Colombia - Second Agricultural Machinery Project : Loan 0108 - Guarantee Agreement - Conformed

LOAN NUMBER 108 CO Guarantee Agreement (Second Agricultural Machinery Project) BETWEEN 0 REPUBLIC OF COLOMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 29, 1954 (6uaranter Atreement AGREEMENT, dated December 29, 1954, between REPUB- LIC OF COLOMBIA (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank). WHEREAS by an agreement of even date herewith between the Bank and Caja de Credito Agrario, Industrial y Minero (hereinafter called the Borrower), which agreement and the schedules therein referred to are hereinafter called the Loan Agreement, the Bank has agreed to make to the Borrower a loan in various currencies in an aggregate prin- cipal amount equivalent to five million dollars ($5,000,000), on the terms and conditions set forth in the Loan Agree- ment, but only on condition that the Guarantor agree to guarantee the payment of the principal, interest and other charges on such loan and the obligations of the Borrower in respect thereof; and WHEREAS pusuant to Law 51 of 1951 and Decree Law 1599 of 1943 the'Guarantor is authorized to guarantee the obli- gations and operations of the Borrower, and pursuant to Law 90 of 1948 the Guarantor is authorized to guarantee loans made by the Bank to official entities or to entities in which the Guarantor has an interest, including the Bor- rower; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to guarantee the payment of the principal, interest and other charges on such loan and the obligations of the Borrower in respect thereof; Now THEREFORE the parties hereto hereby agree as follows: 0 4 ARTICLE I SECTION 1.01. The parties to this Guarantee Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated October 15, 1952, subject, however, to the modifications thereof set forth in Schedule 3 to the Loan Agreement (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. ARTICLE II SECTION 2.01. Without limitation or restriction upon any of the other covenants on its part in this Agreement contained, the Guarantor hereby unconditionally guaran- tees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and the interest and other charges on, the Loan, the principal of and interest on the Bonds, the premium, if any, on the prepay- ment of the Loan or the redemption of the Bonds, and the punctual performance of all the covenants and agreements of the Borrower, all as set forth in the Loan Agreement and in the Bonds. ARTICLE III SECTION 3.01. It is the mutual intention of the Guarantor and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Guarantor undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing pro- visions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely 5 as security for the payment of the purchase price of such property; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. As used in this Section (a) the term "assets of the Guar- antor" includes assets of the Guarantor or of any of its political subdivisions or of any Agency including the Banco de la Repiblica, and (b) the term "Agency" means any agency or instrumentality of the Guarantor or of any political subdivision of the Guarantor and shall include any institution or organization which is owned or controlled directly or indirectly by the Guarantor or by any political subdivision of the Guarantor or the operations of which are conducted primarily in the interest of or for account of the Guarantor or any political subdivision of the Guarantor. SECTION 3.02. (a) The Guarantor and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Guarantor, such information shall include information with respect to financial and economic condi- tions in the territories of the Guarantor and the inter- national balance of payments position of the Guarantor. (b) The Guarantor and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Guarantor shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- 6 ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Guarantor shall afford all reasonable oppor- tunity for accredited representatives of the Bank to visit any part of the territories of the Guarantor for purposes related to the Loan. SECTION 3.03. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed 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, or fees upon, pay- ments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 3.04. This Agreement, the Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Guarantor or laws in effect in its territories on or in connection with the execu- tion, issue, delivery or registration thereof. SECTION 3.05. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Guarantor or laws in effect in its territories. ARTICLE IV SECTION 4.01. The Guarantor shall endorse, in accord- ance with the provisions of the Loan Regulations, its guar- antee on the Bonds to be executed and delivered by the Borrower. The Minister of Finance and Public Credit of the Guarantor and such person or persons as he shall desig- nate in writing are designated as the authorized repre- sentatives of the Guarantor for the purposes of Section 6.12 (b) of'the Loan Regulations. 0 7 ARTICLE V SECTION 5.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Republic of Colombia Ministerio de Hacienda y Cridito Pi'blico Calle 19 entre Carreras 8a. y 9a. BogotA, Colombia For the Bank: International Bank for Reconstruction and Development 1818 H Street, N. W. Washington 25, D. C. United States of America SECTION 5.02. The Minister of Finance and Public Credit of the Guarantor is designated for the purposes pf Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the pairties hereto, acting through their representatives thereunto duly authorized, have caused this Guarantee Agreement to be signed in their respective names and delivered in the District of Columbia, 8 United States of America, as of the day and year first above written. REPUBLIC OF COLOMBIA By EDUARDO ZULETA-ANGEL Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By R. L. GARNER Vice President