Ecuador - Revised Quito Power Project : Loan 0177 - Guarantee Agreement - Conformed

LOAN NUMBER 177EC Guarantee Agreement (Revised Quito Power Project) BETWEEN REPUBLIC OF ECUADOR A"D INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED SEPTEMBER 20, 1957 LOAN NUMBER 177EC Guarantee Agreement (Revised Quito Power Project) BETWEEN REPUBLIC OF ECUADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED SEPTEMBER 20, 1957 AGREEMENT, dated September 20, 1957, between THE REPUBLIC OF ECUADOR (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVEL- OPMENT (hereinafter called the Bank). WHEREAS by an agreement of even date herewith between the Bank and EMPRESA ELECTRICA QUITO, S.A. (hereinafter called the Borrower), which agreement and the schedules therein referred to are hereinafter called the Loan Agree- ment, the Bank has agreed to make to the Borrower a loan in various currencies equivalent to five million dollars ($5,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the payment of the principal, interest and other charges on such loan and that the Banco Central del Ecuador accept its obligations under Section 3.01 of this Guarantee Agreement; WHEREAS in consideration of the Bank's entering into the Loan Agreement with the Borrower, the Guarantor has agreed to guarantee the payment of the principal, interest and.other charges on such loan, and the Banco Central del Ecuador has agreed to accept such obligations of the Banco Central del Ecuador and to evidence its acceptance thereof by causing this Guarantee Agreement to be signed by its duly authorized representative; Now THEREFORE the parties hereto hereby agree as fol- lows: ARTICLE I SECTION 1.01. The parties to this Guarantee Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated June 15, 1956, subject, however, to the modifica- tions thereof set forth in Schedule 3 to the Loan Agreement (said Loan Regulations No. 4 as so modified being herein- after called the Loan Regulations), with the same force and effect as if they were fully set forth herein. 4 ARTICLE II SECTION 2.01. Without limitation or restriction upon any of the other covenants on its part in this Guarantee Agreement contained, the Guarantor hereby unconditionally guarantees, 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, and the premium, if any, on the prepayment of the Loan or the redemption of the Bonds, all as set forth in the Loan Agreement and in the Bonds. SECTION 2.02. The Guarantor shall not take and, within the limits of its constitutional powers shall not permit any of its political subdivisions or agencies to take, any action which would prevent or interfere with the performance by the Borrower of any of the covenants, agreements and obli- gations of the Borrower contained in the Loan Agreement; and the Guarantor shall take or cause to be taken all rea- sonable action which shall be necessary to enable the Bor- rower to perform such covenants, agreements and obliga- tions. ARTICLE III SECTION 3.01. It is the mutual intention of the Guaran- tor and the Bank that no external debt shall enjoy any priority over the Loan by way of a lien hereafter created on governmental assets (including any priority in the allo- cation or realization of foreign exchange). To that end, the Guarantor and Banco Central del Ecuador undertake that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor or of the Banco Central del Ecuador, 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. Within the limits of its constitutional powers, the Guaran- tor will make the foregoing undertaking effective with 5 respect to liens on assets of any of the Guarantor's agencies including agencies granted autonomy by the Constitution of Ecuador (other than Banco Central del Ecuador), or any of the Guarantor 's political subdivisions or of any agency of any such political subdivision, and to the extent that the Guarantor is unable within the limits of its constitutional powers to make such undertaking effective, the Guarantor will give to the Bank an equivalent lien satisfactory to the Bank. The foregoing provisions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the p'2rchase price of such property; (ii) any lien on conimer- cial 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; (iii) any lien arising in the ordinary course of banking transactions to secure a debt maturing not more than one year after the date on which it is originally in- curred; or (iv) any lien solely upon revenues or receipts in currency of the Guarantor which is given by a political subdivision (consejo pr!vincial or municipalidad) or by an agency of a political subdivision of the Guarantor under arrangements containing no provisions which would result in priority in the allocation or realization of foreign ex- change. 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 interna- tional 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 6 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- ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Guarantor shall afford all reasonable opportu- nity 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 ter- ritories; 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 Guarantee 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 execution, 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 Bor- rower. The Ministro dlot Tesoro of the Guarantor and such 7 person or persons as he shall desi,nate in writing are desig- nated as the authorized representatives of the Guarantor for the purposes of Section 6.12 (b) of the Loan Regula- tions. ARTICLE V SECTION 5.01. For the purposes of the Guarantee agree- ment (Quito Power Project), dated March 29, 1956, between the Guarantor and the Bank, paragraph (c) of Section 5.02 of Loan Regulations No. 4 of the Bank, dated February 15, 1955, is hereby amended to read as follows: " (c) A default shall have occurred in the perform- aiice of any other covenant or agreement on the part of the Borrower or the Guarantor under the Loan Agree- ment, the Guarantee Agreement or the Bonds or under the Loan Agreement dated September 20, 1957, the Guarantee Agreement of even date therewith or the Bonds therein provided for."; and the term "Loan Regulations" as used for the purposes of said Guarantee Agreement shall mean Loan Regulations No. 4 of the Bank, dated February 15, 1955, as hereby amended. SECTION 5.02. Except as provided in this Guarantee Agreement, the guarantee agreement (Quito Power Proj- ect), dated March 29, 1956, between the Guarantor and the Bank shall remain in full force and effect. ARTICLE V1 SECTION 6.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Republic of Ecuador Embassy of Ecuador 2342 Massachusetts Ave., N.W. Washington 8, D. C. United States of America 8 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. SECTION 6.02. The Ministro del Tesoro of the Guaran- tor is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the Guarantor and the Bank, act- ing 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, United States of America, as of the day and year first above written, and Banco Central del Ecuador, acting through its duly authorized representative, has evidenc-ld its acceptance 9 of its obligations under Section 3.01 of this Guarantee Agreement. REPUBLIC OF ECUADOR By JosE R. CHIRIBOGA V. Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President BANCO CENTRAL DEL ECUADOR By Josi R. CHIRIBOGA V. Authorized Representative