OFFIC!AI LOAN NUMBER 2339 YU DOCUMENTS LOAN NUMBER 2340 YU Guarantee Agreement (Seventh Industrial Credit Project) between SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA tnd INTERTATIOAL BANK FOR RECINS1tUCTION AND DEVELOPMENT Dated , 1983 LOAN WNU 2339 TO LOAN WWnE 2340 TU GUARANTEE AGREEMIDT AGREEMENT, dated 090 tu^e 1983, between SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Udruzena Kosovska Banka Priatina (hereinafter called KBP), the Bank has agreed to make to KBP a loan in various cur- rencies equivalent to forty-five million dollars ($45,000,000), on the terms and conditions set forth in that Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of KBP in respect of such loan as hereinafter provided; WHEREAS by the Loan Agreement of even date herewith between the Bank and Investiciona Banka Titograd-Udruzena Banka (herein- after called IBT), the Bank has agreed to make to IBT a loan in various :urrencies equivalent to twenty-five million dollars ($25,000,000), on the terms and conditioas set forth in that Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of IBT in respect of such loan as hereinalter provided; U-H1REAS the Guarantor, in.consideration of the Bank's enter- ing into the said Loan Agreements with KBP and IBT, has agreed so to guarantee such oblr -tions of KBP and IBT; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditione; Definitions Section 1.01. The parties to this Agreement accipt 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 Schedule 2 to each of the Loan Agreements described in the Pre- amble to this Agreement (said General Conditions Applicable to Loan and Guarantee Agreements, as so modified, being hereinafter called the General Conditions); provided, however, that: -2- (a) the term "Borrower" shall be read to refer to KBP or IBT, as the case may be; (b) the term "Loan Agreement" shall be read to refer to either Loan Agreement described in the Preamble to this Agree- ment, as the case may be; (c) the term "Loan" shall be read to refer to the Loan made under either of the Loan Agreements, as the case may be; (d) the term "Loan Account" shall be read to refer to the Loan Account to which either of the Loans is credited, as the case may be; and (e) the term "Project" shall be read to refer to. the Project described in either of the Loan Agreements, as the case may be. 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 either of the Loan Agreements 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, each Loan, and the premium, if any, on the prepayment of each of the Loans, all as set forth in the Loan Agreement concerned. 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, each Loan, and the Guarantor, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, i 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 s')divisions, the Guarantor shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, each 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; aLd (ii) any lierm 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 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 Guarantor. Section 3.02. The Guarantor covenants that it !ill not take, or cause or permit to be taken any action which would prevent or interfere with the performance by KBP or IBT of their obligations contained in each 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 KBP or IBT 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 f,-. the purposes of Section 11.01 of the General Conditions: For the Guarantor: Savezni Sekretarijat za Fir.ansije 3 OmladinskiL Brigada 11070 Belgrade Yugoslavia Cable address: Telex: SAVEZNI SEKRETARIAT ZA 11062 YU SIV FINANSIJE 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 - 5.- of Columbia, United States of America, as of the day and year first above written. SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Europe, Middle East and North Africa INTERNATONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this - day of0r",-iqs 3 FOR SECRETARY