Zambia - Dbz Project : Loan 1210 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1210 ZA GUARANTEE AGREEMENT (DBZ Project) between REPUBLIC OF ZAMBIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated February 18, 1976 GUARANTEE AGREEMENT AGREEMENT, dated February 18, 1976, between REPUBLIC OF ZAMBIA (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 Development Bank of Zambia (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to fifteen million dollars ($15,000,000), 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 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, subject, however, to the modifications thereof set forth in Schedule 2 to the Loan Agreement (said General Conditions Applicable to Loan and Guarantee Agreements, as so modified, being hereinafter called the General Conditions). Sectlon 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, and the following additional terms have the.following meanings: (a) "Minister" means the member of the Cabinet of the Guar- antor responsible for finance under the Loans and Guarantees (Authorization) Act, Chapter 601 of the Laws of Zambia; and (b) "local authority" means, with respect to the Guarantor, a city council, a municipal council, a rural council, or any other government'" authority of the Guarantor (other than its central government) which has power to raise revenues by taxation and to charge such revenues or any of its assets as security for external debt. -3- ARTICLE II Guarantee Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreaiant, the Guarantor hereby unconditionally guarantees, as -z'rimary 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, all as set forth in the Loan Agreement. -4- 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 rat- ably 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 local authorities, 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 aot 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; -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 local authority thereof and of any entity owned or controlled by, or operating for the account or ben- efit of, the Guarantor or any such local authority, including gold and other foreign exchange assets held by any institution perform- ing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor. Section 3.02. The Guarantor covenants that it will not take, or cause or permit any of its political subdivisions or instrumen- talities or any of its agencies or any agency or instrumentality of any such political subdivisions to take, any action which would prevent or interfere with the performance by the Borrower of its obligations contained in the Loan Agreement and will take or cause to be taken all reasonable action necessary or appropriate to ena- ble the Borrower to perform such obligations. -6- ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Minister 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: Ministry of Planning and Finance P.O. Box R.W. 62 Ridgeway Lusaka, Zambia Cable address: FINANCE, RIDGEWAY Lusaka 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. -7- 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 ZAMBIA By /s/ Siteke G. Mwale Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By 1sf Stanley Please Acting Regional Vice President Eastern Africa