Iceland - Second Agricultural Project : Loan 0079 - Guarantee Agreement - Conformed

LOAN NUMBER 79 IC Guarantee Agreement (Second Agricultural Project) BETWEEN * REPUBLIC OF ICELAND AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED SEPTEMBER 4, 1953 PRESS OF BYRON S. ADAMS, WASHINGTON, D. C. Ouarantee fgreement AGREEMENT, dated September 4, 1953, between REPUBLIC OF ICELAND (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVEL- OPMENT (hereinafter called the Bank). WHEREAS by an agreement of even date herewith between the Bank and FramkvEemdabanki Islands (Iceland Bank of Development) (hereinafter called the Borrower), which agreement and the schedules therein referred to are herein- after called the Loan Agreement, the Bank has agreed to make to the Borrower a loan in various currencies in an aggregate principal amount equivalent to one million three hundred fifty thousand dollars ($1,350,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the payment of the principal, interest and other charges on such loan and the obligations 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 the payment of the principal, interest and other charges on such loan and the obligations of the Borrower in respect thereof; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I SECTION 1.01. The parties to this Guarantee Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated October 15, 1952, subject, however, to the modi- fications 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. 4 ARTICLE II SECTION 2.01. Without limitation or restriction upon any of the other covenants on its part in this Agreement contained, the Guarantor hereby unconditionally guaran- tees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and the interest and other charges 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. 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 Loi.n 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 ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing pro- visions of this Section shall not apply to: (i) any lien cre- ated on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any pledge of commercial goods or of the proceeds of salo thereof to secure a debt maturing not more than one year after the date on which it is originally in- curred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions to secure a debt maturing not more than one year after the date on which it is orig- inally incurred. 5 The term "assets of the Guarantor" as used in this Section includes assets of the Guarantor or any of its political subdivisions or any agency of the Guarantor or of any such political subdivision, including Landsbanki Islands (National Bank of Icela,1nd), or any institiution performing the functions of a central bank. 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 fur- nish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Guarantor, such information shall 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. (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 inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Guarantor shall afford all reasonable oppor- tunity 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 Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Guarantor or laws in effect in its ter- ritories; provided, however, that the provisions of this Sec- tion shall not apply to taxation of, or fees upon, payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. 6 SECTION 3.04. This Agreement, the Loan Agreement and the Bonds 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 execu- tion, issue, delivery or registration thereof. SECTION 3.05. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Guarantor or laws in effect in its territories. ARTICLE IV SECTION 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 delivered by the Bor- rower. The Minister of Finance 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. ARTICLE V SECTION 5.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Republic of Iceland Ministry of Finance Reykjavik, Iceland or Republic of Iceland Legation of Iceland 1906 23rd Street, N. W. Washington 6, D. C. United States of America SI 7 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N. W. Washington 25, D. C. United States of America SECTION 5.02. The Minister of Finance 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 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 ICELAND By THOR TIoRs Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President