Yugoslavia - Eighth Highway Project : Loan 1377 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1377 YU GUARANTEE AGREEMENT (Eighth Highway Project) between SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated April 13, 1977 GUARANTEE AGREEMENT AGREEMENT, dated April 13, 1977, between SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA (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, party of the first part, and ZAJEDNICA PREDUZECZA PUTEVE S.R. SREIJE, (Association of Enterprises for Roads of the Socialist Republic of Serbia) (hereinafter sometimes called the Serbian Borrower), REPUBLICKA ZAJEDNICA ZA PUTEVE, SARAJEVO (Republic Community for Roads, Sarajevo) (hereinafter sometimes called the Bosnia-Herzegovinan Borrower), SOCIJALISTICKA REPUBLICKA FOND ZA PATISTA S.R. MAKEDONIJE (The Socialist Republic of Macedonia) (hereinafter sometimes called the Macedonian Borrower), SAMOUPRAVNA INTERESNA ZAJEDNICA ZA MAGISTRALNE I REGIONALNE PUTEVE, S.A.P. KOSOVO, PRISTINA (The Self-Managing Community of Interest for Arterial and Regional Roads, S.A.P. Kosovo, Pristina) (hereinafter sometimes called the Kosovan Borrower), parties of the second part (any such parties of the second part hereinafter sometimes individually called a Borrower and all such parties of the second part hereinafter sometimes collectively called the Borrowers), the Bank has agreed to make to the Borrowers a loan in various currencies equivalent to fifty-six million dollars ($56,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrowers in respect of such loan and to cause Part II (A) and (B) of the Project (described in Schedule 2 to the Loan Agreement) to be carried out by the CRO and the CYR (as such terms are defined in the Loan Agreement), as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrowers, has agreed so to guarantee such obligations of the Borrowers; 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 Guarantee 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 5 to the Loan Agreement (said General Conditions Applicable to Loan and Guarantee Agreements, as so modified, 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 the Preamble and 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 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 aggregate amount of the Individual Portions of the Loan allocated to the Borrowers under the Loan Agreement, and the premium, if any, on the prepayment of such aggregate amount. 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 - 3 - 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 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 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. Section 3.02. The Guarantor covenants that it will not take, or cause or permit to be taken, any action which would prevent or interfere with the performance by any of the Borrowers or the CRO of their obligations contained in the Loan Agreement, and that, within the limits of its constitutional powers, it will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrowers and the CRO to perform such obligations. Section 3.03. The Guarantor shall exercise its powers with respect to all public roads so as to ensure: (i) that such roads will be adequately maintained and repaired in accordance with sound engineering and financial practices; (ii) that the systematic collection and recording of the data necessary for the proper planning and maintenance, improvements and extension of -4- such roads will be continued; and (iii) that the dimensions and axle-loads of vehicles using such roads shall not exceed the limits as are appropriate to their design standards. Section 3.04. (a) The Guarantor shall through its Federal Committee for Transport and Communications ensure that CRO will carry out the road-user charges study included in Part II (A) of the Project and that CYR will carry out the rail costs study included in Part II (B) of the Project with due diligence and efficiency, in conformity with appropriate transport practices, and with the assistance of experts whose qualifications, experience and terms of reference are satisfactory to the Bank, and that CRO and CYR will closely cooperate in the carrying out of such studies and regularly exchange information thereon. (b) On or before June 30, 1979 the Guarantor shall review the respective recommendations of such studies with the Bank and shall, promptly after such review, determine, in agreement with the Bank, which of the recommendations shall be implemented and the terms and conditions of such implementation. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Federal Secretary for Finance 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: Savezni Sekretarijat za Finansije Bulevar Avnoj-a 104 11070 Belgrade Yugoslavia Cable address: SAVEZNI SEKRLTARIJAT ZA FINANSIJE Belgrade -5- For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America 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. SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA By /s/ Dimce Belovski Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is/ A. David Knox Acting Regional Vice President Europe, Middle East and North Africa