Colombia - Third Small Scale Industry Project : Loan 1834 - Guarantee Agreement - Conformed

LOAN NUMBER 1834 CO Guarantee Agreement (Third Small-Scale Industry Project) b--tween REPUBLIC OF COLOMBIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated 1 0 , 1980 LOAN NUMBER 1834 CO GUARANTEE AGREEMENT AGREEMENT, dated ) 0 , 1980, between REPUBLIC OF COLOMBIA (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS pursuant to the Loan Agreement of even date herewith between the Bank and Banco de la Repfiblica (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to thirty-two million dollars ($32,000,000), 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 1.01. 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, subject, however, to the modifications thereof set forth in Schedule 2 to the Loan Agreement (said General Conditions Appli- cable 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; Provision of Funds S-ection 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the -2- Guarantor hereby unconditionally 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 and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreemento Section 2.02. (a) Except as the Bank shall otherwise agree and without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor shall provide, or cause to be provided, to CFP in each of the calendar years 1980, 1981 and 1982 an amount in pesos which shall be at least equal to the sum of: (i) the net proceeds of the aggregate draw-downs by CFP during the calendar year 1979 out of CFP's total borrowings; provided, however, that if any such borrowing shall have been either (1) a borrow- ing by CFP from a lender established outside the territories of the Guarantor; or (2) a borrowing by a borrower established within the territories of the Guarantor other than CFP from a lender estab- lished outside the territories of the Guarantor, but the proceeds of which are relent to CFP, then, the proceeds of either such borrowing shall be excluded from the aggregate draw-downs referred to in this sub-paragraph; plus (ii) not less than Col.$50,000,000, which shall be provided to CFP as paid-in capital; provided, however, that (1) any capitalization of CFP's retained earnings or any other allocations thereof to CFP's reserves shall not constitute a credit towards the capital contributions to be made pursuant to this sub-paragraph; and (2) alterna- tively, the capital contributions to be made pursuant to this sub-paragraph shall be paid-in in such other annual amounts as the Guarantor shall determine for each calendar year as long as (A) the aggregate amount of such contributions for the three calendar years shall be equal to not less than Col.$150,000,000 and (B) not less than Col.$75,000,000 of such aggregate amount shall have been paid-in by December 31, 1981 and the balance of such aggregate amount shall have been paid-in by December 31, 1982; plus -3- (iii) an amount in pesos, to be provided to CFP on terms and conditions compatible with CFP's term lending to small-scale industry, which shall be equal to the difference between (1) Col.$150,000,000 and (2) the aggregate of such amounts of capital contributions to CFP made pursuant to the preceding sub-paragraph (ii) as shall have been paid-in during the calendar year in question; provided, however, that the net proceeds of aggregate drawdowns out of (1) a borrowing by CFP from a lender established outside the terri- tories of the Guarantor; or (2) a borrowing under- taken for the purpose of providing credit to medium- and small-scale industrial enterprises by a borrower. established within the territories of the Guarantor (other than CFP) from a lender estab- lished outside the territories of the Guarantor, but the proceeds of which are relent to CFP, shall be excluded from the amount to be provided by CFP pursuant to this sub-paragraph. (b) Any amount provided by the Guarantor to CFP in any of the calendar years 1980, 1981 or 1982 pursuant to sub-paragraphs (a) (ii) or (a) (iii) of this Section which shall be in excess of the amounts to be so provided pursuant to such sub-paragraphs may be carried forward as a credit against the amounts to be so provided during the following calendar year or years. (c) The provisions of this Section supersede the provisions of Section 2.02 (a) of the Guarantee Agreement (Second Small-Scale Industry Project) between the Guarantor and the Bank dated Septem- ber 27, 1977, insofar as such provisions apply to the calendar year 1980; provided, however, that any amount provided by the Guarantor to CFP during the calendar year 1980 pursuant to such Section 2.02 (a) may be carried forward as a credit against the amounts to be provided by the Guarantor to CFP pursuant to sub- paragraphs (a) (ii) and (a) (iii) of this Section. ARTICLE III Other Covenants Section 3.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member con- cerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distri- bution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such Lien shall, unless the Bank shall otherwise agree, ipso facto, and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Guarantor, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, the Guarantor shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other assets, satisfactory to the Bank, of the Guarantor or of any entity owned or controlled by, or operating for the account or benefit of, the Guarantor, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor. (b) The foregoing 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) a lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Guarantor, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Guarantor or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor. Section 3.02. The Guarantor shall take all action, including the granting of all necessary authorizations, import licenses, -5- foreign exchange permits and all other approvals required under the laws of the Guarantor, to ensure the timely procurement of the goods and services required for the Project. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Ministro de Hacienda y Crfdito PGblico 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 4eneral Conditions: For the Guarantor: Ministerio de Hacienda y Cr4dito PGblico Palacio de los Ministerios Plaza San Agustin Bogotg, Colombia Cable address: MINHACIENDA Bogotg 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 in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF COLOMBIA By ' Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Latin America and the Caribbean INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this / day of 2 't- , 198k. FOR SECRETARY