Zambia - Telecommunications Project : Loan 1131 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1131 ZA Guarantee Agreement (Telecommunications Project) BETWEEN REPUBLIC OF ZAMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JUNE 24, 1975 CONFORMED COPY LOAN NUMBER 1131 ZA Guarantee Agreement (Telecommunications Project) BETWEEN REPUBLIC OF ZAMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JUNE 24, 1975 GUARANTEE AGREEMENT AGREEMENT, dated June 24, 1975, 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 Posts and Telecommunications Corporation (hereinafter called the Borrower), a statutory corporation established under the Posts and Telecommunications Act, 1975, of the Guarantor, the Bank has agreed to make to the Borrower a loan in various currencies equivalent to thirty-two million dollars ($32,000,000), on the terms and conditions set forth in the Loan Agreement; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to guarantee the 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 March 15, 1974, with the same force and effect as if they were fully set forth herein (said General 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 and the following additional terms have the following meanings: (a) "Minister" means the member of the Cabinet of the Guarantor 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 governmental authority of the 4 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. 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 provisions of Section 2.01 of this Agreement, the Guarantor specifically 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, to 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. Section 2.03. Without limitation or restriction upon the provisions of Sections 2.01 and 2.02 of this Agreement, the Guarantor shall take all necessary steps to ensure that short-term financing necessary to meet an expected temporary shortage of funds required by the Borrower during the construction period of the Project, shall be available to the Borrower on reasonable terms as and when required. Section 2.04. Except as the Bank shall otherwise agree, the Guarantor shall make arrangements, satisfactory to the Bank, to cover any cash deficits incurred by the Borrower in respect of its operations other than its telecommunications operations. For the purposes of this Section, the term "cash deficit" means the excess of total cash requirements (including operating, maintenance and administration expenses, taxes, if any, or any payments in lieu thereof, and interest, amortization and other charges on debt) over total revenues pertaining to such operations. Such cash deficits shall, to the extent possible, be covered on a current basis. Such deficits may be covered out of revenues derived from the Borrower's telecommunications operations only in accordance with the limitations provided under Section 5.08 of the Loan Agreement. 5 ARTICLE I 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 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 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 local authority thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Guarantor or any such local authority, 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. 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: 6 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. 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. REPUBLIC OF ZAMBIA By /s / S. G. Mwale Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s / S. Shahid Husain Regional Vice President Eastern Africa