CREDIT AGRICOLE LAZARD FINANCIAL PRODUCTS BANK
Share Transaction (Forward Share Purchase)
Confirmation
As of 27 September 2001, the Trade Date
To: Centro Distribuidor de Cemento, S.A. de C.V.,
Xxxxxxx Xxxxxxxxxxxx 000 Xxxxxxxx,
XX Xxx 000,
Xxxxxxxx 00000
Xxxxxx
Dear Sirs,
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the transaction entered into between us on the Trade
Date specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1991 ISDA Definitions as amended
by the 1998 Supplement (the "Swap Definitions"), and the 1996 Equity Derivatives
Definitions (the "Equity Definitions" and together with the Swap Definitions,
the "ISDA Definitions") as published by the International Swaps and Derivatives
Associations Inc, are incorporated into this Confirmation. For the purposes of
the ISDA Definitions, this transaction shall be deemed to constitute a Share
Transaction. In the event of any inconsistency between the Swap Definitions and
the Equity Definitions, the Equity Definitions will prevail. In the event of any
inconsistency between the ISDA Definitions and the provisions of this
Confirmation, this Confirmation will prevail.
This Confirmation supplements, forms a part of, and is subject to, the ISDA
Master Agreement dated as of today's date, as amended and supplemented from time
to time (the "Agreement") between you and us. All provisions contained in the
Agreement govern this Confirmation except as expressly modified below.
The terms of the Transaction to which this Confirmation relates are as follows:
1 - General terms and definitions
ADR Conversion Fee: the fee expressed in USD per ADR calculated
by the Calculation Agent as the gross fees
(including administration expenses) payable
by it for the conversion of 5 CPOs into 1
ADR;
Bank: Credit Agricole Lazard Financial Products
Bank, a bank incorporated under the laws of
England & Wales and regulated by the SFA
(being guaranteed by Caisse Nationale de
Credit Agricole);
Block Trade Certification: a notice given by the Counterparty to the
Bank identifying one or more block purchasers
to be confirmed as acceptable to the Bank for
the purchase of Early Termination Shares on
the Early Termination Effective Date or (as
the case may be) the Number of Shares on the
Termination Effective Date;
Business Day: any day (excluding Saturday) on which
commercial banks settle payments and are
ordinarily open for general business
(including dealings in foreign exchange and
foreign currency deposits) in New York,
London and Mexico City;
Calculation Agent: the Bank;
Counterparty: Centro Distribuidor de Cemento, S.A. de C.V.;
Effective Date: 1 October 2001;
Exchange: The Mexico Stock Exchange;
Exchange Business Day: any Business Day which is a scheduled trading
day on the Exchange;
Foreign Exchange Rate: on any Business Day, the USD/ Mexican Peso
rate reasonably determined by the Calculation
Agent;
Initial Fee Amount: a USD amount equal to [Initial Shares/5] x
[ADR Conversion Fee] x 2;
Initial Fee Payment Date: the third Exchange Business Day next
following notification of the Initial Fee
Amount by the Bank, such notification being
no later than 1 November 2001;
Initial Price: USD 3.988409 (being the weighted average
price of the Shares (converted to USD by the
Calculation Agent at the Foreign Exchange
Rate) at which the Bank purchases the Initial
Shares on the Exchange on the Trade Date in
the form of one more block trades and
individual trades in a number equal to the
Initial Shares);
Initial Shares: 24,870,308 Shares (being a number of Shares
whose USD value is equal to the Notional
Amount divided by the Initial
2
Price), adjusted in accordance with any
Potential Adjustment Event;
Issuer: CEMEX, S.A. de C.V., a company organised
under the laws of the United States of
Mexico;
Mexican Peso: the lawful currency of the United States of
Mexico;
Notional Amount: USD 99,192,957;
Number of Shares: on any day, a number of Shares equal to the
Initial Shares less any Early Termination
Shares;
Physical Settlement
Certification: a written representation by the Counterparty
of the legality and conformity with all
applicable regulations of physical settlement
given by the Counterparty to the Bank in
facsimile form (to be followed with hard
copy) including as an exhibit a Mexican legal
opinion in form and substance satisfactory to
the Bank;
Relevant Price: on any day the arithmetic average of the
prices of the Shares at the Valuation Times,
converted to USD by the Bank using the
Foreign Exchange Rate, or, if such prices are
not available or, as determined by the
Calculation Agent, no longer reflect the same
valuation or method of calculation as it did
on the Trade Date, then such other valuation
determined by the Calculation Agent in good
faith and in a commercially reasonable manner
so as to replicate as closely as possible
such price;
Shares: the fully paid ordinary shares of the Issuer
in CPO form and the expression "Share" means
any one of such CPOs;
Spread 2.15% per annum;
Termination Date: the earlier of the date falling on the fifth
anniversary of the Effective Date, subject to
adjustment in accordance with the Modified
Following Business Day Convention and the
first day on which the Number of Shares is
zero;
Trade Date: 27 September 2001;
USD: the lawful currency of the United States of
America;
Valuation Time: 30 minutes following the opening of the
Exchange, 12.00 noon Mexico City time, 1 hour
prior to the close of the Exchange;
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Distribution definitions:
Distribution Accrual Amount: an amount equal to the sum of all
Distribution Amounts accrued and compounded
at the rate of 3 month USD Libor in each case
calculated from and including each relevant
Distribution Receipt Date to but excluding
the Termination Effective Date;
Distribution Amount: in relation to a cash distribution, an amount
equal to the product of the Number of Shares
on the record date for such cash distribution
and the cash value of each distribution on
Shares, net of any fees or withholding tax
imposed which would be received by the Bank
were it a holder of a Share (or the
equivalent ADR) on the record date relating
to such cash distribution;
Distribution Receipt Date: with respect to a cash distribution, the date
on which the Bank receives such cash
distribution;
Early Termination definitions:
Cumulative Maximum Termination
Shares: in respect of any Early Termination
Notification Date, the number of Shares set
out in the column opposite that in Schedule 1
to this Confirmation;
Early Termination Notice: a notice which may be given by the
Counterparty (but the Counterparty shall not
be obliged to give any such notice) to the
Bank, which if given shall be valid only if
delivered in facsimile form on an Early
Termination Notification Date, requiring an
Early Termination Date and the number of
Early Termination Shares and which shall
further specify whether (1) cash settlement
shall apply (2) physical settlement shall
apply (to be accompanied by a Physical
Settlement Certification) (3) one or more
block trades are arranged (to be accompanied
by a Block Trade Certification);
Early Termination Notification
Date: the last Exchange Business Day of each month
from and including the last Exchange Business
Day of December 2002, to the last Exchange
Business Day of Last Early Termination Month;
Early Termination Block Price: the price (converted to USD by the
Calculation Agent at the Foreign Exchange
Rate) at which (net of brokerage, foreign
exchange and other administrative costs)
Shares the subject
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of an Early Termination Block Notice are sold
by the Bank to a block purchaser acceptable
to the Bank;
Early Termination Date: the third Exchange Business Day next
following an Early Termination Effective
Date;
Early Termination Effective
Date: (1) if cash settlement is to apply, the last
Interim Averaging Date, (2) if physical
settlement is to apply, the Exchange Business
Day next following the latter of the Early
Termination Notification Date and the date on
which the Bank confirms by facsimile to the
Counterparty the acceptability of the
Physical Settlement Certification, (3) if
block trades are to take place, the Exchange
Business Day next following the latter of the
Early Termination Notification Date and the
date on which the Bank confirms by facsimile
to the Counterparty the acceptability of the
Block Trade Certification;
Early Termination Physical
Amount: Early Termination Price x Early Termination
Shares;
Early Termination Price: the present value, calculated by the
Calculation Agent on the relevant Early
Termination Date, of the Forward Price
discounted at the relevant Zero Coupon Swap
Rate from the Early Termination Date to the
Termination Date plus the Spread;
Early Termination Settlement
Amount: an amount in USD equal to (Market Price -
Early Termination Price) x Early Termination
Shares;
Early Termination Shares: the number of Shares notified by the
Counterparty to the Bank in an Early
Termination Notice which shall not exceed the
Maximum nor be less than the Minimum;
Interim Averaging Dates: each of the N(etd) Exchange Business Days
following the relevant Early Termination
Notification Date, subject to the provisions
of Clauses 4 and 5 below;
Last Early Termination Month: the calendar month preceding the calendar
month of the Termination Notification Date;
Market Price: the arithmetic average of the Relevant Price
on each of the Interim Averaging Dates next
following the relevant Early
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Termination Notification Date or if an Early
Termination Block Notice has been served, the
Early Termination Block Price;
Maximum: in respect of an Early Termination
Notification Date, a number of Shares equal
to the Cumulative Maximum Termination Shares
for that Early Termination Date less the
total number of Early Termination Shares (if
any) for all previous Early Termination
Dates;
Minimum: 250,000 Shares;
N(etd): on any Exchange Business Day, a number of
Exchange Business Days equal to the Early
Termination Shares on such Exchange Business
Day divided by 15% of the average daily
trading volume of the Shares reported by the
Exchange for the Exchange Business Days in
the four calendar weeks ending on such
Exchange Business Day;
Final Settlement definitions:
Final Averaging Dates: each of the N(f) Exchange Business Days
following the Termination Notification Date,
subject to the provisions of Clauses 4 and 5
below;
Final Physical Amount: the product of the Number of Shares at the
Termination Effective Date and the Forward
Price;
Final Price: the arithmetic average of the Relevant Price
on each of the Final Averaging Dates or if an
Block Trade Certification has been served,
the Final Block Price;
Final Block Price: the price (converted to USD by the
Calculation Agent at the Foreign Exchange
Rate) at which (net of brokerage, foreign
exchange and other administrative costs)
Shares the subject of a Block Trade
Certification are sold by the Bank to a block
purchaser acceptable to the Bank;
Final Settlement Amount: an amount in USD equal to [Final Price
-Forward Price] x Number of Shares;
Five Year Zero Coupon Swap Rate
at the Trade Date: 4.6090%;
Forward Price: the product of the Initial Price and the
Growth Factor;
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Growth Factor: 1.394261 being equal to : {1+ (Five Year Zero
Coupon Swap Rate at the Trade Date +
Spread)/2} to the 10th power;
N(f): on any Exchange Business Day, a number of
Exchange Business Days equal to the Number of
Shares on such Exchange Business Day divided
by 15% of the average daily trading volume of
the Shares reported by the Exchange for the
Exchange Business Days in the four calendar
weeks ending on such Exchange Business Day;
Termination Effective Date: the third Exchange Business Day prior to the
Termination Date;
Termination Notification Date: the 60th Exchange Business Day prior to the
Termination Effective Date;
Zero Coupon Swap Rate: the zero coupon swap rate for the relevant
maturity, quoted to the Calculation Agent on
the basis of a 30/360 day year by two swap
dealers on the relevant date;
Market disruption, merger, delisting and potential adjustment definitions
Market Disrupted Day: a day on which there is a Market Disruption
Event;
Market Disruption Event: the occurrence or existence on any day on
which Shares are to be valued hereunder of
any suspension or limitation imposed on
trading in the Shares on the Exchange if, in
the determination of the Calculation Agent,
such suspension or limitation is material and
for this purpose:
(a) a limitation on the hours and number of
days trading will not constitute a Market
Disruption Event if it results from an
announced change in the regular business
hours of the Exchange, and
(b) for the avoidance of doubt, a limitation
on trading imposed during the course of the
day by reason of movements in price otherwise
exceeding levels permitted by the Exchange
will constitute a Market Disruption Event;
Merger Event: (a) any consolidation, amalgamation or merger
of the Issuer with or into another entity, or
(b) any person or entity together with any
companies controlled by such person and
persons acting in concert with such person
acquire directly or indirectly the beneficial
ownership of equity securities having the
power to elect a majority of the board of
directors of the Issuer or otherwise
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acquires directly or indirectly the power to
control or direct the policy-making decisions
of the Issuer and which, in the reasonable
opinion of the Calculation Agent, would have
a materially negative effect on this
Transaction;
Delisting Event: (a) all or a substantial part of the Shares
or all the assets or substantially all the
assets of the Issuer are nationalised,
expropriated or are otherwise required to be
transferred to any governmental agency,
authority or entity,
(b) by reason of the voluntary or involuntary
liquidation, bankruptcy or insolvency of, or
any analogous proceeding affecting the
Issuer, or by reason of any legal or
regulatory restriction, holders of the Shares
become legally prohibited or restricted in
transferring them or receiving value for
them,
(c) the Shares are suspended from quotation
on the Exchange for a continuous period of
more than 10 Exchange Business Days, or
(d) the Shares are delisted from the Exchange
or an announcement is made by the Issuer, the
Exchange or any other regulatory or
governmental agency, authority or entity that
such delisting is to take place;
Potential Adjustment Event: means any of the following:
(a) a subdivision, consolidation or
reclassification of Shares;
(b) a reconstruction of the Issuer;
(c) a distribution of assets of the Issuer;
(d) a reduction of share capital of the
Issuer;
(e) any distribution payable in securities or
any other assets, by the Issuer in respect of
the Shares;
(f) any other event that may, in the opinion
of the Calculation Agent, have a diluting or
concentrative effect on the theoretical value
of the Shares.
2 - A Payments on the Effective Date
On the Initial Fee Payment Date the Counterparty shall make payment to the Bank
of the Initial Fee Amount;
2 - B Payments and deliveries on each Early Termination Date:
1. On each Early Termination Date (if any), in respect of which the
Counterparty shall not have delivered to the Bank a valid Physical
Settlement Certification:
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(a) if the relevant Early Termination Settlement Amount is a positive
amount, the Bank shall make payment to the Counterparty of the
relevant Early Termination Settlement Amount;
(b) if the relevant Early Termination Settlement Amount is a negative
amount, the Counterparty shall make payment to the Bank of the
absolute amount of the relevant Early Termination Settlement Amount;
2. On each Early Termination Date (if any), in respect of which the
Counterparty shall have delivered to the Bank a valid Physical Settlement
Certification:
On a delivery versus payment basis:
(a) the Bank shall deliver to the Counterparty the relevant Early
Termination Shares;
(b) the Counterparty shall make payment to the Bank of the relevant Early
Termination Physical Amount;
2-C Payments and deliveries on the Termination Date:
l. In the event that the Counterparty shall not have delivered to the Bank a
valid Physical Settlement Certification:
On the Termination Date
(a) if the sum of (i) the relevant Final Settlement Amount and (ii) the
Distribution Accrual Amount (if any) is a positive amount, the Bank
shall make payment to the Counterparty of the sum of (i) the Final
Settlement Amount and (ii) the Distribution Accrual Amount (if any);
(b) if the sum of (i) the Final Settlement Amount and (ii) the
Distribution Accrual Amount (if any) is a negative amount, the
Counterparty shall make payment to the Bank of the absolute value of
the sum of (i) the Final Settlement Amount and (ii) the Distribution
Accrual Amount (if any);
2. In the event that the Counterparty shall have delivered to the Bank a valid
Physical Settlement Certification:
On the Termination Date:
On a delivery versus payment basis:
(a) the Bank shall deliver to the Counterparty the Number of Shares;
(b) the Counterparty shall make payment to the Bank of the Final Physical
Amount less the Distribution Accrual Amount (if any);
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3 - Market Disruption during averaging periods
In the event that any Interim Averaging Dates or Final Averaging Dates are
Market Disrupted Days, the Early Termination Effective Date or the
Termination Effective Date (as the case may be) shall be postponed until
the earlier of (i) the first Exchange Business Day upon which the number of
non-disrupted days specified in the relevant definition of Interim
Averaging Dates or Final Averaging Dates (as the case may be) has been
achieved, or (ii) the fifth Exchange Business Day following that day which
would otherwise have been the Early Termination Effective Date or the
Termination Effective Date (as the case may be), in which latter case the
Calculation Agent shall determine, acting reasonably and in good faith, the
relevant price or amount, taking into account those Interim Averaging Dates
or Final Averaging Dates (as the case may be) which were not Market
Disrupted Days.
4 - Liquidity Event
Following the determination by the Calculation Agent (acting reasonably and
providing evidence of such determination to the Counterparty, but acting in
its sole discretion) that liquidity of the Shares on the Exchange is
extraordinarily reduced (taking into account comparative historic
liquidities) prior to any Early Termination Effective Date or the
Termination Effective Date as the case may be, the Calculation Agent shall
notify the Counterparty prior to any such Early Termination Date or the
Termination Date of such fact and (a) the Bank may (if such physical
settlement is permitted in all the legal and regulatory circumstances then
prevailing) require the relevant Early Termination Effective Date or
Termination Effective Date as the case may be to be the subject of physical
settlement or (b) the Bank may notify the Counterparty that the relevant
Early Termination Date or Termination Date shall be delayed to such later
Exchange Business Day as the Bank may reasonably require to permit the Bank
to unwind its hedge in respect of this Transaction (in whole or in part as
the case may be) in an orderly and undisrupted manner, having regard to the
liquidity conditions then prevailing.
5 - Delisting, Merger and Potential Adjustment Events
(a) Following the notification by either party to the other of any Delisting
Event or Merger Event, each of the Bank and the Counterparty will use its
respective reasonable endeavours to agree in good faith upon another
exchange or other quotation system in respect of the Shares or to agree
such other amendments to this Confirmation as may be necessary or
desirable. If the Bank and the Counterparty fail to reach agreement within
10 Business Days from the date of any such notification, the Calculation
Agent, acting in good faith, shall have the right (but not the obligation)
to determine another exchange or other quotation system (if applicable), to
determine and make such amendments to this Confirmation as may be necessary
or desirable, or to terminate the transaction. Such termination may occur
by the Calculation Agent, by not less than two nor more than 20 Business
Days notice to the Counterparty specifying such Delisting Event or Merger
Event to be an Additional Termination Event (in respect of which both
parties shall be Affected Parties), and designating a day not earlier than
the day such notice is effective as an Early Termination Date in respect of
any or all outstanding Transactions.
10
(b) Following the declaration by the Issuer of the terms of, or the occurrence
of, any Potential Adjustment Event, the Calculation Agent, acting in good
faith, shall determine (i) whether such Potential Adjustment Event will
have a diluting or concentrative effect on the value of the Shares; and
(ii) any adjustment(s) to be made to the terms of this Transaction to
account for the effect of such Potential Adjustment Event and so that the
value of the Transaction for both parties shall as nearly as possible
remain unchanged. In the absence of manifest error, such determination by
the Calculation Agent shall be definitive.
(c) Any adjustments determined pursuant to paragraph (b) above shall be made to
the settlement terms of this Transaction with effect from the date on which
it is determined by the Calculation Agent that such adjustments should take
effect.
6 - Calculation Agent
The Calculation Agent shall make calculations, adjustments and determinations
and carry out its other functions as provided in this Confirmation and the
Agreement acting reasonably and in good faith, and shall promptly notify the
parties of such calculations, adjustments and determinations within the time
required under this Confirmation. In the event of a dispute as to any
calculation, adjustment, determination or other action of the Calculation Agent
made under this Confirmation that has not been resolved by agreement between the
parties and the Calculation Agent within a period of twenty Business Days, the
Bank and the Counterparty shall jointly nominate an independent third party
(which shall be a bank or other financial institution of good international
reputation with an established expertise in matters relating to this
Confirmation) to review and to confirm or replace the disputed decision of the
Calculation Agent with a decision of such independent third party. The decision
of such independent third party shall be binding in the absence of manifest
error. If the Bank and the Counterparty cannot agree on the joint nomination of
an independent third party within a further period of ten Business Days, then
the dispute shall be submitted to the jurisdiction of the English courts in
accordance with Section 13 of the Agreement. The costs and expenses of this
independent third party shall be borne by the parties hereto in equal shares.
7- Payment Currency, VAT and Withholding Tax
(a) All payments to be made hereunder shall be made in the USD. Unless
otherwise provided herein, any amounts, prices or values originally
denominated or calculated in a currency other than the USD will be
converted into the USD at the Foreign Exchange Rate prevailing on the date
and time such prices are determined, valuations are made or payments are
required to be made hereunder.
(b) All payments provided for are expressed to be net of any applicable
value-added, sales or goods and services tax (together, "VAT") or
withholding tax, which shall in all cases be in addition. In the event of
any imposition of VAT or withholding tax, each party undertakes to each
other to use its best endeavours to mitigate the impact of any such
imposition, and each party agrees to make such reasonable amendments or
additions to this Confirmation. In the event however that no such
reasonable amendments are feasible so as to mitigate such impact, the party
obliged to impose such VAT or make such withholding shall gross-up so that
the net amount received by the other party shall be the same as if no VAT
or withholding tax had been imposed.
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8 - Bank's and Counterparty's Obligations
Nothing in this Confirmation shall oblige the Bank or the Counterparty to take
any action which is in contravention of applicable laws or regulations and in
particular (but without prejudice to the generality of the foregoing), each of
the Bank and the Counterparty acknowledge that as at the trade date no valid
Physical Settlement Notice may be delivered by the Counterparty.
9 - Account Details
The account for payments in the Designated Currency to the Bank shall be:
Chase Manhattan Bank, New York (XXXXXX00) ABA 000000000
Favor Caisse Nationale de Credit Agricole London Branch (AGRIGB2L) - A/C
nb 0000-00000-0
The account for payments in the Designated Currency to the Counterparty shall
be:
A/C 0000000
Citibank, N.A. (NY Branch)
ABA: 000000000
Name: CEMEX y/o Subsidiaries
The account for deliveries of Shares to the Counterparty shall be:
To be advised no later than no later than the date of any Physical
Settlement Certification, if any
or such other account specified by a party to the other in writing from time to
time.
10 - Notices
Any notice or other communication in respect of this Confirmation may be given
in any manner set forth below to the address or number provided below and will
be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by facsimile transmission, on the date the transmission is received
(as indicated by a transmission report generated by the sender's facsimile
machine);
(iii) if sent by certified or registered mail (air mail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered;
unless the date of that delivery or that receipt, as applicable, is not a
Business Day in the place of delivery or that communication is delivered or
received, as applicable, after the close of business on such Business Day, in
which case that communication shall be deemed given and effective on the first
following day that is a Business Day.
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Either party may by written notification to the other party change the address,
facsimile number or other details at which notice or other communications are to
be given to it.
The Bank's notification details are as follows:
CAL FP Bank
Address: 00 Xxxxxxxxxx Xxxxxxxx
Xxxxxx XX0X 0XX
Facsimile: x00 000 000 0000
For the attention of: Derivatives Administration
With a copy for information purposes only to:
CAL FP (US) Inc.
Address: Suite 000,000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000
Facsimile: x0000 000 0000
For the attention of: Derivatives Administration
The Counterparty's notification details are as follows:
Centro Distribuidor de Cemento, S.A. de C.V.,
Address: Xxxxxxx Xxxxxxxxxxxx 000 Xxxxxxxx,
XX Xxx 000,
Xxxxxxxx 00000
Xxxxxx
Facsimile:
Telephone: 00 000 000 0000
For the attention of: Xxxxxxx Xxxxx
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Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely,
CREDIT AGRICOLE LAZARD FINANCIAL PRODUCTS BANK
By:
--------------------------
Name:
Title:
Accepted and confirmed as of the date first above written:
CENTRO DISTRIBUIDOR DE CEMENTO, S.A. DE C.V.
By: /s/ Illegible
--------------------------
Name:
Title:
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Schedule 1
-------------------------------------------------------------------------------
Early Termination Notification Date
---------------------------------------------------------- Cumulative Maximum
Between the last Exchange And the Last Exchange Termination
Business Day of (inclusive) Business Day of (exclusive) Shares
-------------------------------------------------------------------------------
October 2002 October 2003 6,217,577
-------------------------------------------------------------------------------
October 2003 October 2004 12,435,154
-------------------------------------------------------------------------------
October 2004 October 2005 18,652,731
-------------------------------------------------------------------------------
October 2005 Last Early Termination Month 24,870,308
-------------------------------------------------------------------------------
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