Barbados - Power Project : Loan 1940 - Guarantee Agreement - Conformed

OFFICIAL LOAN NUMBER 1940 BAR DOCUMENTS Guarantee Agreement (Power Project) between BARBADOS and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1981 LOAN NUMBER 1940 BAR GUARANTEE AGREEMENT AGREEMENT, dated , 1981, between BARBADOS (hereinafter called the Guarantor) and INTERNA- TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and The Barbados Light and Power Company Limited (herein- after called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to six million dollars ($6,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor 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 entering 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: 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 Guarantee Agreements of the Bank dated October 27, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agree- ments 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. ARTICLE II Guarantee Section 2.01. Without limitation or restriction upon any of its other obligations under this Agreement, the Guarantor -2- 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 all as set forth in the Loan Agreement. ARTICLE III Execution of Part E (2) of the Project Section 3.01. The Guarantor shall carry out Part E (2) of the Project with due diligence and efficiency and in conformity with appropriate administrative and financial practices. Section 3.02. (a) In order to assist the Guarantor in carry- ing out Part E (2) of the Project, the Guarantor shall employ consultants whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Bank. (b) The Guarantor shall promptly furnish the Bank for its review and comments the results of the studies to be carried out under Part E (2) of the Project. ARTICLE IV Other Covenants Section 4.01. (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, specific 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 provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made -3- 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; and (ii) any lien arising in the ordinary course of banking transactions 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 subdivision 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 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 4.02. The Guarantor covenants that it will not take, or cause or permit any of its political subdivisions or any of its agencies or any agency 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 enable the Borrower to perform such obligations. Section 4.03. The principal of, and interest and other charges on, any additional debentures shall be paid without deduction for, and free from any taxes levied under the laws of the Guarantor or laws in effect in its territories; provided, however, that the provisions of this Section shall not apply to taxation of payments under any such additional debentures to a holder thereof other than the Bank when such additional debentures are beneficially owned by an individual or corporate resident of the Guarantor. Section 4.04. The additional debentures shall be free from any taxes levied by, or in the territory of, the Guarantor or in connection with the execution, issue, delivery or registration thereof. -4- Section 4.05. The principal of, and interest and other charges on, any additional debentures shall be paid without restrictions of any kind imposed by, or in the territory of, the Guarantor. Section 4.06. In order to assist the Borrower in fulfilling its obligations under Section 5.09 of the Loan Agreement and in order to ensure majority local ownership of the Borrower, the Guarantor shall, except as the Guarantor and the Bank shall otherwise agree, purchase any shares of the Borrower not sold through the issues of shares required under the said Section. ARTICLE V Representative of the Guarantor; Addresses Section 5.01. The Minister of Finance and Planning of the Guarantor is designated as 'representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 5.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Minister of' Finance and Planning Ministry of Finance and Planning Government Headquarters Bay Street, St. Michael Barbados Cable address: Telex: EXTERNALBAR WB 222 Barbados For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America -5- Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement 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. BARBADOS By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By N, 'co4"' A'UL& CB4 Regional Vice President Latin America and the Caribbean INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this /L9t day of &, 198 . FOR SECRETARY