Conformed Copy - L3208 - Telecommunications Technical Assistance Project - Guarantee Agreement

Page 1 CONFOMED COPY LOAN NUMBER 3208 ME (Telecommunications Technical Assistance Project) between UNITED MEXICAN STATES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 5, 1990 LOAN NUMBER 3208 ME GUARANTEE AGREEMENT AGREEMENT, dated June 5, 1990, between UNITED MEXICAN STATES (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Guarantor and Banco Nacional de Obras y Servicios Publicos, S.N.C. (the Borrower), having been satisfied as to the feasibility and priority of the Project described in Schedule 1 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 twenty two million dollars ($22,000,000), 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 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 "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; Transfer 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 merely as surety, 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. Section 2.02. The Guarantor shall enter into the contractual arrangement referred to in Section 3.01 of the Loan Agreement with the Borrower and except as the Bank may otherwise agree, the Guarantor shall not change or fail to enforce any provision of such contractual arrangement. ARTICLE III Execution of the Project; Other Covenants Section 3.01. 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 shall carry out the Project through SCT, all with due diligence, efficiency and in conformity with appropriate administrative, financial and telecommunications practices, and shall provide, or cause to be provided, promptly as needed, all funds, facilities, services and other resources required for the Project. Section 3.02. The Bank and the Guarantor agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating respectively to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) in respect of the Project shall be carried out by the Guarantor. Section 3.03. Except as the Bank shall otherwise agree, procurement of goods and services required for the Project and to be financed from the proceeds of the Loan shall be governed by the provisions of Schedule 4 to the Loan Agreement. Section 3.04. The Guarantor shall provide, or cause to be provided, to the Borrower all documents and records in respect of the expenditures financed out of the proceeds of the Loan required to enable the Borrower to comply with the provisions of Section 4.01 of the Loan Agreement. Section 3.05. The Guarantor, through SCT, shall: Page 3 (a) Not later than each March 30, June 30, September 30 and December 31 of each year during the implementation of the Project provide to the Bank a written report on the progress achieved in the implementation of the Project, with such scope and in such detail as the Bank shall reasonably request; (b) Not later than February 28 of each year during the implementation of the Project, provide to the Bank a written evaluation concerning the progress achieved in the implementation of the Project during the preceding calendar year, with such scope and in such detail as the Bank shall reasonably request; and (c) Within 30 days of submitting the evaluation referred to in paragraph (b) above, discuss with the Bank the progress achieved in carrying out the Project, and based on such discussions shall take such measures as may be reasonably required to ensure that the objectives of the Project are fully achieved in a timely manner. ARTICLE IV Financial Covenants Section 4.01. (a) The Guarantor shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices and operations, resources and expenditures in respect of the Project of the departments or agencies of the Guarantor responsible for carrying out the Project or any part thereof. (b) The Guarantor shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent and qualified auditors; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Guarantor shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the loan account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said Page 4 auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Representative of the Guarantor; Addresses Section 5.01. The Director General of the Captacion de Credito Externo of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 5.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Direccion General de Captacion de Credito Externo Secretaria de Hacienda y Credito Publico Palacio Nacional, Patio Central, Oficina 4025 06066 Mexico, D.F. Mexico Telex: 1777313 SHDCME Fax: 5225721 5424581 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 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) 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. UNITED MEXICAN STATES By /s/ Gustavo Petricioli Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Page 5 By /s/ Shahid Husain Regional Vice President Latin America and the Caribbean Region