Colombia - La Insula Hydroelectric Project : Loan 0039 - Guarantee Agreement - Conformed

LOAN NUMBER 39 CO Guarantee Agreement BETWEEN REPUBLIC OF COLOMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 28, 1950 Pass or BYaoN S. ADAms. WASHINGTON. D. C. Ouarantee ftreement AGREEMENT, dated December 28, 1950, between RE- PUBLIC OF COLOMBIA (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 Central Hidroelectrica de Caldas Limitada (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 Bor- rower a loan in the aggregate principal amount of Two Million Six Hundred Thousand dollars ($2,600,000), or the equivalent in other currencies, on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agrees to guarantee such loan and the obli- gations of the Borrower in respect thereof; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to guarantee such loan and the obligations of the Borrower in respect thereof ; Now THEREFORE the parties hereto hereby agree as fol- lows: ARTICLE I The parties to this Agreement accept all the provisions of Loan Regulations No. 4 of the Bank, dated August 15, 1950 (hereinafter called the Loan Regulations), a copy of which has been furnished to the Guarantor, with the same force and effect as if they were fully set forth herein. 4 ARTICLE II Wherever used in this Agreement the term Agency shall mean any agency or instrumentality of the Guarantor or of any political subdivision of the Guarantor and shall in- clude any institution or organization which is owned or controlled directly or indirectly by the Guarantor or by any political subdivision of the Guarantor or the opera- tions of which are conducted primarily in the interest of or for account of the Guarantor or any political subdivi- sion of the Guarantor. ARTICLE III SECTION 1. Without limitation or restriction upon any of the other covenants on its part in this Guarantee Agree- ment contained, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and the interest, commitment charge and service charge, if any, on the Loan, the principal 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 performance of all the covenants and agreements of the Borrower, all as set forth in the Loan Agreement and in the Bonds. SECTION 2. Without limitation or restriction upon the provisions of Section 1 of this Article, the Guarantor spe- cifically undertakes, whenever there is reasonable cause to believe that the amount of currency of the Guarantor avail- able to the Borrower will be inadequate to meet the esti- mated expenditures payable in such currency and required for carrying out and completing the Project as provided in Section 4.01 of the Loan Agreement to make arrange- ments, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such amounts of currency of the Guarantor as are needed to meet such expenditures. 5 ARTICLE IV SECTION 1. The Guarantor covenants that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor or any of its political subdivi- sions or any Agency as security for the payment of any external debt, such lien will equally and ratably secure the payment of the principal of, and the interest and other charges on, the Loan and the Bonds, and that in the cre- ation of any such lien express provision will be made to that effect; provided, however, that this Section shall not apply (a) to any lien created on any property at the time of purchase thereof solely as security for the payment of the purchase price of such property; or (b) to any lien created on commercial goods to secure debt maturing not more than one year after its date and to be paid out of the proceeds of sale of such commercial goods. SECTION 2. (a) The Bank and the Guarantor shall coop- erate fully to assure that the purposes of the Loan shall 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 will include information with respect to financial and economic condi- tions in the territories of the Guarantor and the interna- tional balance of payments position of the Guarantor. 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 ; and the Guarantor will promptly inform the Bank of any condition which shall arise that shall prevent, obstruct or interfere with or threaten to prevent, obstruct or interfere with, the accom- plishment of the purposes of the Loan or the maintenance of the service thereof. 6 (b) If the Guarantor, or any of its political subdivisions, or any Agency, shall propose to incur any substantial ex- ternal debt, the Guarantor will notify the Bank promptly of the particular proposal and, before the proposed action is taken, will afford to the Bank all opportunity which is reasonably practicable under the circumstances to exchange views with the Guarantor with respect thereto; provided, however, that the foregoing provisions shall not apply to either of the following: (i) the incurring of additional ex- ternal debt through utilization, in accordance with the terms of any credit established prior to the date of this Agreement, of any unused amounts available under such credit; or (ii) the entering into international payments or similar agreements the term of which is not more than one year and under which the transactions on each side are expected to balance over the period of the agreement. (c) The Guarantor will afford to the Bank all reasonable opportunity for accredited representatives of the Bank to visit freely any part of the territories of tht Guarantor for the purpose of performing the functions set forth in Section 4.04 of the Loan Agreement and for the purpose of studying the financial and economic conditions of the Guar- antor and all other matters relating to the purposes of the Loan. SECTION 3. The Guarantor covenants that the principal of and interest on the Loan and the Bonds, the premium on the prepayment of the Loan or the redemption of the Bonds, as specified in the Loan Agreement and the Bonds, and the commitment charge and service charge on the Loan, as specified in the Loan Agreement, will be paid without deduction for and free from any taxes imposed by the Guarantor or by any taxing authority thereof or there- in and will be paid free from all restrictions of the Guar- antor, its political subdivisions or any Agency. This Sec- tion shall not apply to taxation of payments made under the provisions of any Bonds to a holder thereof other than 7 the Bank when such Bond is beneficially owned by an indi- vidual or corporate resident of the Guarantor. SECTION 4. The Guarantor covenants that this Agree- ment, the Loan Agreement and the Bonds shall be free of any issue, stamp or other tax imposed by the Guarantor or and taxing authority thereof or therein. SECTION 5. The Guarantor covenants that it will not take, or permit any of its political subdivisions or any Agency to take, any action which would prevent or inter- fere with the performance by the Borrower of any of the covenants, agreements and obligations of the Borrower 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 Borrower to perform such covenants, agreements and obligations. ARTICLE V The Guarantor shall endorse, in accordance with the pro- visions of the Loan Regulations, its guarantee on the Bonds to be executed and delivered by the Borrower. The Min- ister of Finance and Public Credit 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 Regu- lations. ARTICLE VI The Guarantor shall promptly furnish to the Bank such information and execute such applications and other docu- ments as the Bank shall reLsonably request, in order to enable the Bank to sell any of the Bonds in any country or to list any of the Bonds on any securities exchange, in com- pliance with applicable laws and regulations. S 8 ARTICLE VII SECTION 1. The following addresses are specified for the purpose of Section 8.01 of the Loan Regulations: (a) For the Guarantor: Ministerio de Hacienda y Credito Pfiblico Bogota, Colombia (b) For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W., Washington 25, District of Columbia, United States of America. SECTION 2. The Minister of Finance and Public Credit of the Guarantor in office at the time in question is desig- nated for the purposes of Section 8.03 of the Loan Regu- lations. IN WITNESS WHEREOF the parties hereto, acting through their representatives thereunto duly authorized, have caused this Guarantee Agreement to be signed in their re- spective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF COLOMBIA by EDUARDO ZULETA ANGEL Authorized Representative INTERNATIONAL BANK POR RECON- STRUCTION AND DEVELOPMENT by R. L. GARNER Vice President