Yugoslavia - Third Power Transmission Project Energy Management System : Loan 2338 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 2338-0 YU 2338-1 YU 2338-2 YU 2338-3 YU 2338-4 YU 2338-5 YU 2338-6 YU 2338-7 YU Guarantee Agreement (Third Power Transmission Project - Energy Management System) between SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated October 5, 1983 LOAN NUMBER 2338-0 YU S 2338-1 YU 2338-2 YU 2338-3 YU 2338-4 YU 2338-5 YU 2338-6 YU 2338-7 YU GUARANTEE AGREEMENT AGREEMENT, dated October 5, 1983, between SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank). WHEREAS by the Loan Agreement of even date herewith bet- ween the Bank, party of the first part, "Elektroprivreda Bosne i Hercegovine" - Sarajevo, "Elektroprivreda Crne Gore" - Niksic, Zajednica Elektroprivrednih Organizacija Hrvatske - Zagreb, "Elektrostopanstvo na Makedonija" - Skopje, "Elektrogospodarstvo Slovenije" - Maribor, "Zdruzena Elektroprivreda" - Beograd, "Elektroprivreda Kosova" - Pristina, "Elektrovojvodina" - Novi Sad, parties of the second part (any of 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), and Zajednica Jugoslovenske Elektroprivrede - Beograd, party of the third part (such party of the third part hereinafter called JUGEL), all such parties of the second and third parts acting in their own names and in the name of, and on behalf of, their respective constituent organizations, the Bank has agreed to make to the Borrowers a loan in various currencies equivalent to one hundred twenty million dollars ($120,000,000), on the terms and and conditions set forth in the Loan Agreement, but on condition that the Guarantor agree to guarantee the obligations of the Borrowers in resprezt of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's enter- ing 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: 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 Gua- rantee Agreements of the Bank dated October 27, 1980, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Sche- dule 5 to the Loan Agreement (said General Conditions Applicable -2- to Loan and Guarantee Agreements, as so modified, being herein- after 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, in the Preamble to this Agreement, 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 the Guarantee Agreement, the Guaran- tor 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 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, 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 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 - 3 - 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 or as security for the payment of debt incurred for the purpose of financing the purchase of such property; and (ii) any lien aris- ing 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 sub- division 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 Gua- rantor. 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 by JUGEL of their respective obligations contained in the Loan Agreement, and that, within the limits of its constitutional powers, it will take or cause to be takep all reasonable action necessary or appropriate to enable the Borrowers and JUGEL to perform such obligations. 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 3 Omladinskih Brigada 11070 Belgrade Yugoslavia -4- Cable address: Telex: SAVEZNI SEKRETARIJAT ZA FINANSIJE 11062 YU SIV Belgrade, Yugoslavia 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 Is/ B. Loncar Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is! R. Chaufournier Regional Vice President Europe, Middle East and North Africa