Ecuador - Guayas Highway Project : Loan 0094 - Guarantee Agreement - Conformed

LOAN NUMBER 94 EC Guarantee Agreement (Guayas Highway Project) BETWEEN THE REPUBLIC OF ECUADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED FEBRUARY 10, 1954 (Snaranter Agirettnt AGREEMENT, dated February 10, 1954 between the REPUBLIC OF ECUADOR (hereinafter called the Guaran- tor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEPEAS by an agreement of even date herewith between the Bank and Comit6 Ejecutivo de Vialidad de la Provincia del Guayas (hereinafter called the Borrower), which agree- ment and the schedules therein referred to are hereinafter called the Loan Agreement, the Bank has agreed to make to the Borrower a loan in various currencies in an aggre- gate principal amount equivalent to eight million five hun- dred thousand dollars ($8,500,000), on the terms and conditions set forth iii the Loan Agreement, but only on condition that the Guarantor agree to guarantee the pay- ment of the principal, interest and other charges on such loan; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to guarantee the payment of the principal, interest and other charges on such loan; Now THEREFORE the parties hereto hereby agree as fol- lows: ARTICLE I SECTION 1.01. The parties to this Guarantee Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated October 15, 1952 (hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. 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 the interest and other charges on, the Loan, the prin- cipal of and interest on the Bonds, the premium, if any, on the prepayment of the Loan or the redemption of the Bonds, all as set forth in the Loan Agreement and in the Bonds. SECTION 2.02. (a) The Guarantor shall not take and, within the limits of its constitutional powers shall not permit any of its political subdivisions or agencies to take, any action which would prevent or interfere with the per- formance by the Borrower of any of the covenants, agree- ments and obligations of the Borrower contained in the Loan Agreement; and the Guarantor shall take or cause to be taken. all reasonable action which shall be necessary to enable the Borrower to perform such covenants, agree- ments and obligations. (b) Without limitation or restriction upon the foregoing provisions of this Section, the Guarantor specifically under- takes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures required for carrying out the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Bor- rower to be provided with such funds as are needed to meet such expenditures. ARTICLE III SECTION 3.01. It is the mutual intention of the Guarantor and the Bank that no external debt hereafter incurred shall enjoy any priority over the Loan by way of a lien on 5 governmental assets or by way of priority in the allocation or realization of foreign exchange. To that end, the Guar- antor and Banco Central del Ecuador undertake that, ex- cept as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor or of the Banco Central del Ecuador, as security for any external debt, such lien will 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 will be made to that effect. Within the limits of its constitutional powers, the Guaran- tor will make the foregoing undertaking effective with respect to liens on assets of any of the Guarantor's agencies including agencies granted autonomy by the Constitution of Ecuador (other than Banco Central del Ecuador), or any of the Guarantor 's political subdivisions or of any agency of any such political subdivision, and to the extent that the Guarantor is unable within the limits of its constitutional powers to make such undertaking effective, the Guarantor will give to the Bank an equivalent lien satisfactory to the Bank. The foregoing provisions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on com- mercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; (iii) any lien arising in the ordinary course of bank- ing transactions to secure a debt maturing not more than one year after the date on which it is originally incurred; or (iv) any lien solely upon revenues or receipts in cur- rency of the Guarantor which is given by a political sub- division (consejo provincial or nunicipalidad) or by an agency of a political subdivision of the Guarantor under arrangements containing no provisions which would result in priority in the allocation or realization of foreign ex- change. 6 SECTION 3.02. (a) The Guarantor and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Guarantor, such information shall include informa- tion with respect to financial and economic conditions in the territories of the Guarantor and the international balance of payments position of the Guarantor. (b) The Guarantor and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Guarantor shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Guarantor shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any part of the territories of the Guarantor for purposes related to the Loan. 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 or fees imposed under the laws of the Guarantor or laws in effect in its territories; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, pay- ments 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 Guarantor. SECTION 3.04. This Guarantee Agreement, the Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Guarantor or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof. 7 SECTION 3.05. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Guarantor or laws in effect in its territories. ARTICLE IV SECTION 4.01. The Guarantor shall endorse, in accord- ance with the provisions of the Loan Regulations, its guarantee on the Bonds to be executed and delivered by the Borrower. The Ambassador of Ecuador to the United States and such person or persons as he shall designate in writing are designated as the authorized representatives of the Guarantor for the purposes of Section 6.12 (b) of the Loan Regulations. ARTICLE V SECTION 5.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Republic of Ecuador Embassy of Ecuador 2320 Bancroft Place, N.W. Washington, D. C. United States of America For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America SECTION 5.02. The Ministro de Tesoro of the Guarantor is designated for the purposes of Section 8.03 of the Loan Regulations. 8 IN WITNESS WHEREOF, the Guarantor and the Bank, act- ing through their representatives thereunto duly authorized, have caused this Guarantee 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, and Banco Central del Ecuador, acting through its duly authorized representative, has evidenced its acceptance of its oblig-itions under Section 3.01 of this Agreement. REPUBLIC OF ECUADOR By JOSE R. CHIRIBOGA V. Authorized Representative BANCO CENTRAL DEL ECUADOR By JOSE R. CHIRIBOGA V. Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By R. L. GARNER Vice President