Zakon o ratifikaciji Garancijske pogodbe (Projekt slovenskih avtocest vzhod-zahod) med Republiko Slovenijo in Evropsko banko za obnovo in razvoj

GUARANTEE AGREEMENT

(SLOVENIA EAST-WEST HIGHWAY PROJECT)

BETWEEN REPUBLIC OF SLOVENIA AND

EUROPEAN BANK

FOR RECONSTRUCTION AND DEVELOPMENT

Dated: 13 May, 1994

Whereas the Guarantor and Družba za Avtoceste v Republiki Sloveniji d.d. (the "Borrower" or "DARS"), have requested assistance from the Bank in the financing of part of the Project (as defined in the Loan Agreement referred to below):

whereas by a, loan agreement of even date herewith between the Bank and the Borrower (the "Loan Agreement"), the Bank has agreed to extend to the Borrower a loan in the amount of USD 32,100,000 (the "Loan"), upon the terms and conditions set forth in the Loan Agreement, but only on the condition that the Guarantor agrees to guarantee the obligations of the Borrower in respect of such loan as provided in this Agreement; and

whereas the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has so agreed to guarantee such obligations of the Borrower;

now therefore, the parties hereby agree as follows:

Section 1.01 Definitions

Whenever used in this Agreement the terms defined in the Preamble to this Agreement or in the Loan Agreement have the meanings ascribed therein, and the following terms have the meanings:

"lien" includes mortgages, pledges, charges, privileges and priorities of any kind; and

"public assets" means property, revenue or claims of any kind of the Guarantor, of any political or administrative subdivision 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 other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilisation fund, or similar functions for the Guarantor.

Section 1.02 Headings

The headings of individual Articles and Sections of this Guarantee Agreement and the Table of Contents are inserted for convenience of reference only and do not form part of this Agreement.

Section 2.01 Guarantee

(a) The Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of any and all sums due under the Loan Agreement, whether at stated maturity or upon prematuring, and the punctual performance of all other obligations of the Borrower, all as set forth in the Loan Agreement.

(b) The Guarantor shall ensure that no action which would prevent or interfere with the execution of the Project or with the efficient operation of the Project facilities or the performance of the Borrower's obligations under the Loan Agreement is taken or permitted to be taken by the Guarantor or any of its political or administrative subdivisions or any of the entities owned or controlled by, or operating for the account or benefit of, the Guarantor or such subdivisions.

Section 2.02 Project Completion

The Guarantor covenants that 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, the Guarantor will take all necessary measures to ensure timely completion of the Project.

Section 3.01 Financial and Economic Data

(a) The Guarantor shall furnish to the Bank all such information as the Bank shall reasonably request:

(1) with respect to financial and economic conditions in its territory, including its balance of payments and its external debt as well as that of its political or administrative subdivisions and of any entity owned or controlled by, or operating for the account or benefit of, the Guarantor or any such subdivision, and of any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor; and

(2) with respect to proposals to implement economic reforms, including proposed measures for privatisation, in the road sector which may have an impact on the Project, including reforms in the legal or regulatory framework for such sector.

(b) The Guarantor shall afford all reasonable opportunity for representatives of the Bank to visit any part of its territory for purposes related to the Loan or the Project.

Section 3.02 Negative Pledge

(a) The Guarantor undertakes to ensure that no other external debt shall have priority over the Loan in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of the Guarantor. If any lien shall be created on any public assets as security for any external debt, or any arrangement having an equivalent effect, which will or might result in a priority for the benefit of the creditor of the external debt in the allocation, realization or distribution of foreign exchange, the lien shall, unless the Bank shall otherwise agree, ipso facto, and at no cost to the Bank, equally and rateably secure the principal of, and the interest and other charges on, the Loan, and the Guarantor, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if 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 subdivisions, the Guarantor shall promptly and at no cost to the Bank secure the principal of, and the interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank.

(b) The foregoing undertaking shall not apply to:

(1) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of that property or as security for the payment of debt incurred for the purpose of financing the purchase of such property; and

(2) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date.

Section 4.01. Discharge by Performance and Preservation of Rights

Except as provided in Section 4.02, the obligations of the Guarantor under this Agreement shall not be discharged except by performance and then only to the extent of such performance. Such obligations shall not require any prior notice to, demand upon or action against the Borrower or any prior notice to or demand upon the Guarantor with regard to any default by the Borrower. Such obligations shall not be impaired by any of the following:

(a) any extension of time, forbearance or concession given to the Borrower;

(b) any assertion of, or failure to assert, or delay in asserting, any right, power or remedy against the Borrower or in respect of any security for the Loan;

(c) any modification or amplification of the provisions of the Loan Agreement contemplated by the terms thereof; or

(d) any failure of the Borrower to comply with any requirement of any law of the Guarantor.

Section 4.02. Termination Upon Payment

If the Borrower shall have failed to make payment of principal or interest or any other payment required under the Loan Agreement (otherwise than as a result of any act or omission to act of the Guarantor) and such payment shall have been made by the Guarantor, the Guarantor may, after consultation with the Bank, by notice to the Bank and the Borrower, terminate its obligations under the Guarantee Agreement with respect to any Available Amount on the date of receipt of such notice by the Bank and not subject to any unconditional Reimbursement Commitment entered into by the Bank pursuant to Section 2.06 of the Loan Agreement. Upon receipt of such notice by the Bank, such obligations in respect of such amount shall terminate.

Section. 5.01. Taxes This Agreement, the Loan Agreement and any supplementary agreement relating thereto between the parties to this Agreement or the Loan Agreement, shall be free from any and all taxes levied by, or in the territory of, the Guarantor, on or in connection with the execution, delivery, registration or performance thereof.

Section 5.02. Manner of Payment

All amounts payable to the Bank under this Agreement shall be paid in the Loan Currency:

(a) at such places as the Bank shall reasonably request; and

(b) without deduction for, and free from, any and all taxes, charges and restrictions of any kind imposed by, or in the territory of, the Guarantor, Amounts due to the Bank hereunder shall be deemed paid when received without such deductions by the Bank.

Section 6.01. Enforceability and Arbitration

The Guarantor shall comply vis-a-vis the Bank with all the conditions set out in Article IX of the Loan Agreement. References to the Borrower or to a party in such Article shall be deemed, for purposes of this Guarantee Agreement, to be references to the Guarantor.

Section 6.02. Notices

Any notice or request required or permitted to be given or made under this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it has been delivered by hand, mail, cable, telex or telefax to the party to which it is required to be given or made, at the party's address specified below or at any other address as the party shall have specified in writing to the party giving the notice or making the request.

For the Guarantor:

Minister of Finance of Slovenia

61000 Ljubljana, Župančičeva 3

Telephone: 010 38 61 152 193

Telefax: 010 38 61 152 067

Telex:

For the Bank:

European Bank for Reconstruction and Development

Attention: Operations Administration Unit

One Exchange Square

London EC2A 2EH England

Telephone: (44-71) 338 6000

Telefax: (44-71) 338 6100

Telex: 881 2161

Section 6.03. Authority to Act

Any action required or permitted to be taken, and any documents required or permitted to be executed under this Agreement on behalf of the Guarantor, may be taken or executed by the Minister of Finance of the Guarantor or the successor of the Minister of Finance or such other officer of the Guarantor as the Minister of Finance or the successor of the Minister of Finance shall designate in writing, and the Guarantor shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such officer of the Guarantor.

Section 6.04. English Language

Any document delivered pursuant to this Agreement shall be in the English language. Documents in any other language shall be accompanied by an English translation thereof certified as being an approved translation and such approved translation shall be conclusive between the parties hereto.

Section 6.05. Effective Date

This Agreement shall become effective on the date upon which the Bank dispatches to the Guarantor notice of its acceptance of the evidence required by Section 6.06.

Section 6.06. Conditions Precedent to Effectiveness

The Guarantor shall furnish the Bank with satisfactory evidence that

(a) the execution and delivery of this Agreement on behalf of the Guarantor has been duly authorized and ratified and is legally binding upon the Guarantor in accordance with its terms; and

(b) all conditions precedent to the effectiveness of the Loan Agreement, other than those related to the effectiveness of this Agreement, shall have been fulfilled.

Section 6.07. Legal Opinion

The Guarantor shall also furnish the Bank with a legal opinion of Minister of Justice of the Guarantor, in a form and substance satisfactory to the Bank, to the effect that this Agreement has been duly authorized and ratified by, and executed and delivered on behalf of, the Guarantor and constitutes a valid and legally binding obligation of the Guarantor in accordance with its terms.

Section 6.08. Termination for Failure to Become Effective

If this Agreement shall not have come into effect by the date specified in Section 10.04 of the Loan Agreement, this Agreement and all obligations of the parties hereunder shall terminate unless the Bank, after consideration of the reasons for the delay, shall establish a later date for the purposes of said Section.

Section 6.09. Termination on Performance

When the entire principal amount of the Loan shall have been repaid and the interest and all charges which shall have accrued on the Loan shall have been paid, this Agreement and all obligations of the parties hereunder shall forthwith terminate.

In witness whereof, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed and delivered at London in four copies in the English language, each considered as original as of the day and year first above written