EXHIBIT 10.1
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INVESTMENT NUMBER 9902
Loan Agreement
between
GW SERVICIOS, S.A. DE C.V.
and
COMPANIA DE FERROCARRILES CHIAPAS-MAYAB, S.A. DE C.V.
and
INTERNATIONAL FINANCE CORPORATION
Dated December 5, 2000
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TABLE OF CONTENTS
Article or
Section Item Page No.
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ARTICLE I......................................................................1
Definitions and Interpretation.................................................1
Section 1.01. General Definitions.........................................1
Section 1.02. Financial Definitions......................................20
Section 1.03. Financial Calculations.....................................24
Section 1.04. Interpretation.............................................24
Section 1.05. Business Day Adjustment....................................25
ARTICLE II....................................................................25
The Project, Project Cost and Financial Plan..................................25
Section 2.01. The Project................................................25
Section 2.02. Project Cost and Financial Plan............................25
ARTICLE III...................................................................27
The Loan......................................................................27
Section 3.01. The Loan...................................................27
Section 3.02. Disbursement Procedure.....................................27
Section 3.03. Interest...................................................28
Section 3.04. Change in Interest Period..................................29
Section 3.05. Default Rate Interest......................................29
Section 3.06. Repayment..................................................30
Section 3.07. Prepayment.................................................31
Section 3.08. Fees.......................................................32
Section 3.09. Currency and Place of Payments.............................33
Section 3.10. Allocation of Partial Payments.............................34
Section 3.11. Increased Costs............................................34
Section 3.12. Unwinding Costs............................................34
Section 3.13. Suspension or Cancellation by IFC..........................35
Section 3.14. Taxes......................................................35
Section 3.15. Expenses...................................................36
Section 3.16. Illegality of Participation................................37
Section 3.17. Notes......................................................38
ARTICLE IV....................................................................38
Representations and Warranties................................................38
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Section 4.01. Representations and Warranties.............................38
Section 4.02. IFC Reliance...............................................42
ARTICLE V.....................................................................42
Conditions of Disbursement....................................................42
Section 5.01. Conditions of Disbursement.................................42
Section 5.02. Additional Conditions of Disbursement......................45
Section 5.03 Borrower's Certification...................................47
Section 5.04. B Loan Conditions..........................................47
Section 5.05 Conditions for IFC's Benefit...............................47
ARTICLE VI....................................................................47
Particular Covenants..........................................................47
Section 6.01. Affirmative Covenants......................................47
Section 6.02. Negative Covenants Relating to the Borrower................51
Section 6.03. Negative Covenants Relating to the Project Company.........54
Section 6.04. Reporting Requirements.....................................58
Section 6.05. Insurance..................................................61
ARTICLE VII...................................................................63
Events of Default.............................................................63
Section 7.01. Acceleration after Default.................................63
Section 7.02. Events of Default..........................................64
Section 7.03. Bankruptcy.................................................67
ARTICLE VIII..................................................................67
Miscellaneous.................................................................67
Section 8.01. Saving of Rights...........................................67
Section 8.02. Notices....................................................68
Section 8.03. English Language...........................................69
Section 8.04. Term of Agreement..........................................69
Section 8.05. Applicable Law and Jurisdiction............................70
Section 8.06. Disclosure of Information..................................72
Section 8.07. Successors and Assigns.....................................72
Section 8.08. Amendments, Waivers and Consents...........................72
Section 8.09. Counterparts...............................................72
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ARTICLE IX....................................................................72
The Merger....................................................................72
Section 9.01. Conditions Precedent of the Merger.........................72
Section 9.02. Acknowledgment of the Project Company......................73
ANNEX A.......................................................................75
BORROWER/PROJECT AUTHORIZATIONS...............................................75
ANNEX B.......................................................................76
INSURANCE REQUIREMENTS........................................................76
ANNEX C.......................................................................77
BRIDGE REPAIR PROGRAM.........................................................77
SCHEDULE 1....................................................................78
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY...............................78
SCHEDULE 2....................................................................80
FORM OF REQUEST FOR IFC DISBURSEMENT..........................................80
SCHEDULE 3....................................................................83
FORM OF LOAN DISBURSEMENT RECEIPT.............................................83
SCHEDULE 4-A..................................................................84
FORM OF SERVICE OF PROCESS LETTER.............................................84
SCHEDULE 4-B..................................................................86
FORM OF SERVICE OF PROCESS LETTER.............................................86
SCHEDULE 4-C..................................................................88
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FORM OF SERVICE OF PROCESS LETTER.............................................88
SCHEDULE 5(A).................................................................90
MATTERS TO BE COVERED IN LOCAL COUNSEL'S LEGAL OPINION........................90
SCHEDULE 5(B-1)...............................................................91
MATTERS TO BE COVERED IN SPECIAL COUNSEL'S LEGAL OPINION......................91
SCHEDULE 5(B-2)...............................................................92
MATTERS TO BE COVERED IN SPONSOR'S COUNSEL'S LEGAL OPINION....................92
SCHEDULE 6....................................................................93
FORM OF LETTER TO BORROWER'S AUDITORS.........................................93
SCHEDULE 7....................................................................95
FORM OF BORROWER'S CERTIFICATION ON DISTRIBUTION OF DIVIDENDS.................95
SCHEDULE 8....................................................................97
FORM OF PROGRESS REPORT RE: PROJECT IMPLEMENTATION............................97
SCHEDULE 9....................................................................98
INFORMATION TO BE INCLUDED IN ANNUAL REVIEW OF OPERATIONS.....................98
SCHEDULE 10..................................................................100
FORM OF ANNUAL MONITORING REPORT.............................................100
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SCHEDULE 11..................................................................104
FORM OF NOTES................................................................104
SCHEDULE 12..................................................................105
INTERMODAL CAPITAL INVESTMENT PROGRAM........................................105
LOAN AGREEMENT
AGREEMENT, dated December 5, 2000 between:
(1) GW SERVICIOS, S.A. DE C.V., a sociedad anonima de capital variable
organized and existing under the laws of the United Mexican States
(the "Borrower"; provided, however, that after the Merger (as
defined below) the "Borrower" shall mean the surviving entity);
(2) COMPANIA DE FERROCARRILES CHIAPAS-MAYAB, S.A. DE C.V., a sociedad
anonima de capital variable organized and existing under the laws of
the United Mexican States (the "Project Company"); and
(3) INTERNATIONAL FINANCE CORPORATION, an international organization
established by Articles of Agreement among its member countries
including the United Mexican States ("IFC").
ARTICLE I
Definitions and Interpretation
Section 1.01. General Definitions. Wherever used in this Agreement, the
following terms have the meanings opposite them:
"A Loan" the loan specified in Section 3.01(a) (The Loan) or, as the context
requires, its principal amount from time to time outstanding;
"A Loan Disbursement"
any disbursement of the A Loan;
"A Loan Interest Rate"
for any Interest Period, the rate at which interest is payable on the A Loan
during that Interest Period, determined in accordance with Section 3.03
(Interest) and, if applicable, Section 3.04 (Change in Interest Period);
"Accounting Principles"
United States Generally Accepted Accounting Principles (US-GAAP) promulgated by
the Financial and Accounting Standards Board, together with its pronouncements
thereon from time to time, and applied on a consistent basis;
"Affiliate"
any Person directly or indirectly controlling, controlled by or under common
control with, the Borrower or the Project
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Company (for purposes of this definition, "control" means the power to direct
the management or policies of a Person, directly or indirectly, whether through
the ownership of shares or other securities, by contract or otherwise, provided
that the direct or indirect ownership of ten per cent (10%) or more of the
voting share capital of a Person is deemed to constitute control of that Person,
and "controlling" and "controlled" have corresponding meanings);
"Asset Purchase Agreement"
the Asset Purchase Agreement dated as of June 18, 1999 between the Project
Company and GoM;
"Auditors"
Arthur Andersen L.L.P, or such other firm that each of the Borrower and the
Project Company appoints from time to time as its auditors pursuant to Section
6.01 (d) (Affirmative Covenants);
"Authority"
any national, supranational, regional or local government or governmental,
administrative, fiscal, judicial, or government-owned body, department,
commission, authority, tribunal, agency or entity, or central bank (or any
Person, whether or not government owned and howsoever constituted or called,
that exercises the functions of a central bank);
"Authorization"
any consent, registration, filing, agreement, notarization, certificate,
license, approval, permit, authority or exemption from, by or with any
Authority, whether given by express action or deemed given by failure to act
within any specified time period and all corporate, creditors' and shareholders'
approvals or consents;
"Authorized Representative"
any natural person who is duly authorized by the Borrower or the Project Company
to act on its behalf for the purposes specified in, and whose name and a
specimen of whose signature appear on, the Certificate of Incumbency and
Authority most recently delivered by the Borrower and the Project Company to
IFC;
"B Loan"
the loan specified in Section 3.01(b) (The Loan) or, as the context requires,
its principal amount from time to time outstanding;
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"B Loan Disbursement"
any disbursement of the B Loan;
"B Loan Interest Rate"
for any Interest Period, the rate at which interest is payable on the B Loan
during that Interest Period, determined in accordance with Section 3.03
(Interest) and, if applicable, Section 3.04 (Change in Interest Period);
"Business Day"
a day when banks are open for business in New York, New York or, solely for the
purpose of determining the applicable Interest Rate other than pursuant to
Section 3.03 (d)(ii)(Interest), London, England;
"CAP"
the Corrective Action Plan dated August 4, 2000, prepared by the Sponsor on
behalf of the Project Company;
"Certificate of Incumbency and Authority"
a certificate provided to IFC by each of the Borrower and the Project Company in
the form of Schedule 1;
"Charter"
with respect to any Person, the estatutos sociales and any other constitutive
document of such Person;
"Chiapas Constitutional Proceeding"
the litigation (Amparo Indirecto No. 258/2000) proceeding filed on May 9, 2000
by the Project Company in the federal court of Tapachula relating to a decree by
the government of the State of Chiapas, dated April 19, 2000 requiring the
Project Company to relocate its offices and to move its railroad track out of
the city of Tapachula;
"Concession Agreement"
the Concession Agreement dated August 26, 1999 between the Project Company and
GoM;
"Concession Termination Compensation Assignment Notice"
a notice to be filed with the GoM by the Project Company, pursuant to which the
Project Company shall assign to the Senior Lenders any concession termination
compensation payments payable to the Project Company by the GoM;
"Credit Line Agreement"
the Credit Line Agreement dated the date hereof, between the Borrower and the
Project Company;
"Derivative Transaction"
any swap agreement, cap agreement, collar agreement, futures contract, forward
contract or similar arrangement
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with respect to interest rates, currencies or commodity prices;
"Disbursement"
any disbursement of the A Loan, the B Loan or the FMO Loan or all of the above,
as the context requires;
"Dollars" and "$"
the lawful currency of the United States of America;
"Environmental Assessment Report"
the Baseline Environmental Assessment report dated January 12, 1999, relating to
the Project Company, prepared by TRC Environmental Corporation;
"Environmental, Health and Safety Guidelines"
the IFC Environmental, Health and Safety Guidelines for Railway Systems, dated
November 20, 1995, a copy of which has been delivered to, and receipt of which
has been acknowledged by letter dated February 10, 2000 by, each of the Borrower
and the Project Company and which is incorporated herein by reference;
"Environmental and Social Policies"
the IFC Policy on Environmental Assessment (OP 4.01), dated October 1998, the
IFC Policy on Pest Management (OP 4.09), dated June 1990, the World Bank Policy
on Involuntary Resettlement (OD 4.30), dated June 1990, the World Bank Policy
Note on Management of Cultural Property (OPN 11.03), dated September 1986, and
the IFC Policy Statement on Forced Labor and Harmful Child Labor, dated March
1998, copies of which have been delivered to, and receipt of which has been
acknowledged by letter dated February 10, 2000 by, each of the Borrower and the
Project Company and which are incorporated herein by reference;
"Equivalent Percentage of Shares"
the percentage of shares in the capital stock of the Project Company that is
equal to the product of:
(A) the IFC Shares divided by the total number of issued and outstanding
shares in the capital of the Borrower; and
(B) the IFC Shares divided by the total number of issued and outstanding
shares in the capital of the Project Company;
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"Escrow Account"
the Dollar denominated bank account to be opened by the Project Company pursuant
to the Escrow Account Agreement;
"Escrow Account Agreement"
the Escrow Account Agreement dated the date of this Agreement among the Project
Company, The Bank of New York and the Senior Lenders;
"Event of Default"
any one of the events specified in Section 7.02 (Events of Default);
"Financial Plan"
the proposed sources of financing for the Project set out in Section 2.02 (b)
(Project Cost and Financial Plan);
"Financial Support Agreement"
the agreement entitled "Financial Support Agreement" dated the date of this
Agreement among the Borrower, the Project Company, the Sponsor and the Senior
Lenders;
"Financial Year"
the accounting year of each of the Borrower and the Project Company commencing
each year on January 1 and ending on the following December 31, or such other
period as the Borrower and the Project Company, with IFC's consent, from time to
time designate as their accounting year;
"Fleet Bank"
Fleet National Bank, N.A., a banking institution organized and existing under
the laws of the United States of America;
"Fleet Bank Loan"
all amounts outstanding under the Fleet Loan Agreement;
"Fleet Bank Security"
the first priority pledge created in favor of Fleet Bank over (i) the assets of
the Project Company, (ii) all present and future assets of the Borrower, (iii)
all of the issued and outstanding shares of capital stock of the Project Company
currently owned by the Sponsor, Custodio Privado de Valores, S.A. de C.V. and
the Borrower, and (iv) all of the issued and outstanding shares of capital stock
of the Borrower currently owned by the Sponsor and Custodio Privado de Valores,
S.A. de C.V., to secure all amounts owing under the Fleet Loan Agreement
"Fleet Indemnification Letter"
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the Indemnity Agreement dated December 6, 2000 between Fleet Bank and the
Sponsor;
"Fleet Loan Agreement"
the Third Amended and Restated Revolving Credit and Term Loan Agreement dated
August 17, 1999, between Fleet Bank and the Project Company as amended by (i)
the First Amendment, Consent and Joinder dated June 16, 2000, among Fleet Bank,
the Project Company and the Borrower, (ii) the Second Amendment, Consent and
Release dated June 16, 2000, among Fleet Bank, the Project Company and the
Borrower, (iii) the Third Amendment, dated November 11, 2000, between Fleet Bank
and the Borrower and (iv) the Fourth Amendment, dated December 6, 2000, between
Fleet Bank and the Borrower;
"FMO"
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V., a limited
liability company organized under the laws of The Netherlands ("FMO");
"FMO Disbursement"
a Disbursement of the FMO Loan;
"FMO Guarantee"
the Guarantee Agreement dated the date of this Agreement between the Project
Company and FMO;
"FMO Loan"
the loan specified in Section 3.01 of the FMO Loan Agreement or, as the context
requires, its principal amount from time to time outstanding;
"FMO Loan Agreement"
the Loan Agreement dated on the date hereof among the Borrower, the Project
Company and FMO;
"GoM"
the Government of Mexico;
"GoM Letter"
a letter from the GoM to the Project Company, inter alia, (i) consenting to the
creation of the Security, (ii) approving the new ownership structure of the
Project, (iii) confirming the right of the Senior Lenders to appoint a new
operator upon the occurrence of an Event of Default pursuant to Article 18 of
the Railroad Law, and (iv) agreeing to notify the Senior Lenders in the event a
notification, fine, warning or other action or communication from the GoM is
taken with respect to, or delivered to the Project Company with respect to the
actual or alleged noncompliance by the Project Company with the terms of the
Concession Agreement;
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"GoM Lien"
the lien granted by the Project Company to the GoM pursuant to the Asset
Purchase Agreement;
"IFC Disbursement"
an A Loan Disbursement or a B Loan Disbursement or both, as the context
requires;
"IFC Guarantee"
the Guarantee Agreement dated the date of this Agreement between the Project
Company and IFC;
"IFC Loan"
collectively, the A Loan and the B Loan or, as the context requires, the
principal amount of the A Loan and the B Loan outstanding from time to time;
"IFC Shares "
the aggregate of:
(C) all shares in the share capital of the Borrower subscribed for and
acquired by IFC pursuant to the Subscription Agreement;
(D) all shares of the Borrower to be subscribed or acquired by IFC after
the execution of this agreement pursuant to the exercise of
preemptive rights, options or warrants accruing to IFC in relation
of any IFC Shares;
(E) all shares of the Borrower received by IFC after the execution of
this agreement as a result of stock splits or stock dividends on any
IFC Shares; and
(F) all shares (of any company) received by IFC in exchange, replacement
or substitution of the IFC Shares;
"IFC Subscription"
the subscription by IFC to shares of the Borrower provided for in the
Subscription Agreement;
"Increased Costs"
the amount certified in an Increased Costs Certificate to be the net incremental
costs of, or reduction in return to, IFC or any Participant in connection with
the making or maintaining of the IFC Loan or its Participation that result from:
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(i) any change in any applicable law or regulation or directive (whether or
not having force of law) or in its interpretation or application by any
Authority charged with its administration; or
(ii) compliance with any request from, or requirement of, any central bank or
other monetary or other Authority;
which, in either case, after the date of this Agreement:
(A) imposes, modifies or makes applicable any reserve, special deposit
or similar requirements against assets held by, or deposits with or
for the account of, or loans made by, IFC or that Participant;
(B) imposes a cost on IFC as a result of IFC having made the IFC Loan or
on that Participant as a result of that Participant having acquired
its Participation or reduces the rate of return on the overall
capital of IFC or that Participant that it would have achieved, had
IFC not made the IFC Loan or that Participant not acquired its
Participation, as the case may be;
(C) changes the basis of taxation on payments received by IFC in respect
of the IFC Loan or by that Participant with respect to its
Participation (otherwise than by a change in taxation of the overall
net income of IFC or that Participant imposed by the jurisdiction of
its incorporation or in which it books its Participation or in any
political subdivision of any such jurisdiction); or
(D) imposes on IFC or that Participant any other condition regarding the
making or maintaining of the IFC Loan or its Participation,
but excluding any incremental costs of making or maintaining a
Participation that are a direct result of that Participant having its
principal office in Mexico or having or maintaining a permanent office or
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establishment in Mexico, if and to the extent that permanent office or
establishment acquires that Participation;
"Increased Costs Certificate"
a certificate provided from time to time by IFC (based on a certificate to IFC
from any Participant, if the Increased Costs affect its Participation),
certifying:
(i) the circumstances giving rise to the Increased Costs;
(ii) that the costs of IFC or, as the case may be, that Participant, have
increased or the rate of return of either of them has been reduced as a
result of the Increased Costs;
(iii) that, IFC or, as the case may be, that Participant, has, in its opinion,
exercised reasonable efforts to minimize or eliminate the relevant
increase or reduction, as the case may be; and
(iv) the amount of Increased Costs;
"Interest Determination Date"
except as otherwise provided in Section 3.03 (d) (ii) (Interest) the second
Business Day before the beginning of each Interest Period;
"Interest Payment Date"
March 15 and September 15 in any year or, in the case of any Interest Period of
less than six (6) months, any day which is the 15th day of the month in which
the relevant Interest Period ends;
"Interest Period"
each period of six (6) months or, in the circumstances referred to in Section
3.04 (Change in Interest Period), each period of three (3) months or one (1)
month determined pursuant to that Section, in each case beginning on an Interest
Payment Date and ending on the day immediately before the next following
Interest Payment Date, except in the case of the first period applicable to an
IFC Disbursement when it means the period beginning on the date on which such
IFC Disbursement is made and ending on the day immediately before the next
following Interest Payment Date;
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"Interest Rate"
(i) with respect to the A Loan, the A Loan Interest Rate, or (ii) with respect
to the B Loan, the B Loan Interest Rate, as the context requires;
"Intermodal Capital Investment Program"
the Intermodal Capital Investment Program referred to in Section 5.01(q);
"ITISA"
Impulsora Tlaxcalteca de Industrias, S.A. de C.V., a sociedad anonima de capital
variable organized and existing under the laws of Mexico;
"Letters of Credit"
collectively, the letters of credit issued to IFC for the account of the Sponsor
to guarantee the Sponsor's obligations under Article II of, and otherwise
meeting the requirements of, the Financial Support Agreement;
"Letter of Information"
the Letter of Information, dated March 8, 2000, provided to IFC by the Project
Company with respect to the Project, as amended by the Letter of Information,
dated November 14, 2000, provided to the Senior Lenders by the Borrower;
"LIBOR"
the British Bankers' Association ("BBA") interbank offered rates for deposits in
Dollars which appear on the relevant page of the Telerate Service (currently
page 3750) or, if not available, on the relevant pages of any other service
(such as Reuters Service or Bloomberg Financial Markets Service) that displays
such BBA rates; provided that if BBA for any reason ceases (whether permanently
or temporarily) to publish interbank offered rates for deposits in Dollars,
"LIBOR" shall mean the rate determined pursuant to Section 3.03 (d) (Interest);
"Lien"
any mortgage, pledge, charge, assignment, hypothecation, security interest,
title retention, preferential right, trust arrangement, right of set-off,
counterclaim or banker's lien, privilege or priority of any kind having the
effect of security, any designation of loss payees or beneficiaries or any
similar arrangement under or with respect to any insurance policy or any
preference of one creditor over another arising by operation of law;
"Loans"
collectively, the A Loan, the B Loan and the FMO Loan or, as the context
requires, the principal amount of the A Loan, the B Loan and the FMO Loan
outstanding from time to time;
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"Long-term Contract"
any contract between the Borrower and the Project Company or between the
Borrower and/or the Project Company and any third party, in each case with a
term that is longer than one year and generating proceeds to the Borrower and/or
the Project Company of at least $1,000,000 annually;
"Material Adverse Effect"
a material adverse effect on:
(i) the Borrower or the Project Company, its assets or properties;
(ii) the Borrower's or the Project Company's business prospects (as reflected
in the Project Company's base case projections) or financial condition;
(iii) the implementation of the Project, the Financial Plan or the carrying on
of the Borrower's or the Project Company's business or operations;
(iv) the ability of the Borrower or the Project Company to comply with its
obligations under this Agreement or any other Transaction Document or
Project Document; or
(v) the Sponsor, if any of the events specified in clauses (i) through (iv)
above occurs with respect to the Sponsor;
"Mercantile Pledge Agreements"
collectively, the Mercantile Pledge Agreement, dated as of even date herewith by
and among the Sponsor, the Project Company, the Borrower and the Senior Lenders;
and the Mercantile Pledge Agreement, dated as of even date herewith, by and
among the Borrower, the Sponsor and the Senior Lenders;
"Merger"
the proposed merger of the Borrower with and into the Project Company, with the
Project Company as the surviving entity;
"Merger Deadline Date"
January 1, 2006;
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"Merger Effective Date"
the date on which all of the following requirements have been fully satisfied:
(i) the Merger shall have been completed; (ii) the IFC Shares shall have been
exchanged for the Equivalent Percentage of Shares in the capital of the Project
Company issued and outstanding immediately after completion of the Merger, (iii)
the Project Company shall have executed promissory notes substantially in the
form of Schedule 11 in replacement of the Notes, (iv) the Charter and by-laws of
the Project Company shall have been amended and IFC shall have determined, in
their reasonable judgment that, such Charter and by-laws, as amended, is not
inconsistent with the provisions of the Transaction Documents, (v) the Borrower,
the Project Company and the Sponsor shall have executed, acknowledged and
delivered or cause to be executed, acknowledged and delivered such further
instruments as may reasonably be requested by IFC for perfecting or maintaining
in full force and effect the Security or for re-registering the Security or
otherwise to enable the Borrower, the Project Company or the Sponsor to comply
with its obligations under the Transaction Documents, and (vi) IFC shall have
received, at the expense of the Project Company, a legal opinion, in form and
substance satisfactory to IFC, from IFC's counsel in Mexico regarding the
Merger, and such other matters as IFC may reasonably request;
"Mexico"
the United Mexican States;
"Note" or "Notes"
the promissory notes referred to in Article III, or any of them;
"Official"
any officer of a political party or candidate for political office in Mexico or
any officer or employee (i) of the GoM (including any legislative, judicial,
executive or administrative department, agency or instrumentality thereof) or
(ii) of a public international organization;
"Participant"
any Person who acquires a Participation;
"Participation"
the interest of any Participant in the B Loan, or as the context requires, in a
Disbursement of the B Loan;
"Participation Agreement"
any of the agreements entitled "Participation Agreement" between IFC and the
Participants pursuant to which each Participant acquires a Participation;
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"Person"
any natural person, corporation, company, partnership, firm, voluntary
association, joint venture, trust, unincorporated organization, Authority or any
other entity whether acting in an individual, fiduciary or other capacity;
"Potential Event of Default"
any event or circumstance which would, with notice, lapse of time, the making of
a determination or any combination thereof, become an Event of Default;
"Prohibited Payments"
any offer, gift, payment, promise to pay or authorization of the payment of any
money or anything of value, directly or indirectly, to or for the use or benefit
of any Official (including to or for the use or benefit of any other Person if
the Borrower, the Project Company or the Sponsor knows, or has reasonable
grounds for believing, that the other Person would use such offer, gift,
payment, promise or authorization of payment for the benefit of any such
Official), for the purpose of influencing any act or decision or omission of any
Official in order to obtain, retain or direct business to, or to secure any
improper benefit or advantage for, the Borrower, the Project Company, the
Sponsor, their respective Affiliates or any other Person; provided that any such
offer, gift, payment, promise or authorization of payment shall not be
considered a Prohibited Payment if, in IFC's reasonable opinion, it (i) is
lawful under applicable written laws and regulations or (ii) is made for the
purpose of expediting or securing the performance of a routine governmental
action (as such term is construed under applicable law);
"Project"
the project described in Section 2.01 (The Project);
"Project Company"
Compania de Ferrocarriles Chiapas-Mayab, S.A. de C.V., a sociedad anonima de
capital variable organized and existing under the laws of Mexico, and a
wholly-owned subsidiary of the Borrower;
"Project Documents"
(i) the Concession Agreement;
(ii) the Asset Purchase Agreement;
(iii) the Technical Assistance Agreement;
(iv) the Security Trust Indenture;
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(v) the Urgent Repairs Agreement;
(vi) the Credit Line Agreement;
(vii) the Fleet Loan Agreement; and
(viii) the Fleet Indemnification Letter;
"Project Financial Completion Date"
the last day of the month in which all of the following requirements have been
fully satisfied:
(i) the Project Physical Completion Date has occurred;
(ii) the Auditors have delivered to each Senior Lender a certificate,
certifying that:
(A) for a period of four (4) consecutive financial quarters which
includes the Project Physical Completion Date:
(1) the Borrower's Debt Service Coverage Ratio at the end of such
period shall be equal to or in excess of 1.4; provided,
however, that for this purpose, if the relevant calculation
date falls in a financial quarter in which no principal of the
Loans is payable, then the calculation of item (ii) of the
definition of Debt Service Coverage Ratio shall be done for
the four consecutive financial quarters period beginning with
the financial quarter in which for the first time principal of
the Loans are due and payable;
(2) the Borrower's Long-term Debt to Tangible Net Worth Ratio at
the end of such period shall not be in excess of 2.0;
(3) the Borrower's EBITDA for such period shall be in excess of
$8,000,000; and
-15-
(B) the Project Company has applied not less than $7,700,000 of its
internal cash generation to the Project;
(iii) the Escrow Account has been fully funded in accordance with the Escrow
Account Agreement;
(iv) no Event of Default or Potential Event of Default has occurred and is
continuing; and
(v) IFC shall have notified the Borrower that the certification referred to in
paragraph (ii) is acceptable to IFC; provided that if all requirements set
forth in paragraphs (i) through (iv) are met, IFC will send such notice
within thirty (30) days of having received the certification referred to
in paragraph (ii);
"Project Physical Completion Date"
the last day of the month in which all of the following requirements have been
fully satisfied:
(i) the Project Company has properly completed all the investments specified
in Section 2.02(a);
(ii) the Project Company has achieved a locomotive availability of at least
eighty per cent (80%);
(iii) the necessary bridge repairs specified in Annex C have been completed and
verified by an independent engineer acceptable to the Senior Lenders;
(iv) the Project Company has set up an effective vegetation control system;
(v) the Project Company has acquired all consummables and supplies comprised
in the Project;
(vi) the Project Company has acquired unconditional ownership of all the
equipment set forth in the Asset Purchase Agreement;
(vii) there are no outstanding claims by contractors in respect of the Project
(other than claims being
-16-
contested in good faith and with respect to which the Project Company has
made adequate reserves);
(viii) all Authorizations required for the normal operation of the Project and
the performance by each of the Borrower and the Project Company of its
obligations under the Transaction Documents and the Project Documents
have been obtained and remain in full force and effect;
(ix) no Event of Default or Potential Event of Default has occurred and is
continuing;
(x) the Borrower has delivered to IFC a notice, together with the supporting
data, signed by an Authorized Representative and verified by a party
acceptable to IFC, certifying that the requirements set out in paragraphs
(i) through (ix) above have been fulfilled; and
(xi) IFC shall have notified the Borrower that the Borrower's notice is
acceptable to IFC; provided that if all requirements in paragraphs (i)
through (x) are met, IFC will send such notice within thirty (30) days of
having received the notice referred to in paragraph (x);
"Put Option Agreement"
the agreement entitled "Put Option Agreement" dated the date of this Agreement
between the Sponsor, the Borrower and IFC;
"Railroad Law"
Mexico's Law Regulating Railroad Services (Ley Reglamentaria del Servicio
Ferroviario) and the applicable rules and regulations thereunder, as amended
from time to time;
"Relevant Spread"
three and one-half per cent (3.5%) per annum.
"SCT"
the Secretaria de Comunicaciones y Transportes of Mexico;
"SCT Letter"
a letter from SCT to the effect that the Project Company shall be entitled to
indemnification pursuant to the applicable provisions of the Railroad Law,
including Section 23 thereof, in the event of a unilateral modification of the
Concession Agreement;
-17-
"Security"
the security created by or pursuant to the Security Documents to secure all
amounts owing by the Borrower to IFC under the Transaction Documents;
"Security Documents"
the documents providing for the Security consisting of:
(i) a first ranking pledge over all the present and future movable assets of
the Project Company and the Borrower;
(ii) a first ranking mortgage over all the present and future immovable assets
of each of the Project Company and the Borrower, if any;
(iii) a first ranking pledge over all the present and future accounts receivable
of each of the Project Company and the Borrower;
(iv) a first ranking pledge over all of the Project Company's title to, rights
and interest in the Project Documents other than the Urgent Repairs
Agreement and the Fleet Loan Agreement;
(v) a first ranking pledge over all of the Project Company's or the Borrower's
title to, rights and interest in all Long-term Contracts;
(vi) a first ranking pledge over all of the Project Company's and the
Borrower's title to, rights and interest in their respective present and
future bank accounts;
(vii) an assignment of all of the Project Company's title to, rights and
interest in the Escrow Account;
(viii) a first ranking pledge over the Sponsor's shares in the Borrower;
(ix) a first ranking pledge over the Sponsor's and the Borrower's shares in the
Project Company; and
(x) nomination of IFC as a loss payee/beneficiary in respect of the insurance
obtained in connection with the assets subject to the Security Documents
and a
-18-
first ranking pledge over such insurance policies and proceeds;
"Security Sharing Agreement"
the Security Sharing Agreement dated the date hereof between FMO and IFC;
"Security Trust Indenture"
the Security Trust Indenture dated August 17, 1999 between the Project Company
and the GoM;
"Senior Lenders"
collectively, IFC and FMO;
"Sponsor"
Genesee & Wyoming, Inc., a corporation organized and existing under the laws of
the State of Delaware, United States of America;
"Subscription Agreement"
the agreement entitled "Subscription Agreement" dated the date of this Agreement
between the Borrower and IFC;
"Subsidiary"
with respect to any Person, any entity:
(i) over 50% of whose capital is owned, directly or indirectly, by that
Person;
(ii) for which that Person may nominate or appoint a majority of the members of
the board of directors or such other body performing similar functions; or
(iii) which is otherwise effectively controlled by that Person;
"Taxes"
any present or future taxes, withholding obligations, duties and other charges
of whatever nature levied by any Authority;
"Technical Assistance Agreement"
the Assistance Agreement dated June 16, 1999 between the Project Company and the
Sponsor, as amended by the Amended and Restated Assistance Agreement dated
December 6, 2000, between the Project Company and the Sponsor;
"Transaction Documents"
(i) this Agreement;
(ii) the FMO Loan Agreement;
-19-
(iii) the Financial Support Agreement;
(iv) the Security Documents;
(v) the Subscription Agreement;
(vi) the Put Option Agreement;
(vii) the Escrow Account Agreement;
(viii) the Letters of Credit;
(ix) the IFC Guarantee;
(x) the FMO Guarantee;
(xi) the GoM Letter;
(xii) the Concession Termination Compensation Assignment Notice; and
(xiii) the Notes.
"Urgent Repairs Agreement"
the Set Price and Fixed Term Construction Agreement dated February 18, 2000
between the Project Company and ITISA;
"World Bank"
the International Bank for Reconstruction and Development, an international
organization established by Articles of Agreement among its member countries;
and
"Year 2000 Compliant"
with respect to a Person, that such Person's software, hardware, firmware,
automated process control devices, electronic data transmission and reception
systems, or information systems will, prior to, during and after, the calendar
year 2000, operate and handle, without error, date input and output information
and, in particular, will respond to two-digit year input and process two-digit
year date information in ways that resolve the ambiguity as to century in a
disclosed, defined and predetermined manner.
Section 1.02. Financial Definitions. (a) Wherever used in this Agreement,
unless the context otherwise requires, the following terms have the meanings
opposite them:
-20-
"Consolidated" or "Consolidated Basis"
(with respect to any financial statements to be provided, or any financial
calculation (including financial ratios) to be made, under or for the purposes
of this Agreement and any other Transaction Document) the method referred to in
Section 1.03 (d) (Financial Calculations); and the entity whose accounts are to
be consolidated with the accounts of the Borrower is the Project Company;
"Current Assets"
the aggregate of the Person's cash, marketable securities, trade and other
receivables realizable within one year, prepaid expenses which are to be charged
to income within one year and inventories, but excluding (i) all amounts
outstanding in the Escrow Account, (ii) funds temporarily on hand pending
application to property and equipment included in the Project;
"Current Liabilities"
the aggregate of all liabilities of the Person falling due on demand or within
one year (including the portion of Long-term Debt falling due within one year),
but excluding liabilities for property, plant and equipment to the extent that
the amount of funds therefrom are excluded from the calculation of Current
Assets;
"Current Ratio"
the result obtained by dividing Current Assets by Current Liabilities;
"Debt"
the aggregate of all obligations (whether actual or contingent) of the Person to
pay or repay money including, without limitation:
(i) all Indebtedness for Borrowed Money;
(ii) the aggregate amount then outstanding of all liabilities of any party to
the extent the Person guarantees them or otherwise directly or indirectly
obligates itself to pay them;
(iii) all liabilities of the Person (actual or contingent) under any conditional
sale or a transfer with recourse or obligation to repurchase, including,
without limitation, by way of discount or factoring of book debts or
receivables; and
-21-
(iv) all liabilities of the Person (actual or contingent) under its Charter,
any resolution of its shareholders, or any agreement or other document
binding on the Person to redeem any of its shares;
"Debt Service Coverage Ratio"
the ratio obtained by dividing:
(i) the aggregate, for the four (4) financial quarter period most recently
ended prior to the relevant date of calculation for which audited
Consolidated financial statements of the Person are available, of (A) net
income after deduction of taxes payable on that net income (whether or not
actually paid), (B) Non-Cash Items and (C) the amount of all payments that
were due during such four (4) financial quarter period (whether or not
actually paid) on account of interest and other charges on Debt; less
amounts actually paid during such period in respect of any capital
expenditure, other than capital expenditures required for carrying out the
Project as described in Section 2.02(a) or essential to the Project
Company's business and operations;
by
(ii) the aggregate of (A) all scheduled payments that fall due during the four
(4) financial quarter period beginning with the financial quarter in which
the relevant date of calculation falls (whether or not actually paid) on
account of principal of Long-term Debt, and interest and other charges on
Debt and (B) without double counting with respect to any payment already
counted in the preceding sub-paragraph (A), any payment made or required
to be made to any debt service account during such four (4) quarter period
under the terms of any agreement providing for the Debt (excluding, until
the Project Financial Completion Date, payments to the Escrow Account);
"EBITDA"
the earnings of the Person before interest, taxes, depreciation and
amortization, extraordinary increases or losses, gain or loss on
discontinued operations, and currency gains or losses;
-22-
"Indebtedness for Borrowed Money"
all obligations of the Person to repay money including, without limitation, with
respect to:
(i) borrowed money;
(ii) the outstanding principal amount of any bonds, debentures, notes, loan
stock, commercial paper, acceptance credits, bills or promissory notes
drawn, accepted, endorsed or issued by the Person;
(iii) any credit to the Person from a supplier of goods or services under any
installment purchase or other similar arrangement with respect to goods or
services (except trade accounts that are payable in the ordinary course of
business and included in Current Liabilities);
(iv) non-contingent obligations of the Person to reimburse any other Person
with respect to amounts paid by that Person under a letter of credit or
similar instrument (excluding any letter of credit or similar instrument
issued for the benefit of the Person with respect to trade accounts that
are payable in the ordinary course of business and included in Current
Liabilities);
(v) amounts raised under any other transaction having the financial effect of
a borrowing and which would be classified as a borrowing (and not as an
off-balance sheet financing) under the Accounting Principles including,
without limitation, under leases or similar arrangements entered into
primarily as a means of financing the acquisition of the asset leased;
(vi) the amount of the Person's obligations pursuant to Derivative Transactions
which consist of swap, collar and cap agreements entered into in
connection with other Debt of the Person, provided that for the avoidance
of double counting and for so long as any such swap, collar or cap
agreement is in effect, that Debt will be included in Indebtedness for
Borrowed Money pursuant to the terms of the relevant Derivative
Transaction and not the terms of
-23-
the agreement providing for that Debt when it was incurred; and
(vii) any premium payable on a mandatory redemption or replacement of any of the
foregoing obligations;
"Long-term Debt"
that part of the Debt the final maturity of which, by its terms or the terms of
any agreement relating to it, falls due more than one year after the date of its
incurrence;
"Long-term Debt to Tangible Net Worth Ratio"
the result obtained by dividing Long-term Debt by Tangible Net Worth;
"Non-Cash Items"
for any period, the net aggregate amount (which may be a positive or negative
number) of all non-cash expenses and non-cash credits which have been subtracted
or, as the case may be, added in calculating net income during that period,
including, without limitation, depreciation, amortization, deferred taxes,
provisions for severance pay of staff and workers, and credits resulting from
revaluation of the assets' book value;
"Short-term Debt"
all Debt other than Long-term Debt.
"Tangible Net Worth"
on any date means (i) the sum of the Person's total assets, minus (ii) the sum
of:
(A) the Person's total liabilities, plus
(B) (to the extent not already included in the Person's total liabilities) an
amount equal to the sum of the maximum liability of the Person under any
guarantee or other obligation for the financial or other obligation of any
third party, the amount of any taxes and any other commitments which, in
each case in accordance with the Accounting Principles, should be recorded
in the notes of the financial statements as a liability, plus
(C) intangible assets of the Person (for purposes of this Agreement, the
Concession Agreement (having a value of $7.5 million) shall be considered
a tangible asset), plus
-24-
(D) (to the extent not already included in the Person's total liabilities) any
obligations of the Person under any capital lease (including any lease
which should be capitalized in accordance with the Accounting Principles
and any other lease which is in substance a financial lease).
Section 1.03. Financial Calculations. (a) All financial calculations to be
made under, or for the purposes of, this Agreement and any other Transaction
Document shall be determined in accordance with the Accounting Principles and,
except as otherwise required to conform to any provisions of this Agreement,
shall be calculated from the then most recently issued Consolidated quarterly
financial statements which the Borrower is obligated to furnish to IFC under
Section 6.04 (a) (Reporting Requirements). Except otherwise indicated, all
financial calculations with respect to the definitions in Section 1.02 shall be
done on a Consolidated Basis.
(b) Where quarterly financial statements are used for the purpose of
making certain financial calculations and those statements are with respect to
the last quarter of a Financial Year then, at IFC's option, those calculations
may instead be made from the Consolidated audited financial statements for the
relevant Financial Year.
(c) For purposes of the Project Financial Completion Date, the payment of
dividends, the payment of subordinated debt and the payment of technical
assistance fees under the Technical Assistance Agreement, if any material
adverse change in the financial condition of the Borrower has occurred after the
end of the period covered by the financial statements used to make the relevant
financial calculations, that material adverse change shall also be taken into
account in calculating the relevant figures.
(d) If a financial calculation is to be made under or for the purposes of
this Agreement or any other Transaction Document on a Consolidated Basis, that
calculation shall be made by reference to the sum of all amounts of similar
nature reported in the relevant financial statements of each of the entities
whose accounts are to be consolidated with the accounts of the Borrower plus or
minus the consolidation adjustments customarily applied to avoid double counting
of transactions among any of those entities, including the Borrower.
Section 1.04. Interpretation. In this Agreement, unless the context
otherwise requires:
(a) headings are for convenience only and do not affect the interpretation
of this Agreement;
(b) words importing the singular include the plural and vice versa;
(c) a reference to an Annex, Article, party, Schedule or Section is a
reference to that Article or Section of, or that Annex, party or Schedule to,
this Agreement;
-25-
(d) a reference to a document includes an amendment or supplement to, or
replacement or novation of, that document but disregarding any amendment,
supplement, replacement or novation made in breach of this Agreement; and
(e) a reference to a party to any document includes that party's
successors and permitted assigns.
Section 1.05. Business Day Adjustment When the day on or by which a
payment is due to be made is not a Business Day, that payment shall be made on
or by the next succeeding Business Day. Interest, fees and charges (if any)
shall continue to accrue for the period from the due date that is not a Business
Day to that next succeeding Business Day.
ARTICLE II
The Project, Project Cost and Financial Plan
Section 2.01. The Project. The project to be financed consists of the
rehabilitation, modernization, and operation of the Chiapas and Mayab lines by
the Project Company pursuant to the Concession Agreement in the States of Oaxaca
and Chiapas (for the Chiapas line) and Campeche, Yucantan, Veracruz and Tabasco
(for the Mayab line), including repayment of all amounts outstanding under the
Fleet Bank Loan, as further described in the Letter of Information.
Section 2.02. Project Cost and Financial Plan.(1) (a) The total estimated
cost of the Project is the equivalent of $49,150,000, as follows:
- --------
(1) For purposes of this Section, an exchange rate of 9.4 Mexican Pesos
= $1 has been assumed.
-26-
$ million
equivalent %
---------- -
Concession investment 7.5 15.0
Rolling Stock 12.3 25.0
Urgent repair works 9.7 20.0
Intermodal 1.4 3.0
Track rehabilitation 4.9 10.0
Locomotive repair 1.7 3.5
Locomotive purchase 2.2 4.5
Other 1.0 2.0
----- -----
Sub-total 40.7 83.0
----- -----
Contingency 1.0 2.0
Pre-opening expenses 1.35 3.0
Working capital 6.1 12.0
----- -----
Sub-total 8.45 17.0
----- -----
TOTAL PROJECT COST 49.15 100.0
(b) The proposed sources of financing for the Project are as follows:
-27-
$ million
equivalent %
---------- -
Equity
Sponsor 13.10 26.7
IFC 1.90 3.9
----- ----
Total Equity 15.00 30.5
----- ----
Long-term Debt
IFC "A" Loan 10.50 21.4
FMO Loan 7.00 14.2
IFC "B" Loan 10.00 20.4
----- ----
Total Long-term Debt 27.50 56.0
----- ----
Cash generation 6.65 13.5
TOTAL FINANCING 49.15 100
===== ===
ARTICLE III
The Loan
Section 3.01. The Loan. Subject to the provisions of this Agreement, IFC
agrees to lend, and the Borrower agrees to borrow, the IFC Loan consisting of:
(a) the A Loan, being ten million five hundred thousand Dollars
($10,500,000); and
(b) the B Loan, being ten million Dollars ($10,000,000).
Section 3.02. Disbursement Procedure. (a) The Loans shall be disbursed in
one Disbursement. The Borrower may request disbursement of the IFC Loan by
delivering to IFC, at least ten (10) Business Days prior to the proposed date of
the IFC Disbursement, an IFC Disbursement request substantially in the form of
Schedule 2 and a receipt substantially in the form of Schedule 3.
-28-
(b) The IFC Disbursement shall be made by IFC at a bank in New York, New
York for further credit to the Borrower's account at a bank in Mexico, or any
other place acceptable to IFC, all as specified by the Borrower in the relevant
Disbursement request.
Section 3.03. Interest. Subject to the provisions of Section 3.05 (Default
Rate Interest), the Borrower shall pay interest on the IFC Loan in accordance
with this Section 3.03:
(a) During each Interest Period, the IFC Loan (or, with respect to the
first Interest Period for the IFC Disbursement, the amount of the Disbursement)
shall bear interest at the applicable Interest Rate for that Interest Period.
(b) Interest on each of the A Loan and the B Loan shall accrue from day to
day, be prorated on the basis of a 360-day year for the actual number of days in
the relevant Interest Period and be payable in arrears on the Interest Payment
Date immediately following the end of that Interest Period; provided that if the
IFC Disbursement is made less than fifteen (15) days before an Interest Payment
Date, interest on the IFC Disbursement shall be payable commencing on the second
Interest Payment Date following the date of the IFC Disbursement.
(c) Subject to Section 3.04 (Change in Interest Period), the A Loan
Interest Rate and the B Loan Interest Rate for any Interest Period shall be the
rate which is the sum of:
(i) the Relevant Spread; and
(ii) LIBOR on the Interest Determination Date for that Interest
Period for six (6) months (or, in the case of the first
Interest Period for any Disbursement, for one (1) month, two
(2) months, three (3) months or six (6) months, whichever
period is closest to the duration of the relevant Interest
Period (or, if two periods are equally close, the longer one))
rounded upward to the nearest three decimal places.
(d) If, for any Interest Period, IFC cannot determine LIBOR by reference
to the Telerate Service or any other service that displays BBA rates, IFC shall
notify the Borrower and shall instead determine LIBOR:
(i) on the second Business Day before the beginning of the
relevant Interest Period by calculating the arithmetic mean
(rounded upward to the nearest three decimal places) of the
offered rates advised to IFC on or around 11:00 a.m., London
time, for deposits in Dollars and otherwise in accordance with
Section 3.03 (c) (ii), by any four (4) major banks active in
Dollars in the London interbank market, selected by IFC;
provided that if less than four quotations are received, IFC
may rely on the quotations so received if not less than two
(2); or
-29-
(ii) if less than two (2) quotations are received from the banks in
London in accordance with subsection (i) above, on the first
day of the relevant Interest Period, by calculating the
arithmetic mean (rounded upward to the nearest three decimal
places) of the offered rates advised to IFC on or around 11:00
a.m., New York time, for loans in Dollars and otherwise in
accordance with Section 3.03 (c) (ii), by a major bank or
banks in New York, New York selected by IFC.
(e) On each Interest Determination Date for any Interest Period, IFC shall
determine the A Loan Interest Rate and the B Loan Interest Rate applicable to
that Interest Period and promptly notify the Borrower of those rates.
(f) The determination by IFC, from time to time, of the applicable
Interest Rate shall be final and conclusive and bind the Borrower (unless the
Borrower shows to IFC's satisfaction that the determination involves manifest
error).
Section 3.04. Change in Interest Period. Without prejudice to the
provisions of Section 3.05 (Default Rate Interest), if at any time the Borrower
fails to pay any amount of principal of, or interest on, the IFC Loan when due
(whether at stated maturity or upon acceleration), and any part of that amount
remains unpaid on the third Business Day immediately preceding any Interest
Payment Date falling after that amount became due, then:
(a) IFC may elect that the duration of the Interest Period commencing on
that Interest Payment Date and, subject to Section 3.04 (c), any subsequent
Interest Period shall be either three (3) months or one (1) month and shall
notify the Borrower of that election in the notice referred to in Section 3.03
(e) (Interest);
(b) the Interest Rates applicable to any Interest Period which is three
(3) months or one (1) month shall be determined in accordance with Section 3.03
(Interest) in all respects, except that any reference in Section 3.03 (c) (ii)
to six (6) months shall be deemed to be a reference to three (3) months or, as
the case may be, one (1) month; and
(c) unless an Event of Default or Potential Event of Default has occurred
and is continuing, IFC shall reinstate Interest Periods of six (6) months as of
the first Interest Payment Date which is March 15 or September 15 falling at
least three (3) Business Days after the payment default is remedied in full and
shall inform the Borrower of that reinstatement in the notice referred to in
Section 3.03 (e) (Interest).
Section 3.05. Default Rate Interest. (a) Without limiting the remedies
available to IFC under this Agreement or otherwise (and to the maximum extent
permitted by applicable law), if the Borrower fails to make any payment of
principal or interest (including interest payable pursuant to this Section) or
any other payment provided for in Section 3.08 (Fees) when due as specified in
this Agreement (whether at stated maturity or upon acceleration), the Borrower
shall pay interest on the amount of that payment due
-30-
and unpaid at the default rate which shall be the sum of two per cent (2%) per
annum and the A Loan Interest Rate (with respect to amounts relating to the A
Loan) or two per cent (2%) per annum and the B Loan Interest Rate (with respect
to amounts relating to the B Loan) in effect from time to time;
(b) Interest at the rate referred to in Section 3.05 (a) shall accrue from
the date on which payment of the relevant overdue amount became due until the
date of actual payment of that amount (as well after as before judgment), and
shall be payable on demand or, if not demanded, on each Interest Payment Date
falling after any such overdue amount became due.
Section 3.06. Repayment. (a) The Borrower shall repay the A Loan on the
following dates and in the following amounts:
Date Payment Due Principal Amount Due
---------------- --------------------
March 15, 2003 $750,000
September 15, 2003 $750,000
March 15, 2004 $750,000
September 15, 2004 $750,000
March 15, 2005 $750,000
September 15, 2005 $750,000
March 15, 2006 $750,000
September 15, 2006 $750,000
March 15, 2007 $750,000
September 15, 2007 $750,000
March 15, 2008 $750,000
September 15, 2008 $750,000
March 15, 2009 $750,000
September 15, 2009 $750,000
-----------
TOTAL $10,500,000
===========
(b) The Borrower shall repay the B Loan on the following dates and in the
following amounts:
-31-
Date Payment Due Principal Amount Due
---------------- --------------------
March 15, 2003 $833,333
September 15, 2003 $833,333
March 15, 2004 $833,333
September 15, 2004 $833,333
March 15, 2005 $833,333
September 15, 2005 $833,333
March 15, 2006 $833,333
September 15, 2006 $833,333
March 15, 2007 $833,333
September 15, 2007 $833,333
March 15, 2008 $833,333
September 15, 2008 $833,337
-----------
TOTAL $10,000,000
===========
(c) The dates for repayment of principal of the IFC Loan are intended to
coincide with the original Interest Payment Dates.
Section 3.07. Prepayment. Subject to Section 3.14, Section 3.16 and
Section 6.05 (c):
(a) the Borrower may prepay on any Interest Payment Date all or any part
of the IFC Loan, on not less than thirty (30) days' prior notice to IFC, but
only if:
(i) the Borrower simultaneously pays all accrued interest and
Increased Costs (if any) on the amount of the IFC Loan to be
prepaid, together with the prepayment premium specified in
Section 3.07 (b) and all other amounts then due and payable
under this Agreement, including the amount payable under
Section 3.12 (Unwinding Costs), if the prepayment is not made
on an Interest Payment Date;
(ii) the Borrower simultaneously prepays a pro rata portion of the
FMO Loan;
(iii) for a partial prepayment, that prepayment is an amount not
less than one million Dollars ($1,000,000); and
(iv) if requested by IFC, the Borrower delivers to IFC, prior to
the date of prepayment, evidence satisfactory to IFC that all
necessary Authorizations with respect to the prepayment of the
IFC Loan and FMO Loan have been obtained.
-32-
(b) On the date of any prepayment of the IFC Loan in accordance with
Section 3.07(a), the Borrower shall pay a prepayment premium consisting of an
amount in Dollars equal to (i) two per cent (2%) of the amount to be prepaid, if
such prepayment occurs on or prior to December 31, 2005 and (ii) one per cent
(1%) of the amount to be prepaid, if such prepayment occurs after December 31,
2005. The determination by IFC of the prepayment premium shall be final and
conclusive and bind the Borrower (unless the Borrower shows, to the satisfaction
of IFC, that such determination involved manifest error).
(c) Amounts of principal prepaid under this Section shall:
(i) first be allocated by IFC pro rata between the A Loan and the
B Loan in proportion to their respective principal amounts
outstanding; and
(ii) then be applied by IFC to the respective outstanding
installments of principal of the A Loan and the B Loan in
inverse order of maturity.
(d) Upon delivery of a notice in accordance with Section 3.07 (a), the
Borrower shall make the prepayment in accordance with the terms of that notice.
(e) Any principal amount of the IFC Loan prepaid under this Agreement may
not be re-borrowed.
Section 3.08. Fees. (a) The Borrower shall pay to IFC a commitment fee at
the rate of one-half of one per cent (1/2%) per annum on that part of the IFC
Loan which from time to time has not been disbursed or cancelled. The commitment
fee shall:
(i) begin to accrue,
(A) with respect to the A Loan, on the date of this
Agreement; and
(B) with respect to the B Loan, for each Participation, on
the date of the Participation Agreement evidencing that
Participation;
(ii) be pro rated on the basis of a 360-day year for the actual
number of days elapsed; and
(iii) be payable semi-annually, in arrears, on the Interest Payment
Dates in each year, the first such payment to be due on March
15, 2001.
(b) The Borrower shall also pay to IFC:
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(i) a front-end fee on the A Loan of one hundred five thousand
Dollars ($105,000), to be paid upon the earlier of (x) the
date which is thirty (30) days after the date of this
Agreement and (y) the date immediately preceding the date of
the first A Loan Disbursement;
(ii) a front-end fee on the B Loan of one hundred thousand Dollars
($100,000), to be paid, upon the earlier of (x) the date which
is thirty (30) days after the date of the relevant
Participation Agreement and (y) the date immediately preceding
the first B Loan Disbursement from the relevant Participation;
(iii) a syndication fee of one hundred seventy thousand Dollars
($170,000), to be paid, upon the earlier of (x) the date which
is thirty (30) days after the date of the relevant
Participation Agreement and the FMO Loan Agreement and (y) the
date immediately preceding the first B Loan Disbursement from
the relevant Participation and the FMO Disbursement;
(iv) an annual B Loan administration fee of five thousand Dollars
($5,000) per Participant for each calendar year during which
any portion of that Participant's Participation is committed
or outstanding, whether that year is complete or not, to be
paid in full in advance:
(A) with respect to the first calendar year, within thirty
(30) days after the date of the relevant Participation
Agreement; and
(B) with respect to each subsequent calendar year, on the
first Interest Payment Date in that year; and
(v) a success fee of two hundred seventy-five thousand Dollars
($275,000), to be paid in full in advance on the date of
signing of the Participation Agreement(s) and the FMO Loan
Agreement.
Section 3.09. Currency and Place of Payments. (a) The Borrower shall make
all payments of principal, interest, fees, and any other amount due to IFC under
this Agreement in Dollars, in same day funds, to the account of IFC at Northern
Trust International Banking Corporation, New York, New York, U.S.A., CHIP UID
142255, or at such other bank or account in New York as IFC from time to time
designates. Payments must be received in IFC's designated account no later than
1:00 p.m. New York time; and the Borrower hereby irrevocably agrees that IFC may
deem any payment, or part thereof, relating to the B Loan that is received after
that time as made on the next Business Day and accordingly interest will accrue
on any Participant's pro rata share of
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that payment with respect to which IFC is unable to make same day remittance to
that Participant.
(b) The tender or payment of any amount payable under this Agreement
(whether or not by recovery under a judgment) in any currency other than Dollars
shall not novate, discharge or satisfy the obligation of the Borrower to pay in
Dollars all amounts payable under this Agreement except to the extent that (and
as of the date when) IFC actually receives funds in Dollars in the account
specified in, or pursuant to, Section 3.09 (a).
(c) The Borrower shall indemnify IFC against any losses resulting from a
payment being received or an order or judgment being given under this Agreement
in any currency other than Dollars or in any place other than the account
specified in, or pursuant to, Section 3.09 (a). The Borrower shall, as a
separate obligation, pay such additional amount as is necessary to enable IFC to
receive, after conversion to Dollars at a market rate and transfer to that
account, the full amount due to IFC under this Agreement in Dollars and in the
account specified in, or pursuant to, Section 3.09 (a).
(d) Notwithstanding the provisions of Section 3.09 (a) and Section 3.09
(b), IFC may require the Borrower to pay (or reimburse IFC) for any Taxes, fees,
costs, expenses and other amounts payable under Section 3.14 (a) (Taxes) and
Section 3.15 (Expenses) in the currency in which they are payable, if other than
Dollars.
Section 3.10. Allocation of Partial Payments. If at any time IFC receives
less than the full amount then due and payable to it under this Agreement, IFC
may allocate and apply the amount received in any way or manner and for such
purpose or purposes under this Agreement as IFC in its sole discretion
determines, notwithstanding any instruction that the Borrower may give to the
contrary.
Section 3.11. Increased Costs. On each Interest Payment Date, the Borrower
shall pay, in addition to interest, the amount which IFC from time to time
notifies to the Borrower in an Increased Costs Certificate as being the
aggregate Increased Costs of IFC and each Participant accrued and unpaid prior
to that Interest Payment Date.
Section 3.12. Unwinding Costs. (a) If IFC or any Participant incurs any
cost, expense or loss as a result of the Borrower
(i) failing to borrow in accordance with a request for
Disbursement made pursuant to Section 3.02 (Disbursement
Procedure), or to prepay in accordance with a notice of
prepayment; or
(ii) prepaying all or any portion of the IFC Loan on a date other
than an Interest Payment Date;
then the Borrower shall immediately pay to IFC the amount which IFC from time to
time notifies to the Borrower as being the amount of those costs, expenses and
losses incurred.
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(b) For the purposes of this Section, "costs, expenses or losses" include
any premium, penalty or expense incurred to liquidate or obtain third party
deposits or borrowings in order to make, maintain or fund all or any part of the
IFC Loan.
Section 3.13. Suspension or Cancellation by IFC. (a) IFC may, by notice to
the Borrower, suspend the right of the Borrower to the IFC Disbursement or
cancel the undisbursed portion of the IFC Loan in whole or in part:
(i) if the IFC Disbursement has not been made by December 31,
2000, or such other date as the parties agree;
(ii) if the right of the Borrower to any subscription under the
Subscription Agreement is suspended or canceled pursuant to
the provisions of that Agreement;
(iii) if any Event of Default has occurred and is continuing or if
the Event of Default specified in Section 7.02 (f) (Events of
Default) is, in the reasonable opinion of IFC, imminent; or
(iv) if any event or condition has occurred which has or can be
reasonably expected to have a Material Adverse Effect.
(b) Upon the giving of any such notice, the right of the Borrower to the
IFC Disbursement shall be suspended or canceled, as the case may be. The
exercise by IFC of its right of suspension shall not preclude IFC from
exercising its right of cancellation, either for the same or any other reason
specified in Section 3.13 (a). Upon any cancellation the Borrower shall pay to
IFC all fees and other amounts accrued (whether or not then due and payable)
under this Agreement up to the date of that cancellation. A suspension shall not
limit any other provision of this Agreement.
(c) Any portion of the IFC Loan that is canceled under this Section 3.13
may not be reborrowed.
Section 3.14. Taxes. (a) The Borrower shall pay or cause to be paid all
Taxes, other than taxes, if any, payable on the overall income of IFC, on or in
connection with the payment of any and all amounts due under this Agreement that
are now or in the future levied or imposed by any Authority of Mexico or any
jurisdiction through or out of which a payment is made.
(b) All payments of principal, interest, fees and other amounts due under
this Agreement shall be made without deduction for or on account of any Taxes.
(c) If the Borrower is prevented by operation of law or otherwise from
making or causing to be made those payments without deduction, the principal or
(as the case may be) interest, fees or other amounts due under this Agreement
shall be increased
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to such amount as may be necessary so that IFC receives the full amount it would
have received (taking into account any Taxes payable on amounts payable by the
Borrower under this subsection) had those payments been made without that
deduction.
(d) If Section 3.14 (c) applies and IFC so requests, the Borrower shall
deliver to IFC official tax receipts evidencing payment (or certified copies of
them) within thirty (30) days of the date of that request.
(e) Section 3.14 (a) and Section 3.14 (b) do not apply to Taxes which
directly result from a Participant (or, as the case may be, a participant with a
comparable participation in the A Loan) having its principal office in Mexico or
having or maintaining a permanent office or establishment in Mexico, if and to
the extent that such permanent office or establishment acquires the relevant
Participation (or a comparable participation in the A Loan).
Section 3.15. Expenses. (a) The Borrower shall pay or, as the case may be,
reimburse IFC or its assignees any amount paid by them on account of, all taxes
(including stamp taxes), duties, fees or other charges payable on or in
connection with the execution, issue, delivery, registration or notarization of
the Transaction Documents and any other documents related to this Agreement or
any other Transaction Document.
(b) The Borrower shall pay to IFC or as IFC may direct:
(i) the reasonable out-of-pocket travel expenses of IFC relating
to the supervision of the CAP;
(ii) the fees and expenses of IFC's counsel in Mexico and New York
incurred in connection with:
(A) the preparation of the investment by IFC provided for
under this Agreement and any other Transaction Document;
(B) the preparation and/or review, execution and, where
appropriate, translation and registration of the
Transaction Documents and any other documents related to
them;
(C) the giving of any legal opinions required by IFC under
this Agreement and any other Transaction Document;
(D) the administration by IFC of the investment provided for
in this Agreement or otherwise in connection with any
amendment, supplement or modification to, or waiver
under, any of the Transaction Documents;
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(E) the registration (where appropriate) and the delivery of
the evidences of indebtedness relating to the IFC Loan
and its disbursement;
(F) matters pertaining to the IFC Subscription; and
(G) the occurrence of any Event of Default or Potential
Event of Default;
(iii) in the year 2000 and in each calendar year thereafter upon
receipt of a statement from IFC, the amount of up to ten
thousand Dollars ($10,000) on account of IFC's expenses in
carrying out its annual supervision review of the Borrower and
the Project; and
(iv) the costs and expenses incurred by IFC in relation to efforts
to enforce or protect its rights under any Transaction
Document, or the exercise of its rights or powers consequent
upon or arising out of the occurrence of any Event of Default
or Potential Event of Default, including legal and other
professional consultants' fees.
Section 3.16. Illegality of Participation. If, after the date of this
Agreement, any change made in any applicable law or regulation or official
directive (or its interpretation or application by any Authority charged with
its administration) (herein the "Relevant Change") makes it unlawful for any
Participant to continue to maintain or to fund its Participation:
(a) the Borrower shall, upon request by IFC (but subject to any applicable
Authorization having been obtained), on the earlier of (i) the next Interest
Payment Date and (ii) the date that IFC advises the Borrower is the latest day
permitted by the Relevant Change, prepay in full that part of the B Loan that
IFC advises corresponds to that Participation;
(b) concurrently with the prepayment of the part of the B Loan
corresponding to the Participation affected by the Relevant Change, the Borrower
shall pay all accrued interest, Increased Costs (if any) on that part of the B
Loan (and, if that prepayment is not made on an Interest Payment Date, any
amount payable in respect of the prepayment under Section 3.12 (Unwinding
Costs));
(c) the Borrower agrees to take all reasonable steps to obtain, as quickly
as possible after receipt of IFC's request for prepayment, the Authorization
referred to in Section 3.16 (a) if any such Authorization is then required; and
(d) the Borrower shall have no further right to disbursement of the
undisbursed portion of the B Loan corresponding to that Participation after it
has received IFC's request for prepayment under this Section.
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Section 3.17. Notes. (a) The Borrower shall issue non-negotiable Notes to
IFC in the form of Schedule 11 and otherwise in form and substance satisfactory
to IFC in connection with and at the time of each Disbursement.
(b) The issuance of Notes pursuant to this Agreement shall not entail a
novation with respect to this Agreement or the IFC Loan. Notwithstanding the
foregoing, payment of the principal of any Note shall pro tanto discharge the
obligation of the Borrower to repay the portion of the IFC Loan to which such
Note relates; and the payment of interest on the Note shall pro tanto discharge
the obligation of the Borrower to pay interest on that portion of the IFC Loan
to which such Note relates.
(c) The Borrower represents that, after the delivery thereof, each Note
shall constitute in Mexico a valid binding and enforceable obligation of the
Borrower in accordance with its terms and, if IFC so requests, the Borrower
shall furnish IFC evidence satisfactory to IFC that all formalities required for
that purpose have been satisfied.
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties. Each of the Borrower and the
Project Company represents and warrants that:
(a) each of the Borrower and the Project Company is a company duly
incorporated and validly existing under the laws of Mexico and has the corporate
power to own its assets, conduct its business as presently conducted and to
enter into, and comply with its obligations under, the Transaction Documents to
which it is a party or will, in the case of any Transaction Document not
executed as at the date of this Agreement, when that Transaction Document is
executed, have the corporate power to enter into, and comply with its
obligations under, that Transaction Document;
(b) each Transaction Document to which the Borrower or the Project Company
is a party has been, or will be, duly authorized and executed by the Borrower or
the Project Company, as the case may be, and constitutes, or will when executed
constitute, a valid and legally binding obligation of the Borrower or the
Project Company or both, as applicable;
(c) neither the making of any Transaction Document or Project Document to
which either of the Borrower or the Project Company is a party nor (when all the
Authorizations referred to in Section 5.01(e) (Conditions of Disbursement) have
been obtained) the compliance with its terms will conflict with or result in a
breach of any of the terms, conditions or provisions of, or constitute a default
or require any consent under, any indenture, mortgage, agreement or other
instrument or arrangement to which the Borrower or the Project Company is a
party or by which it is bound, or violate any of
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the terms or provisions of the Borrower's or the Project Company's Charter or
any Authorization, judgment, decree or order or any statute, rule or regulation
applicable to the Borrower or the Project Company;
(d) to the best of their knowledge, after due inquiry:
(i) the Authorizations specified in Annex A are all the
Authorizations (other than Authorizations that are of a
routine nature and are obtained in the ordinary course of
business) needed by either of the Borrower or the Project
Company to conduct its business, carry out the Project and
execute, and comply with its obligations under, this Agreement
and each of the other Transaction Documents to which it or the
Project Company is a party;
(ii) all Authorizations specified in Section (1) of Annex A have
been obtained and are in full force and effect; and
(iii) either the Borrower or the Project Company, as the case may
be, has applied (or is making arrangements to apply) for all
Authorizations specified in Section (2) of Annex A, and has no
reason to believe that it will not obtain those Authorizations
in a timely manner;
(e) neither the Borrower's Charter nor the Project Company's Charter has
been amended since December 6, 2000 and October 5, 1999, respectively;
(f) neither the Borrower nor the Project Company nor any of their
respective properties enjoys any right of immunity from set-off, suit or
execution with respect to its assets or its obligations under any Transaction
Document to which the Borrower or the Project Company is a party;
(g) the Information Memorandum dated April 2000 relating to the Borrower,
the Project Company and the Project was and continues to be true and accurate
(other than for projections and other forward-looking statements contained in
that Information Memorandum which each of the Borrower and the Project Company
believes to be reasonable) and does not contain any information which is
misleading in any material respect nor does it omit any information the omission
of which makes the information contained in it misleading in any material
respect;
(h) since September 30, 2000 neither the Borrower nor the Project Company:
(i) has suffered any change that has a Material Adverse Effect or
incurred any substantial loss or liability;
(ii) has undertaken or agreed to undertake any substantial
obligation other than pursuant to the Transaction Documents;
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(i) the Consolidated financial statements of the Borrower for the period
ending on September 30, 2000:
(i) have been prepared in accordance with the Accounting
Principles, and present fairly the financial condition of the
Borrower as of the date as of which they were prepared and the
results of the Borrower's operations during the period then
ended;
(ii) disclose all liabilities (contingent or otherwise) of the
Borrower, and the reserves, if any, for such liabilities and
all unrealized or anticipated liabilities and losses arising
from commitments entered into by the Borrower (whether or not
such commitments have been disclosed in such financial
statements);
(j) neither the Borrower nor the Project Company is a party to, or
committed to enter into, any contract which would or might affect the judgment
of a prospective investor;
(k) neither the Borrower nor the Project Company has outstanding Liens on
any of its assets other than Liens arising by operation of law, and no contracts
or arrangements, conditional or unconditional, exist for the creation by the
Borrower or the Project Company of any Lien, except for the Security, the Fleet
Bank Security and the GoM Lien:
(l) all tax returns and reports of each of the Borrower and the Project
Company required by law to be filed have been duly filed and all Taxes,
obligations, fees and other governmental charges upon the Borrower or the
Project Company, or their respective properties, or their respective income or
assets, which are due and payable or to be withheld, have been paid or withheld,
other than those presently payable without penalty or interest, and those being
contested in good faith by appropriate proceedings so long as:
(A) those proceedings do not involve any substantial danger of the
sale, forfeiture or loss of any part of the Project, title
thereto or any interest therein, nor interfere in any material
respect with the use or disposition thereof or the
implementation of the Project or the carrying on of the
business of the Borrower or the Project Company; and
(B) each of the Borrower and the Project Company has set aside
adequate reserves sufficient to promptly pay in full any
amounts that it may be ordered to pay on final determination
of any such proceedings;
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(m) neither the Borrower nor the Project Company is engaged in nor, to the
best of its knowledge, threatened by, any litigation, arbitration or
administrative proceedings, the outcome of which could reasonably be expected to
have a Material Adverse Effect except for the Chiapas Constitutional Proceeding;
(n) to the best of its knowledge and belief, after due inquiry, neither
the Borrower nor the Project Company is in violation of any statute or
regulation of any Authority;
(o) except for the Chiapas Constitutional Proceedings, no judgment or
order has been issued which has or may reasonably be expected to have a Material
Adverse Effect;
(p) except as identified in the Environmental Assessment Report:
(i) to the best of its knowledge and belief, after due inquiry,
neither the Borrower nor the Project Company is in violation
of any of the Environmental, Health and Safety Guidelines or
of the Environmental and Social Policies; and
(ii) neither the Borrower nor the Project Company has received or
is aware of any complaint, order, directive, claim, citation
or notice from any Authority with respect to any matter of the
Borrower's or the Project Company's compliance with the
relevant environmental, health and safety laws and regulations
in effect in Mexico such as, without limitation, air
emissions, discharges to surface water or ground water, noise
emissions, solid or liquid waste disposal, or the use,
generation, storage, transportation or disposal of toxic or
hazardous substances or wastes;
(q) none of the Borrower, the Project Company, the Sponsor or any
Affiliate, nor any Person acting on the Borrower's, the Project Company's, the
Sponsor's or any Affiliate's behalf, has made, with respect to the Project or
any transaction contemplated by this Agreement, any Prohibited Payment;
(r) the Borrower and the Project Company have filed a request to SCT to
extend the deadline for completing the urgent repairs pursuant to the Urgent
Repairs Agreement and have received oral confirmation from SCT that the deadline
would be extended to January 25, 2001;
(s) the Borrower and the Project Company have received oral confirmation
from SCT that eighty per cent (80%) of the urgent repairs have been completed
and approved;
(t) neither the Borrower nor the Project Company has entered into any
agreement to amend or otherwise modify the terms of the Concession Agreement;
and
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(u) none of the representations and warranties in this Section 4.01 omits
any matter the omission of which makes any of such representations and
warranties misleading.
Section 4.02. IFC Reliance. Each of the Borrower and the Project Company
acknowledges that it makes the representations and warranties in Section 4.01
with the intention of inducing IFC to enter into this Agreement (and the
Participants to enter into the Participation Agreements) and that IFC enters
into this Agreement (and the Participants will enter into the Participation
Agreements) on the basis of, and in full reliance on, each of such
representations and warranties.
ARTICLE V
Conditions of Disbursement
Section 5.01. Conditions of Disbursement. The obligation of IFC to make
the IFC Disbursement is subject to the fulfillment prior to or concurrently with
the making of the IFC Disbursement of the following conditions:
(a) the following agreements, each in form and substance satisfactory to
IFC, have been entered into by all parties to them and have become (or, as the
case may be, remain) unconditional and fully effective in accordance with their
respective terms (except for this Agreement having become unconditional and
fully effective, if that is a condition of any of those agreements), and IFC has
received a copy of each of those agreements to which it is not a party:
(i) each Transaction Document; and
(ii) each Project Document;
(b) IFC has entered into Participation Agreements with Participants for
the acquisition by them of Participations in an aggregate amount equal to the
full amount of the B Loan and those Participation Agreements are in full force
and effect;
(c) the Borrower has certified to IFC that no amendment has been made to
any of the Borrower's and the Project Company's Charter since December 7,
2000 and October 5, 1999, respectively, or if any such amendment was made, IFC
has received a copy of the Borrower's or the Project Company's amended Charter,
as the case may be, and determined, in its reasonable judgment, that it is not
inconsistent with the provisions of any Transaction Document and does not have
or may not reasonably be expected to have a Material Adverse Effect;
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(d) the Security has been duly created as first ranking security interests
in all assets and rights subject to the Security Documents, subject only to the
release of the Fleet Bank Security, and the registration of such Security as
first ranking security interests in all assets and rights subject to the
Security Documents has been completed in all respects;
(e) the Borrower or the Project Company, as the case may be, has obtained,
and provided to IFC copies of, all Authorizations listed in Section (1) of Annex
A, and such other Authorizations not listed in those Sections that may become
necessary for:
(i) the Loans;
(ii) the business of the Borrower and the Project Company as it is
presently carried on and is contemplated to be carried on;
(iii) the Project and the implementation of the Financial Plan;
(iv) the due execution, delivery, validity and enforceability of,
and performance by each of the Borrower and the Project
Company of its obligations under, this Agreement and the other
Transaction Documents and the Project Documents to which it is
a party and any other documents necessary or desirable to the
implementation of any of those agreements or documents; and
(v) the remittance to IFC or its assigns in Dollars of all monies
payable with respect to the Transaction Documents;
and all those Authorizations are in full force and effect;
(f) IFC has received a legal opinion to the effect set out in Schedule 5
(A), from their counsel in Mexico and concurred in by counsel for the Borrower,
and covering such other matters relating to the transactions contemplated by
this Agreement as IFC may reasonably request;
(g) IFC has received a legal opinion to the effect set out in Schedule 5
(B-1), from IFC's special counsel in New York, New York with regard to the New
York law aspects of this Agreement and other Transaction Documents; and a legal
opinion to the effect set out in Schedule 5 (B-2), from the Sponsor's counsel in
New York covering certain aspects with respect to the Financial Support
Agreement;
(h) IFC has received a certification from the Auditors confirming that, as
at a date not earlier than sixty (60) days prior to the date of the IFC
Disbursement, each of the Borrower and the Project Company is in compliance with
the provisions of Section 6.01(c) (Affirmative Covenants) and containing a brief
description of the systems and records in place;
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(i) IFC has received copies of all insurance policies required to be
obtained pursuant to Section 6.05 (Insurance) and Annex B prior to the date of
the IFC Disbursement, and a certification of the Project Company's insurers or
insurance agents confirming that such policies are in full force and effect and
all premiums then due and payable under those policies have been paid;
(j) IFC has received the fees specified in Section 3.08 (Fees) required to
be paid before the date of the IFC Disbursement;
(k) if IFC so requires, IFC has received the reimbursement of all invoiced
fees and expenses of IFC's counsel as provided in Section 3.08 and Section 3.15,
or confirmation that those fees and expenses have been paid directly to that
counsel;
(l) IFC has received a copy of the authorization to the Auditors referred
to in Section 6.01(e) (Affirmative Covenants);
(m) IFC has received a Certificate of Incumbency and Authority;
(n) the Borrower has delivered to IFC evidence, substantially in the form
of Schedules 4-A, 4-B and 4-C, respectively, of appointment of an agent for
service of process pursuant to Section 8.05(d) (Applicable Law and
Jurisdiction), Section 7.06(c) of the Financial Support Agreement (Applicable
Law and Jurisdiction), and Section 12 of the Escrow Agreement;
(o) IFC has received a certificate signed by an Authorized Representative,
with supporting evidence attached satisfactory to IFC, certifying that each of
the Borrower and the Project Company is Year 2000 Compliant;
(p) the Escrow Account shall have been established in accordance with the
Escrow Account Agreement;
(q) the Borrower has submitted to IFC a time-table, in the form of
Schedule 12 and otherwise in form and substance acceptable to IFC, outlining the
implementation of the Intermodal Capital Investment Program;
(r) the Sponsor has caused to be issued to IFC an irrevocable Letter of
Credit from a reputable bank acceptable to IFC, in the amount of $8,000,000 to
cover cost over-runs and cash shortfalls of the Project Company pursuant to the
Financial Support Agreement until the Project Physical Completion Date occurs;
(s) the Borrower has provided to IFC a bridge repair program prepared by
an independent consultant, in form and substance acceptable to IFC, for all
bridges longer than 20 meters;
(t) the Project Company has provided to IFC a CAP in form and substance
satisfactory to IFC, with respect to the Project Company's responsibility for
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environmental contamination from acts, facts and omissions that have occurred
after the date of the Concession Agreement;
(u) the Project Company has provided to IFC a herbicide management plan,
acceptable to IFC, with respect to the control of vegetation on the right-of-way
granted to the Project Company under the Concession Agreement;
(v) the Borrower has provided to IFC the GoM Letter;
(w) the Project Company has provided to IFC internal guidelines, in form
and substance acceptable to IFC, relating to illegal immigrants that make use of
the facilities of the Project Company;
(x) the IFC has subscribed for and received the IFC Shares pursuant to the
Subscription Agreement;
(y) the Project Company has filed the Concession Termination Compensation
Assignment Notice with the SCT;
(z) the Borrower has provided to IFC a letter from Fleet Bank certifying
the release of the Fleet Bank Security upon the disbursement of the IFC Loan;
and
(aa) the Borrower has provided to IFC the SCT Letter;
(bb) the Borrower and the Project Company have provided to IFC a
certificate from an Authorized Representative certifying that since September
30, 2000, neither the Project Company nor the Borrower has suffered any material
loss or liability; and
(cc) the Borrower and the Project Company have provided to IFC a letter
from an Authorized Representative confirming recent discussions between the
Project Company and SCT relating to the Project Company's completion, and SCT's
approval, of the urgent repairs.
Section 5.02. Additional Conditions of Disbursement. The obligation of IFC
to make the IFC Disbursement is also subject to the conditions that:
(a) no Event of Default and no Potential Event of Default has occurred and
is continuing;
(b) the proceeds of that Disbursement are, at the date of the relevant
request, needed by the Borrower for the purpose of the Project, or will be
needed for that purpose within three (3) months of that date;
(c) since the date of this Agreement nothing has occurred which has or can
reasonably be expected to have a Material Adverse Effect;
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(d) since September 30, 2000 neither the Borrower nor the Project Company
has incurred any material loss or liability (except such liabilities as may be
incurred in accordance with Section 6.02 (Negative Covenants Relating to the
Borrower ) and Section 6.03 (Negative Covenants Relating to the Project
Company), respectively);
(e) the representations and warranties made in Article IV hereof are true
and correct in all material respects on and as of the date of that Disbursement
with the same effect as if those representations and warranties had been made on
and as of the date of that Disbursement (but in the case of Section 4.01(c)
(Representations and Warranties), without the words in parentheses);
(f) the proceeds of that Disbursement are not in reimbursement of, or to
be used for, expenditures in the territories of any country which is not a
member of the World Bank or for goods produced in or services supplied from any
such country;
(g) IFC has received (if it so requires) a legal opinion or opinions in
form and substance satisfactory to IFC, of IFC's counsel in Mexico, and
concurred in by counsel for the Borrower, with respect to any matters relating
to the IFC Disbursement;
(h) after giving effect to the IFC Disbursement, neither the Borrower nor
the Project Company would be in violation of:
(i) its Charter;
(ii) any provision contained in any document to which the Borrower
or the Project Company is a party (including this Agreement)
or by which the Borrower or the Project Company is bound; or
(iii) any law, rule, regulation, Authorization or agreement or other
document binding on the Borrower directly or indirectly
limiting or otherwise restricting the Borrower's borrowing
power or authority or its ability to borrow;
(i) (without limiting the generality of Section 5.02(h)), after taking
into account the amount of the Disbursement and any other Long-term Debt
incurred by the Borrower and of any amounts of Tangible Net Worth paid into the
Borrower after the date of the latest financial statements of the Borrower due
pursuant to Section 6.04(a) (Reporting Requirements), the Borrower's Current
Ratio would not be less than 1.0, the Borrower's Long-term Debt to Tangible Net
Worth Ratio would not exceed 2.0, and the Borrower's Debt Service Coverage Ratio
would be in excess of 1.4; provided that, if the Disbursement is requested prior
to the date of the first financial statements due pursuant to Section 6.04(a)
(Reporting Requirements), the calculation of the Borrower's Current Ratio, the
Borrower's Long-term Debt to Tangible Net Worth Ratio and the Borrower's Debt
Service Coverage Ratio shall be made on the basis of such information as IFC may
reasonably request, verified, if IFC so requires, by the Auditors; provided,
further, that
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for the purposes of the Disbursement, only the Borrower's Current Ratio
requirement shall apply; and
(j) that Disbursement is made pro rata among the A Loan, the B Loan and
the FMO Loan.
Section 5.03. Borrower's Certification. The Borrower shall deliver to IFC
with respect to the IFC Disbursement request:
(a) certifications, in the form included in Schedule 2, relating to the
conditions specified in Section 5.02 (Additional Conditions of Disbursement)
(other than the condition in Section 5.02(g)) expressed to be effective as of
the date of the IFC Disbursement, and in the case of Section 5.02(d) and Section
5.02(i), also certified by the Auditors; and
(b) such evidence as IFC may reasonably request of the proposed
utilization of the proceeds of the IFC Disbursement or the utilization of the
proceeds of any prior Disbursement.
Section 5.04. B Loan Conditions. Notwithstanding any other provision of
this Agreement, IFC is not obliged to make:
(a) any B Loan Disbursement, except to the extent that the Participants
provide funds for that B Loan Disbursement under their Participations; and
(b) the IFC Disbursement except pro rata from the A Loan and the B Loan.
Section 5.05. Conditions for IFC's Benefit. The conditions in Section 5.01
through Section 5.04 are for the benefit of IFC and may be waived only by IFC at
its sole discretion.
ARTICLE VI
Particular Covenants
Section 6.01. Affirmative Covenants. Unless IFC otherwise agrees, the
Borrower shall, and shall cause the Project Company to, and the Project Company
shall:
(a) carry out the Project and cause the Project to be carried out, and
conduct its business with due diligence and efficiency and in accordance with
sound engineering, financial and business practices;
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(b) cause the financing specified in the Financial Plan to be applied
exclusively to the Project and use its best efforts to cause the Project
Physical Completion Date to occur before March 31, 2002;
(c) promptly install and maintain an accounting and control system,
management information system and books of account and other records, which
together adequately reflect truly and fairly the financial condition of each of
the Borrower and the Project Company and the results of each of the Borrower's
and the Project Company's operations in conformity with the Accounting
Principles;
(d) maintain the Auditors, or appoint and maintain, or cause to be
appointed and maintained at all times a firm of internationally recognized
independent public accountants acceptable to IFC as auditors of each of the
Borrower and the Project Company;
(e) irrevocably authorize, in the form of Schedule 6, the Auditors (whose
fees and expenses shall be for the account of the Borrower) to communicate
directly with IFC at any time regarding the Borrower's Consolidated accounts and
operations, and provide to IFC a copy of that authorization, and, no later than
thirty (30) days after any change in Auditors, issue a similar authorization to
the new Auditors and provide a copy thereof to IFC;
(f) upon IFC's request, such request to be made with reasonable prior
notice to the Borrower, except if an Event of Default or Potential Event of
Default has occurred and is continuing or if special circumstances so require,
permit representatives of IFC, during normal office hours, to:
(i) visit the Project site and any of the premises where the
business of the Borrower or the Project Company is conducted;
(ii) inspect all facilities, plant and equipment comprised in the
Project;
(iii) have access to the Borrower's or the Project Company's books
of account and records; and
(iv) have access to those employees and agents of the Borrower or
the Project Company who have or may have knowledge of matters
with respect to which IFC seeks information;
(g) (i) design, construct, operate, maintain and monitor all of its
equipment and facilities:
(A) in accordance with the Environmental and Social Policies
and the Environmental, Health and Safety Guidelines; and
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(B) in compliance with the CAP, as well as applicable
environmental occupational health and safety
requirements, and any child labor and forced labor laws,
rules and regulations (including any international
treaty obligations, if any) of the GoM and the local
authorities; and
(ii) not to effect any relocation of businesses and people residing
on the right-of-way granted to the Project Company under the
Concession Agreement without prior notification to IFC;
(h) no later than thirty (30) days after the date of this Agreement but in
any event prior to the date of the IFC Disbursement:
(i) provide IFC with all information necessary to enable IFC to
update the document dated February 8, 2000, (specify reference
number) entitled Environmental Review Summary ("ERS") by
incorporating any modification or addition to that document
relating to the Project; and
(ii) display the updated ERS in appropriate public places in the
United Mexican States acceptable to IFC for public access;
and IFC shall be entitled to place a copy of that updated ERS in the
World Bank public information center known as InfoShop for public
access;
(i) (A) obtain and maintain, or cause to be obtained and
maintained in force (and where appropriate, renew, or
cause to be renewed in a timely manner) all
Authorizations, including without limitation the
Authorizations specified in Annex A, which are necessary
for the implementation of the Project, the carrying out
of the Borrower's or the Project Company's business and
operations generally and the compliance by each of the
Borrower and the Project Company with all its
obligations under the Transaction Documents; and
(B) comply, or cause compliance, with all the conditions and
restrictions contained in, or imposed on the Borrower or
the Project Company by, those Authorizations;
(j) from time to time, execute, acknowledge and deliver or cause to be
executed, acknowledged and delivered such further instruments as may reasonably
be requested by IFC for perfecting or maintaining in full force and effect the
Security or for re-registering the Security (including updating Exhibit A to
each of the Mercantile Pledge Agreements and pledging for the benefit of IFC,
after the date hereof, any Long-term Contracts) or otherwise to enable the
Borrower or the Project Company to comply with its obligations under the
Transaction Documents;
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(k) maintain the minimum balance provided in the Escrow Account Agreement;
(l) comply with all its obligations under the Transaction Documents and
the Project Documents;
(m) control the vegetation on the rights-of-way granted to the Project
Company under the Concession Agreement, consistent with the plan approved by IFC
pursuant to Section 5.01(u);
(n) procure and purchase crossties only from suppliers approved by the GoM
so long as such approval is required;
(o) implement the Intermodal Capital Investment Program;
(p) implement the Project Company's internal guidelines relating to
illegal immigrants;
(q) use the proceeds of the IFC Loan to pay all amounts owing under the
Fleet Loan Agreement;
(r) provide to IFC no later than February 1, 2000, a letter from SCT
confirming the extension of the deadline for completing the urgent repairs
pursuant to the Urgent Repairs Agreement;
(s) provide to IFC no later than February 1, 2000, a letter from SCT
confirming the Project Company's completion, and SCT's approval, of eighty per
cent (80%) of the urgent repairs;
(t) provide to IFC no later than December 11, 2000, an Auditors'
certificate to the effect that the Sponsor has disbursed in full its equity
contributions to the Borrower in accordance with the Financial Plan;
(u) provide to IFC no later than December 11, 2000 evidence of the release
of the Fleet Bank Security and the filing of the Security as first ranking
security interests in all assets and rights subject to the Security Documents;
(u) provide to IFC no later than January 15, 2001 evidence of the
registration of the Security as first ranking security interests in all assets
and rights subject to the Security Documents;
(v) provide to IFC, on a best efforts basis, no later than December 31,
2001, a letter from SCT outlining the criteria that would be used in the
selection of a new operator pursuant to Article 18 of the Railroad Law; and
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(w) provide to IFC no later than January 20, 2001, evidence of the
endorsement of the insurance policies in the name of each of the Senior Lenders.
Section 6.02. Negative Covenants Relating to the Borrower. Unless IFC
otherwise agrees, the Borrower shall not:
(a) declare or pay any dividend or make any distribution on its share
capital (other than dividends or distributions payable in shares of the
Borrower), or purchase, redeem or otherwise acquire any shares of the Borrower
or any option over them, unless any such action occurs after the Project
Financial Completion Date and then only if the proposed payment or distribution
is out of retained earnings and the Borrower, no earlier than sixty (60) days
nor later than thirty (30) days prior to doing so, certifies to IFC in writing,
in the form attached as Schedule 7, the sufficiency of such retained earnings
and that:
(i) no Event of Default or Potential Event of Default has occurred
and is continuing; and
(ii) after giving effect to any such action:
(A) the Borrower's Current Ratio will be at least 1.0;
(B) the Borrower's Long-term Debt to Tangible Net Worth
Ratio will be equal to or less than 2.0; and
(C) the Borrower's Debt Service Coverage Ratio will not be
less than 1.4;
provided always that:
(A) the retained earnings out of which any of the payments
or distributions referred to in this sub-section may be
made should in no event include any amount resulting
from the revaluation of any of the Borrower's assets;
and
(B) the Borrower shall not make any payments or
distributions of the type referred to in this
sub-section if, after giving effect to it, the Borrower
could not certify the matters referred to in Section
6.02(a)(i) and (ii);
(b) incur expenditures or commitments for expenditures for fixed or other
non-current assets;
(c) incur, assume or permit to exist any Debt of the Borrower except:
(i) the Loans;
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(ii) any subordinated Debt of the Borrower required or permitted
pursuant to this Agreement or the Financial Support Agreement;
(iii) the credit line under the Credit Line Agreement but only until
the Merger occurs; and
(iv) the Fleet Bank Loan.
(d) enter into any agreement or arrangement to lease any property or
equipment of any kind;
(e) enter into any Derivative Transaction or assume the obligations of any
party to any Derivative Transaction, except as contemplated in the FMO Loan
Agreement;
(f) enter into any agreement or arrangement to guarantee or, in any way or
under any condition, assume or become obligated for all or any part of any
financial or other obligation of another Person;
(g) create or permit to exist any Lien on any property, revenues or other
assets, present or future, of the Borrower, except for:
(i) the Security;
(ii) the naming of each of IFC and FMO IFC as a loss
payee/beneficiary under the Borrower's insurance policies;
(iii) any Lien arising from any tax, assessment or other
governmental charge or other Lien arising by operation of law,
in each case if the obligation underlying any such Lien is not
yet due or, if due, is being contested in good faith by
appropriate proceedings so long as:
(A) those proceedings do not involve any substantial danger
of the sale, forfeiture or loss of any part of the
Project, title thereto or any interest therein, nor
interfere in any material respect with the use or
disposition thereof or the implementation of the Project
or the carrying on of the business of the Borrower; and
(B) the Borrower has set aside adequate reserves sufficient
to promptly pay in full any amounts that the Borrower
may be ordered to pay on final determination of any such
proceedings; and
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(iv) the Fleet Bank Security, but only prior to the IFC
Disbursement;
(h) enter into any transaction except in the ordinary course of business
on the basis of arm's-length arrangements (including, without limitation,
transactions whereby the Borrower might pay more than the ordinary commercial
price for any purchase or might receive less than the full ex-works commercial
price (subject to normal trade discounts) for its products);
(i) establish any sole and exclusive purchasing or sales agency;
(j) enter into any partnership, profit-sharing or royalty agreement or
other similar arrangement whereby the Borrower's income or profits are, or might
be, shared with any other Person;
(k) enter into any management contract or similar arrangement whereby its
business or operations are managed by any other Person;
(l) form or have any Subsidiary other than the Project Company;
(m) make or permit to exist loans or advances to, or deposits (except the
Borrower's equity investment in the Project Company as of the date hereof and
commercial bank deposits in the ordinary course of business) with, other Persons
or investments in any Person or enterprise (other than pursuant to the Financial
Support Agreement) other than short-term marketable securities acquired solely
to give temporary employment to its idle funds;
(n) reduce its share capital or otherwise change its Charter in any manner
which would be inconsistent with the provisions of any Transaction Document;
(o) change its Financial Year;
(p) change the nature or scope of the Project or change the nature of its
present business or operations;
(q) sell, transfer, lease or otherwise dispose of all or a substantial
part of its assets, whether in a single transaction or in a series of
transactions, related or otherwise;
(r) undertake or permit any merger, spin-off, consolidation or
reorganization other than the Merger permitted under Article IX;
(s) terminate, amend, grant any waiver or assignment with respect to any
provision of any of the agreements listed in Section 5.01(a) (Conditions of
Disbursement) or any agreements evidencing any loans provided under the
Financial Support Agreement;
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(t) prepay (whether voluntarily or involuntarily) or repurchase any
Long-term Debt of the Borrower (other than the IFC Loan) pursuant to any
provision of any agreement or note with respect to that Long-term Debt unless:
(i) that Long-term Debt is refinanced using new Long-term Debt on
terms and conditions (as to interest rate, other costs and
tenor) at least as favorable to the Borrower as those of the
Long-term Debt being refinanced; or
(ii) the Borrower gives IFC at least thirty (30) days' advance
notice of its intention to make the proposed prepayment and,
if IFC so require, the Borrower contemporaneously prepays a
proportion of the Loan equivalent to the proportion of the
part of the Long-term Debt being prepaid, such prepayment to
be made in accordance with the provisions of Section 3.07
(Prepayment) except that there shall be no minimum amount,
prepayment premium or advance notice period for that
prepayment; or
(u) use the proceeds of any IFC Disbursement in the territories of any
country which is not a member of the World Bank or for reimbursements of
expenditures in those territories or for goods produced in or services supplied
from any such country;
(v) make (or authorize or permit any Affiliate or any other Person acting
on its behalf to make) with respect to the Project or any transaction
contemplated by this Agreement, any Prohibited Payment. The Borrower further
covenants that should IFC notify the Borrower of its concerns that there has
been a violation of the provisions of this Section or of Section 4.01(q) of this
Agreement, it shall cooperate in good faith with IFC and its representatives in
determining whether such a violation has occurred, and shall respond promptly
and in reasonable detail to any notice from IFC, and shall furnish documentary
support for such response upon IFC's request; or
(w) make any payments to its Affiliates except as permitted under any
Transaction Document or Project Document.
Section 6.03. Negative Covenants Relating to the Project Company. Unless
IFC otherwise agrees, the Borrower shall cause the Project Company not to, and
the Project Company shall not:
(a) declare or pay any dividend or make any distribution on its share
capital (other than dividends or distributions payable in shares of the Project
Company), or purchase, redeem or otherwise acquire any shares of the Project
Company or any option over them, unless any such action occurs after the Project
Financial Completion Date and then only if the proposed payment or distribution
is out of retained earnings and the Project Company, no earlier than sixty (60)
days nor later than thirty (30) days prior to doing so, certifies to IFC in
writing, in the form attached as Schedule 7, the sufficiency of such retained
earnings and that:
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(i) no Event of Default or Potential Event of Default has occurred
and is continuing; and
(ii) after giving effect to any such action:
(A) the Project Company's Current Ratio will be at least
1.0;
(B) the Project Company's Long-term Debt to Tangible Net
Worth Ratio will be equal to or less than 2.0; and
(C) the Project Company's Debt Service Coverage Ratio will
not be less than 1.4;
provided always that:
(A) the retained earnings out of which any of the payments
or distributions referred to in this sub-section may be
made should in no event include any amount resulting
from the revaluation of any of the Project Company's
assets; and
(B) the Project Company shall not make any payments or
distributions of the type referred to in this
sub-section if, after giving effect to it, the Project
Company could not certify the matters referred to in
Section 6.03(a)(i) and (ii);
(b) incur expenditures or commitments for expenditures for fixed or other
non-current assets, other than those required for carrying out the Project or
necessary for repairs, replacements and maintenance of satisfactory operating
conditions that are essential to the Project Company's business or operations,
unless those expenditures or commitments are incurred (i) after the Project
Financial Completion Date and do not exceed an aggregate amount equivalent to
five million Dollars ($5,000,000.00) in any Financial Year; or (ii) in
connection with the Project expansion (in the same line of business) and are
paid for by the utilization of funds freely available for the payment of
dividends after the Project Financial Completion Date;
(c) incur, assume or permit to exist any Debt of the Project Company
except:
(i) any subordinated Debt required or permitted pursuant to this
Agreement or the Financial Support Agreement;
(ii) trade accounts incurred in the normal course of business and
not overdue by more than 90 days;
(v) Short-term Debt incurred in the ordinary course of business
which, when aggregated with contingent liabilities arising
from the
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discounting of trade receivables, would not exceed at any one
time outstanding the aggregate of the Project Company's
receivables, inventories, cash and short-term deposits;
(vi) loans to the Borrower pursuant to the Credit Line Agreement;
and
(vii) after the Merger, the Loans;
(d) enter into any agreement or arrangement to lease any property or
equipment of any kind, except leases with respect to which the aggregate lease
payments do not exceed the equivalent of one million Dollars ($1,000,000.00) in
any Financial Year;
(e) enter into any Derivative Transaction or assume the obligations of any
party to any Derivative Transaction, except as contemplated in the FMO Loan
Agreement;
(f) enter into any agreement or arrangement to guarantee or, in any way or
under any condition, assume or become obligated for all or any part of any
financial or other obligation of another Person other than the IFC Guarantee and
the FMO Guarantee;
(g) create or permit to exist any Lien on any property, revenues or other
assets, present or future, of the Project Company, except for:
(i) the Security;
(ii) the GoM Lien;
(iii) the naming of each of IFC and FMO as a loss payee/beneficiary
under the Project Company's insurance policies;
(iv) any Lien arising from any tax, assessment or other
governmental charge or other Lien arising by operation of law,
in each case if the obligation underlying any such Lien is not
yet due or, if due, is being contested in good faith by
appropriate proceedings so long as:
(A) those proceedings do not involve any substantial danger
of the sale, forfeiture or loss of any part of the
Project, title thereto or any interest therein, nor
interfere in any material respect with the use or
disposition thereof or the implementation of the Project
or the carrying on of the business of the Project
Company; and
(B) the Project Company has set aside adequate reserves
sufficient to promptly pay in full any amounts that the
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Project Company may be ordered to pay on final
determination of any such proceedings; and
(v) the Fleet Bank Security, but only prior to the IFC
Disbursement;
(h) enter into any transaction with its Affiliates or any other Person
except in the ordinary course of business on the basis of arm's-length
arrangements (including, without limitation, transactions whereby the Project
Company might pay more than the ordinary commercial price for any purchase or
might receive less than the full ex-works commercial price (subject to normal
trade discounts) for its products) except as otherwise permitted under the
Project Documents;
(i) establish any sole and exclusive purchasing or sales agency;
(j) enter into any partnership, profit-sharing or royalty agreement or
other similar arrangement whereby the Project Company's income or profits are,
or might be, shared with any other Person;
(k) enter into any management contract or similar arrangement (except for
the Technical Assistance Agreement) whereby its business or operations are
managed by any other Person;
(l) form or have any Subsidiary;
(m) make or permit to exist loans or advances to, or deposits (except
commercial bank deposits in the ordinary course of business) with, other Persons
or investments in any Person or enterprise (except for loans to the Borrower
pursuant to the Credit Line Agreement) other than short-term marketable
securities acquired solely to give temporary employment to its idle funds;
(n) change its Charter in any manner which would be inconsistent with the
provisions of any Transaction Document;
(o) change its Financial Year;
(p) change the nature or scope of the Project or change the nature of its
present or contemplated business or operations;
(q) sell, transfer, lease or otherwise dispose of all or a substantial
part of its assets, whether in a single transaction or in a series of
transactions, related or otherwise;
(r) undertake or permit any merger, spin-off, consolidation or
reorganization, other than the Merger permitted under Article IX;
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(s) withdraw from, terminate, amend or grant any waiver with respect to
any provision of any Project Document or Transaction Document or consent to an
assignment of any part thereof;
(t) transfer or assign all or any part of the Concession Agreement or any
permit and/or license relating to the Project;
(u) make any payment to its Affiliates except as permitted under any
Transaction Document or Project Document; and
(v) make (or authorize or permit any Affiliate or any other Person acting
on its behalf to make) with respect to the Project or any transaction
contemplated by this Agreement, any Prohibited Payment. The Project Company
further covenants that should IFC notify the Project Company of its concerns
that there has been a violation of the provisions of this Section or of Section
4.01(q) of this Agreement, it shall cooperate in good faith with IFC and its
representatives in determining whether such a violation has occurred, and shall
respond promptly and in reasonable detail to any notice from IFC, and shall
furnish documentary support for such response upon IFC's request.
Section 6.04. Reporting Requirements. Unless IFC otherwise agrees, the
Borrower shall:
(a) as soon as available but in any event within sixty (60) days after the
end of each quarter of each Financial Year, deliver to IFC:
(i) two (2) copies of the Borrower's complete financial statements
for such quarter prepared, on an unconsolidated basis and on a
Consolidated Basis, in accordance with the Accounting
Principles;
(ii) until the Project Physical Completion Date has occurred, a
report, in the form attached as Schedule 8, on the progress in
implementation of the Project, including any factors that have
or could reasonably be expected to have a Material Adverse
Effect;
(iii) after the Project Physical Completion Date has occurred, a
report on any factors that have or could reasonably be
expected to have a Material Adverse Effect;
(iv) a management report, including revenue by main client,
tariffs, the Project Company's intermodal and maintenance
activities, operating cost; and
(v) a statement of all transactions during that quarter between
each of the Borrower and the Project Company and their
respective Affiliates, if any, and a certification by an
Authorized
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Representative that those transactions were on the basis of
arm's-length arrangements;
(b) as soon as available but in any event within one hundred and twenty
(120) days after the end of each Financial Year, deliver to IFC:
(i) two (2) copies of its complete and audited financial
statements for that Financial Year (which are in agreement
with its books of account and prepared, on an unconsolidated
basis and Consolidated Basis, in accordance with the
Accounting Principles), together with the Auditors' audit
report on them, all in form satisfactory to IFC;
(ii) a management letter and such other communication from the
Auditors commenting, with respect to that Financial Year, on,
among other things, the adequacy of the Borrower's and the
Project Company's financial control procedures, accounting
systems and management information system;
(iii) a report by the Auditors certifying that, on the basis of its
financial statements, each of the Borrower and the Project
Company was in compliance with the covenants contained in
Section 6.02 (Negative Covenants Relating to the Borrower) and
Section 6.03 (Negative Covenants Relating to the Project
Company), respectively, as of the end of that Financial Year
or, as the case may be, detailing any non-compliance;
(iv) a report by each of the Borrower and the Project Company on
its operations during that Financial Year, in the form of, and
addressing the topics listed in, Schedule 9; and
(v) a statement by each of the Borrower and the Project Company of
all transactions between each of them and their respective
Affiliates, if any, during that Financial Year, and a
certification by an Authorized Representative that those
transactions were on the basis of arm's-length arrangements;
(c) deliver to IFC, promptly following receipt, a copy of any management
letter or other communication sent by the Auditors (or any other accountants
retained by the Borrower) to either of the Borrower or the Project Company or
their management in relation to the Borrower's and the Project Company's
financial, accounting and other systems, management or accounts, if not provided
pursuant to Section 6.04(b)(ii);
(d) within ninety (90) days after the end of each Financial Year, cause
the Project Company to deliver to IFC an annual monitoring report in the form of
Schedule 10, confirming compliance with the applicable national or local
requirements,
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the Environmental and Social Policies, the Environmental, Health and Safety
Guidelines, and the CAP and Sections 6.01(g) and 6.01(h) or, as the case may be,
detailing any non-compliance together with (A) the action being taken to ensure
compliance and (B) a written report verifying the contents of that annual
monitoring report, prepared by an independent third party consultant of the
Project Company, acceptable to IFC;
(e) as soon as possible but no later than three (3) days after its
occurrence, notify IFC of any incident or accident which has or may reasonably
be expected to have an adverse effect on the environment, health or safety,
including, without limitation, explosions, spills or workplace accidents which
result in death, serious or multiple injury or major pollution, specifying, in
each case, the nature of the incident or accident, the on-site and off-site
impacts arising or likely to arise therefrom and the measures the Project
Company is taking or plans to take to address those impacts; and keep IFC
informed of the on-going implementation of those measures;
(f) give notice to IFC, concurrently with the Borrower's or the Project
Company's notification to its shareholders, of any meeting of the Borrower's or
the Project Company's shareholders, such notice to include the agenda of the
meeting; and, as soon as available, deliver to IFC two (2) copies of:
(i) all notices, reports and other communications of the Borrower
or the Project Company, as the case may be, to its
shareholders, whether any such communication has been made on
an individual basis or by way of publication in a newspaper or
other communication medium; and
(ii) the minutes of all such shareholders' meetings;
(g) promptly notify IFC of any proposed change in the nature or scope of
the Project or the business or operations of the Borrower or the Project Company
and of any event or condition which has or may reasonably be expected to have a
Material Adverse Effect;
(h) promptly upon becoming aware of any litigation or administrative
proceedings before any Authority or arbitral body which has or may reasonably be
expected to have a Material Adverse Effect, notify IFC by facsimile of that
event specifying the nature of that litigation or those proceedings and the
steps the Borrower or the Project Company, as the case may be, is taking or
proposes to take with respect thereto ;
(i) promptly upon the occurrence of an Event of Default or Potential Event
of Default, notify IFC by facsimile specifying the nature of that Event of
Default or Potential Event of Default and any steps the Borrower or the Project
Company, as the case may be, is taking to remedy it;
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(j) promptly notify IFC (x) in the event the Borrower or the Project
Company receives a notification, fine, warning or other communication from the
GoM with respect to noncompliance by the Project Company with the terms of the
Concession Agreement, (y) in the event the Project Company fails to exercise any
of its rights under the Concession Agreement for a period of thirty (30) days,
or (z) of any other action which, pursuant to the terms of the Concession
Agreement, if left unresolved or with the passage of time, could result in the
termination, suspension or revocation of the Concession Agreement;
(k) cause the Project Company to provide to IFC, in a timely manner, the
insurance certificates and other information referred to in Section 6.05 (d)
(Insurance); and
(l) promptly provide to IFC such other information as IFC from may time to
time reasonably request about the Borrower and the Project Company, their
respective assets and the Project.
Section 6.05. Insurance.
(a) Insurance Requirements and Borrower's and Project Company's
Undertakings. Unless IFC otherwise agrees, the Borrower shall cause the Project
Company to, and the Project Company shall:
(i) insure and keep insured, with financially sound and reputable
insurers, all its assets and business against all insurable
losses to include the insurances specified in Annex B and any
insurance required by law;
(ii) punctually pay any premium, commission and any other amounts
necessary for effecting and maintaining in force each
insurance policy;
(iii) promptly notify the relevant insurer of any claim by the
Project Company under any policy written by that insurer and
diligently pursue that claim;
(iv) comply with all warranties under each policy of insurance;
(v) not do or omit to do, or permit to be done or not done,
anything which might prejudice the Project Company's, or,
where IFC isloss payee or an additional named insured, IFC's
right to claim or recover under any insurance policy; and
(vi) not vary, rescind, terminate, cancel or cause a material
change to any insurance policy;
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provided always that if at any time and for any reason any insurance
required to be maintained under this Agreement shall not be in full
force and effect, then IFC shall thereupon or at any time while the
same is continuing be entitled (but have no such obligation) on its
own behalf to procure that insurance at the expense of the Project
Company and to take all such steps to minimize hazard as IFC may
consider expedient or necessary.
(b) Policy Provisions. Each insurance policy required to be obtained
pursuant to this Section shall be on terms and conditions acceptable to IFC, and
shall contain provisions to the effect that:
(i) no policy can expire nor can it be canceled or suspended by
the Project Company or the insurer for any reason (including
failure to renew the policy or to pay the premium or any other
amount) unless IFC and, in the case of expiration or if
cancellation or suspension is initiated by the insurer, the
Project Company receive at least forty-five (45) days' notice
(or such lesser period as IFC may agree with respect to
cancellation, suspension or termination in the event of war
and kindred peril) prior to the effective date of termination,
cancellation or suspension;
(ii) IFC and all contractors working at the Project site are named
as additional named insured on all liability policies;
(iii) where relevant, all its provisions (except those relating to
limits of liability) shall operate as if they were a separate
policy covering each insured party; and
(iv) on every insurance policy on the Project Company's assets
which are the subject of the Security and for business
interruption or delayed start-up, IFC is named as a loss payee
for any claim of, or any series of claims arising with respect
to the same event whose aggregate amount is, the equivalent of
five hundred thousand Dollars ($500,000) or more;
(c) Application of Proceeds.
(i) At its discretion, IFC may remit the proceeds of any insurance
paid to it to the Project Company to repair or replace the
relevant damaged assets or may apply those proceeds towards
any amount payable to IFC under this Agreement, including to
repay or prepay all or any part of the IFC Loan in accordance
with Section 3.07 (Prepayment); provided that there shall be
no minimum amount or notice period or prepayment premium for
any such prepayment.
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(ii) The Project Company shall use any insurance proceeds it
receives (whether from IFC or directly from the insurers) for
loss of or damage to any asset solely to replace or repair
that asset.
(d) Reporting Requirements. Unless IFC otherwise agrees, the Borrower
shall cause the Project Company to, and the Project Company shall provide to IFC
the following:
(i) as soon as possible after its occurrence, notice of any event
which entitles the Project Company to claim for an aggregate
amount exceeding the equivalent of five hundred thousand
Dollars ($500,000) under any one or more insurance policies;
(ii) within forty-five (45) days after the main insurance policy is
issued to the Project Company, a copy of that policy
incorporating any loss payee provisions required under Section
6.05 (b) (iv) (unless that policy has already been provided to
IFC pursuant to Section 5.01(i));
(iii) not less than ten (10) days prior to the expiry date of any
insurance policy (or, for insurance with multiple renewal
dates, not less than ten (10) days prior to the expiry date of
the policy on the principal asset), a certificate of renewal
from the insurer, insurance broker or agent confirming the
renewal of that policy and the renewal period, the premium,
the amounts insured for each asset or item and any changes in
terms or conditions from the policy's issue date or last
renewal, and confirmation from the insurer that provisions
naming IFC as a loss payee or additional named insured, as
applicable, remain in effect;
(iv) such evidence of premium payment as IFC may from time to time
request; and
(v) any other information or documents on each insurance policy as
IFC request from time to time.
ARTICLE VII
Events of Default
Section 7.01. Acceleration after Default. If any Event of Default occurs
and is continuing (whether it is voluntary or involuntary, or results from
operation of law or otherwise), IFC may, by notice to the Borrower, require the
Borrower to repay the IFC
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Loan or such part of the IFC Loan as is specified in that notice. On receipt of
any such notice, the Borrower shall immediately repay the IFC Loan (or that part
of the IFC Loan specified in that notice) and pay all interest accrued on it,
the prepayment premium specified in Section 3.07 on the amount of the IFC Loan
whose payment is accelerated and any other amounts then payable under this
Agreement. The Borrower waives any right it might have to further notice,
presentment, demand or protest with respect to that demand for immediate
payment.
Section 7.02. Events of Default. It shall be an Event of Default if:
(a) the Borrower fails to pay when due any part of the principal of, or
interest on, the IFC Loan and such failure continues for a period of five (5)
days;
(b) the Borrower fails to pay when due any part of the principal of, and
interest on, the FMO Loan;
(c) the Borrower fails to pay when due any part of the principal of, or
interest on, any loan from IFC to the Borrower other than the IFC Loan and any
such failure continues for the relevant period of grace provided for in the
agreement providing for that loan;
(d) the Borrower fails to comply with any of its obligations under this
Agreement or any other Transaction Document or any other agreement between the
Borrower and/or the Project Company and IFC (other than for the payment of the
principal of, or interest on, the IFC Loan or any other loan from IFC to the
Borrower), and any such failure continues for a period of thirty (30) days after
the earlier of the date on which (i) IFC notifies the Borrower of that failure,
or (ii) the Borrower or the Project Company becomes aware of of such failure;
(e) any party to a Transaction Document (other than IFC or the Borrower)
or a Project Document fails to observe or perform any of its obligations under
that Transaction Document or Project Document, and any such failure continues
for a period of thirty (30) days after the earlier of the date on which (i) IFC
notifies the Borrower of that failure, or (ii) the Borrower or the Project
Company becomes aware of such failure;
(f) any representation or warranty made in Article IV or in connection
with the execution of, or any request (including a request for Disbursement)
under, this Agreement or any other Transaction Document is found to be incorrect
in any material respect;
(g) any Authority condemns, nationalizes, seizes, or otherwise
expropriates all or any substantial part of the property or other assets of the
Borrower and/or the Project Company or of its share capital, or assumes custody
or control of that property or other assets or of the business or operations of
the Borrower or of its share capital, or takes any action for the dissolution or
disestablishment of the Borrower or any action that would
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prevent the Borrower or its officers from carrying on all or a substantial part
of its business or operations;
(h) a decree or order by a court is entered against the Borrower:
(i) adjudging the Borrower bankrupt or insolvent;
(ii) approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of, or with respect to,
the Borrower under any applicable law;
(iii) appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Borrower or of
any substantial part of its property or other assets; or
(iv) ordering the winding up or liquidation of its affairs;
or any petition is filed seeking any of the above and is not dismissed within
thirty (30) days;
(i) the Borrower:
(i) requests a moratorium or suspension of payment of debts from
any court;
(ii) institutes proceedings or takes any form of corporate action
to be liquidated, adjudicated bankrupt or insolvent;
(iii) consents to the institution of bankruptcy or insolvency
proceedings against it;
(iv) files a petition or answer or consent seeking reorganization
or relief under any applicable law, or consents to the filing
of any such petition or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Borrower or of any substantial part of its
property;
(v) makes a general assignment for the benefit of creditors; or
(vi) admits in writing its inability to pay its debts generally as
they become due or otherwise becomes insolvent;
(j) an attachment or analogous process is levied or enforced upon or
issued against any of the assets of the Borrower for an amount in excess of the
equivalent of one million Dollars ($1,000,000) and is not discharged within
thirty (30) days;
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(k) any other event occurs which under any applicable law would have an
effect analogous to any of those events listed in Section 7.02 (g) through
Section 7.02 (i);
(l) the Borrower or the Project Company fails to pay any of its Debt due
and payable in excess of five hundred thousand Dollars ($500,000) (other than
the IFC Loan or any other loan from IFC to the Borrower) or to perform any of
its obligations under any agreement pursuant to which there is outstanding any
Debt, and any such failure continues for more than any applicable period of
grace or any such Debt becomes prematurely due and payable or is placed on
demand;
(m) any Authorization necessary for the Borrower or the Project Company to
perform and observe its obligations under any Transaction Document is not
obtained when required or is rescinded, terminated, lapses or otherwise ceases
to be in full force and effect, including with respect to the remittance to IFC
or its assignees, in Dollars, of any amounts payable under any Transaction
Document, and is not restored or reinstated within thirty (30) days of notice by
IFC to the Borrower requiring that restoration or reinstatement;
(n) any Security Document or any of its provisions:
(i) is revoked, terminated or ceases to be in full force and
effect or ceases to provide the security intended, without, in
each case, the prior consent of IFC;
(ii) becomes unlawful or is declared void; or
(iii) is repudiated or its validity or enforceability is challenged
by any Person and any such repudiation or challenge continues
for a period of thirty (30) days during which period such
repudiation or challenge has no effect;
(o) any Transaction Document (other than a Security Document) or any of
its provisions:
(i) is revoked, terminated or ceases to be in full force and
effect without, in each case, the prior consent of IFC, and
that event, if capable of being remedied, is not remedied to
the satisfaction of IFC within thirty (30) days of IFC's
notice to the Borrower; or
(ii) becomes unlawful or is declared void;
(p) any Transaction Document (other than a Security Document) is
repudiated or the validity or enforceability of any of its provisions at any
time is challenged by any Person and such repudiation or challenge is not
withdrawn within thirty (30) days of IFC's notice to the Borrower requiring that
withdrawal; provided that no such notice shall
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be required or, as the case may be, the notice period shall terminate if and
when such repudiation or challenge becomes effective;
(q) any Project Document:
(i) is breached by any party to it and such breach has or could
reasonably be expected to have a Material Adverse Effect; or
(ii) is revoked, amended, terminated or ceases to be in full force
and effect without the prior consent of IFC, or performance of
any of the material obligations under any such agreement
becomes unlawful or any such agreement is declared to be void
or is repudiated or its validity or enforceability at any time
is challenged by any party to it;
(r) any of the events specified in Section 7.02 (g) through 7.02 (l)
occurs to the Sponsor or its properties, assets, or capital; provided, that, the
threshold under Section 7.02 (j) and Section 7.02 (l) shall be $2,000,000;
(s) any of the events specified in Section 7.02(g) through 7.02(k) occurs
with respect to the Project Company or its properties, assets, or capital;
(t) the Project Company fails to exercise any of its rights under the
Concession Agreement;
(u) the Merger shall not have occurred by the Merger Deadline Date; or
(v) GoM notifies the Project Company or IFC of its intention to terminate
the Concession Agreement.
Section 7.03. Bankruptcy. If the Borrower or the Project Company is
liquidated or declared bankrupt, the IFC Loan, all interest accrued on it and
any other amounts payable under this Agreement will become immediately due and
payable without any presentment, demand, protest or notice of any kind, all of
which the Borrower waives.
ARTICLE VIII
Miscellaneous
Section 8.01. Saving of Rights. (a) The rights and remedies of IFC in
relation to any misrepresentation or breach of warranty on the part of the
Borrower and/or the Project Company shall not be prejudiced by any investigation
by or on behalf of IFC or any of the Participants into the affairs of the
Borrower and/or the Project Company, by the execution or the performance of this
Agreement or by any other act or thing which
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may be done by or on behalf of IFC in connection with this Agreement and which
might, apart from this Section, prejudice such rights or remedies.
(b) No course of dealing or waiver by IFC in connection with any condition
of Disbursement of the IFC Loan under this Agreement shall impair any right,
power or remedy of IFC with respect to any other condition of Disbursement, or
be construed to be a waiver thereof.
(c) No course of dealing and no failure or delay by IFC in exercising, in
whole or in part, any power, remedy, discretion, authority or other right under
this Agreement or any other agreement shall waive or impair, or be construed to
be a waiver of or an acquiescence in, such or any other power, remedy,
discretion, authority or right under this Agreement, or in any manner preclude
its additional or future exercise; nor shall the action of IFC with respect to
any default, or any acquiescence by it therein, affect or impair any right,
power or remedy of IFC with respect to any other default.
Section 8.02. Notices. Any notice, request or other communication to be
given or made under this Agreement shall be in writing. Subject to Section 6.04
(i) and Section 6.04 (h) (Reporting Requirements) and Section 8.05 (c), any such
communication may be delivered by hand, airmail, facsimile or established
courier service to the party's address specified below or at such other address
as such party notifies to the other party from time to time, and will be
effective upon receipt. A notice, request or other communication (other than
under Article III) which is made by facsimile shall be confirmed by mail but
without prejudice to it being effective on receipt of the facsimile.
For the Borrower:
GW Servicios, S.A. de C.V.
Calle 43 429-C
Col. Industrial
Merida, Yucatan
97000
Mexico
Attention: Carlos Pereyra, Chief Financial Officer
Alternative address for communications by facsimile:
011-529-930-2543
For the Project Company:
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Compania de Ferrocarriles Chiapas-Mayab, S.A. de C.V.
Calle 43 429-C
Col. Industrial
Merida, Yucatan
97000
Mexico
Attention: Carlos Pereyra, Chief Financial Officer
Alternative address for communications by facsimile:
011-529-930-2543
For IFC:
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Facsimile: (202) 974-4310
Attention: Director, Infrastructure Department
With a copy (in the case of communications relating to payments)
sent to the attention of the Senior Manager, Financial Operations
Unit, at:
Facsimile: 202-974-4371.
Section 8.03. English Language. (a) All documents to be provided or
communications to be given or made under this Agreement shall be in the English
language.
(b) To the extent that the original version of any document to be
provided, or communication to be given or made, to IFC under this Agreement or
any other Transaction Document is in a language other than English, that
document or communication shall be accompanied by an English translation
certified by an Authorized Representative to be a true and correct translation
of the original. IFC may, if it so requires, obtain an English translation of
any document or communication received in a language other than English at the
cost and expense of the Borrower. IFC may deem any such English translation to
be the governing version between the Borrower and IFC.
Section 8.04. Term of Agreement. This Agreement shall continue in force
until all monies payable under it have been fully paid in accordance with its
provisions.
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Section 8.05. Applicable Law and Jurisdiction. (a) This Agreement is
governed by, and shall be construed in accordance with, the laws of the State of
New York, United States of America.
(b) Each of the parties hereby irrevocably submits to the jurisdiction of
any court of the United States of America located in the Southern District of
New York in any action or proceeding arising out of or relating to this
Agreement. By the execution and delivery of this Agreement each of the parties
hereby irrevocably submits to the jurisdiction of any such court and, except as
otherwise provided in Section 8.05 (e), hereby irrevocably waives the benefit of
jurisdiction derived from present or future domicile or otherwise in any such
action or proceeding; provided, that IFC's submission to jurisdiction as set
forth above does not constitute any waiver of its immunities under its Articles
of Agreement.
(c) Each of the Borrower and the Project Company hereby irrevocably
designates, appoints and empowers CT Corporation System, 111 Eighth Avenue, 13th
Floor, New York, New York 10011, United States of America, as its authorized
agent to receive for and on its behalf service of summons or other legal process
in any such action or proceeding in New York, New York, United States of
America. Each of the Borrower and the Project Company agrees that the failure of
such agent to give notice to the Borrower of any such service shall not impair
or affect the validity of such service or of any judgment rendered in any action
or proceeding based thereon. Each of the Borrower and the Project Company
further irrevocably consents to the service of process out of any such court by
mailing copies thereof by registered United States air mail postage prepaid to
the Borrower or the Project Company at its address specified herein. Final
judgment against the Borrower or the Project Company in any such action, suit or
proceeding shall be conclusive and may be enforced in any other jurisdiction,
including Mexico, by suit on the judgment, a certified or exemplified copy of
which shall be conclusive evidence of the fact. Nothing herein shall affect the
right of IFC to serve process upon the Borrower or the Project Company in any
manner authorized by the laws of any such other jurisdiction.
(d) Each of the parties hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in the courts of the United States of America located in the
Southern District of New York and hereby further irrevocably waives, to the
fullest extent permitted by law, any claim that any such suit, action or
proceeding brought in any such court has been brought in any inconvenient forum.
Each of the Borrower and the Project Company further covenants and agrees that,
until all monies actually or contingently payable hereunder shall have been
fully paid in accordance with the terms of this Agreement, it shall maintain
duly appointed agents for the service of summons and other legal process in New
York, New York, United States of America, for purposes of any legal action or
proceeding brought by IFC in respect of this Agreement and shall keep IFC
advised of the identity and location of such agents.
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(e) Each of the Borrower and the Project Company hereby irrevocably agrees
that any legal action, suit or proceeding arising out of or relating to this
Agreement may be brought in the courts of the Federal District of Mexico at the
election of IFC without any requirement that IFC submit, based upon Article VI,
Section 11 of the Articles of Agreement of IFC, to the jurisdiction of such
courts in connection with any legal action, suit or proceeding arising out of or
relating to this Agreement that may be brought at the election of the Borrower
or the Project Company. By the execution and delivery of this Agreement, each of
the Borrower and the Project Company hereby irrevocably submits to the
jurisdiction of any such court and hereby irrevocably waives the benefit of
jurisdiction derived otherwise in any such action, suit or proceeding. Nothing
in this Agreement constitutes a waiver by IFC of any immunity to which IFC may
be entitled under the Articles of Agreement establishing IFC or under applicable
law.
(f) Each of the Borrower and the Project Company irrevocably waives to the
fullest extent permitted by applicable law any and all rights to demand a trial
by jury in any action, suit or proceeding brought against the Borrower or the
Project Company by IFC.
(g) To the extent that either the Borrower or the Project Company may be
entitled in any jurisdiction to claim for itself or its assets immunity in
respect of its obligations under this Agreement from any suit, execution,
attachment (whether provisional or final, in aid of execution, before judgment
or otherwise) or other legal process or to the extent that in any jurisdiction
such immunity (whether or not claimed) may be attributed to it or its assets, it
irrevocably agrees not to claim and irrevocably waives such immunity to the
fullest extent permitted by the laws of such jurisdiction.
(h) Each of the Borrower and the Project Company hereby acknowledges that
IFC shall be entitled under applicable law, including the provisions of the
International Organizations Immunities Act, to immunity from a trial by jury in
any action, suit or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby brought against IFC in any court of the
United States of America. Each of the Borrower and the Project Company hereby
waives any and all rights to demand a trial by jury in any action, suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated by this Agreement, brought against IFC in any forum in which IFC is
not entitled to immunity from a trial by jury.
(i) To the extent that either the Borrower or the Project Company may, in
any suit, action or proceeding brought in any of the courts referred to in
subsection (b) above or elsewhere (other than a court in Mexico) arising out of
or in connection with this Agreement be entitled to the benefit of any provision
of law requiring IFC in such suit, action or proceeding to post security for the
costs of the Borrower or the Project Company (cautio judicatum solvi), or to
post a bond or to take similar action, each of the Borrower and the Project
Company hereby irrevocably waives such benefit, in each case to the fullest
extent now or in the future permitted under the laws of the jurisdiction in
which such court is located.
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Section 8.06. Disclosure of Information. (a) IFC may disclose any
documents or records of, or information about, this Agreement or any other
Transaction Document, or the assets, business or affairs of the Borrower to:
(i) its outside counsel, auditors and rating agencies,
(ii) any Person with a participation in or who intends to purchase
a participation in a portion of the IFC Loan, and
(iii) any other Person as IFC may deem appropriate in connection
with any proposed sale, transfer, assignment or other
disposition of IFC's rights under this Agreement or any other
Transaction Document or otherwise for the purpose of
exercising any power, remedy, right, authority, or discretion
relevant to this Agreement or any other Transaction Document.
(b) The Borrower acknowledges and agrees that, notwithstanding the terms
of any other agreement between the Borrower and IFC, a disclosure of information
by IFC in the circumstances contemplated by Section 8.06 (a) does not violate
any duty owed to the Borrower under this Agreement or under any such other
agreement.
Section 8.07. Successors and Assignees. This Agreement binds and benefits
the respective successors and permitted assignees of the parties. However,
neither the Borrower nor the Project Company may, subject to Article IX, assign
or delegate any of its rights or obligations under this Agreement without the
prior consent of IFC. Any purported assignment or delegation in violation of
this Section shall be void.
Section 8.08. Amendments, Waivers and Consents. Any amendment or waiver
of, or any consent given under, any provision of this Agreement shall be in
writing and, in the case of an amendment, signed by the parties.
Section 8.09 Counterparts. This Agreement may be executed in several
counterparts, each of which is an original, but all of which together constitute
one and the same agreement.
ARTICLE IX
The Merger
Section 9.01. Conditions Precedent of the Merger. The Merger shall be
subject to the following conditions precedent:
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(a) the Borrower and the Project Company shall provide to IFC no less
than six (6) months' prior notice in writing of the Merger;
(b) the Borrower and the Project Company shall provide to IFC documents
in form and substance satisfactory to IFC evidencing that IFC shall
receive the Equivalent Percentage of Shares upon the Merger;
(c) the Borrower and the Project Company shall provide to IFC such other
documents as IFC may reasonably request in connection with the
Merger;
(d) the Borrower, the Project Company, and the Sponsor shall execute,
acknowledge, deliver or cause to be executed, acknowledged and
delivered such further instruments as IFC may reasonably request for
perfecting the Security or otherwise to enable the Borrower, the
Project Company or the Sponsor to comply with its obligations under
the Transaction Documents; and
(e) IFC shall receive, at the expense of the Project Company, a legal
opinion, satisfactory to IFC, from IFC's counsel in Mexico:
(i) confirming that the Merger is tax-free under the laws of
Mexico; all formalities have been fulfilled to ensure that the
Project Company shall assume all the obligations of the
Borrower under this Agreement, the Security Documents and
other Transaction Documents; all formalities have been
fulfilled to ensure that the Security is perfected; and
(ii) covering such other matters as IFC may reasonably request.
Section 9.02. Acknowledgment of the Project Company. Without in any way
limiting the effect of the Merger under law, the Project Company acknowledges
and agrees that, on the Merger Effective Date, each and every obligation and
liability of the Borrower under this Agreement shall become the obligation and
liability of the Project Company, without any further action by any party hereto
or any other Person.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed in
their respective names as of the date first above written.
GW SERVICIOS, S.A. DE C.V.
/s/ Thomas P. Loftus
By : _______________________
Thomas P. Loftus
Name: __________________________
Attorney-in-Fact
Title : _______________________
COMPANIA DE FERROCARRILES CHIAPAS-MAYAB, S.A. DE C.V.
/s/ Thomas P. Loftus
By : _______________________
Thomas P. Loftus
Name: __________________________
Attorney-in-Fact
Title : _______________________
INTERNATIONAL FINANCE CORPORATION
/s/ Declan J. Duff
By : _______________________
Declan J. Duff
Name: __________________________
Director
Title : _______________________