Peru - Centromin Expansion Project : Loan 1281 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1281 PE GUARANTEE AGREEMENT (Centromin Expansion Project) between REPUBLIC OF PERU and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated December 6, 1976 GUARANTEE AGREEMENT AGREEMENT, dated December 6, 1976, between REPUBLIC OF PERU (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Empresa Minera del Centro del Peri (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to forty million dollars ($4o,ooo,ooo), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guar- antee the obligations of the Borrower in respect of such loLn 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, 19T4, 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 Gen- eral 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 pro- visions of Section 2.01 of this Agreement, the Guarantor specifi- cally 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, and the Stage I Expansion Program, to make arrange- ments, 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. 14 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 other- wise 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 provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdi- visions, 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; and (ii) any lien arising in the ordinar - 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 subdi- vision thereof and of any entity owned or controlled by, or operat- ingafor the account or benefit of, the Guarantor or any such sub- division, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or ex- change stabilization fund, or similar functions, for the Guarantor. Section 3.02. The Guarantor shall take all action, including the granting of all necessary authorizations, foreign exchange per- mits and other approvals required, to ensure the timely procurement of the goods and services required for the Project and Stage I Ex- pansion Program. Section 3.03. The Guarantor covenants that it will take all action necessary or advisable on its part: (i) to ensure to the Borrower a supply of electric power sufficient for the efficient carrying out of the Project and of the Borrower's mining operations; (ii) to ensure the carrying out of the Stage I Ex- pansion Program by the Borrower in accordance with Section 4.03 of the Loan Agreement; -6- (iii) to enable the Borrower to fulfill its obliga- tions under Section 4.02 (c) of the Loan Agreement; and (iv) to authorize and facilitate the Borrower's timely employment of the personnel referred to in Section 3.02 of the Loan Agreement. Section 3.04. The Guarantor shall charge and collect from the Borrower a guarantee fee of 1-1/2% per annum on the principal amount of the Loan from time to time outstanding, such fee to ac- crue from the respective dates on which amounts of the Loan shall be withdrawn from the Loan Account. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. Either the Ministro de Economfa y Finanzas of the Guarantor or the Director General de Cr4dito Pdblico of the Ministerio de Economfa , 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, Perd Cable address: MINDEF Lima, Perd 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. - 8 - 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/ C. Garcia Bedoya Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ E. Lerdau Acting Regional Vice President Latin America and the Caribbean