Philippines - Fourth Development Finance Corporation Project : Loan 1052 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1052 PH Guarantee Agreement (Fourth Development Corporation Project) BETWEEN REPUBLIC OF THE PHILIPPINES AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED NOVEMBER 12, 1974 CONFORMED COPY LOAN NUMBER 1052 PH Guarantee Agreement (Fourth Development Corporation Project) BETWEEN REPUBLIC OF THE PHILIPPINES AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED NOVEMBER 12, 1974 GUARANTEE AGREEMENT AGREEMENT, dated November 12, 1974, between REPUBLIC OF THE PHILIPPINES (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Philippines National Bank (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to thirty million dollars ($30,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower: NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.0 1. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Schedule 2 to the Loan Agreement (said General Conditions Applicable to Loan and Guarantee Agreements, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally 4 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 premium, if any, on the prepayment of the Loan, all as set forth in the Loan Agreement. ARTICLE III Other Covenants Section 3.01. (a) It is the mutual intention of the Guarantor and the Bank that no other external debt shall enjoy any priority over the loan by way of a lien on governmental assets. (b) To that end the Guarantor (i) represents that at the date of this Agreement no lien exists on any assets of the Guarantor as security for any external debt except as otherwise disclosed in writing by the Guarantor to the Bank, and (ii) undertakes that, except as the Bank shall otherwise agree, if any such lien shall be created, it will ipso facto equally and ratably, and at no cost to the Bank, secure the payment of the principal of, and interest and other charges on, the Loan and in the creation of any such lien express provision will be made to that effect. The Guarantor shall promptly inform the Bank of the creation of any such lien. (c) The foregoing representation and undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. As used in this Section, the term "assets of the Guarantor" means assets of the Guarantor or of any agency of the Guarantor, including the Central Bank of the Philippines or any other institution performing the functions of a central bank. The Guarantor further undertakes that, within the limits of the laws in force in its territories, it will make the foregoing undertaking effective with respect to liens on the assets of its political subdivisions and their agencies, and to the extent that the Guarantor is unable within the limits of the laws in force in its territories to make this undertaking effective, the Guarantor will give to the Bank an equivalent lien satisfactory to the Bank. Section 3.02. The Guarantor covenants that it will not take any action which would prevent or interfere with the performance by the Borrower of its obligations 5 contained in the Loan Agreement and with the performance by the Corporation of its obligations contained in the Project Agreement and in the Subsidiary Loan Agreement, and will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrower and the Corporation to perform such obligations. Section 3.03. The Guarantor, upon the request of the Corporation, may exercise the option to provide to the Corporation insurance coverage against the risk of differentials, in respect of any withdrawals from the Loan Account and the interest payable in respect thereof, between the exchange rate between pesos and the currency which the Borrower must repay the Bank under the Loan Agreement and the exchange rate between pesos and the currency withdrawn from the Loan Account with respect to Sub-loans committed during the period for which such coverage is offered, and in consideration of a fee to be determined by the Guarantor, and to be paid by the Corporation to the Guarantor over the period of amortization of the Sub-loans covered. Such coverage shall apply only in respect of withdrawals, and interest in respect thereof, in cases in which the currency to be repaid to the Bank differs from the currency of withdrawal. Section 3.04. The Guarantor shall make arrangements with the Corporation, for the purpose, and in accordance with the terms set forth, in Section 3.07 of the Project Agreement, and shall collect any amounts due to it under such arrangements. ARTICLE IV Representat,ve of the Guarantor; Addresses Section 4.01. The Secretary of Finance of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Secretary of Finance Department of Finance Manila Philippines 6 Cable address: SECFINANCE Manila For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF THE PHILIPPINES By /s/ Eduardo Z. Romualdez Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s / Bernard R. Bell Regional Vice President East Asia and Pacific