Peru - Urban Sites And Services Development Project : Loan 1283 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1283 PE GUARANTEE AGREEMENT (Urban Sites and Services Development Project) between REPUBLIC OF PERU and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated October 12, 1976 GUARANTEE AGREEMENT AGREEMENT, dated October 12, 1976, between REPUBLIC OF PERU (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RE- CONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the LoF-n Agreement of even date herewith between the Bank and Banco de la Vivienda del Peru" (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to twenty-one million six hundred thousand dollars ($21,600,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guar- antor agrees 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 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: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said Gen- eral Conditions Applicable to Loan and Guarantee Agreements being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, 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. -3- 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 provisioLs of Section 2.01 of this Agreement, the Guarantor specifically undertakes to: (a) make, or cause to be made, in accordance with a sche- dule satisfactory to the Bank, contributions to the Borrower's capital stock in an aggregate amount equivalent to nineteen million one hundred thousand dollars ($19,100,000); and (b) 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 Proj- ect, including the prompt replenishment of the Revolving Fund to the level required by Section 3.05 of the Loan Agreement, 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. ARTICLE III Other Covenants Section 3.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Guarantor, in creating or permitting the creation of such lien, shall make express provi- sion to that effect; provided, however, that, if for any constitu- tional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Guarantor shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; I -5- and (ii) any lien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Guarantor, of any political or administrative sub- division thereof and of any entity owned or controlled by, or operating for The account or benefit of, the Guarantor or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor. Section 3.02. (a) The Guarantor shall take all action as shall be necessary or advisable on its part to ensure the prampt execution and delivery of the contracts referred to in Section 3.02 of the Loan Agreement. (b) The Guarantor shall take all action as shall be neces- sary to ensure that the land to be developed for industrial sites under Part A (b) of the Project shall be available for purchase by private, public or any other type of enterprises. (c) The Guarantor shall take all steps as shall be necessary on its part to ensure the timely employment by the corresponding agencies or entities of the consultants referred to in Section 3.07 of the Loan Agreement. (d) The Guarantor shall take all action, including the grant- ing of all necessary authorizations, foreign exchange permits and other approvals required to ensure the timely procurement of the goods and services required for the Project. -6- Section 3.03. For the purpose of assisting the Borrower in the carrying out of Part A (a) of the Project, the Guarantor shall: (i) establish within the Ministerio Vivienda a Technical Assistance Unit; (ii) employ, from time to time, in the Technical Assistance Unit such technical and supporting staff as shall be necessary for its efficient operation; and (iii) provide, or cause to be provided, such Technical Assistance Unit, promptly as needed, with such facilities, funds and other resources as shall be required for the efficient operation thereof. Section 3.04. The Guarantor shall compensate or shall cause the Borrower to be compensated for any losses related to the carrying out of the Project incurred in connection with the pay- nnt of interest and other charges on, or the repayment of prin- cipal of, the Loan, resulting from change in the rate of exchange between soles and the currency or currencies in which such pay- ments or repayments are to be made. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. Either the Ministro de Economia y Finanzas of the Guarantor or the Director General de Credito Pfblico of the Ministerio de Economfa y Finanzas 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: Ministerio de Economfa y Finanzas Avenida Abancay 5a Cuadra Lima, Peri Cable address: MINDEF Lima, Peru' For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 PERU By /s/ Carlos Garcia Bedoya Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ S.M.L. van der Meer Acting Regional Vice President Latin America and the Caribbean