LOAN NUMBER 136 JA Guarantee Agreement (Industrial Projects) BETWEEN JAPAN AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED FEBRUARY 21, 1956 (6~unranter Agrtntu AGREEMENT, dated February 21, 1956, between JAPAN (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by an agreement of even date herewith between the Bank and The Japan Development Bank (hereinafter called the Borrower), which agreement and the schedules therein referred to are hereinafter called the Loan Agree- ment, the Bank has agreed to make to the Borrower a loan in various currencies equivalent to eight million one hun- dred thousand dollars ($8,100,000), on the terms and condi- tions set forth in the Loan Agreement, but only on condition that the Guarantor agrees to guarantee the obligations of the Borrower as herein provided; and WHEREAS the Guarantor, in consideration of the Bank's entering 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 fol- lows: ARTICLE I SECTION 1.01. The parties to this Guarantee Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated February 15, 1955, subject, however, to the modifications thereof set forth in Schedule 3 to the Loan Agreement (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Wherever used in this Guarantee Agree- ment, unless the context shall otherwise require, the several 4 terms defined in the Loan Agreement shall have the respec- tive meanings therein set forth. ARTICLE II SECTION 2.01. Without limitation or restriction upon any of the other covenants on its part in this 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 and other charges on, the Loan, the principal of and interest on the Bonds and the premium, if any, on the prepayment of the Loan or the redemption of the Bonds, all as set forth in the Loan Agreement and in the Bonds. ARTICLE III SECTION 3.01. It is the mutual intention of the Guaran- tor and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Guarantor undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing pro- visions of this Section shall not apply to: (i) any lien cre- ated on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions to 5 secure a debt maturing not more than one year after the date on which it is originally incurred. The term "assets of the Guarantor" as used in this Sec- tion includes assets of the Guarantor or of any agency of the Guarantor. The Guarantor further undertakes that, within the limits of its constitutional powers, it will make the foregoing un- dertaking effective with respect to liens on the assets of any of its political subdivisions and their agencies, including local governing authorities. SECTION 3.02. (a) The Guarantor and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Guarantor, such information shall include information with respect to financial and economic condi- tions in the territories of the Guarantor and the interna- tional balance of payments position of the Guarantor. (b) The Guarantor and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Guarantor shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. (c) The Guarantor shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any part of tbi territories of the Guarantor for purposes related to the Loan. SECTION 3.03. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Guarantor or laws in effect in its ter- 6 ritories; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, pay- ments under 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 3.04. This Agreement, the Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Guarantor or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof. SECTION 3.05. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Guarantor or laws in effect in its territories. SECTION 3.06. So long as any part of the Loan shall be outstanding and unpaid, the Guarantor will not take any action which would prevent or interfere with the perform- ance by the Borrower of any of the covenants, agreements and obligations of the Borrower in the Loan Agreement contained, and will take or cause to be taken all action neces- sary or appropriate to enable the Borrower to perform such covenants, agreements and obligations. ARTICLE IV SECTION 4.01. The Guarantor shall endorse, in accord- ance with the provisions of the Loan Regulations, its guar- antee on the Bonds to be executed and delivered by the Bor- rower. The Minister of Finance of the Guarantor and such person or persons as he shall designate in writing are des- ignated as the authorized representatives of the Guarantor for the purposes of Section 6.12 (b) of the Loan Regulations. 7 ARTICLE V SECTION 5.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Minister of Finance Ministry of Finance 2 Honshiocho, Shinjuku-Ku Tokyo, Japan For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D.C. United States of America SECTION 5.02. The Minister of Finance of the Guarantor is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Guarantee Agreement to be signed in their re- spective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. JAPAN By S. SHIMA Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President