Philippines - Leyte-luzon Geothermal Project- MPC : Loan 3746 - Guarantee Agreement - Conformed

LOAN NUMBER 3746 PH Guarantee Agreement (Leyte - Luzon Geothermal Project - NPC) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated / aL ,- 1994 LOAN NUMBER 3746 PH GUARANTEE AGREEMENT AGREEMENT, dated )L, 1994, between REPUBLIC OF THE PHILIPPINES (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank"). WHEREAS: (A) The Guarantor and the National Power Corporation (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 WHEREAS: (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 one hundred thirteen million dollars ($113,000,000), 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 and to undertake such other obligations, all as provided in this Agreement; and WHEREAS: (C) 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 and to undertake such other obligations. 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 below (the "General Conditions") constitute an integral part of this Agreement: (a) The last sentence of Section 3.02 is deleted. -2- (b) In Section 6.02, sub-paragraph (k) is re-lettered as sub-paragraph (1) and a new sub-paragraph (k) is added to read: "4k) An extraordinary situation shall have arisen under which any further withdrawals under the Loan would be inconsistent with the provisions of Article III, Section 3 of the Bank's Articles of Agreement." Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to and 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 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 specifically undertakes, 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, to 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. -3- ARTICLE III Other Covenants Section 3.01. Without limitation or resttiction upon the provisions of Section 2.01 of this Agreement, the Guarantor shall: (a) Take or cause to be taken all measures necessary on its part to enable the Borrower, promptly as required, to adjust the structure or levels of its tariffs in order to comply with its obligations set forth in Section 5.02 of the Loan Agreement; (b) (i) Take all measures necessary on its part to continue to carry out the Energy Sector Plan with due diligence and efficiency; (ii) prepare and furnish to the Bank, not later than June 30 of each Fiscal Year, a report, of such scope and in such detail as the Bank may reasonably request, on the progress achieved in the carrying out of the Energy Sector Plan during the preceding Fiscal Year, together with any revisions proposed to be introduced into said plan; and (iii) afford the Bank a reasonable opportunity to exchange views with the Guarantor on each report prepared pursuant to subparagraph (ii) hereof, and thereafter promptly introduce such revisions into the Energy Sector Plan as shall have been agreed between the Guarantor and the Bank; and (c) (i) Exchange views with the Bank and the Borrower on each Power Development Program furnished to it by the Borrower pursuant to Section 4.06 of the Loan Agreement, and (ii) thereafter, promptly take all measures necessary on its part to enable the Borrower to carry out, in accordance with the provisions of said Section of the Loan Agreement, the Power Development Program agreed upon among the Guarantor, the Bank and the Borrower pursuant to said Section. Section 3.02. The Guarantor shall carry out a time-based program, satisfactory to the Bank, designed to ensure that the outstanding amount of the excess tax payments, made by the Borrower prior to January 1, 1994, shall be fully repaid to the Borrower. -4- ARTICLE IV Representatives 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: Department of Finance Manila Republic of the Philippines Cable address: Telex: SECFIN 40268 CB-CONF 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: Telex: INTBAFRAD 248423 (RCA), Washington, D.C. 82987 (FTCC), 64145 (WUI) or 197688 (TRT). 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 THE PHILIPPINES By IS / ?-a Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President East Asia and Pacific 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 International Bank for Reconstruction and Development. FOR SEC RETARY