Mexico - Seventh Agricultural Credit Project : Loan 1891 - Guarantee Agreement - Conformed

= CAL LOAN NUMBER 1891 ME Gusartee Agreement (Seventh Agricultural Credit Project) between UNITED MEXICAN STATES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated / 5 , 1980 LOAN NUMBER 1891 ME GUARANTEE AGREEMENT AGREEMENT, dated , 1980, between UNITED MEXICAN STATES (herei fter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Special Trust Agreement between the Guarantor and Banxico dated August 26, 1965, Banxico has been entrusted by the Guarantor with the Special Trust Fund for the purpose of financing agricultural, livestock, fisheries and agro-industrial development in Mexico; WHEREAS the Guarantor, Banxico and the Borrower have requested the Bank to assist in financing such development; WHEREAS the Bank has in the past made the prior loans for that purpose and has now agreed to make to the Borrower a seventh loan in various currencies equivalent to three hundred twenty-five million dollars ($325,000,000) 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 hereinafter provided and that Banxico undertake certain obligations to the Bank as in the Project Agreement set forth; 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 follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein subject, however, to- the modifications thereof set forth in Schedule 4 to the Loan Agreement (said General Conditions Appli- cable to Loan and Guarantee Agreements, as so modified, being hereinafter called the General Conditions). -2- Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee; Provision of Funds 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, the Loan, and the premium, if any, on the prepayment of the Loan, 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: (a) to cause Banxico to carry out the Project with due diligence and efficiency and in conformity with sound agricul- tural, industrial, administrative and financial policies and practices; (b) whenever there is reasonable cause to believe that the funds available to Banxico for purposes of the Project will be inadequate to meet the estimated expenditures required for carrying out the Project, to make arrangements, satisfactory to the Bank, promptly to provide Banxico or cause Banxico to be provided with such funds as are needed to meet such expenditures; (c) to pay into the Fondo Especial de Asistencia Tecnica y Garantla jpara Cr6ditos Agropecuarios, such amounts as shall be required by Banxico to carry out Part 2 of the Project; (d) with regard to the portion of the Loan allocated to carry out Part 2 of the Project, to pay to the Borrower such amounts as the Borrower shall require: (i) to repay to the Bank such portion of the Loan; and (ii) to pay to the Bank any interest and other charges due thereon. -3- 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 govern- mental 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, 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 interest and other charges on, the Loan by an equivalent lien on other governmental 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; and (ii) any lien 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 "governmental assets" means assets of the Guarantor, of any of its political sub- divisions, or of any agency; and the term "agency" means any agency or instrumentality of the Guarantor or of any political subdivision of the Guarantor and shall include any institution or organization which is owned or controlled directly or indirectly by the Guarantor or by any political subdivision of the Guarantor or the operations of which are conducted primarily in the interest of or for account of the Guarantor or any political subdivision of the Guarantor. -4- Section 3.02. The Guarantor covenants that it will not take, or cause or permit any of its political subdivisions or any of its agencies or any agency of any such political subdivisions to take, any action which would prevent or interfere with the performance by the Borrower or Banxico of its respective obliga- tions contained in the Loan Agreement or the Project Agreement and will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrower and Banxico to perform such obligations. Section 3.03. The Guarantor shall take all action which shall be necessary or advisable: (a) upon the recommendation of FONDO to that effect, to cause such import permits as shall be needed for the importation of goods required to carry out the Project to be issued as promptly as possible, in compliance with the legislation and administrative procedures of the Guarantor; and (b) to enable Banxico to apply or cause to be applied the policies set forth in Schedule 2 to the Project Agreement. Section 3.04. The Guarantor shall, in accordance with its laws, appoint independent and qualified auditors for the purposes of Section 2.10 of the Project Agreement. Section 3.05. The Guarantor shall enter into contractual arrangements, satisfactory to the Bank, with the Borrower, providing that any loss incurred by the Borrower in connection with the payment of interest or other charges on, or the repayment of principal of, the Loan and resulting from changes in the rate of exchange between the currencies in which payments or repayments are to be made will be borne by the Guarantor. The Guarantor shall not change or fail to enforce any provision of such arrangements. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Nacional Financiera, S.A. is designated as representative of the Guarantor for the purposes of Section 10.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: -5- For the Guarantor: United Mexican States c/o Nacional Financiera, S.A. Isabel la Cat6lica 51 M4xico 1, D.F. Mexico Cable address: Telex: NAFIN Mexico City NAFIN 383-1775765 Mexico City 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 of Columbia, United States of America, as of the day and year first above written. UNITED MEXICAN STATES By j thorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By S Regional Vice President Latin merica and the Caribbean INTERNATIONAL 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 of 198 0. FOR SECRETARY