EXHIBIT 10.3
EXECUTION COPY
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AMENDED AND RESTATED
LOAN AGREEMENT
BETWEEN
GW SERVICIOS, S.A. DE C.V.
AND
COMPANIA DE FERROCARRILES CHIAPAS-MAYAB, S.A. DE C.V.
AND
NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR
ONTWIKKELINGSLANDEN N.V.
DATED DECEMBER 5, 2000
AMENDED AND RESTATED AS OF MARCH 15, 2005
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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............. 14
Section 1.03. Financial Calculations............ 19
Section 1.04. Interpretation.................... 19
Section 1.05. Business Day Adjustment........... 20
ARTICLE II......................................... 20
THE PROJECT, PROJECT COST AND FINANCIAL PLAN....... 20
Section 2.01. The Project....................... 20
Section 2.02. Project Cost and Financial Plan... 20
ARTICLE III........................................ 21
THE FMO LOAN....................................... 21
Section 3.01. The FMO Loan...................... 21
Section 3.02. [reserved]........................ 21
Section 3.03. Interest.......................... 22
Section 3.04. Change in Interest Period......... 23
Section 3.05. Default Rate Interest............. 23
Section 3.06. Repayment......................... 24
Section 3.07. Prepayment........................ 24
Section 3.08. Fees.............................. 25
Section 3.09. Currency and Place of Payments.... 26
Section 3.10. Allocation of Partial Payments.... 26
Section 3.11. Increased Costs................... 27
Section 3.12. Unwinding Costs................... 27
Section 3.13. [reserved]........................ 27
Section 3.14. Taxes............................. 27
Section 3.15. Expenses.......................... 28
Section 3.16. Notes............................. 29
ARTICLE IV......................................... 29
Amended and Restated FMO Loan Agreement
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REPRESENTATIONS AND WARRANTIES......................................................... 29
Section 4.01. Representations and Warranties........................................ 29
Section 4.02. FMO Reliance.......................................................... 32
ARTICLE V.............................................................................. 32
CONDITIONS OF DISBURSEMENT............................................................. 32
Section 5.01. Conditions of Effectiveness........................................... 32
Section 5.02 FMO Notice; Amendment and Restatement; Conditions for FMO's Benefit... 34
ARTICLE VI............................................................................. 34
PARTICULAR COVENANTS................................................................... 34
Section 6.01. Affirmative Covenants................................................. 34
Section 6.02. Negative Covenants Relating to the Borrower........................... 37
Section 6.03. Negative Covenants Relating to the Project Company.................... 41
Section 6.04. Reporting Requirements................................................ 45
Section 6.05. Insurance............................................................. 49
ARTICLE VII............................................................................ 52
EVENTS OF DEFAULT...................................................................... 52
Section 7.01. Acceleration after Default............................................ 52
Section 7.02. Events of Default..................................................... 52
Section 7.03. Bankruptcy............................................................ 55
ARTICLE VIII........................................................................... 55
MISCELLANEOUS.......................................................................... 55
Section 8.01. Saving of Rights...................................................... 56
Section 8.02. Notices............................................................... 56
Section 8.03. English Language...................................................... 57
Section 8.04. Term of Agreement..................................................... 58
Section 8.05. Applicable Law and Jurisdiction....................................... 58
Section 8.06. Disclosure of Information............................................. 59
Section 8.07. Successors and Assigns................................................ 60
Section 8.08. Amendments, Waivers and Consents...................................... 60
Section 8.09. Counterparts.......................................................... 60
ARTICLE IX............................................................................. 60
THE MERGER............................................................................. 60
Amended and Restated FMO Loan Agreement
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Section 9.01. Conditions Precedent of the Merger............. 60
Section 9.02. Acknowledgment of the Borrower................. 61
ANNEX A......................................................... 63
[RESERVED]...................................................... 63
ANNEX B......................................................... 64
MINIMUM INSURANCE REQUIREMENTS.................................. 64
ANNEX C......................................................... 65
[RESERVED]...................................................... 65
SCHEDULE 1...................................................... 66
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY................. 66
SCHEDULE 2...................................................... 68
FORM OF CERTIFICATION OF REPRESENTATIONS AND WARRANTIES......... 68
SCHEDULE 3...................................................... 70
FORM OF NOTICE OF EFFECTIVENESS................................. 70
SCHEDULE 4...................................................... 71
FORM OF SERVICE OF PROCESS LETTER............................... 71
SCHEDULE 5...................................................... 73
[RESERVED]...................................................... 73
SCHEDULE 6...................................................... 74
FORM OF LETTER TO BORROWER'S AUDITORS........................... 74
SCHEDULE 7...................................................... 76
FORM OF BORROWER'S CERTIFICATION ON DISTRIBUTION OF DIVIDENDS... 76
Amended and Restated FMO Loan Agreement
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SCHEDULE 8.................................................. 78
[RESERVED].................................................. 78
SCHEDULE 9.................................................. 79
INFORMATION TO BE INCLUDED IN ANNUAL REVIEW OF OPERATIONS... 79
SCHEDULE 10................................................. 81
FORM OF ANNUAL MONITORING REPORT............................ 81
SCHEDULE 11................................................. 85
FORM OF NOTES............................................... 85
Amended and Restated FMO Loan Agreement
AMENDED AND RESTATED LOAN AGREEMENT
AMENDED AND RESTATED LOAN AGREEMENT, dated December 5, 2000, as amended
and restated as of March 15, 2005, 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) NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR ONTWIKKELINGSLANDEN
N.V., a limited liability company organized and existing under the
laws of The Netherlands ("FMO").
(A) Under the terms of a loan agreement dated December 5, 2000 between the
Borrower, the Project Company and FMO (the "Original FMO Loan Agreement"), FMO
made a loan to the Borrower in the principal amount of seven million Dollars
($7,000,000), of which the principal amount of four million six hundred sixty
four thousand Dollars ($4,664,000) is currently outstanding (which amount shall
be reduced to four million five hundred seventeen thousand eight hundred ninety
and 91/100th Dollars ($4,517,890.91) after prepayment of the amount set forth in
Section 5.01(b)).
(B) The Borrower, the Project Company and FMO desire to modify the
Original FMO Loan Agreement in order to, among other things, extend the
repayment term of the FMO Loan (as defined below) and make other changes as more
fully set forth herein.
(C) In order to accomplish the foregoing, the Borrower, the Project
Company and FMO are amending and restating in its entirety the Original FMO Loan
Agreement as set forth herein.
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. General Definitions. Wherever used in this Agreement, the
following terms have the meanings opposite them:
Amended and Restated FMO Loan Agreement
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"A Loan" the loan specified in Section 3.01(a) of the
IFC Loan Agreement or, as the context requires,
its principal amount from time to time
outstanding;
"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 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" PricewaterhouseCoopers 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
Amended and Restated FMO Loan Agreement
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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 FMO;
"B Loan" the loan specified in Section 3.01(b) of the
IFC Loan Agreement or, as the context requires,
its principal amount from time to time
outstanding;
"Business Day" a day when banks are open for business in
New York, New York or, solely for the purpose
of determining the FMO 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 FMO 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;
"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 with respect to interest
rates, currencies or commodity prices;
Amended and Restated FMO Loan Agreement
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"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;
"Event of Default" any one of the events specified in Section 7.02
(Events of Default);
"Existing Deficiency
Loan Agreements" collectively, the Deficiency Loan Agreement
entered into among the Borrower, the Project
Company and the Sponsor on December 17, 2004
and the Deficiency Loan Agreement entered into
among the same parties on September 21, 2004;
"Financial Plan" the proposed sources of financing for the
Project set out in Section 2.02 (b) (Project
Cost and Financial Plan);
Amended and Restated FMO Loan Agreement
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"Financial Support
Agreement" the agreement entitled "Financial Support
Agreement" dated December 5, 2000, as amended
and restated as of the date hereof, 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
FMO's consent, from time to time designate as
their accounting year;
"FMO Disbursement" any Disbursement of the FMO Loan;
"FMO Guarantee" the Guarantee Agreement dated December 5, 2000
between the Project Company and FMO;
"FMO
Interest Rate" for any Interest Period, the rate at which
interest is payable on the FMO Loan during
that Interest Period, determined in accordance
with Section 3.03 (Interest) and, if
applicable, Section 3.04 (Change in Interest
Period);
"FMO Loan" the loan specified in Section 3.01 (The FMO
Loan) or, as the context requires, its
principal amount from time to time outstanding;
"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 the 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;
"GoM Lien" the lien granted by the Project Company to the
GoM pursuant to the Asset Purchase Agreement;
Amended and Restated FMO Loan Agreement
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"IFC" International Finance Corporation, an
international organization established by
Articles of Agreement among its member
countries including the United Mexican States;
"IFC Guarantee" the Guarantee Agreement dated December 5, 2000
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:
(A) all the shares in the share capital
of the Borrower subscribed for and
acquired by IFC pursuant to the
Subscription Agreement;
(B) 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;
(C) 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
(D) all shares (of any company)
received by IFC in exchange,
replacement or substitution of the
IFC Shares;
"Increased Costs" the amount certified in an Increased Costs
Certificate to be the net incremental costs of,
or reduction in return to, FMO in connection
with the making or maintaining of the FMO Loan
that result from:
(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
Amended and Restated FMO Loan Agreement
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(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, FMO;
(B) imposes a cost on FMO as a result
of FMO having made the FMO Loan or
reduces the rate of return on the
overall capital of FMO that it
would have achieved, had FMO not
made the FMO Loan;
(C) changes the basis of taxation on
payments received by FMO in respect
of the FMO Loan (otherwise than by
a change imposed by the
jurisdiction of its incorporation
or in any political subdivision of
any such jurisdiction); or
(D) imposes on FMO any other condition
regarding the making or maintaining
of the FMO Loan;
"Increased Costs Certificate" a certificate provided from time to time by FMO
certifying:
(i) the circumstances giving rise to the
Increased Costs;
(ii) that the costs of FMO have increased or
the rate of return of either of them has
been reduced as a result of the Increased
Costs;
(iii) that, FMO 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
Amended and Restated FMO Loan Agreement
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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 FMO
Disbursement when it means the period beginning
on the date on which such FMO Disbursement is
made and ending on the day immediately before
the next following Interest Payment Date;
"ITISA" Impulsora Tlaxcalteca de Industrias, S.A. de
C.V., a sociedad anonima de capital variable
organized and existing under the laws of
Mexico;
"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
Amended and Restated FMO Loan Agreement
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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;
"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 December 5, 2000 by and among the
Sponsor, the Project Company, the Borrower and
the Senior Lenders; and the Mercantile Pledge
Agreement, dated as of December 5, 2000, by and
among the Borrower, the Sponsor and the Senior
Lenders;
Amended and Restated FMO Loan Agreement
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"Merger" the proposed merger of the Project Company with
and into the Borrower, with the Borrower as the
surviving entity;
"Merger Deadline Date" the later of (i) January 1, 2010 and (ii) the
date that is six (6) months after the date of
filing of the Project Company's tax return that
demonstrates that the Project Company's net
operating losses for tax purposes have been
fully utilized;
"Merger Effective Date" the date on which the Merger shall have been
consummated and all of the conditions precedent
to the Merger listed in Section 9.01 shall have
been fully satisfied or waived;
"Mexico" the United Mexican States;
"Note" or "Notes" the promissory notes referred to in Section
3.16, 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;
"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;
Amended and Restated FMO Loan Agreement
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provided that any such offer, gift, payment,
promise or authorization of payment shall not
be considered a Prohibited Payment if, in FMO'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 Documents" (i) the Concession Agreement;
(ii) the Asset Purchase Agreement;
(iii) the Technical Assistance Agreement;
(iv) the Security Trust Indenture;
(v) the Urgent Repairs Agreement;
(vi) the Credit Line Agreement;
"Put Option Agreement" the agreement entitled "Put Option Agreement"
dated December 5, 2000, as amended as of the
date hereof, 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;
provided, that the "Relevant Spread" shall
equal four per cent (4%) per annum for each
Interest Period beginning on or after September
15, 2008;
"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;
Amended and Restated FMO Loan Agreement
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"Security" the security created by or pursuant to the
Security Documents to secure all amounts owing
by the Borrower to FMO and 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;
(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) a first ranking pledge over the Sponsor's
shares in the Borrower;
(viii)a first ranking pledge over the Sponsor's
and the Borrower's shares in the Project
Company; and
(ix) nomination of FMO as a loss
payee/beneficiary in respect of the
insurance obtained in connection with the
assets subject to the Security Documents
and a first ranking pledge over such
insurance policies and proceeds;
provided, that for all purposes of the Security
Sharing Agreement dated December 5, 2000
between FMO and
Amended and Restated FMO Loan Agreement
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IFC, the Sponsor Guarantee Agreement shall also
be considered a Security Document;
"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;
"Sponsor Guarantee
Agreement" the agreement entitled "Sponsor Guarantee
Agreement" dated as of the date hereof between
the Sponsor and the Senior Lenders;
"Subscription Agreement" the agreement entitled "Subscription Agreement"
dated December 5, 2000 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;
Amended and Restated FMO Loan Agreement
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(ii) the IFC Loan Agreement;
(iii) the Financial Support Agreement;
(iv) the Security Documents;
(v) the Subscription Agreement;
(vi) the Put Option Agreement;
(vii) the Sponsor Guarantee Agreement;
(viii) the IFC Guarantee;
(ix) the FMO Guarantee;
(x) the Concession Termination Compensation
Assignment Notice; and
(xi) the Notes;
"Urgent Repairs
Agreement" the Set Price and Fixed Term Construction
Agreement dated February 18, 2000 between the
Project Company and ITISA; and
"World Bank" the International Bank for Reconstruction and
Development, an international organization
established by Articles of Agreement among its
member countries.
Section 1.02. Financial Definitions. (a) Wherever used in this Agreement,
unless the context otherwise requires, the following terms have the meanings
opposite them:
"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);
"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 funds
temporarily
Amended and Restated FMO Loan Agreement
- 15 -
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
(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
Amended and Restated FMO Loan Agreement
- 16 -
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;
"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;
"Free Cash Flow" in respect of any financial year of any Person
and as reflected in such Person's financial
statements for such financial year:
(i) the sum of such Person's (A) net income
plus (B) Non-Cash Items (excluding
accrued but unpaid interest on the FMO
Loan and the IFC Loan);
minus
(ii) the sum of (A) capital expenditures made
by such Person plus (B) repayments on the
principal component of Debt made by such
Person;
"Indebtedness for
Borrowed Money" all obligations of the Person to repay money
including, without limitation, with respect to:
Amended and Restated FMO Loan Agreement
- 17 -
(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 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;
Amended and Restated FMO Loan Agreement
- 18 -
"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
Amended and Restated FMO Loan Agreement
- 19 -
(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 FMO under
Section 6.04 (a) (Reporting Requirements). Except as otherwise is 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 FMO's option, those calculations
may instead be made from the Consolidated audited financial statements for the
relevant Financial Year.
(c) For purposes of 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;
Amended and Restated FMO Loan Agreement
- 20 -
(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, Yucatan, Veracruz and Tabasco
(for the Mayab line), including repayment of all amounts outstanding under a
certain loan from Fleet National Bank, N.A., 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:
$ 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
==== ====
---------------------
(1) For purposes of this Section, an exchange rate of 9.4 Mexican Pesos = $1
has been assumed.
Amended and Restated FMO Loan Agreement
-21-
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:
$ 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 FMO LOAN
Section 3.01. The FMO Loan. Subject to the provisions of this Agreement,
FMO agrees to lend to the Borrower, and the Borrower agrees to borrow from FMO,
the FMO Loan in the aggregate amount of seven million US Dollars ($7,000,000).
Section 3.02. [reserved].
Amended and Restated FMO Loan Agreement
-22-
Section 3.03. Interest. Subject to the provisions of Section 3.05 (Default
Rate Interest), the Borrower shall pay interest on the FMO Loan in accordance
with this Section 3.03:
(a) During each Interest Period, the FMO Loan (or, with respect to the
first Interest Period for the FMO Disbursement, the amount of the Disbursement)
shall bear interest at the applicable FMO Interest Rate for that Interest
Period.
(b) Interest on the FMO 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 FMO
Disbursement is made less than fifteen (15) days before an Interest Payment
Date, interest on the FMO Disbursement shall be payable commencing on the second
Interest Payment Date following the date of the FMO Disbursement.
(c) Subject to Section 3.04 (Change in Interest Period), the FMO
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, FMO cannot determine LIBOR by reference
to the Telerate Service or any other service that displays BBA rates, FMO 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 FMO 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 FMO;
provided that if less than four quotations are received, FMO
may rely on the quotations so received if not less than two
(2); or
(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
Amended and Restated FMO Loan Agreement
-23-
rates advised to FMO 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 FMO.
(e) On each Interest Determination Date for any Interest Period, FMO
shall determine the FMO Interest Rate applicable to that Interest Period and
promptly notify the Borrower of that rate.
(f) The determination by FMO, from time to time, of the FMO Interest
Rate shall be final and conclusive and bind the Borrower (unless the Borrower
shows to FMO'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 FMO 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) FMO 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 FMO Interest Rate 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, FMO 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 FMO 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 and unpaid at the default
rate which shall be the sum of two per cent (2%) per annum and the FMO Interest
Rate in effect from time to time;
Amended and Restated FMO Loan Agreement
-24-
(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 FMO Loan on the
following dates and in the following amounts:
Date Payment Due Principal Amount Due
------------------ --------------------
1. March 15, 2005 $ 322,700
2. September 15, 2005 $ 322,700
3. March 15, 2006 $ 322,700
4. September 15, 2006 $ 322,700
5. March 15, 2007 $ 322,700
6. September 15, 2007 $ 322,700
7. March 15, 2008 $ 322,700
8. September 15, 2008 $ 322,700
9. March 15, 2009 $ 322,700
10. September 15, 2009 $ 322,700
11. March 15, 2010 $ 322,700
12. September 15, 2010 $ 322,700
13. March 15, 2011 $ 322,700
14. September 15, 2011 $ 322,790.91
--------------
TOTAL $ 4,517,890.91
Section 3.07. Prepayment. Subject to Section 3.14 (Taxes) and Section 6.05
(c):
(a) the Borrower may prepay on any Interest Payment Date all or any part
of the FMO Loan, on not less than thirty (30) days' prior notice to FMO, but
only if:
(i) the Borrower simultaneously pays all accrued interest and
Increased Costs (if any) on the amount of the FMO Loan to be
prepaid, together with 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
IFC Loan;
(iii) [reserved]; and
Amended and Restated FMO Loan Agreement
-25-
(iv) if requested by FMO, the Borrower delivers to FMO, prior to
the date of prepayment, evidence satisfactory to FMO that all
necessary Authorizations with respect to the prepayment of the
IFC Loan and FMO Loan have been obtained.
(b) Not later than the first Interest Payment Date following the
Borrower's delivery of annual financial statements (as required under Section
6.04 (Reporting Requirements)) after the end of each Financial Year of the
Borrower ending on or after December 31, 2005, the Borrower shall make mandatory
prepayments of the FMO Loan and the IFC Loan in an aggregate amount equal to the
Borrower's Consolidated Free Cash Flow for such Financial Year minus one million
Dollars ($1,000,000). Such aggregate amount shall be allocated between the FMO
Loan and the IFC Loan in proportion to the respective principal amounts
outstanding of each Loan. At least ten (10) Business Days prior to any
prepayment required under this Section 3.07(b), the Borrower shall deliver a
notice to FMO, certified by its Chief Financial Officer, specifying the amount
of the prepayment required under this Section 3.07(b). Other than Section
3.07(a)(ii), the terms of this Section 3.07 shall apply to any prepayment made
under this Section 3.07(b).
(c) Amounts of principal prepaid under this Section shall be applied by
FMO to the outstanding installments of principal of the FMO Loan in inverse
order of maturity.
(d) Upon delivery of a notice in accordance with Section 3.07 (a) or
(b), the Borrower shall make the prepayment in accordance with the terms of that
notice.
(e) Any principal amount of the FMO Loan prepaid under this Agreement
may not be re-borrowed.
Section 3.08. Fees. (a) The Borrower shall pay to FMO a commitment fee at
the rate of one-half of one per cent ( 1/2%) per annum on that part of the FMO
Loan which from time to time has not been disbursed or cancelled. The commitment
fee shall:
(i) begin to accrue on the date of this Agreement;
(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 15
March 2001.
(b) The Borrower shall also pay to FMO:
(i) a front-end fee on the FMO Loan of seventy thousand Dollars
($70,000), 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 FMO
Disbursement;
Amended and Restated FMO Loan Agreement
-26-
(ii) an appraisal fee of fifty thousand Dollars ($50,000), this fee
has been received already by FMO;
(iii) an annual monitoring fee of ten thousand Dollars ($10,000) to
be paid each year on March 15, the first such payment to be
due on March 15, 2001; and
(iv) such other fees as agreed to by FMO and the Borrower in
connection with the amendment and restatement of the Original
FMO Loan Agreement and the other transactions contemplated
hereby, to be paid prior to the effectiveness of this
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 FMO under
this Agreement in Dollars, in same day funds, to the account of FMO, account
number 456.060.893.941, at ABN AMRO Bank N.V., New York Branch, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, S.W.I.F.T. code: ABNAUS33, ABA number 000000000,
reference number MX A0.002, or at such other account in New York as FMO from
time to time designates. Payments must be received in FMO's designated account
no later than 1:00 p.m. New York time.
(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) FMO actually receives funds in Dollars in the account
pursuant to Section 3.09 (a).
(c) The Borrower shall indemnify FMO 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 pursuant to Section 3.09 (a). The Borrower shall, as a separate
obligation, pay such additional amount as is necessary to enable FMO to receive,
after conversion to Dollars at a market rate and transfer to that account, the
full amount due to FMO under this Agreement in Dollars and in the account
pursuant to Section 3.09 (a).
(d) Notwithstanding the provisions of Section 3.09 (a) and Section 3.09
(b), FMO may require the Borrower to pay (or reimburse FMO) 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 FMO receives
less than the full amount then due and payable to it under this Agreement, FMO
may allocate and apply the amount received in any way or manner and for such
purpose or purposes under this Agreement as FMO in its sole discretion
determines, notwithstanding any instruction that the Borrower may give to the
contrary.
Amended and Restated FMO Loan Agreement
-27-
Section 3.11. Increased Costs. On each Interest Payment Date, the Borrower
shall pay, in addition to interest, the amount which FMO from time to time
notifies to the Borrower in an Increased Costs Certificate as being the
aggregate Increased Costs of FMO accrued and unpaid prior to that Interest
Payment Date.
Section 3.12. Unwinding Costs. (a) If FMO 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 FMO Loan on a date other
than an Interest Payment Date;
then the Borrower shall immediately pay to FMO the amount which FMO from time to
time notifies to the Borrower as being the amount of those costs, expenses and
losses incurred.
(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 FMO Loan.
Section 3.13. [reserved].
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 FMO, 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 to such amount as may be necessary so that FMO 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 FMO so requests, the Borrower shall
deliver to FMO official tax receipts evidencing payment (or certified copies of
them) within thirty (30) days of the date of that request.
Amended and Restated FMO Loan Agreement
-28-
Section 3.15. Expenses. (a) The Borrower shall pay or, as the case may be,
reimburse FMO 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 FMO or as FMO may direct:
(i) the fees and expenses of FMO's counsel in Mexico and New York
incurred in connection with:
(A) the preparation of the investment by FMO 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 FMO under
this Agreement and any other Transaction Document;
(D) the administration by FMO 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;
(E) the registration (where appropriate) and the delivery of
the evidences of indebtedness relating to the FMO Loan
and its disbursement;
(F) the occurrence of any Event of Default or Potential
Event of Default; and
(G) for the avoidance of doubt, the preparation of the
amendment and restatement of the Original FMO Loan
Agreement contemplated by this Agreement, the
preparation of the other Transaction Documents listed in
Section 5.01(a) (Conditions of Effectiveness) and the
giving of any legal opinions in connection herewith and
therewith; and
(ii) the costs and expenses incurred by FMO 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
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Default, including legal and other professional
consultants' fees as well as reasonable traveling and
hotel expenses.
Section 3.16. Notes. (a) The Borrower shall issue non-negotiable Notes to
FMO in the form of Schedule 11 and otherwise in form and substance satisfactory
to FMO in connection with and at the time of the FMO Disbursement.
(b) The issuance of Notes pursuant to this Agreement shall not entail a
novation with respect to this Agreement or the FMO 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 FMO 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 FMO 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 FMO so requests, the Borrower
shall furnish FMO evidence satisfactory to FMO 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 the following are true and correct
in all material respects:
(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 the
compliance with
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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 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, all
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 have been
obtained and are in full force and effect;
(e) neither the Borrower's Charter nor the Project Company's Charter has
been amended since December 7, 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) [reserved];
(h) since September 30, 2004 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;
(i) the Consolidated financial statements of the Borrower for the period
ending on September 30, 2004:
(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);
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(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 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;
(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;
(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) 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
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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) neither the Borrower nor the Project Company has entered into any
agreement to amend or otherwise modify the terms of the Concession Agreement;
and
(s) 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. FMO 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 FMO to enter into this Agreement and that FMO
enters into this Agreement on the basis of, and in full reliance on, each of
such representations and warranties.
ARTICLE V
CONDITIONS OF EFFECTIVENESS
Section 5.01. Conditions of Effectiveness. The amendment and
restatement of the Original FMO Loan Agreement set forth in this Agreement shall
become effective only upon the fulfillment of the following conditions (and
prior to the fulfillment thereof, the Original FMO Loan Agreement as in
existence prior to the amendment and restatement contemplated hereby shall
remain in full force and effect):
(a) the following agreements, each in form and substance satisfactory to
FMO, 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 or any one of such documents having
become unconditional
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and fully effective, if that is a condition of any of such documents, it being
the intention of the parties that all of such documents shall become effective
simultaneously), and FMO has received a copy of each of those agreements to
which it is not a party:
(i) the Financial Support Agreement;
(ii) the IFC Loan Agreement; and
(iii) the Sponsor Guarantee Agreement;
(b) FMO has received from the Borrower a prepayment of the FMO Loan in
the amount of one hundred forty-six thousand one hundred nine and 9/100th
Dollars ($146,109.09);
(c) FMO has received a legal opinion from the Borrower's counsel in
Mexico, in form and substance satisfactory to FMO, with regard to Mexican tax
law as it relates to (i) the Merger and (ii) the railroad diesel tax credit;
(d) FMO has received a legal opinion from its special counsel in New
York, New York, in form and substance satisfactory to FMO, with regard to the
New York law aspects of this Agreement and the other Transaction Documents
referred to in subsection (a) above;
(e) FMO has received a legal opinion from the Borrower's counsel in
Mexico, in form and substance satisfactory to FMO, with regard to the due
organization, power and authority of the Borrower and the Project Company to
enter into this Agreement and the other Transaction Documents referred to in
subsection (a) above to which it is a party and covering such other matters
relating to the transactions contemplated hereby and thereby as FMO may
reasonably request;
(f) FMO has received a legal opinion from the Sponsor's general counsel,
in form and substance satisfactory to FMO, with regard to the Sponsor's due
organization, power and authority to enter into the Financial Support Agreement
and the Sponsor Guarantee Agreement and covering such other matters relating to
the transactions contemplated hereby and thereby as FMO may reasonably request;
(g) FMO has received the reimbursement of all invoiced fees and expenses
of FMO's counsel incurred in connection with the execution of this Agreement and
the transactions contemplated hereby (as provided in Section
3.15(b)(i)(G)(Expenses)), or confirmation that those fees and expenses have been
paid directly to that counsel;
(h) each Existing Deficiency Loan Agreement has been amended to provide
for repayment of the relevant deficiency loan on the later of (i) the repayment
in full of both the FMO Loan and the IFC Loan and (ii) (in equal installments)
on March 15, 2013 and September 15, 2013;
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(i) the Borrower and the Project Company have certified to FMO, in the
form of Schedule 2, that the representations and warranties made in Article IV
hereof are true and correct in all material respects as of the date upon which
all of the foregoing conditions have been satisfied; and
(j) FMO has received any fees under Section 3.08(b)(iv) (Fees) required
to be paid in connection with the execution of this Agreement and the
transactions contemplated hereby.
Section 5.02. FMO Notice; Amendment and Restatement; Conditions for FMO's
Benefit. (a) Upon the fulfillment of the conditions listed in Section 5.01, FMO
shall send notice to the Borrower, the Project Company, the Sponsor and IFC, in
the form of Schedule 3, stating that this Agreement has become effective.
(b) The Borrower, the Project Company and FMO have agreed to remove the
conditions to disbursement that had been included in Article V of the Original
FMO Loan Agreement prior to the amendment and restatement contemplated by this
Agreement. For the avoidance of doubt, such removal is without prejudice to any
claims that FMO may have under Section 7.02(f).
(c) The conditions in Section 5.01 are for the benefit of FMO and may be
waived only by FMO at its sole discretion.
ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Affirmative Covenants. Unless FMO 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;
(b) cause the financing specified in the Financial Plan to be applied
exclusively to the Project;
(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
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accountants acceptable to FMO 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 FMO at any time regarding the Borrower's Consolidated
accounts and operations, and provide to FMO 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 FMO;
(f) upon FMO'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 FMO, 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 FMO 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
(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 FMO;
(h) no later than thirty (30) days after the date of this Agreement but
in any event prior to the date of the FMO Disbursement:
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(i) provide FMO with all information necessary to enable FMO 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 FMO for public access;
and FMO 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 FMO 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 FMO,
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;
(k) [reserved];
(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 herbicide management
plan approved by FMO;
(n) procure and purchase crossties only from suppliers approved by the
GoM so long as such approval is required;
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(o) [reserved];
(p) implement the Project Company's internal guidelines relating to
illegal immigrants;
(q) [reserved];
(r) [reserved];
(s) [reserved];
(t) [reserved];
(u) [reserved];
(v) [reserved]; and
(w) maintain on at least a yearly rolling basis financial instruments
structured to match the debt payment amounts (principal and interest) related to
the Loans for each subsequent year, in order to protect the Borrower against the
effect from depreciation of the Mexican Peso. This may be done either through
the maintenance of forwards, the maintenance of currency options, or the
maintenance of other commonly used derivatives for managing currency risk. In
each year the strike price of the financial instrument as used shall be such
that the sum of the premium paid and the maximum loss resulting from a
devaluation of the Mexican Peso shall not exceed $750,000. For purposes of this
covenant, maximum loss will be calculated using the forward exchange rates as of
the close of business on the day in which the currency xxxxxx are established.
If the Borrower enters into forward contracts, the portion of exposure covered
by the forward contract shall be considered to have zero loss for purposes of
the loss limit established by the hedging requirement. If the Borrower, in its
reasonable judgment and with the consent of FMO (such consent not to be
unreasonably withheld) believes that the available derivatives and derivatives
pricing have been significantly negatively impacted by conditions external to
the Borrower, then the Borrower may choose to delay the maintenance of
derivatives until the negative impact of the external conditions is no longer
evident.
Section 6.02. Negative Covenants Relating to the Borrower. Unless FMO
otherwise agrees, (I) before the Merger Effective Date, the Borrower shall not
take any of the actions set forth in subsections (a) through (w) below and (II)
after the Merger Effective Date, the Borrower shall not take any of the actions
set forth in subsections (s), (t) and (u) below (it being understood that
Section 6.03 (Negative Covenants Relating to the Project Company) shall also
apply to the Borrower after the Merger Effective Date, as set forth therein,
with references to the "Project Company" therein being deemed to be references
to the "Borrower"):
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(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 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 FMO 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;
(ii) prior to the taking of any such action, the Borrower has made
prepayments under Section 3.07 (Prepayment) in a sufficient
amount, and such prepayments have been applied against the
remaining installments of the FMO Loan in inverse order of
maturity (as required under Section 3.07(c)), such that the
final installment of the FMO Loan under Section 3.06
(Repayment) is due no later than September 15, 2008; and
(iii) 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 subsection 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 subsection
if, after giving effect to it, the Borrower could not
certify the matters referred to in Section 6.02(a)(i)
and (iii);
(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:
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(i) the Loans;
(ii) any subordinated Debt of the Borrower required or permitted
pursuant to this Agreement or the Financial Support Agreement;
and
(iii) the credit line under the Credit Line Agreement but only until
the Merger occurs;
(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 this
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 the Senior Lenders as a loss
payee/beneficiary under the Borrower's insurance policies; and
(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;
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(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 Transaction Documents or Project Documents or any
agreements evidencing any loans provided under the Financial Support Agreement
(other than the amendment of the Existing Deficiency Loan Agreements described
in Section 5.01(h) (Conditions of Effectiveness));
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(t) prepay (whether voluntarily or involuntarily) or repurchase any
Long-term Debt of the Borrower (other than the Loans) 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 FMO at least thirty (30) days' advance
notice of its intention to make the proposed prepayment and,
if FMO so requires, the Borrower contemporaneously prepays a
proportion of the FMO 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 or
advance notice period for that prepayment;
(u) use the proceeds of any FMO 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 FMO 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 FMO and its representatives in
determining whether such a violation has occurred, and shall respond promptly
and in reasonable detail to any notice from FMO, and shall furnish documentary
support for such response upon FMO'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
FMO otherwise agrees, (I) before the Merger Effective Date, the Borrower shall
cause the Project Company not to, and the Project Company shall not take any of
the actions set forth in subsections (a) through (w) below and (II) after the
Merger Effective Date, the Borrower shall not take any of the actions set forth
in subsections (a) through (w) below, other than the actions set forth in
subsection (s) below (it being understood that the Borrower shall continue to be
subject instead to the comparable restrictions set forth in Section 6.02(s)
(Negative Covenants Relating to the Borrower)):
(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
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over them, unless 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 FMO 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) prior to the taking of any such action, prepayments have been
made under Section 3.07 (Prepayment) in a sufficient amount,
and such prepayments have been applied against the remaining
installments of the FMO Loan in inverse order of maturity (as
required under Section 3.07(c)), such that the final
installment of the FMO Loan under Section 3.06 (Repayment) is
due no later than September 15, 2008; and
(iii) 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 subsection 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 subsection
if, after giving effect to it, the Project Company could
not certify the matters referred to in Section
6.03(a)(i) and (iii);
(b) subject to the provisions of the Financial Support Agreement and
Section 6.03(w) below, 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;
(c) incur, assume or permit to exist any Debt of the Project Company
except:
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(i) any subordinated Debt of the Project Company 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;
(iii) Short-term Debt of the Project Company incurred in the
ordinary course of business which, when aggregated with
contingent liabilities arising from the 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;
(iv) loans to the Borrower pursuant to the Credit Line Agreement;
and
(v) 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 this
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 the Senior Lenders as a loss
payee/beneficiary under the Project Company's insurance
policies; and
(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:
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(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
Project Company may be ordered to pay on final
determination of any such proceedings;
(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;
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(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) 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;
(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 FMO 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 FMO and its
representatives in determining whether such a violation has occurred, and shall
respond promptly and in reasonable detail to any notice from FMO, and shall
furnish documentary support for such response upon FMO's request; or
(w) beginning in the Financial Year during which the Sponsor's
obligation to make Investment Overrun Loans (as such term is defined in the
Financial Support Agreement) terminates in accordance with Section 2.04(b) of
the Financial Support Agreement, if such obligation terminates, incur
expenditures for Capital Investments (as such term is defined in the Financial
Support Agreement) unless those expenditures do not exceed an aggregate amount
in any Financial Year equivalent to sixty percent (60%) of the Project Company's
EBITDA for such Financial Year.
Section 6.04. Reporting Requirements. Unless FMO 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 FMO:
(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) [reserved];
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(iii) 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 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 FMO:
(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 FMO;
(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;
(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;
and
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(vi) starting with the Financial Year ending on December 31, 2005,
a report by the Borrower setting forth the calculations for
such Financial Year of: (A) the railroad diesel taxes paid;
(B) the amount of the railroad diesel tax credit actually
credited to other tax obligations; and (C) the amount of the
railroad diesel tax credit that cannot be credited to other
tax obligations because of an insufficient amount of
applicable taxes against which it could be credited, together
with the Auditors' verification of such calculations;
(c) deliver to FMO, 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 FMO an annual monitoring report in the form of
Schedule 10, confirming compliance with the applicable national or local
requirements, 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 FMO;
(e) as soon as possible but no later than three (3) days after its
occurrence, notify FMO 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 FMO
informed of the on-going implementation of those measures;
(f) give notice to FMO, 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 FMO 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
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(ii) the minutes of all such shareholders' meetings;
(g) promptly notify FMO 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 FMO 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 FMO 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;
(j) promptly notify FMO (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 FMO, in a timely manner, the
insurance certificates and other information referred to in Section 6.05 (d)
(Insurance);
(l) promptly provide to FMO such other information as FMO may from time
to time reasonably request about the Borrower and the Project Company, their
respective assets and the Project; and
(m) as soon as available but in any event within one hundred and twenty
(120) days after June 30 and December 31 in each Financial Year, deliver to FMO:
(i) two (2) copies of the Sponsor's complete financial statements
for such period prepared on a Consolidated Basis in accordance
with the Accounting Principles, which (A) in the case of the
financial statements delivered in respect of June 30, shall be
unaudited and cover the six-month period ending on June 30 and
(B) in the case of the financial statements delivered in
respect of December 31,
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shall be audited and cover the Financial Year ending on such
date; and
(ii) a statement of the outstanding amount (measured as of the
relevant June 30 or December 31) of all liabilities of any
Person (other than itself) which the Sponsor has guaranteed or
otherwise directly or indirectly obligated itself to pay;
provided, that such financial or other statements need not be delivered if and
to the extent that corresponding financial statements have been filed with the
United States Securities and Exchange Commission and are publicly available.
Section 6.05. Insurance.
(a) Insurance Requirements and Borrower's and the Project Company's
Undertakings. Unless FMO otherwise agrees, the Borrower shall cause the Project
Company to, and the Project Company (and, after the Merger Effective Date, the
Borrower) 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 (or, after the Merger Effective Date, the
Borrower) 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 its, or, where FMO is loss
payee or an additional named insured, FMO'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;
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 FMO shall thereupon or at any time while the
same is
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continuing be entitled (but have no such obligation) on its own
behalf to procure that insurance at the expense of the Project
Company (and, after the Merger Effective Date, at the expense of the
Borrower) and to take all such steps to minimize hazard as FMO 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 FMO, 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, after the Merger Effective Date, the
Borrower) or the insurer for any reason (including failure to
renew the policy or to pay the premium or any other amount)
unless FMO and, in the case of expiration or if cancellation
or suspension is initiated by the insurer, the Project Company
(and, after the Merger Effective Date, the Borrower) receive
at least forty-five (45) days' notice (or such lesser period
as FMO 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) FMO 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 (and, after
the Merger Effective Date, the Borrower's) assets which are
the subject of the Security and for business interruption or
delayed start-up, FMO 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, FMO may remit the proceeds of any insurance
paid to it to the Project Company (or, after the Merger
Effective Date, the Borrower) to repair or replace the
relevant damaged assets or may apply those proceeds towards
any amount payable to FMO under this Agreement, including to
repay or prepay all or any part of the FMO Loan in accordance
with Section 3.07
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(Prepayment); provided that there shall be no minimum amount
or notice period for any such prepayment.
(ii) The Project Company (and, after the Merger Effective Date, the
Borrower) shall use any insurance proceeds it receives
(whether from FMO or directly from the insurers) for loss of
or damage to any asset solely to replace or repair that asset.
(d) Reporting Requirements. Unless FMO otherwise agrees, the Borrower
shall cause the Project Company to, and the Project Company (and, after the
Merger Effective Date, the Borrower) shall provide to FMO the following:
(i) as soon as possible after its occurrence, notice of any event
which entitles the Project Company (and, after the Merger
Effective Date, the Borrower) 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 (and, after the Merger Effective
Date, the Borrower), 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 FMO);
(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 FMO as a loss payee or additional named insured, as
applicable, remain in effect;
(iv) such evidence of premium payment as FMO may from time to time
request; and
(v) any other information or documents on each insurance policy as
FMO request from time to time.
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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), FMO may, by notice to the Borrower, require the
Borrower to repay the FMO Loan or such part of the FMO Loan as is specified in
that notice. On receipt of any such notice, the Borrower shall immediately repay
the FMO Loan (or that part of the FMO Loan specified in that notice) and pay all
interest accrued on it 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 FMO 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, or
interest on, the IFC Loan and such failure continues for a period of five (5)
days;
(c) the Borrower fails to pay when due any part of the principal of, or
interest on, any loan from FMO to the Borrower other than the FMO Loan and any
such failure continues for the relevant period of grace provided for in the
agreement providing for that loan;
(d) the Borrower or the Project Company 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 FMO (other than
for the payment of the principal of, or interest on, the FMO Loan or any other
loan from FMO to the Borrower), and any such failure continues for a period of
thirty (30) days after the earlier of the date on which (i) FMO notifies the
Borrower or the project Company of that failure, or (ii) the Borrower or the
Project Company becomes aware of such failure;
(e) any party to a Transaction Document (other than FMO 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) FMO
notifies the Borrower or the Project Company 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
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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 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 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
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(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;
(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 FMO Loan or any other loan from FMO 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 FMO
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
FMO 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 FMO;
(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 FMO, and
that event, if capable of being remedied, is not remedied to
the satisfaction of FMO within thirty (30) days of FMO's
notice to the Borrower; or
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(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 FMO's notice to the Borrower requiring that
withdrawal; provided that no such notice shall 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 FMO, 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 FMO 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 FMO 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
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Section 8.01. Saving of Rights. (a) The rights and remedies of FMO 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 FMO 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 may be done by or on behalf of FMO 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 FMO in connection with any condition
of effectiveness of this Agreement shall impair any right, power or remedy of
FMO with respect to any other condition of effectiveness, or be construed to be
a waiver thereof.
(c) No course of dealing and no failure or delay by FMO 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 FMO with respect to
any default, or any acquiescence by it therein, affect or impair any right,
power or remedy of FMO with respect to any other default.
(d) The Borrower, the Project Company and FMO have agreed to remove
certain provisions that had been included in the Original FMO Loan Agreement.
For the avoidance of doubt, such removal is without prejudice to any rights or
remedies arising from such provisions (i) which may have accrued to FMO prior to
the effectiveness of this Agreement and (ii) which may accrue to FMO on or after
the effectiveness of this Agreement with respect to the period prior thereto.
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: Chief Financial Officer
Amended and Restated FMO Loan Agreement
-57-
Alternative address for communications by facsimile:
x00-0-000-0000
For the Project Company:
Compania de Ferrocarriles Chiapas-Mayab, S.A. de C.V.
Calle 43 429-C
Col. Industrial
Merida, Yucatan
97000
Mexico
Attention: Chief Financial Officer
Alternative address for communications by facsimile:
x00-0-000-0000
For FMO:
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.
Xxxx van Xxxxxxxxxx 00
0000 XX Xxx Xxxxx
Xxx Xxxxxxxxxxx
Facsimile: x00-00-000-0000
Attention: Latin America and Caribbean Department
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 FMO 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. FMO 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. FMO may deem any such English translation to
be the governing version between the Borrower and FMO.
Amended and Restated FMO Loan Agreement
-58-
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.
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.
(c) Each of the Borrower and the Project Company hereby irrevocably
designates, appoints and empowers CT Corporation System, 000 Xxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Xxxxxx Xxxxxx 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 Project Company agrees that the failure of
such agent to give notice to the Borrower or the Project Company 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 FMO 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 FMO in respect of this Agreement and shall keep FMO
advised of the identity and location of such agents.
Amended and Restated FMO Loan Agreement
-59-
(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 FMO without any requirement that FMO submits, 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 FMO of any
immunity to which FMO may be entitled 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 FMO.
(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 irrevocably 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 FMO in any forum in which FMO 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 FMO 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.
Section 8.06. Disclosure of Information. (a) FMO 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:
Amended and Restated FMO Loan Agreement
-60-
(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 FMO Loan, and
(iii) any other Person as FMO may deem appropriate in connection
with any proposed sale, transfer, assignment or other
disposition of FMO'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 FMO, a disclosure of information
by FMO 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 FMO. 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:
(a) the Borrower and the Project Company shall provide to FMO no less
than six (6) months' prior notice in writing of the Merger;
(b) [reserved];
Amended and Restated FMO Loan Agreement
-61-
(c) the Borrower and the Project Company shall provide to FMO such other
documents as FMO 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 FMO 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) FMO shall receive, at the expense of the Project Company, a legal
opinion, satisfactory to FMO, from FMO'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
Borrower shall assume all the obligations of the Project
Company 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 FMO may reasonably request.
Section 9.02. Acknowledgment of the Borrower. Without in any way limiting
the effect of the Merger under law, the Borrower acknowledges and agrees that,
on the Merger Effective Date, each and every obligation and liability of the
Project Company under this Agreement shall become the obligation and liability
of the Borrower, without any further action by any party hereto or any other
Person.
-signature page follows-
Amended and Restated FMO Loan Agreement
-62-
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.
By: _________________________
Name: _______________________
Title: ______________________
COMPANIA DE FERROCARRILES CHIAPAS-MAYAB, S.A. DE C.V.
By: _________________________
Name: _______________________
Title: ______________________
NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ
VOOR ONTWIKKELINGSLANDEN N.V.
By: _________________________ By: ____________________________
Name: _______________________ Name: __________________________
Title: ______________________ Title: _________________________
Amended and Restated FMO Loan Agreement
-63-
ANNEX A
Page 1 of 1
[reserved]
Amended and Restated FMO Loan Agreement
-64-
ANNEX B
Page 1 of 1
MINIMUM INSURANCE REQUIREMENTS
(See Section 6.05 (a) of the Loan Agreement)
MINIMUM INSURANCE REQUIREMENTS
The company shall have the following insurances in place at all times as
applicable:
1. CONSTRUCTION/REHABILITATION WORK
a) Construction All Risks, based on full contract value and including:
i) Riot and Strike
ii) Debris Removal
iii) Extra Expenses
iv) Maintenance
v) Third Party Liability for not less than $75 million
b) Marine all Risks (including war) in respect of all critical imports.
2. OPERATIONAL PHASE
a) Fire and named perils or All Risks Insurance based on replacement value
of all fixed assets
b) All Risks Insurance for full replacement value, or for 125% of PML
as calculated by an experienced Insurance surveyor, on all movable
assets including rolling stocks.
c) Business Interruption or Extra Expenses with an indemnity period of
not less than 12 months
d) Third Party Liability, including Passenger and Goods Liability for
not less than $ 75 million
3. AT ALL TIMES
Such insurances as required by local legislation or by contract
Directors' and Officers' Liability insurance
Amended and Restated FMO Loan Agreement
-65-
ANNEX C
Page 1 of 1
[reserved]
Amended and Restated FMO Loan Agreement
-66-
SCHEDULE 1
Page 1 of 2
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY
(See Section 1.01 of the Loan Agreement)
[Borrower's Letterhead]
[Date]
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.
Xxxx van Xxxxxxxxxx 00
0000 XX Xxx Xxxxx
Xxx Xxxxxxxxxxx
Attention: Latin America and Caribbean Department
Ladies and Gentlemen:
Certificate of Incumbency and Authority
With reference to the Loan Agreement among GW Servicios, S.A. de C.V. (the
"Borrower"), Compania de Ferrocarriles Chiapas-Mayab, S.A. de C.V. (the "Project
Company") and Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden
N.V. ("FMO"), dated December 5, 2000, as amended and restated as of March 15,
2005 (the "Loan Agreement"), I, the undersigned [Chairman/Director] of [GW
Servicios, S.A. de C.V., (the "Borrower")][Compania de Ferrocarriles
Chiapas-Mayab, S.A. de C.V. (the "Project Company")], duly authorized to do so,
hereby certify that the following are the names, offices and true specimen
signatures of the persons [each] [any two] of whom are, and will continue to be,
authorized:
(a) to sign the certifications provided for in Section 5.01(i) of the Loan
Agreement; and
Amended and Restated FMO Loan Agreement
-67-
SCHEDULE 1
Page 2 of 2
(b) to take any other action required or permitted to be taken, done,
signed or executed under the Loan Agreement or any other agreement to which FMO
and the Borrower may be parties.
*Name Office Specimen Signature
____________________________ _______________________ _____________________
____________________________ _______________________ _____________________
____________________________ _______________________ _____________________
You may assume that any such person continues to be so authorized until
you receive authorized written notice from the Borrower that they, or any of
them, is no longer so authorized.
Yours truly,
[GW SERVICIOS, S.A. DE C.V.]
[COMPANIA DE FERROCARRILES
CHIAPAS-MAYAB, S.A. DE C.V.]
By ________________________
[Chairman/Director]
---------------------
* Designations may be changed by the Borrower or the Project Company at any
time by issuing a new Certificate of Incumbency and Authority authorized
by the Board of Directors of the Borrower where applicable.
Amended and Restated FMO Loan Agreement
-68-
SCHEDULE 2
Page 1 of 2
FORM OF CERTIFICATION OF REPRESENTATIONS AND WARRANTIES
(See Section 5.01(i) of the Loan Agreement)
[Borrower's Letterhead]
March ___, 2005
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.
Xxxx van Xxxxxxxxxx 00
0000 XX Xxx Xxxxx
Xxx Xxxxxxxxxxx
Attention: Latin America and Caribbean Department
Ladies and Gentlemen:
1. Please refer to the Loan Agreement (the "Loan Agreement") dated December 5,
2000, as amended and restated as of March 15, 2005, among GW Servicios, S.A. de
C.V. (the "Borrower"), Compania de Ferrocarriles Chiapas-Mayab, S.A. de C.V.
(the "Project Company") and Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden N.V. ("FMO"). Terms defined in the Loan Agreement have their
defined meanings whenever used in this request.
2. For the purpose of Section 5.01(i) of the Loan Agreement, the Borrower and
the Project Company certify that the representations and warranties made in
Article IV of the Loan Agreement are true and correct in all material respects
on the date of this certificate with the same effect as if such representations
and warranties had been made on and as of the date hereof.
Amended and Restated FMO Loan Agreement
-69-
SCHEDULE 2
Page 2 of 2
The above certification is effective as of the date of this Certificate.
If this certification is no longer valid as of or prior to the date of receipt
of the notice described in Section 5.02(a) from FMO, the Borrower and the
Project Company undertake to immediately notify the Senior Lenders.
Yours truly,
GW SERVICIOS, S.A. DE C.V.
By ____________________________
Authorized Representative
COMPANIA DE FERROCARRILES
CHIAPAS MAYAB, S.A. DE C.V.
By ____________________________
Authorized Representative
Amended and Restated FMO Loan Agreement
-70-
SCHEDULE 3
Page 1 of 1
FORM OF NOTICE OF EFFECTIVENESS
(See Section 5.02(a) of the Loan Agreement)
[FMO Letterhead]
March ___, 2005
GW Servicios, S.A. de C.V.
Calle 43 429-C
Col. Industrial
Merida, Yucatan
97000
Mexico
Attention: Chief Financial Officer
Dear _____________:
Effectiveness of Amendment and Restatement
of Loan Agreement and Other Documents
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.
("FMO") hereby notifies G.W. Servicios, S.A. de C.V. (the "Borrower") that the
conditions of effectiveness described in Section 5.01 of the Amended and
Restated Loan Agreement dated as of March 15, 2005, among the Borrower, Compania
de Ferrocarriles Chiapas-Mayab, S.A. de C.V. and FMO (the "Loan Agreement") have
been met. Consequently, the Loan Agreement and the other documents described in
Section 5.01(a) of the Loan Agreement shall be effective as of the date thereof
(subject, in the case of any document to which International Finance Corporation
("IFC") is a party, to receipt by the Borrower and FMO of a comparable notice of
effectiveness from IFC).
Yours truly,
NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR
ONTWIKKELINGSLANDEN N.V.
By _____________________
cc: IFC
Amended and Restated FMO Loan Agreement
-71-
SCHEDULE 4
Page 1 of 2
FORM OF SERVICE OF PROCESS LETTER
[Letterhead of Agent for Service of Process]
(See Section 8.05 (c) Loan Agreement)
[Date]
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.
Xxxx van Xxxxxxxxxx 00
0000 XX Xxx Xxxxx
Xxx Xxxxxxxxxxx
Attention: Latin America and Caribbean Department
Dear Sirs:
Reference is made to Section 8.05 of the Loan Agreement dated December 5,
2000, as amended and restated as of March 15, 2005 (the "Loan Agreement"), among
GW Servicios, S.A. de C.V. (the "Borrower"), Compania de Ferrocarriles
Chiapas-Mayab, S.A. de C.V. (the "Project Company") and Nederlandse
Financierings-Maatschappij voor Ontwikkelingslanden N.V. ("FMO"). Unless
otherwise defined herein, capitalized terms used herein shall have the meaning
specified in the Loan Agreement.
Pursuant to Section 8.05 (c) of the Loan Agreement, each of the Borrower
and the Project Company has irrevocably designated and appointed the
undersigned, CT Corporation System, with offices currently located at 000 Xxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its authorized agent to receive
for and on its behalf service of process in any legal action or proceeding with
respect to the Loan Agreement in the courts of the United States of America for
the Southern District of New York.
The undersigned hereby informs you that it has irrevocably accepted that
appointment as process agent as set forth in Section 8.05(c) of the Loan
Agreement from _______(2) until ___________ (3) and agrees with you that the
undersigned (i) shall inform FMO promptly in writing of any change of its
address in New York, (ii) shall perform its
----------------------
(2) Insert date of effectiveness of appointment.
(3) Insert date which is [three] months after the last repayment of the Loan.
Amended and Restated FMO Loan Agreement
-72-
SCHEDULE 4
Page 2 of 2
obligations as such process agent in accordance with the relevant provisions of
Section 8.05(c) of the Loan Agreement, and (iii) shall forward promptly to the
Borrower and the Project Company any legal process received by the undersigned
in its capacity as process agent.
As process agent, the undersigned and its successor or successors agree to
discharge the above-mentioned obligations and will not refuse fulfillment of
such obligations as provided under Section 8.05 (c) of the Loan Agreement.
Very truly yours,
CT Corporation System
By ____________________
Title:
cc: [Borrower]
[Project Company]
Amended and Restated FMO Loan Agreement
-73-
SCHEDULE 5
Page 1 of 1
[reserved]
Amended and Restated FMO Loan Agreement
-74-
SCHEDULE 6
Page 1 of 2
FORM OF LETTER TO BORROWER'S AUDITORS
(See Section 6.01(e) of
the Loan Agreement)
[Borrower's Letterhead]
[Date]
[NAME OF AUDITORS]
[ADDRESS]
Ladies and Gentlemen:
We hereby authorize and request you to give to Nederlandse
Financierings-Maatschappij voor Ontwikkelingslanden N.V. ("FMO"), Xxxx van
Xxxxxxxxxx 00 0000 XX, Xxx Xxxxx, Xxx Xxxxxxxxxxx, all such information as FMO
may reasonably request with regard to the financial statements of the
undersigned company, both audited and unaudited. We have agreed to supply that
information and those statements under the terms of a Loan Agreement between the
undersigned company, Compania de Ferrocarriles Chiapas-Mayab, S.A. de C.V., and
FMO dated December 5, 2000, as amended and restated as of March 15, 2005 (the
"Loan Agreement"). For your information we enclose a copy of the Loan Agreement.
We authorize and request you to send two copies of the audited accounts of
the undersigned company to FMO to enable us to satisfy our obligation to FMO
under Section 6.04(b)(i) of the Loan Agreement. When submitting the same to FMO,
please also send, at the same time, a copy of your full report on such accounts
in a form reasonably acceptable to FMO.
Please note that under Section 6.04(b)(ii) and (iii) and Section 6.04(c)
of the Loan Agreement, we are obliged to provide FMO with:
(a) a copy of the annual and any other management letter or other
communication from you to the undersigned company or its management commenting
on, among other things, the adequacy of the undersigned company's financial
control procedures and accounting and management information system; and
Amended and Restated FMO Loan Agreement
-75-
SCHEDULE 6
Page 2 of 2
(b) a report by you certifying that, based upon its audited financial
statements, the undersigned company and the Project Company (as defined in the
Loan Agreement) were in compliance with the financial covenants contained in
Section 6.02 and Section 6.03, respectively, of the Loan Agreement as at the end
of the relevant Financial Year or, as the case may be, detailing any
non-compliance.
Please also submit each such communication and report to FMO with the
audited accounts.
For our records, please ensure that you send to us a copy of every letter
which you receive from FMO, immediately upon receipt and a copy of each reply
made by you immediately upon the issue of that reply.
Yours truly,
GW SERVICIOS, S.A. DE C.V.
By _____________________________
Authorized Representative
Enclosure
cc:
Latin America and Caribbean Department
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.
Xxxx van Xxxxxxxxxx 00
0000 XX Xxx Xxxxx
Xxx Xxxxxxxxxxx
Amended and Restated FMO Loan Agreement
-76-
SCHEDULE 7
Page 1 of 2
FORM OF BORROWER'S CERTIFICATION ON DISTRIBUTION OF DIVIDENDS
(See Section 6.02(a) of the Loan Agreement)
[Borrower's Letterhead]
[Date]
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.
Xxxx van Xxxxxxxxxx 00
0000 XX Xxx Xxxxx
Xxx Xxxxxxxxxxx
Attention: Latin America and Caribbean Department
Dear Sirs:
1. Please refer to the Loan Agreement (the "Loan Agreement") dated December 5,
2000, as amended and restated as of March 15, 2005 among GW Servicios, S.A. de
C.V. (the "Borrower"), Compania de Ferrocarriles Chiapas-Mayab, S.A. de C.V.
(the "Project Company") and Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden N.V. ("FMO"). Terms defined in the Loan Agreement have their
defined meanings whenever used in this request.
2. This is to inform you that the Borrower plans a distribution of dividends to
its shareholders in the aggregate amount of ______________ (______), such
distribution to commence on or about _________, ___. Pursuant to Section 6.02(a)
of the Loan Agreement, the Borrower hereby certifies that, as at the date
hereof:
(a) the proposed distribution will be entirely out of retained earnings
and such retained earnings do not include any amount resulting from
the revaluation of any of the Borrower's assets;
(b) no Event of Default or Potential Event of Default has occurred and
is continuing;
(c) prior to the date hereof, the Borrower has made prepayments under
Section 3.07 of the Loan Agreement in a sufficient amount, and such
prepayments have been applied against the remaining installments of
the FMO Loan in inverse order of maturity (as required under Section
3.07(c) of the Loan Agreement), such that the final installment of
the FMO Loan under Section 3.06 of the Loan Agreement is due no
later than September 15, 2008; and
Amended and Restated FMO Loan Agreement
-77-
SCHEDULE 7
Page 2 of 2
(d) after giving effect to the proposed distribution:
(i) the Borrower's Current Ratio would be at least 1.0;
(ii) the Borrower's Long-term Debt to Tangible Net Worth Ratio
would be less than 2.0; and
(iii) the Borrower's Debt Service Coverage Ratio would not be less
than 1.4.
3. The Borrower undertakes not give effect to the proposed distribution or any
part thereof if, at the time of so doing or after giving effect to it, the
Borrower could not certify the matters referred to in section 2 of this
certification.
Yours truly,
GW SERVICIOS, S.A. DE C.V.
By _____________________________
Authorized Representative
Amended and Restated FMO Loan Agreement
-78-
SCHEDULE 8
Page 1 of 1
[reserved]
Amended and Restated FMO Loan Agreement
-79-
SCHEDULE 9
Page 1 of 2
INFORMATION TO BE INCLUDED IN ANNUAL REVIEW OF OPERATIONS
(See Section 6.04(b) (iv) of the Loan Agreement)
[(1) Sponsors and Shareholdings. Information on significant changes in
share ownership of Borrower, the reasons for such changes, and the
identity of major new shareholders.
(2) Country Conditions and Government Policy. Report on any material
changes in local conditions, including government policy changes,
that directly affect the Borrower (e.g. changes in government
economic strategy, taxation, foreign exchange availability, price
controls, and other areas of regulations.)
(3) Management and Technology. Information on significant changes in (i)
the Borrower's senior management or organizational structure, and
(ii) technology used by the Borrower, including technical assistance
arrangements.
(4) Corporate Strategy. Description of any changes to the Borrower's
corporate or operational strategy, including changes in products,
degree of integration, and business emphasis.
(5) Markets. Brief analysis of changes in Borrower's market conditions
(both domestic and export), with emphasis on changes in market share
and degree of competition.
Amended and Restated FMO Loan Agreement
-80-
SCHEDULE 9
Page 2 of 2
(6) Operating Performance. Discussion of major factors affecting the
year's financial results (sales by value and volume, operating and
financial costs, profit margins, capacity utilization, capital
expenditure, etc.).
(7) Financial Condition. Key financial ratios for previous year,
compared with ratios covenanted in the Loan Agreement.]
Amended and Restated FMO Loan Agreement
-81-
SCHEDULE 10
Page 1 of 4
FORM OF ANNUAL MONITORING REPORT
(See Section 6.04 (d) of the Loan Agreement)
GENERAL INSTRUCTIONS: provide information in sufficient detail for evaluation of
environmental performance in relation to:
- National and local laws and regulations in Mexico;
- World Bank/IFC environmental and social policies and guidelines:
- IFC Environmental, Health and Safety Guidelines for Railroad
Systems, November 20, 1995;
- IFC Policy on Environmental Assessment (OP 4.01), October
1998;
- IFC Policy on Pest Management (OP 4.09), November 1998;
- World Bank Policy on Involuntary Resettlement (OD 4.30), June
1990;
- World Bank Policy Note on Management of Cultural Property (OPN
11.03), September 1986; and
- IFC Policy Statement on Forced Labor and Harmful Child Labor,
March 1998.
- Loan Agreement, (DATE);
- Environmental Review Summary, February 8, 2000;
- Herbicide Management Plan (Criterio Para El Uso De Herbicidas En La:
Compania De Ferrocarriles Chiapas-Mayab, S. A. de C. V.), May 25, 2000;
- Environmental Corrective Action Plan, Compania De Ferrocarriles
Chiapas-Mayab, August 4, 2000;
Provide information in summary form and enclose environmental reports if
applicable. For any areas that do not meet agreed-upon performance levels,
describe actions and timetable for bringing the project into compliance.
Information reported previously need only be referenced.
Return the completed report to FMO by the date specified in the Loan Agreement
(April 1).
Please note that the term "environment" includes workplace and community health
and safety as well as social and cultural issues.
Amended and Restated FMO Loan Agreement
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SCHEDULE 10
Page 2 of 4
PROJECT INFORMATION
Contact Person:
Telephone:
Fax:
E-mail:
Report period: from _______________ to ______________
SUMMARY OF CURRENT OPERATIONS - Describe company operations, level of business
activity, etc.
STATUS OF MODERNIZATION/EXPANSION OR NEW PROJECT IMPLEMENTATION - Provide a
description, status, and completion timetable for all environment-related items
in any modernization/ expansions or new projects.
CHANGES TO COMPANY - Describe significant changes in the company, such as
changes in capacity, product lines, business activities, customers served, or
acquisitions that may affect environmental performance.
CHANGES IN OPERATIONS - Describe any changes in day-to day operations, such as
use of different cleaning solvents or thinners, any changes in chemicals used or
storage methods, changes in solid/hazardous waste disposal, use of difference
service providers.
COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS - Is the company currently in
compliance with national and local laws and regulations and applicable World
Bank guidelines? (If no, please explain.)
ENVIRONMENTAL ISSUES - Highlight any new or emerging environmental issues, such
as pending regulations. Describe any changes affecting the environmental impacts
of the company's operations.
NEW INITIATIVES AIMED AT IMPROVING ENVIRONMENTAL PERFORMANCE - Describe any
planned initiatives. Examples are implementation of a formal environmental
management system (EMS), recycling initiatives, waste minimization and energy
efficiency measures.
CORRECTIVE ACTION PLAN
Provide a status report on each item in the CAP, including any difficulties
encountered or revised completion dates.
Amended and Restated FMO Loan Agreement
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SCHEDULE 10
Page 3 of 4
HERBICIDE MANAGEMENT PLAN
Provide an update on the company's vegetation control system, including
procedures used (e.g., mechanical, chemical), herbicides used, changes in the
program.
WOOD CROSSTIE SOURCING
Provide a summary of crosstie purchases, including supplier, number of ties,
wood source.
Provide confirmation that FCCM has purchased crossties only from suppliers
approved by the Mexican government.
RELOCATION OF BUSINESSES OR PEOPLE
Provide a summary of right-of-way management activities, including encroachment
incidents. If new encroachments have occurred, explain how they were addressed
in compliance with Government of Mexico requirements. (Except for new
encroachments, any relocation of businesses or people residing on the
right-of-way must be conducted with the prior notification of FMO and in
accordance with World Bank policy 4.30 on Involuntary Resettlement.)
UNAUTHORIZED USE OF COMPANY FACILITIES
Provide an update of FCCM's programs to curb use of company facilities by
illegal immigrants.
COMPLIANCE TESTING
AIR EMISSIONS
Provide summary of any testing by local authorities.
Provide summary of any testing by the company, including ambient air quality and
fugitive dust monitoring (include maps, figures, etc. as necessary for FMO's
review).
LIQUID EFFLUENTS (INCLUDING SANITARY AND STORM EFFLUENTS)
Describe day-to-day operations of effluent handling and treatment facilities,
difficulties encountered, remedies, etc.
Provide summary of any testing by local authorities.
Provide summary of any testing by the company, including process effluent, storm
water, and sewage (include maps, figures, etc. as necessary for FMO's review).
NOISE
Provide summary of any testing by local authorities.
Amended and Restated FMO Loan Agreement
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SCHEDULE 10
Page 4 of 4
Provide summary of any testing by the company, including noise levels
experienced by outside receptors and occupational noise (include maps, figures,
etc. as necessary for FMO's review).
ACCIDENTS, FIRES, AND OTHER EMERGENCIES
Provide a summary of any accidents, derailments, fires, or explosions, or
significant accidental releases to the environment. Include response measures
taken and any improvements made to equipment or procedures as a result.
WORKER HEALTH AND OCCUPATIONAL SAFETY
Provide a summary of work-related accidents, discussion of trends, response
measures taken, and other actions taken to reduce accidents.
Provide a summary of training activities, including any new programs that have
been implemented.
Describe status of implementation of equipment safeguarding and provision of
personal protective equipment (PPE). Evaluate usage rate of PPE and identify any
needed improvements.
COMMUNITY RELATIONS
Describe any outreach or cooperative programs with the community.
Report any significant accidental releases, failure to meet permit limits,
lawsuits, community complaints, adverse media coverage, etc.
Amended and Restated FMO Loan Agreement
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SCHEDULE 11
Page 1 of 1
FORM OF NOTES
(See Section 3.16 of the Loan Agreement)
[reserved]
Amended and Restated FMO Loan Agreement
