Colombia - Agricultural Machinery Project : Loan 0018 - Guarantee Agreement - Conformed

LOAN NUMBER 18 CO Guarantee Agreement (Agricultural Machinery Project) BETWEEN REPUBLIC OF COLOMBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED AUGUST 19, 1949 Press of Byron S. Adams @uarantte agreement AGREEMENT, dated August 19, 1949, between IrEPUB- LIC OF COLO1MBIA (hereinafter called the Guarantor) and INTERNATIONAL BANK FO RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank). WHEREAS by an agreement of even date herewith be- tween the Bank and Caja de Credito Agrario, Industrial y Minero (hereinafter called the Borrower), which agree- ment and the Schedules therein referred to are hereinafter called the Loan Agreement, the Bank has agreed to make to the Borrower a loan in the aggregate principal amount of five million dollars ($5,000,000), or the equivalent in other currrencies, on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agrees to guarantee such loan and the obliga- tions of the Brrower in respect thereof; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to guarantee such loan and the obligations of the Borrower in respect thereof; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I Unless the context shall otherwise require, terms used in the Loan Agreement shall, wherever used in this Guar- antee Agreement, have the respective meanings which they have when used in the Loan Agreement, and the term Agency shall mean 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 Guaran- tor or by any political subdivision of the Guarantor or the 2 operations of which are conducted primarily in the inter- est of or for account of the Guarantor or any political subdivision of the Guarantor. ARTICLE II Without limitation or restriction upon any of the other covenants on its part in this Guarantee Agreement con- tained, 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, commitment charge and service charge, if any, on, the Loan, the principal of, interest on, and premium, if any, on the redemption of the Bonds, and the punctual perform- ance of all the covenants and agreements of the Borrower, all as set forth in the Loan Agreement and in the Bonds. It is further agreed by the Guarantor that its obligations under any covenants and agreements on its part in this Guarantee Agreement are not subject to any prior notice to, demand upon or action against the Borrower or to any prior notice to or demand upon the Guarantor with re- gard to any default by the Borrower in respect of any of its obligations set forth in the Loan Agreement or in the Bonds. No extnsion of time or forbearance given to the Borrower in respect of the performance of any of its obligations under the Bonds or the Loan Agree- ment, and no failure of the Bank or of any holder of the Bonds to give any notice or to make any demand or pro- test whatsoever, or strictly to assert any right or pursue any remedy against the Borrower in respect of the Bonds or of the Loan Agreement, and no action undertaken to enforce any security available to the Bank under the Loan Agreement or the Bonds and no agreement by the Bank and the Borrower to any modification of the Project or of the provisions of the Loan Agreement and no failure of the Borrower to comply with any requirement of any law, regulation or order of the Guarantor or any of its politi- cal subdivisions or agencies, shall in any way terminate, 3 diminish or limit the unconditional guarantee of the Guar- antor hereunder, it being the intent of the parties hereto that the obligations of the Guarantor shall not be dis- charged except by performance and then only to the extent of such performance. No delay by the Bank in exercising or omission of the Bank to exercise any right under this Guarantee Agreement shall impair any such right or be construed to be a waiver thereof or a waiver of or acquies- cence in any default by the Guarantor under this Guaran- tee Agreement; nor shall any action by the Bank in respect of any such default or in respect of the waiver of any such default affect or impair any such right in respect of any other or subsequent default on the part of the Guarantor. ARTICLE III SECTION 1. The Guarantor covenants that it will afford to the Bank all reasonable opportunity for accredited rep- resentatives of the Bank to visit freely any part of the territories of the Guarantor for the purpose of performing the functions set forth in Section 3 of Article VII of the Loan Agreement and for the purpose of studying the finan- cial and economic conditions of the Guarantor and all other matters relating to the purposes of the Loan. SECTION 2. The Guarantor covenants that it will fur- nish to the Bank all such information, at such times, in such form and in such detail as the Bank shall reasonably request, relating to financial and economic conditions in the territories of the Guarantor and the international bal- ance of payments position of the Guarantor. SECTION 3. The Guarantor covenants that, except as the Bank shall otherwise agree in writing, if any privilege or priority (including any mortgage, pledge or charge) shall be created on any property, assets, revenues or re- ceipts of the Guarantor or any of its political subdivisions or any Agency as security for the payment of any external 4 debt, then by the creation thereof such privilege or pri- ority will equally and ratably secure the payment of the principal of, and the interest and other charges on, the Loan and the Bonds, and in the creation of any such privi- lege or priority, express provision will be made to that effect; provided, however, that this Section shall not apply (a) to any mortgage, pledge or other charge or priority created on any property at the time of purchase thereof solely as security for the payment of the purchase price of such property; or (b) to any pledge of commercial goods given to secure debt maturing not more than one year after its date and to be paid out of the proceeds of sale of such commercial goods. SECTION 4. (a) Each party to this Guarantee Agree- ment shall from time to time, as the other party hereto shall reasonably request, afford such other party all rea- sonable opportunity for exchanges of views between their respective accredited representatives in regard to any and all matters relating to the Loan and the purposes for which it was granted. The suggestions and observations made by either party pursuant to any provisions of this Section shall be received by the other party in a spirit of mutual cooperation and shall be given due consideration. (b) If the Guarantor, or any of its political subdivi- sions, or any Agency, shall propose to incur, assume or guarantee any external debt, or substantially to modify the terms of payment of any then existing external debt, incurred, assumed or guaranteed by any of them, the Guarantor will notify the Bank promptly of the particular proposal and prior to the time of taking the proposed action, will afford to the Bank all opportunity which is rea- sonably practicable under the circumstances to exchange views with the Guarantor with regard to such proposal; provided, however, that the foregoing provisions shall not apply to either of the following: (i) the incurring of addi- tional external debt through utilization, in accordance with the terms of any credit established prior to the date of 5 this Guarantee Agreement, of any unused amounts avail- able under such credit; or (ii) the entering into interna- tional payments or similar agreements the term of which is not more than one year and under which the transac- tions on each side are expected to balance over the period of the agreement. (c) The Guarantor will promptly inform the Bank of any condition which shall arise that shall prevent, obstruct or interfere or threaten to prevent, obstruct or interfere with, the accomplishment of the purpose of the Loan or the maintenai.ce of the service of the Loan. SECTIOX 5. The Guarantor covenants that the principal of and interest on the Loan and the Bonds, the premium on the redemption of the Bonds, as specified in the Loan Agreement and the Bonds, and the commitment charge and service charge on the Loan, as specified in the Loan Agreement, will be paid without deduction for and free of any taxes, imposts, fees or duties of any nature now or at any time hereafter imposed by the Guarantor or by any taxing authority thereof or therein and will be paid free from all restrictions of the Guarantor, its political sub- divisions or any Agency. This Section shall not apply to taxation of payments made under the provisions of 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 6. The Guarantor covenants that this Guaran- tee Agreement, the Loan Agreement and the Bonds shall be free of any issue, stamp or other tax imposed by the Guarantor or any taxing authority thereof or therein. SECTION 7. The Guarantor covenants that it will not take or permit any of its political subdivisions or any Agency to take any action which would prevent or inter- fere with the performance by the Borrower of any of the covenants, agreements and obligations of the Borrower in 6 the Loan Agreement contained and will take or cause to be taken all reasonable action which shall be necessary in order to enable the Borrower to perform such covenants, agreements and obligations. ARTICLE IV SECTION 1. The Guarantor agrees to endorse its guar- antee hereunder on the Bonds to be executed by the Bor- rower and delivered in accordance with Article V of the Loan Agrement. Such guarantee shall be substantially in the form set forth in Schedules 3-A and 3-B to the Loan Agreement, respectively. SECTION 2. The Guarantee on the Bonds shall be signed in the name and on behalf of the Guarantor by its author- ized representative or representatives. The signature of any such representative may be a facsimile signature, if such Guarantee is also countersig-ned manually by an authorized representative of the Guarantor. If any au- thorized representative of the Guarantor whose manual or facsimile signature shall be affixed to any such guaran- tee shall thereafter cease to be such authorized representa- tive, the Bond on which such Guarantee is endorsed may nevertheless be delivered under the Loan Agreement and such Guarantee shall be valid and binding on the Guaran- tor as though the person whose manual or facsimile signa- ture shall have been affixed to such Guarantee had not ceased to be such authorized representative. ARTICLE V SECTION 1. No holder of any Bond other than the Bank shall by virtue of being the holder thereof be entitled to exercise any of the rights conferred, or be subject to any of the conditions or obligations imposed, upon the Bank under this Guarantee Agreement except as shall be other- wise provided in such Bond or in the guarantee of the Guarantor endorsed thereon. 7 SEcTIoN 2. At any time or from time to time, upon the request of the Bank, the Guarantor shall, at its own expense, do any and all such things as the Bank shall rea- sonably request to comply with any laws or regulations of any nation or state or political subdivision thereof, or of any securities exchange therein, in order to enable the Bank to sell or offer for sale any of the Bonds, by public sale or otherwise, in any country or to list any of the Bonds for trading on any securities exchange. To that end the Guarantor shall execute and deliver all registra- tion statements, applications and other documents, and furnish to the Bank all information which shall be required in order so to comply with any such law or regulation. The Guarantor shall comply with any such request within such reasonable period, not less than 60 days, as the Bank shall specify in such request. ARTICLE VI SECTION 1. The respective rights and obligations of the parties hereto under this Guarantee Agreement and under the Bonds shall be valid and enforceable in accordance with their terms, anything in any statute, law or regulation of any nation or state or political subdivision thereof to the contrary notwithstanding. Neither of such parties shall be entitled in any proceeding under this Article to assert any claim that any provision of this Guarantee Agreement or of the Loan Agreement or of the Bonds is invalid or unenforceable because of any provision of the Articles of Agreement of the Bank or for any other reason. SEOTIow. 2. The provisions of this Guarantee Agree- ment shall be interpreted in accordance with the law of the State of New York, United States, as at the time in effect. SECTION 3. Any controversy between the parties to this Guarantee Agreement and any claim by either party to this Guarantee Agreement against the other party thereto 8 arising under this Guarantee Agreement or the Bonds which shall not be determined by agreement of such par- ties shall be submitted to and determined by arbitration by an Arbitral Tribunal in accordance with the provisions of Loan Regulations No. 1 of the Bank, dated May 9, 1947, a copy of which has been furnished to the Guarantor. The parties to this Guarantee Agreement accept and agree to the provisions of said Loan Regulations No. 1 with the same force and effect as if fully set forth herein; provided, however, that the Bank shall not be entitled to enter any judgment against the Guarantor in any court for the en- forcement of any award rendered pursuant to said Loan Regulations No. 1, or to enforce by execution against the Guarantor any judgment entered upon any such award or any judicial mandate or order made in any proceeding to enforce any such award, except as any such remedy may be available to the Bank against the Guarantor otherwise than by reason of the provisions of said Loan Regulations No. 1. ARTICLE VII SECTION 1. Any notice, demand or request required or permitted to be given or made under this Guarantee Agreement shall be in writing and shall be deemed to have been duly given or made when it shall be delivered in writing or by telegram, cable or radiogram to the party to which such notice, demand or request is required or permitted to be given or made at its address hereinafter specified, or at such other address as such party shall have designated by notice in writing to the party giving or mak- ing such notice, demand or request. The addresses so specified are: (a) For the Guarantor: Republic of Colombia, Ministerio de Hacienda y Credito Publico, Calle 19 entre Carreras 8a. y 9a., Bogota, Colombia. 0 9 (b) For the Bank: International Bank for Reconstruction and De- velopment, 1818 H Street, N. W., Washington 25, District of Columbia, United States of America. SECTION 2. This Guarantee Agreement may be exe- cuted in several counterparts, each of which shall be an original and all collectively but one instrument. SECTION 3. Any action required or permitted to be taken, and any documents required or permitted to be exe- cuted, under this Guarantee Agreement on behalf of the Guarantor may be taken or executed by its Minister of Finance and Public Credit or any person thereunto author- ized in writing by him. Any modification or amplification of the provisions of this Guarantee Agreement may be agreed to on behalf of the Guarantor by written instru- ment executed on behalf of the Guarantor by its Minister of Finance and Public Credit or any person thereunto au- thorized in writing by him; provided, that in the opinion of such Minister of Finance and Public Credit, such modi- fication or amplification is reasonable in the circumstances and will not substantially increase the obligations of the Guarantor hereunder. The Bank may accept the execu- tion by such Minister of Finance and Public Credit or such other person of any such instrument as conclusive evidence that, in the opinion of such Minister of Finance and Public Credit, any modification or amplification of the provisions of this Guarantee Agreement effected by such instrument is reasonable in the circumstances and will not substan- tially increase the obligations of the Guarantor hereunder. SECTION 4. The Guarantor shall furnish to the Bank sufficient evidence of the authority of the person or per- sons who will, on behalf of the Guarantor, take any action or execute any documents required or permitted to be taken or executed by the Guarantor pursuant to any of the 10 provisions of this Guarantee Agreement or the Loan Agreement and the authenticated specimen signature of each such person. ARTICLE VIII SECTION 1. This Guarantee Agreement shall come into force and effect on the Effective Date. If, pursuant to Section 3 of Article XI of the Loan Agreement, the Bank shall terminate the Loan Agreement, the Bank shall promptly notify the Guarantor thereof and upon the giv- ing of such notice, this Agreement and all obligations of the parties hereunder shall forthwith cease and determine. SECTION 2. If and when the entire principal amount of the Loan shall have been paid or caused to be paid by the Borrower or the Guarantor (or shall have been cancelled), together with the redemption premium, if any, on the re- demption of all Bonds which shall have been called for redemption and all interest and other charges which shall have accrued on the Loan and the Bonds, this Guarantee Agreement and all obligations of the Guarantor hereunder shall forthwith terminate. IN WITNESS WHEREOF the parties hereto have caused this Guarantee Agreement to be signed in their respective names by their representatives thoreunto duly authorized as of the day and year first above written. REPUBLIC OF COLOMBIA by GONZALO RESTREPO JARAMILLO Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT by EUGENE R. BLACK President