Mexico - Second Urban And Regional Development Project : Loan 1990 - Guarantee Agreement - Conformed

'II TS LOAN NUMBER 1990 ME Guarantee Agreement (Second Urban and Regional Development Project) between UNITED MEXICAN STATES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated /3 , 1981 LOAN NUMBER 1990 ME GUARANTEE AGREEMENT AGREEMENT, dated 3 1981 between UNITED MEXICAN STATES- (h ter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTR TION AND DEVELOPMENT (here- inafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Banco Nacional de Obras y Servicios PGblicos, S.A. (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to one hundred sixty-four million dollars ($164,000,000), 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 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 October 27, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agree- ments being hereinafter called the General Conditions). 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 -2- 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 or the Project Institutions will be inadequate to meet the estimated expenditures required for the carrying out of the Project, to make arrange- ments, satisfactory to the Bank, promptly to provide the Borrower or the Project Institutions, as the case may be, or cause the Borrower or the Project Institutions, as the case may be, to be provided with such funds as are needed to meet such expenditures. ARTICLE III Execution of the Project Section 3.01. (a) The Guarantor, through SAHOP,.-shall: (i) construct, or ensure the construction of, the works included in Parts B (1) and B (2) of the Project; (ii) procure, or ensure the procurement of, works, goods and services required for such Parts of the Project in accordance with the provisions set forth in Schedule 4 to the Loan Agreement; and (iii) provide technical assistance to the Borrower as required for the carrying out of ,Parts E (1) and E (4) (a) of the Project; all with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Guarantor shall consult with the Bank before agreeing with the Water Authorities to any substantial change in the design and specifications for Parts B (1) and B (2) of the Project. Section 3.02. (a) The Guarantor undertakes, in respect of Parts B (1) and B (2) of the Project, to insure, or cause to be insured, or make, or cause to be made, adequate provision for the insurance of, the imported goods to be financed out of the pro- ceeds of the Loan against hazards incident to the acquisition, -3- transportation and delivery thereof to the place of use or instal- lation, and for such insurance any indemnity shall be payable in a currency freely usable-by the Guarantor to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Guarantor shall cause all goods and services financed out of the proceeds of the Loan for the Parts of the Project referred to in Section 3.01 of this Agreement to be used exclusively for such Parts of the Project. Section 3.03. (a) The Guarantor shall furnish to the Bank, or cause to be furnished, promptly upon their preparation, the plans, specifications, reports, contract documents and construc- tion and procurement schedules for the Parts of the Project referred to in Section 3.01 (a) of this Agreement, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Guarantor: (i) shall maintain or cause to be main- tained records and procedures adequate to record and monitor the progress of said Parts of the Project (including their cost and the benefits to be derived from them), to identify the works, goods and services financed out of the proceeds of the Loan for said Parts of the Project, and to disclose their use in said Parts of the Project; (ii) shall furnish to the Borrower, at every six-month period, a report on the execution of said Parts of the Project; (iii) shall enable the Bank's accredited representatives, or cause them to be enabled, to visit the facilities and construc- tion sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iv) shall furnish to the Bank at'regular intervals all such information as the Bank shall reasonably request concerning said Parts of the Project, the expenditure of the proceeds of the Loan therefor and the works, goods and ser- vices financed out of such proceeds. ARTICLE IV Other Covenants Section 4.01. (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 -4- 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 interesZ 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 foregping 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 sub- division 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. Section 4.02. 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, the States or the Project Institu- tions of their respective obligations contained in the Loan Agreement, the State-project Agreements and the Subsidiary Loan -5- Agreements, and will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrower, the States and the Project Institutions to perform such obligations. Section 4.03. The Guarantor shall, not later than June 30, 1981 or such later date as the Bank may agree, establish a federal inter-ministerial committee which shall be responsible for the coordination of the Project. ARTICLE V Representative of the Guarantor; Addresses Section 5.01. The Director General de Cr4dito PGblico de la Secretaria de Hacienda y Crfdito PGblico 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 11.03 of the General Conditions: For the Guarantor: Direcci6n General de Crfdito Pibligo Secretaria de Hacienda y Crfdito PGblico Moneda 4 M4xico 1, D.F. M6xico Telex: HDA - 01777 HDA - 01313 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) -6- 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 Qf Columbia, United States of America, as of the day and year "first above written. UNITED MEXICAN STATES By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Latiinmerica 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 FOR'SECRETARY