Philippines - Rural Electrification Project : Loan 1547 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1547 PH Gu aratee Agreement (Rural Electrification Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIOKL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated May 10, 1978 LOAN NUMBER 1547 PH GUARANTEE AGREEMENT AGREEMENT, dated May 10, 1978, 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 National Electrification Administration (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to sixty million dollars ($60,000,000), 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 enter- ing 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 1.01. 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 (said General Conditions Applicable to Loan and Guarantee Agree- ments 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; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as primary obligor and not as -2- 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 and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. The Guarantor undertakes: (i) to provide, if necessary, such funds to the Borrower as shall be required by the Borrower for timely completion of the Rural Electrification Program; and (ii) that in the event the Borrower is unable to meet from its revenues the additional cost, if any, resulting from the changes in the rates of exchange between the currency of the Guarantor and the amounts withdrawn from the Loan Account in the various currencies, including the interest payable to the Bank on such withdrawals, the Guarantor shall provide to the Borrower funds sufficient to meet such additional costs. 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 governmental assets 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) Th2 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. - 3 - (d) 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 effec- tive, the Guarantor will give to the Bank an equivalent lien satisfactory to the Bank. (e) As used in this Section, the term "governmental assets" means assets of the Guarantor or of any agency of the Guarantor including the Central Bank of the Philippines or any institution performing the functions of a central bank for the Guarantor. Section 3.02. The Guarantor undertakes that the Borrower shall continue to exercise the authority over the granting of electric power utility franchises in the territories of the Guarantor. Section 3.03. The Guarantor shall, in consultation with the Bank, undertake a review of the auditing procedures for the Borrower's accounts, and shall make suitable arrangements in time for completion of the Borrower's audit reports in respect of the fiscal year 1979 on the basis of recommendations arising from said review. ARTICLE IV Representative 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 -4- 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 respect we names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF THE PHILIPPINES By /s/ Geronimo Velasco Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ S. Shahid Husain Regional Vice President East Asia and Pacific