El Salvador - Second Rio Lempa Hydroelectric Project : Loan 0221 - Guarantee Agreement - Conformed

LOAN NUMBER 221 ES Guarantee Agreement (Second Rio Lempa Hydroelectric Project) BETWEEN REPUBLIC OF EL SALVADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED FEBRUARY 20, 1959 LOAN NUMBER 221 ES Guarantee Agreement (Second Rio Lempa Hydroelectric Project) BETWEEN REPUBLIC OF EL SALVADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED FEBRUARY 20, 1959 (Cuaranttrr 1grmmunt AGREEMENT, dated February 20, 1959, between the REPUBLIC OF EL SALVADOR (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 Comisi6n Ejecutiva Hidroelectrica del Rio Lempa (hereinafter called the Borrower), which agreement 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 equivalent to three million dollars ($3,000,000), on the terms and conditions s,et 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 SECTION 1.01. The parties to this Guarante,e Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated June 15, 1956, subject, however, to the modifi- cations thereof set forth in Schedule 3 to the Loan Agree- ment (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. 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, 4 as primary obligor and not as snrety merely, the due and punctual paynient. of the principal of, and the interest and other charges on, the Loan, the prjincipal of and interest on the Bonds, the premium, if any, on the prepayment of the Loan or the redemption of the Bonds, and the punctual peiformance of all the covenants and agreements of the Borrower, all as set forth in the Loan Agreciment and in the Bonds. SECTION 2.02. Without Iiitation or restrietion upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically iindertakes, whenever there is reasonable cause to believe that the fmds available to the Borrower will be ina(equate to meet the estimated expenditures required for carrying out the Project, to make a rranigements, satis- factory to the Bank, promptly to provide the Borrower or cause the Borrower to be provi(led with suc.h funds as are needed to ineet such expenditures. ARTIOLE III SECToN 3.01. It is the iutual intention of the Guaran- tor and the Bank that no other external (ebt hereafter ereated shall enjoy any prioritv over the Lon by way of a lien 011 governmental assets. i that ed, the Guarantor undertakes that, except as the Bik shall otherwise agree, if any lien shall be erented on any assets of the Guarantor as security for ay externa del)t, such lien will ipso faclo equally and ratably secure the paymeut of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of anv such liei express provision will be made to that effect, provided, however, that the foregoing provisions of this Section shall not apply to (i) any lien ereated on property, at the time of purehase thereof, solely as security for the payient of the purchase price of such property; (ii) any lien on commercial goods to secure a debt maturing not miore than one year after the date on which it is originally incurred and to be paid out 」 6 tion shall not apply to taxation of, or fees upon, payments under any Bon(l to a bolder thereof other than the Bank when Sucli Bond is beneficially owned by an- individual or corporate resident of the Guarantor. SECTION 3.04. This Agreeinent, the Loan Agreement and the Bonds shall be free f rom any taxes or fees that shall be imposed under the laws of the Gua,rantor or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof. SECTION 3 .05. The principal of, and interest and other charges on, the Loan aiid the Bouds shall be paid free from all resfl ictions imposed under the laws of the Guarantor or laws in effect hi its territories. SECTION T 3.06. The Guarantor, in accordance with the pi.iueipk, s presontly set forth in the law creating the Bor- rowei,, covenants that it will peri-nit the Borrower to earn revenues sufficient: (a) to cover opet-ating expenses, includ- ing taxes if any' adequate niaintenance, depreciation and intere;st; (1)) to meet repa- ' Nyments on long-term indebtednes,s but only to the extent that such repayments shall exceed provision foi.- depreciation; and (c) to leave a surplus for financing a i-easonable portion of planned expansion. ARTICLE IV SE OTION 4.01. The Guarantor shall endorse, in accord- ance with the provisions of the Loan Regulations, its guar- antee on the Bonds to be executed and deli-iTered by the Bor- rower. The Ministro de Hacienda of the Guarantor and such person or persons as he shall designate in writing are designated as the authorized representatives of the Guar- antor for the purposes of Section 6.12 (b) of the Loan Regulations. 7 ARTICLE V SECTION 5.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Ministro de Hacienda Palacio Nacional San Salvador, El Salvador Alternative address for cablegrams and radiograms: Ministro Hacienda San Salvador For the Bank: International Bank for Reconstruction and Development 1818 H Street, NA.. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. SECTION 5.02. The Jlnistro de Hacienda of the Guaran- tor 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, 8 United States of America, as of the day and year first above written. REPUBLIC OF EL SALVADOR By HCTOR DAVID CASTRO Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By W. A. B. ILIFF Vice President