loan and the Bonds, and that in the creation of -any such lien express provision shall be made to that effect. However, this Section shall not apply to: (i) any lien created on any property at the time of purchase thereof solely as security for the payment of the purchase price of such property; (ii) -any lien on commercial goods to secure debt maturing not more than one year after its date and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien created by the South African Reserve Bank on any of its assets in the ordinary course of its banking business to secure any indebtedness maturing not more than one year after its date. SECTION 3.03. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for and free from any taxes imposed by the Guarantor or any taxing authority thereof or therein and 6 free from all restrictions of the Guarantor and any Prov- ince or other political subdivision of the Guarantor or any agency of any of them (including local governing authori- ties). The foregoing provisions of this Section shall not apply to taxes on payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guar- antor. The Guarantee Agreement, the Loan Agreement and the Bonds shall be free of any issue, stamp or other tax imposed by the Guarantor or any taxing authority thereof or therein. SECTION 3.04. The Guarantor covenants that it will not take any action which would prevent or materially inter- fere with the performance by the Borrower of any of the covenants, agreements and obligations of the Borrower in the Loan Agreement or the Loan Regulations contained. ARTICLE IV SECTION 4.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Secretary to the Treasury, Union Buildings, Pretoria, Union of South Africa. For the Bank: International Bank for Reconstruction and Development, 1818 H Street, N. W., Washington 25, D. C., United States of America.. SECTION 4.02. The Minister of Finance of the Guaran- tor and such person or persons as he shall appoint in writiiig are designated as authorized representatives of 7 the Guarantor for the purposes of Section 6.12(b) of the Loan Regulations. SECTION 4.03. The Minister of Finance of the Guaran- tor in office at the time in question is designated for the purposes of Section 8.03 of the Loan Regulations. SECTION 4.04. In this Agreement any reference to the Minister of Finance of the Guarantor shall include a refer- ence to any Minister of State of the Guarantor for the time being acting for or on behalf of the Minister of Finance of the Guarantor. IN WITNESS WMEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. THE UNION OF SOUTH AFRICA by G. P. JOOSTE For the Minister of Finance on behalf of The Union of South Africa INTERNATIONAL BANK FOR RECON- STRUCTION AND DEVELOPMENT by EUGENE R. BLACK President