Conformed Copy - L3345 - TEK Restructuring Project - Guarantee Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3345 TU (TEK Restructuring Project) between REPUBLIC OF TURKEY and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated September 13, 1991 LOAN NUMBER 3345 TU GUARANTEE AGREEMENT AGREEMENT, dated September 13, 1991, between REPUBLIC OF TURKEY (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Guarantor and Turkiye Elektrik Kurumu (the Borrower), having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to the Loan Agreement, have requested the Bank to assist in the financing of the Project; and (B) by the Loan Agreement of even date herewith between the Bank and the Borrower, the Bank has agreed to extend to the Borrower a loan in various currencies equivalent to three hundred million dollars ($300,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Page 2 Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as provided in this Agreement; 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 "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth in Section 1.01 of the Loan Agreement (the General Conditions) constitute an integral part of this Agreement. Section 1.02. 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. The Guarantor declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, 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 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. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor shall (a) whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures required for the carrying out of the Project, make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures; and (b) ensure that the departments, agencies and other entities of the Guarantor shall pay amounts due for electricity supplied to them by the Borrower within three months of the billing date. ARTICLE III Other Covenants Section 3.01. (a) The Guarantor acting in conjunction with the Borrower, shall: (i) ensure, by December 31, 1992, the preparation and the start of implementation of the electricity pricing policy referred to in Part A (1) of the Project; and (ii) until such policy is implemented, enable the Borrower to maintain electricity prices at least at the minimum level specified in paragraph A (1) (b) of Schedule 5 to the Loan Agreement. (b) The Guarantor shall take all necessary action to: (i) enable the Borrower to meet the projected financial deficit referred to in Section 7.01 (a) of the Loan Agreement; and (ii) include in the 1992 Budget Law a proposal to convert into paid-up capital debt owed by the Borrower to the Guarantor on account of Page 3 payments made by the Guarantor to service the Borrower's foreign debt in 1991. Page 4 ARTICLE IV Representatives of the Guarantor; Addresses Section 4.01. The Undersecretary of the Treasury and Foreign Trade of the Borrower is designated as representative of the Borrower 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 Borrower: Basbakanlik Hazine Ve Distecaret Mustesarligi Yeniehir, Ankara Republic of Turkey Cable address: Telex: MALIYE 821-42285 (MLYE-TR) or Hazine, Ankara 821-42689 (ANK-TR) For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) Page 5 IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 TURKEY By /s/ Falih Selekler Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Ram Chopra Acting Regional Vice President Europe, Middle East and North Africa