Chile - Lota Project : Loan 0172 - Guarantee Agreement - Conformed

LOAN NUMBER 172 CH Guarantee Agreement (Lota Project) BETWEEN THE REPUBLIC OF CHILE AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JULY 24, 1957 LOAN NUMBER 172 CH Guarantee Agreement (Lota Project) BETWEEN THE REPUBLIC OF CHILE AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JULY 24, 1957 (uarater Aguretnut AGREEMENT, dated July 24, 1957, between THE REPUBLIC OF CHILE (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank). WHEREAS by an agreement of even date herewith between the Bank and Corporaci6n de Fomento de la Producci6n and Compaiia Carbonifera e Industrial de Lota (here- inafter called the Borrowers), which agreement and the schedules therein referred to are hereinafter called the Loan Agreement, the Bank has agreed to make to the Bor- rowers a loan in various currencies equivalent to nine million six hundred thousand dollars ($9,600,000), 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 Borrowers 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 Borrowers, has agreed so to guarantee such obligations of the Borrowers; 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 June 15, 1956, subject, however, to the modifica- tions thereof set forth in Schedule 3 to the Loan Agreement (said Loan Regulations No. 4 as so modified being herein- after called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Wherever used in this Guarantee Agree- ment, unless the context shall otherwise require, the several 4 terms defined in the Loan Agreement shall have the respec- tive meanings therein set forth. ARTICLE II SECTION 2.01. Without limitation or restriction upon any of the other covenants on its part in this Agreement con- tained, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punc- tual payment of the principal of, and the interest and other charges on, the Loan, the principal of and interest on the Notes, and the premium, if any, on the prepayment of the Loan or the Notes, all as set forth in the Loan Agreement and in the Notes. SECTION 2.02. Whenever there is reasonable cause to believe that the funds available to Fomento will be inade- quate to enable it to carry out its obligations under the Loan Agreement, the Guarantor undertakes to make arrange- ments, satisfactory to the Bank, promptly to provide Fo- mento or cause Fomento to be provided with such funds as are needed to meet such obligations. ARTICLE III SECTION 3.01. It is the mutual intention of the Guaran- tor and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on govern- mental assets. To that end, the Guarantor undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor as security for any external debt, such lien will ipso facto equally and rat- ably secure the payment of the principal of, and interest and other charges on, the Loan and the Notes, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing provi- sions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as secu- rity for the payment of the purchase price of such property; 5 (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is orig- inally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the or., Inary course of banking transactions and securing a debt maturing not more than one year after its date. The term "assets of the Guarantor" as used in this Sec- tion includes assets of the Guarantor or of any of its politi- cal subdivisions or of any agency of the Guarantor or of any such political subdivision, including the Banco Central de Chile. 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 re- quest with regard to the general status of the Loan. On the part of the Guarantor, such information shall include infor- mation with respect to financial and economic conditions in the territories of the Guarantor and the international bal- ance 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 interferes with, or threatens to interfere with, the accomplishment 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 Notes shall be paid without deduction for, and free from, any taxes or fees imposed 6 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 Note to a holder thereof other than the Bank when such Note is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 3.04. This Agreement, the Loan Agreement, the Notes and the Mortgage 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, registration, recordation or filing thereof. SECTION 3.05. The principal of, and interest and other charges on, the Loan and the Notes shall be paid free from all restrictions imposed under the laws of the Guarantor or laws in effect in its territories. SECTION 3.06. The Guarantor shall not take or permit any of its political subdivisions or agencies to take any action which would prevent or interfere with the perform- ance by the Borrowers of any of the covenants, agreements and obligations of the Borrowers or either of them, in the Loan Agreement contained, and will take or cause to be taken all reasonable action which shall be necessary in order to enable the Borrowers to perform such covenants, agree- ments and obligations. To implement these obligations the Guarantor by letter of even date herewith signed by the Ambassador of Chile to the United States has outlined its policy of assuring free market prices for the sale of coal without intervention by the Government. ARTICLE IV SECTION 4.01. In accordance with the provisions of the Loan Agreement, the Guarantor shall endorse its guaran- 7 tee on the Notes to be executed and delivered by the Bor- rowers. The Minister of Finance of the Guarantor and such person or persons as he shall appoint in writing are desig- nated as authorized representatives of the Guarantor for the purposes of signature of the guarantee on the Notes. The signature of any such representative may be a facsimile signature if such guarantee is also countersigned manually by an authorized representative of the Guarantor. If any authorized representative of the Guarantor whose manual or facsimile signature shall be affixed to any such guarantee shall cease to be such authorized representative, the Note on which such guarantee is endorsed may nevertheless be delivered under the Loan Agreement and such guarantee shall be valid and binding on the Guarantor as though the person whose manual or facsimile signature shall have been affixed to such guarantee had not ceased to be such author- ized representative. ARTICLE V SECTION 5.01. If the Guarantor shall default in the per- formance of any agreement on its part in this Guarantee Agreement contained, the Bank, at its option, may by notice to the Guarantor require that the Guarantor pay the prin- cipal amount of all the Notes which shall then be outstand- ing and unpaid, and the interest accrued and unpaid thereon to the date of payment thereof, and forthwith upon the giv- ing of such notice such principal and interest shall become immediately due and payable by the Guarantor, anything in this Guarantee Agreement, the Loan Agreement, the Mortgage or the Notes to the contrary notwithstanding. Such principal and interest in respect of any Nota shall be paid at the place designated in the Note for the payment of principal thereof and interest thereon, upon surrender of such Note at said place, accompanied by such instruments of assignment as shall be necessary to vest in the Guarantor 8 all the right, title and interest of the holder thereof. If and when any such Note shall have been so surrendered and such payment shall have been made with respect thereto, the Guarantor shall succeed to all rights of the holder of such Note thereunder and under the Mortgage; provided, however, that nothing herein contained shall be deemed to confer upon the Guarantor or any successor in interest to the Guarantor any right to declare the principal of any such Note to be due and payable by the Borrowers or to require payment thereof prior to the maturity date specified there- in, except upon the occurrence of an event of default as provided in the Mortgage; and provided further that neither the Guarantor nor any successor in interest to the Guaran- tor shall succeed to any right of any such holder under any guarantee by the Bank. The exercise by the Bank of its right hereunder to require payment by the Guarantor of the principal of, and interest on, the Notes shall not impair or affect any right of the Bank under the Loan Agreement in respect of the commitment charge or service charge on the Loan or any other right, power or remedy which the Bank may have under this Guarantee Agreement or the Loan Agreement, none of which shall accrue to the Guar- antor by reason of such payment by it. ARTTOLK VT SECTION 6.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: The Republic of Chile c/o Corporaci6n de Fomento de la Producci6n 37 Wall Street New York, New York United States of America 9 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. SECTION 6.02. The Minister of Finance of the Guarantor is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting 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. THE REPUBLIC OF CHILE By M. PUGA Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By W. A. B. ILIFF Vice President