Page 1 CONFORMED COPY LOAN NUMBER 2900 ZIM (Second Power Project) between ZIMBABWE and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated March 18, 1988 LOAN NUMBER 2900 ZIM GUARANTEE AGREEMENT AGREEMENT, dated March 18, 1988, between ZIMBABWE (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Guarantor and Zimbabwe Electricity Supply Authority (the Borrower), having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to the Loan Agreement, have requested the Bank to assist in the financing of the Project; and (B) by the Loan Agreement of even date herewith between the Bank and the Borrower, the Bank has agreed to extend to the Borrower a loan in various currencies equivalent to forty-four million dollars ($44,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as provided in this Agreement; and Page 2 WHEREAS the Guarantor, in consideration of the Bank's enter- ing into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to, and Section 1.02 of, the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee; Provision of Funds Section 2.01. The Guarantor declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement and, to this end, 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, the Loan, and the premium, if any, on the prepayment of the Loan, and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures required for the carrying out of the Project, to make arrangements, satisfactory to the Bank, to promptly provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures. ARTICLE III Other Covenants Section 3.01. Until the adoption by the Borrower of its Five- Year (1988-92) Power Investment Program pursuant to Section 5.02 of the Loan Agreement, the Guarantor shall not undertake or cause to be undertaken, any new investment in the power sector estimated to cost in excess of the equivalent of $50,000,000. Section 3.02. The Guarantor shall, promptly as required, take all action necessary on its part to enable the Borrower to fulfill its obligations under Sections 5.03, 5.04, 5.05 and 5.06 of the Loan Agreement. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Minister of Finance, Economic Planning and Development 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: Page 3 For the Guarantor: The Secretary Ministry of Finance, Economic Planning and Development Private Bag 7705 Causeway Harare, Zimbabwe Cable address: Telex: MINFIN 2141 ZW Harare Zimbabwe 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 duly authorized representatives, 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. ZIMBABWE By /s/ Arthur T.Charamba Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Edward V. K. Jaycox Regional Vice President Africa