DRAFT
Subject to modifications and final approval by EIB management	

E U R O P E A N   I N V E S T M E N T   B A N K

								FI N° 

SLOVAK REPUBLIC – ENVIRONMENT SECTOR LOAN

GUARANTEE AGREEMENT

between

THE MINISTRY of FINANCE of SLOVAK REPUBLIC

and

EUROPEAN INVESTMENT BANK

Bratislava,                   2002
Luxembourg,                   2002

THIS CONTRACT IS MADE BETWEEN :

The Slovak Republic, represented by the Ministry of Finance, having its office at 5, Stefanovicova, 81308 Bratislava, Slovak Republic, represented by 

					hereinafter called:	the “Guarantor" 

of the first part, and

European Investment Bank having its Head Office at 100, boulevard Konrad Adenauer, Luxembourg‑Kirchberg, Grand Duchy of Luxembourg, represented by 

					hereinafter called:	the “Bank" 

of the second part. 

	WHEREAS: 

1.	The Council of the European Union has decided to continue its plan of action for European Community assistance to the Slovak Republic in support of its efforts to bring about political and economic reforms.

2.	The Board of Governors of the Bank has taken note of this decision and authorised the granting of further loans for investment projects in the Slovak Republic.

3.	A Framework Agreement (hereinafter called the “Framework Agreement”) concerning this financial cooperation was signed by the Bank and the Slovak Republic on 18 July 1997 and applies to this Guarantee Agreement.

4.	By Article 3 of the Framework Agreement the Guarantor agreed that interest and all other payments due to the Bank and arising out of activities envisaged by such Framework Agreement, as well as the assets and revenues of the Bank connected with such activities, shall be exempt from tax. 

5.	By Article 4 of the Framework Agreement the Guarantor agreed that, throughout the life of any financial operation concluded pursuant to Article 2 of such Framework Agreement, the Guarantor shall: 

(a)	ensure: (i) that beneficiaries may convert into any fully convertible currency, at the prevailing market exchange rate on the due date, the amounts in the national currency of the Guarantor necessary for the timely payment of all sums due to the Bank in respect of loans and guarantees in connection with any project; and (ii) that such amounts shall be freely, immediately and effectively transferable; 

(b)	ensure: (i) that the Bank may convert into any fully convertible currency, at such prevailing market exchange rate, the amounts in the national currency of the Guarantor received by the Bank by way of payments arising in respect of loans and guarantees or any other activity and that the Bank may freely, immediately and effectively transfer the amounts so converted; or, at the Bank’s option, (ii) that it may freely dispose of such amounts within the territory of the Guarantor in accordance with the general laws and regulations of the Guarantor. 

6.	By an agreement (hereinafter called the "Finance Contract”) dated [                     2002] and made between the Bank and Slovenská záručná a razvojová banka, a.s. (hereinafter called "the Borrower"), the Bank has agreed to establish in favour of the Borrower a credit in a total amount of EUR 30 million (thirty million euro). 

7.	The obligations of the Bank under the Finance Contract are conditional upon the prior execution and delivery by the Guarantor of a guarantee of performance by the Borrower of its financial obligations under the Finance Contract, and the delivery of a favourable legal opinion by the Guarantor.

8.	References herein to “Articles”, “Recitals”, “Paragraphs”, “Sub-paragraphs”, “Indents” and “Annexes” are references respectively to articles, recitals, paragraphs, sub-paragraphs, indents and annexes of this Guarantee Agreement. 

9.	Execution of this Guarantee Agreement by the Guarantor has been authorised under documents attached as Annex I.

	NOW THEREFORE it is hereby agreed as follows :

ARTICLE 1
Finance Contract

1.01	The Guarantor declares that it is well acquainted with the terms, conditions and clauses of the Finance Contract, a true copy of which as signed by the parties has been delivered to it.

ARTICLE 2
Undertakings by the Guarantor

2.01	The Guarantor, as primary obligor and not merely as surety, guarantees entirely the full and punctual performance of all the repayment obligations of the Borrower to the Bank under the Finance Contract, and all payments of interest without any limitation, commissions, incidental charges and other expenses and all the sums being due by the Borrower to the Bank under any provision of the Finance Contract (hereinafter referred to as “Guaranteed Sums”).

2.02	If the Guarantor should hereafter grant to any third party security for the performance of any of its external debt obligations or any preference or priority in respect thereof, the Guarantor shall so inform the Bank and shall, if so required by the Bank, provide to the Bank equivalent security for the performance of its obligations hereunder or grant to the Bank equivalent preference or priority. The Guarantor represents that no such security, preference or priority presently exists.

	Nothing in this Paragraph 2.02 shall apply to any vendor's lien or to any charge which secures only the purchase price of any land or goods.

ARTICLE 3
Enforcement of Guarantee

3.01	Demand may be made under this Guarantee Agreement as soon as the Borrower has not performed all or part of the obligations guaranteed pursuant to Paragraph 2.01 of this Guarantee Agreement.

3.02	The Guarantor undertakes to pay all sums due hereunder in full, free of set-off or counterclaim. This Guarantee Agreement may be enforced by the Bank upon provision of a statement of the reason for the demand. The Bank shall not be obliged to take any action against the Borrower or to have recourse to any other guarantee.

3.03	The payment by the Guarantor shall fall due five Luxembourg business days after the day on which demand is made.

3.04	In the event of the Bank making demand, the Guarantor shall have the right to discharge immediately, under the conditions set out in the Finance Contract, all the payment obligations of the Borrower under the Finance Contract which are still outstanding at the time of such discharge.

ARTICLE 4
Subrogation

4.01	When the Guarantor has made a payment to the Bank, it is subrogated, to the extent of such payment, to the rights and actions relating to the said payment that the Bank has against the Borrower; this right of subrogation shall not be invoked to the detriment of the Bank.

ARTICLE 5
Modification of the Finance Contract

5.01	Subject to Paragraph 5.02, the Bank may agree to any amendment to the Finance Contract which does not increase the amounts payable by the Borrower thereunder. The Bank shall notify the Guarantor of each such amendment.

5.02	The Bank may grant the Borrower, in respect of the due date of payment of any Guaranteed Sum, an extension of time of up to three months. Any such extension of time shall be notified to the Guarantor.

5.03	The Bank may not amend or vary the terms of the Finance Contract save as provided in Paragraphs 5.01 and 5.02 or save with the prior written consent of the Guarantor, which consent shall not be unreasonably withheld.

ARTICLE 6
Guarantee of the European Community

6.01	This Guarantee Agreement is independent of guarantees given to the Bank by the European Community. The Guarantor hereby waives any right to contribution or indemnity from the European Community. If payment is made to the Bank by the European Community on account of any Guaranteed Sum, the European Community may recover from the Guarantor the amount so paid by it. 

ARTICLE 7
Particular Undertakings

7.01	The Guarantor shall grant exemption from taxation of all payments of principal, interest and other sums due hereunder as well as under the Finance Contract and permit the payment of all such sums gross without deduction of tax at source.

7.02	The Guarantor shall ensure that the Borrower obtains and/or will maintain all necessary exchange control requirements and/or consents (as the case may be) to permit the Borrower to receive disbursements under the Finance Contract, to repay the same and to pay interest and all other amounts due thereunder; such consents and/or requirements must extend to the opening and maintenance of the accounts to which the Borrower directs the Bank to disburse the Credit.

7.03	The Guarantor undertakes to implement such measures on its part as are necessary to enable the Borrower to perform the obligations set out in the Finance Contract. 

ARTICLE 8
Taxes, Charges and Expenses

8.01	Taxes or fiscal charges, legal costs and other expenses incurred in the execution or implementation of this Guarantee Agreement shall be borne by the Guarantor.

ARTICLE 9
Legal Regime of the Agreement

9.01	This Guarantee Agreement, its formation and validity shall be governed by the laws of the Grand Duchy of Luxembourg.

9.02	The place of performance of this Guarantee Agreement is the head office of the Bank.

9.03	The parties hereto submit to the exclusive jurisdiction of the Court of Justice of the European Communities  (hereinafter called the “Court”) and all disputes concerning this Guarantee Agreement shall be submitted to the Court.

The decision of the Court shall be conclusive and shall be accepted as such by the parties without restriction or reservation.

9.04	The Guarantor appoints the Mission of the Slovak Republic to the European Communities, whose address is presently at 79, avenue De Cortenbergh 1000 Brussels, Belgium, to be its attorney for the purpose of accepting service on its behalf of any writ, notice, order, judgement or other legal process. 

9.05	The parties hereto agree that this Guarantee Agreement is of a commercial nature and hereby undertake to waive any immunities which they may now or hereafter enjoy in any country from the jurisdiction of the Court.

ARTICLE 10 
Final Clauses 

10.01	Notices and other communications given hereunder (other than such as arise out of litigation) to the Guarantor or to the Bank shall be sent out by telex, telegram, registered letter or letter with recorded delivery addressed to it at its address set out below or at such other address as it shall have previously notified to the other in writing as its new address for such purpose, except that notices to the Guarantor relating to litigation whether pending or threatened shall be sent to the address mentioned under Paragraph 9.04, where the Guarantor elects domicile: 

‑ for the Guarantor	:	Ministry of Finance
		Stefanovicova 5
		81308 Bratislava
		Slovak Republic

‑ for the Bank	:	100, boulevard Konrad Adenauer
		L‑2950 Luxembourg	
	
Each party may, by notice to the other, change its addresses as set out above, provided that the address in Paragraph 9.04 may only be changed to another address within the EU. 

10.02	Recitals and Annexes 

The Recitals form part of this Guarantee Agreement. 

The following Annex is attached hereto:
	
Annex I	- Authority of Signatory.

IN WITNESS WHEREOF the parties hereto have caused this Guarantee Agreement to be executed in three originals in the English language, each page having been initialled by [                     ] on behalf of the Slovak Republic and by [                 ], on behalf of the Bank. 

Signed for and on behalf of	Signed for and on behalf of	
THE SLOVAK REPUBLIC 	EUROPEAN INVESTMENT BANK	

	

	

	This      day of ,      at Bratislava 
This      day of      , at Luxembourg