UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
|_| REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _________________
Commission file number 1-14946
CEMEX, S.A. de C.V.
- -------------------------------------------------------------------------------
(Exact name of the registrant as specified in its charter)
CEMEX MEXICO, S.A. de C.V.
EMPRESAS TOLTECA DE MEXICO, S.A. de C.V.
- -------------------------------------------------------------------------------
(Exact names of co-registrants and guarantors as specified
in their respective charters)
CEMEX CORPORATION
- -------------------------------------------------------------------------------
(Translation of registrant's name into English)
CEMEX MEXICO CORPORATION
EMPRESAS TOLTECA DE MEXICO CORPORATION
- -------------------------------------------------------------------------------
(Translation of co-registrants' and guarantors' names into English)
United Mexican States
- -------------------------------------------------------------------------------
(Jurisdiction of incorporation or organization)
Av. Ricardo Margain Zozaya #325, Colonia del Valle Campestre,
Garza Garcia, Nuevo Leon, Mexico 66265
- -------------------------------------------------------------------------------
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Name of each exchange on
Title of each class which registered
American Depositary Shares ("ADSs"),
each ADS representing five
Ordinary Participation Certificates
(Certificados de Participacion
Ordinarios) ("CPOs"), each CPO
representing two Series A shares
and one Series B share New York Stock Exchange
- ----------------------------------------- -------------------------------
American Depositary Warrants ("ADWs"),
each ADW representing five
Appreciation Warrants (Titulos Opcionales) New York Stock Exchange
- ----------------------------------------- --------------------------------
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Not applicable
- -------------------------------------------------------------------------------
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.
9.625% Notes due 2009 guaranteed by CEMEX Mexico, S.A. de C.V. and Empresas
Tolteca de Mexico, S.A. de C.V.
- -------------------------------------------------------------------------------
(Title of Class)
Guarantees of the 9.625% Notes due 2009 by CEMEX Mexico, S.A. de C.V.
and Empresas Tolteca de Mexico, S.A. de C.V.
- -------------------------------------------------------------------------------
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by
the annual report.
1,711,320,746 CPOs
3,547,614,432 Series A shares (including Series A shares underlying CPOs)
1,773,807,216 Series B shares (including Series B shares underlying CPOs)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes |X| No____
Indicate by check mark which financial statement item the registrant
has elected to follow.
Item 17 ___ Item 18 |X|
TABLE OF CONTENTS
Page
----
PART I
Item 1 - Identity of Directors, Senior Management and Advisors..............2
Item 2 - Offer Statistics and Expected Timetable............................2
Item 3 - Key Information....................................................2
Risk Factors...............................................................2
Cautionary Statement Regarding Forward Looking Statements..................7
Mexican Peso Exchange Rates................................................8
Selected Consolidated Financial Information................................9
Item 4 - Information on the Company........................................13
Business Overview.........................................................13
Our Production Process....................................................16
User Base.................................................................16
Our Business Strategy.....................................................16
Our Corporate Structure...................................................19
North America.............................................................20
Europe, Asia and Africa...................................................27
South America, Central America and the Caribbean..........................36
Our Trading Operations....................................................46
Regulatory Matters and Legal Proceedings..................................47
Item 5 - Operating and Financial Review and Prospects......................54
Critical Accounting Policies..............................................55
Results of Operations.....................................................57
Liquidity and Capital Resources...........................................73
Research and Development, Patents and Licenses, etc.......................78
Trend Information.........................................................79
Summary of Material Contractual Obligations and Commercial Commitments....79
Off-Balance Sheet Arrangements............................................81
Qualitative and Quantitative Market Disclosure............................81
Investments, Acquisitions and Divestitures................................86
The Euro Conversion.......................................................87
U.S. GAAP Reconciliation..................................................88
Newly Issued Accounting Pronouncements Under U.S. GAAP....................88
Item 6 - Directors, Senior Management and Employees........................90
Senior Management and Directors...........................................90
Board Practices...........................................................95
Compensation of Our Directors and Members of Our Senior Management........95
Employees.................................................................99
Share Ownership..........................................................100
Item 7 - Major Shareholders and Related Party Transactions................101
Major Shareholders.......................................................101
Related Party Transactions...............................................102
i
Item 8 - Financial Information............................................103
Consolidated Financial Statements and Other Financial Information........103
Legal Proceedings........................................................103
CEMEX Dividends..........................................................103
Significant Changes......................................................104
Item 9 - Offer and Listing................................................105
Market Price Information.................................................105
Item 10 - Additional Information..........................................106
Articles of Association and By-laws......................................106
Material Contracts.......................................................113
Exchange Controls........................................................114
Taxation.................................................................114
Documents on Display.....................................................119
Item 11 - Quantitative and Qualitative Disclosures About Market Risk......120
Item 12 - Description of Securities Other than Equity Securities..........120
PART II
Item 13 - Defaults, Dividend Arrearages and Delinquencies.................121
Item 14 - Material Modifications to the Rights of Security Holders
and Use of Proceeds.............................................121
Item 15 - Controls and Procedures.........................................121
Item 16A - Audit Committee Financial Expert...............................121
Item 16B - Code of Ethics.................................................121
Item 16C - Principal Accountant Fees and Services.........................122
PART III
Item 17 - Financial Statements............................................123
Item 18 - Financial Statements............................................123
Item 19 - Exhibits........................................................123
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES ..................F-1
SCHEDULE I - Parent Company Only Financial Statements......................S-2
SCHEDULE II - Valuation and Qualifying Accounts............................S-11
ii
INTRODUCTION
CEMEX, S.A. de C.V. is incorporated as a stock corporation with
variable capital organized under the laws of the United Mexican States. As
used in this annual report and except as the context otherwise may require,
"CEMEX" refers to CEMEX, S.A. de C.V., its consolidated subsidiaries and,
except for accounting purposes, its non-consolidated affiliates. For
accounting purposes, "CEMEX" refers solely to CEMEX, S.A. de C.V. and its
consolidated subsidiaries. See note 1 to our consolidated financial statements
included elsewhere in this annual report.
PRESENTATION OF FINANCIAL INFORMATION
Our consolidated financial statements included elsewhere in this
annual report have been prepared in accordance with Generally Accepted
Accounting Principles in Mexico ("Mexican GAAP"), which differ in significant
respects from U.S. GAAP. We are required, pursuant to Mexican GAAP, to present
our financial statements in constant Pesos representing the same purchasing
power for each period presented. Accordingly, all financial data presented
below and, unless otherwise indicated, elsewhere in this annual report are
stated in constant Pesos as of December 31, 2003. See note 23 to our
consolidated financial statements included elsewhere in this annual report for
a description of the principal differences between Mexican GAAP and U.S. GAAP
as they relate to us. Non-Peso amounts included in those statements are first
translated into Dollar amounts, in each case at a commercially available or an
official government exchange rate for the relevant period or date, as
applicable. Those Dollar amounts are then translated into Peso amounts at the
CEMEX accounting rate, described under Item 3 -- "Key Information -- Mexican
Peso Exchange Rates" as of the relevant period or date, as applicable.
References in this annual report to "U.S.$" and "Dollars" are to U.S.
Dollars, references to "(euro)" are to Euros, references to "(Y)" are to
Japanese Yen and, unless otherwise indicated, references to "Ps," "Mexican
Pesos" and "Pesos" are to constant Mexican Pesos as of December 31, 2003. The
Dollar amounts provided in the financial statements included in this annual
report and, unless otherwise indicated, elsewhere in this annual report are
translations of constant Peso amounts, at an exchange rate of Ps11.24 to
U.S.$1.00, the CEMEX accounting rate as of December 31, 2003. However, in the
case of transactions conducted in Dollars, we have presented the Dollar amount
of the transaction and the corresponding Peso amount that is presented in our
consolidated financial statements. These translations have been prepared
solely for the convenience of the reader and should not be construed as
representations that the Peso amounts actually represent those Dollar amounts
or could be converted into Dollars at the rate indicated. See Item 3 -- "Key
Information -- Selected Consolidated Financial Information."
The noon buying rate for Pesos on December 31, 2003 was Ps11.242 to
U.S.$1.00 and on April 30, 2004 was Ps11.402 to U.S.$1.00.
CO-REGISTRANTS
Our co-registrants are wholly-owned subsidiaries that have provided a
corporate guarantee guaranteeing payment of our 9.625% Notes due 2009. These
subsidiaries, which we refer to as our guarantors, are CEMEX Mexico, S.A. de
C.V., or CEMEX Mexico, and Empresas Tolteca de Mexico, S.A. de C.V., or
Empresas Tolteca de Mexico. The guarantors, together with their subsidiaries,
account for substantially all of our revenues and operating income. See Item 4
- -- "Information on the Company -- North America -- Our Mexican Operations."
Pursuant to Rule 12h-5 under the Exchange Act, no separate financial
statements or other disclosures concerning the guarantors other than the
narrative disclosures and financial information set forth in note 23(x) to our
consolidated financial statements have been presented in this annual report.
PART I
Item 1 - Identity of Directors, Senior Management and Advisors
-----------------------------------------------------
Not applicable.
Item 2 - Offer Statistics and Expected Timetable
---------------------------------------
Not applicable.
Item 3 - Key Information
---------------
Risk Factors
Many factors could have an effect on our financial condition, cash
flows and results of operations. We are subject to various risks resulting
from changing economic, environmental, political, industry, business and
financial conditions. The principal factors are described below.
Our ability to pay dividends and repay debt depends on our subsidiaries'
ability to transfer income and dividends to us.
We are a holding company with no significant assets other than the
stock of our wholly-owned and non-wholly-owned subsidiaries and our holdings
of cash and marketable securities. Our ability to pay dividends and repay debt
depends on the continued transfer to us of dividends and other income from our
wholly-owned and non-wholly-owned subsidiaries. The ability of our
subsidiaries to pay dividends and make other transfers to us is limited by
various regulatory, contractual and legal constraints that affect our
subsidiaries.
We have incurred and will continue to incur debt, which debt could have an
adverse effect on the price of our CPOs, ADSs, appreciation warrants and ADWs,
result in us incurring increased interest costs and limit our ability to
distribute dividends, finance acquisitions and expansions and maintain
flexibility in managing our business activities.
We have incurred and will continue to incur significant amounts of
debt, which could have an adverse effect on the price of our Ordinary
Participation Certificates, or CPOs, and American Depositary Shares, or ADSs.
Since the values of our appreciation warrants and American Depositary
Warrants, or ADWs, are linked to the price of our CPOs and ADSs, their prices
could also be adversely affected by our debt levels. Our indebtedness may have
important consequences, including increased interest costs if we are unable to
refinance existing indebtedness on satisfactory terms. In addition, the debt
instruments governing a substantial portion of our indebtedness contain
various covenants that require us to maintain financial ratios, restrict asset
sales and restrict our ability to use the proceeds from a sale of assets.
Consequently, our ability to distribute dividends, finance acquisitions and
expansions and maintain flexibility in managing our business activities could
be limited. As of December 31, 2003, we had outstanding debt equal to Ps65.9
billion (U.S.$5.9 billion), not including obligations under preferred stock
transactions and under equity derivative transactions in our own stock and in
stock of our subsidiaries.
We have to service our Dollar and Yen denominated debt with revenues generated
in Pesos or other currencies, as we do not generate sufficient revenue in
Dollars and Yen from our operations to service all our Dollar and Yen
denominated debt. This could adversely affect our ability to service our debt
in the event of a devaluation or depreciation in the value of the Peso, or any
of the other currencies of the countries in which we operate.
A substantial portion of our outstanding debt is denominated in
Dollars and Yen. This debt, however, must be serviced by funds generated from
sales by our subsidiaries. Currently, we do not generate sufficient revenue in
Dollars and Yen from our operations to service all our Dollar and Yen
denominated debt. Consequently, we have to use revenues generated in Pesos or
other currencies to service our Dollar and Yen denominated debt. See Item 5
"Operating and Financial Review and Prospects--Qualitative and Quantitative
Market Disclosure -- Interest Rate
2
Risk, Foreign Currency Risk and Equity Risk -- Foreign Currency Risk." A
devaluation or depreciation in the value of the Peso, or any of the other
currencies of the countries in which we operate, compared to the Dollar or the
Yen could adversely affect our ability to service our debt. During 2003,
Mexico and Spain, our main non-U.S. Dollar denominated operations, generated
approximately half of our sales (approximately 34% and 16%, respectively),
before eliminations resulting from consolidation. In 2003, approximately 22%
of our sales were generated in the United States, with the remaining 28% of
our sales being generated in several countries, with a number of currencies
also having material depreciations against the Dollar and the Yen. During
2003, the Peso depreciated 8.3% against the Dollar and depreciated 16.5%
against the Yen, while the Euro appreciated 16.5% against the Dollar and
appreciated 8.3% against the Yen.
We may not be able to continue our growth if our acquisition strategy is not
successful.
A key element of our growth strategy is to integrate our recently
acquired operations with existing operations. Our ability to realize the
expected benefits from future acquisitions depends, in large part, on our
ability to integrate the new operations with existing operations in a timely
and effective manner. We cannot assure you that these efforts will be
successful with respect to future acquisitions by us. Furthermore, our
strategy depends on our ability to identify and acquire suitable assets at
desirable prices. We cannot assure you that we will be successful in
identifying or purchasing suitable assets in the future. If we fail to make
further acquisitions, we may not be able to continue to grow in the long term
at our historic rate.
We are subject to restrictions due to minority interests in our consolidated
subsidiaries.
We conduct our business through subsidiaries. In some cases,
third-party shareholders hold minority interests in these subsidiaries.
Various disadvantages may result from the participation of minority
shareholders whose interests may not always coincide with ours. Some of these
disadvantages may, among other things, result in our inability to implement
organizational efficiencies and transfer cash and assets from one subsidiary
to another in order to allocate assets most effectively.
Our derivative instruments and other financing arrangements may have adverse
effects on the market for our securities and some of our subsidiaries'
securities, and may adversely affect our ability to achieve operating
efficiencies as a combined group.
In recent years, we have entered into several derivative instruments
and engaged in other financing transactions involving shares of our capital
stock and shares of capital stock of some of our subsidiaries under equity
forward contracts as a source of financing and as a means of meeting our
obligations that may require us to deliver significant numbers of shares of
our own stock.
We have equity forward agreements in our own stock, which estimated
fair value is linked to the market price of our CPOs or ADSs. As of December
31, 2003, the notional amount of our outstanding obligations under our equity
forward contracts was approximately U.S.$1.1 billion, with an estimated fair
value gain of U.S.$16.4 million. In addition to the estimated fair value gain
of our equity forward agreements, a portion of which corresponds to the
contracts designated as hedges of our stock option programs which are
periodically recorded in our income statements, during 2003 we had gains
amounting to approximately U.S.$19.5 million (Ps219.2 million) resulting from
the net settlement in October 2003 of forward contracts entered into to cover
our obligations under our appreciation warrants. See note 16A to our
consolidated financial statements included elsewhere in this annual report.
The increase in the estimated fair value of our outstanding equity forward
contracts is due to an increase in the market price of our listed securities
(ADSs and CPOs). Pursuant to the terms of our equity forward contracts, if the
shares underlying our equity forward agreements suffer a substantial decrease
in market value, we could be required to compensate for the decrease in market
value. If we default in this obligation, the counterparties to our equity
forward agreements have the option of either selling the underlying shares
into the market or requiring us to repurchase the underlying shares.
As stated above, if we default on the terms of our equity forward
agreements, our counterparties may sell the shares underlying these
agreements, which may:
3
o dilute shareholders' interests in our equity securities;
o have an adverse effect on the market for our equity securities;
o have an adverse effect on the market for the equity securities of
some of our subsidiaries;
o reduce the amount of dividends and other distributions that we
receive from our subsidiaries;
o create public minority interests in some of our subsidiaries that may
adversely affect our ability to realize operating efficiencies as a
combined group; and
o have an adverse effect on other financing agreements.
Any of these factors could adversely affect the price of our CPOs and ADSs and
our other securities, such as our appreciation warrants and ADWs, whose prices
are dependent on the prices of our CPOs and ADSs.
We are subject to several anti-dumping rulings that may limit our ability to
export cement to the United States.
Our Mexican operations are subject to anti-dumping rulings by the
U.S. Commerce Department which may limit our ability to export cement to the
United States. Since April 1990, our exports of gray Portland cement and
clinker to the United States from Mexico, which represented 3.8% of total
sales volume of our Mexican operations in 2003, have been subject to U.S.
anti-dumping duties. In addition, importers of gray Portland cement and
clinker from Mexico, including our U.S. operations, have been required to pay
substantial cash deposits to the U.S. Customs Service to secure the eventual
payment of those duties.
We are disputing some tax claims an adverse resolution of which may result in
a significant additional tax expense.
We have received notices from the Mexican tax authorities of tax
claims in respect of the tax years from 1992 through 1996 for an aggregate
amount of approximately Ps4.9 billion, including interest and penalties
through December 31, 2003. An adverse resolution of these claims could
materially reduce our net income. See Item 4 -- "Information on the Company --
Regulatory Matters and Legal Proceedings -- Tax Matters."
Our operations are subject to environmental laws and regulations.
Our operations are subject to laws and regulations relating to the
protection of the environment in the various jurisdictions in which we
operate, such as regulations regarding the release of cement dust into the
air. Stricter laws and regulations, or stricter interpretation of existing
laws or regulations, may impose new liabilities on us or result in the need
for additional investments in pollution control equipment, either of which
could result in a material decline in our profitability in the short term.
We are an international company and are exposed to risks in the countries in
which we have significant operations or interests.
We are dependent, in large part, on the economies of the countries in
which we market our products. The economies of these countries are in
different stages of socioeconomic development. Consequently, like many other
companies with significant international operations, we are exposed to risks
from changes in foreign currency exchange rates, interest rates, inflation,
governmental spending, social instability and other political, economic or
social developments that may materially reduce our net income.
In 2003, the largest percentage of our net sales (34%) and total
assets (22%), at year-end, were in Mexico. If the Mexican economy experiences
a recession or if Mexican inflation and interest rates increase significantly,
our net income from our Mexican operations may decline materially because
construction activity may decrease, which may lead to a decrease in sales of
cement and ready-mix concrete. The Mexican government does not currently
4
restrict the ability of Mexicans or others to convert Pesos to Dollars, or
vice versa. The Mexican Central Bank has consistently made foreign currency
available to Mexican private sector entities to meet their foreign currency
obligations. Nevertheless, if shortages of foreign currency occur, the Mexican
Central Bank may not continue its practice of making foreign currency
available to private sector companies, and we may not be able to purchase the
foreign currency we need to service our foreign currency obligations without
substantial additional cost.
We also have operations in the United States (22% of net sales and
18% of total assets in 2003), Spain (16% of net sales and 14% of total
assets), Venezuela (4% of net sales and 3% of total assets), Central America
and the Caribbean (8% of net sales and 5% of total assets), Colombia (3% of
net sales and 3% of total assets), the Philippines (2% of net sales and 3% of
total assets), other Asian countries, including Thailand (2% of total assets),
and Egypt (2% of net sales and 2% of total assets). As in the case of Mexico,
adverse economic conditions in any of these countries may produce a negative
impact on our net income from our operations in that country.
In recent years, Venezuela has experienced considerable volatility
and depreciation of its currency, high interest rates, political instability
and declining asset values. Additionally, Venezuela has experienced increased
inflation, decreased gross domestic product and labor unrest, including a
general strike. In response to this situation, and in an effort to shore up
the economy and control inflation, Venezuelan authorities have imposed foreign
exchange and price controls on specified products, including cement. Further
economic stagnation in the private sector may result as a consequence of these
market distortions and political unrest. These developments have had and may
continue to have an impact on cement prices and an adverse effect on the
construction sector in Venezuela, reducing demand for cement and ready-mix
concrete, which may continue to affect our sales and net income adversely.
We believe that Asia represents an important market for our future
growth. However, since mid-1997, many countries in Asia in which we have made
significant investments have experienced considerable volatility and
depreciation of their currencies, high interest rates, banking sector crises,
stock market volatility, political instability and declining asset values.
These developments have had and may continue to have an adverse effect on the
Asian construction sector, as a result of reduced demand for cement and
ready-mix concrete, which has adversely affected our sales and net income.
We believe that Egypt also represents an important market for our
future growth. Rising instability in the Middle East, however, has resulted
from, among other things, civil unrest, extremism, the continued deterioration
of Israeli-Palestinian relations and the recent war in Iraq. There can be no
assurance that political turbulence in the Middle East will abate at any time
in the near future or that neighboring countries, including Egypt, will not be
drawn into the conflict. In Egypt, extremists have engaged in a sometimes
violent campaign against the government in recent years. There can be no
assurance that extremists will not escalate their opposition in Egypt or that
the government will continue to be successful in maintaining the prevailing
levels of domestic order and stability. Since 2000, the Egyptian government
devalued the pound four times, and in January 2003, it decided to let the
pound trade as a freely floating currency. Since that time, the Egyptian pound
has depreciated significantly against the Dollar. Future depreciation of the
Egyptian pound relative to other currencies could create additional
inflationary pressures in Egypt by generally increasing the price of imported
products and requiring recessionary government policies to curb aggregate
demand. On the other hand, if the Egyptian pound were to appreciate against
other currencies, this could dampen export-driven growth, thereby weakening
the Egyptian economy and indirectly adversely affecting cement demand. The
potential impact of the floating exchange rate system and of measures by the
Egyptian government aimed at improving Egypt's investment climate is
uncertain. The Egyptian Central Bank continues to monitor the exchange rate
and reserves the right to intervene without notice. We still consider the
depreciation of the Egyptian pound a significant risk to our results in Egypt.
The overall lack of confidence in monetary policy and speculation with respect
to the Egyptian pound during 2003 resulted in a 35% local currency
depreciation against the U.S. Dollar, which in turned created inflationary
pressures, fueled increases in commodity prices and caused an overall negative
affect on GDP growth through reduced private spending. Weakened investor
confidence as a result of currency instability as well as any of the other
foregoing circumstances could have a material adverse effect on the political
and economic stability of Egypt and consequently on our Egyptian operations.
The September 11, 2001 terrorist attacks on the World Trade Center
and the Pentagon temporarily disrupted the trading markets in the United
States and caused declines in major stock markets around the world. Since
those attacks, there have been terrorist attacks in Indonesia and Spain and
ongoing threats of future terrorist
5
attacks in the United States and abroad. In response to these terrorist
attacks and threats, the United States has instituted several anti-terrorism
measures, most notably, the formation of the Office of Homeland Security, a
formal declaration of war against terrorism and the recent war in Iraq.
Although it is not possible at this time to determine the long-term effect of
these terrorist threats and attacks and the consequent response by the United
States, including the war in Iraq, there can be no assurance that there will
not be other attacks or threats in the United States or abroad that will lead
to further economic contraction in the United States or any other of our major
markets. In the short-term, however, terrorist activity against the United
States and the consequent response by the United States has contributed to the
uncertainty of the stability of the United States economy as well as global
capital markets. The current weakness of the United States economy has had,
and may continue to have, an adverse effect on the private construction
sector. In addition, the projected United States budget deficits may have an
adverse effect on the public construction sector. Further economic contraction
in the United States or any of our major markets could affect domestic demand
for cement and have a material adverse effect on our operations.
On October 31, 2001, certain individuals purporting to represent the
people of the Indonesian province of West Sumatra, in which the Padang plant
of PT Semen Gresik (Persero) Tbk., or Gresik, is located, issued a declaration
which stated that, commencing November 1, 2001, PT Semen Padang , or Semen
Padang, the 99.99%-owned subsidiary of Gresik that owns and operates the
Padang plant, was placed under the temporary control of the people of West
Sumatra. The declaration ordered the management of Semen Padang to report to
the local government of the West Sumatra Province, under the supervision of
the People's Representative Assembly of West Sumatra, pending a "spin-off" of
the Semen Padang subsidiary. On November 1, 2001, the People's Representative
Assembly of West Sumatra issued a decision approving this declaration. We
believe the provincial administration lacks legal authority to direct or
interfere with the affairs of Semen Padang. Since the attempt by the West
Sumatra provincial administration in November 2001 to arrogate to itself the
management of Semen Padang, several groups opposed to any further sale of
Indonesia's stock ownership in Gresik have threatened strikes and other
actions that would affect our Indonesian operations. Further attempts to
reassume control at Semen Padang, including shareholder-approved changes in
management, have been met with resistance and lawsuits by various interest
groups. The former management of Semen Padang refused to relinquish control
until September 2003 when the newly-appointed management was finally permitted
to enter the Padang Facility and assume control of Semen Padang. However, we
believe that the newly-appointed management was admitted on condition that it
encourage a spin-off of Semen Padang, and in October 2003, it explicitly
agreed to do so.
Gresik has experienced other ongoing difficulties at Semen Padang,
including the effective loss of operational and financial control of Semen
Padang, the inability to prepare consolidated financial statements that
include Semen Padang's operations and the inability of its independent
auditors to provide an unqualified audit opinion on such financial statements.
After the failure of several attempts to reach a negotiated or mediated
solution to these problems involving Gresik, on December 10, 2003, CEMEX Asia
Holdings, Ltd., or CAH, our subsidiary through which we hold our interest in
Gresik, filed a request for arbitration against the Republic of Indonesia and
the Indonesian government before the International Centre for Settlement of
Investment Disputes, or ICSID, based in Washington D.C. CAH is seeking, among
other things, rescission of the purchase agreement entered into with the
Republic of Indonesia in 1998, plus repayment of all costs and expenses, and
compensatory damages. ICSID has accepted and registered CAH's request for
arbitration and issued a formal notice of registration on January 27, 2004. As
a result of the registration, an Arbitral Tribunal will be established to hear
the dispute. We cannot predict, however, what effect, if any, this action will
have on our investment in Gresik or what the ruling of the Arbitral Tribunal
will be.
You may be unable to enforce judgments against us
You may be unable to enforce judgments against us. We are a stock
corporation with variable capital, or sociedad anonima de capital variable,
organized under the laws of Mexico. Substantially all our directors and
officers and some of the experts named in this prospectus reside in Mexico,
and all or a significant portion of the assets of those persons may be, and
the majority of our assets are, located outside the United States. As a
result, it may not be possible for investors to effect service of process
within the United States upon those persons or to enforce judgments against
them or against us in U.S. courts, including judgments predicated upon the
civil liability provisions of the U.S. federal securities laws. We have been
advised by Lic. Ramiro G. Villarreal, General Counsel of CEMEX, that it may
not be possible to enforce, in original actions in Mexican courts, liabilities
predicated solely
6
on the U.S. federal securities laws and it may not be possible to enforce, in
Mexican courts, judgments of U.S. courts obtained in actions predicated upon
the civil liability provisions of the U.S. federal securities laws.
Cautionary Statement Regarding Forward Looking Statements
Some of the information in this annual report may constitute
forward-looking statements, which are subject to various risks and
uncertainties. Such statements can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"continue," "plan" or other similar words. These statements discuss future
expectations, contain projections of results of operations or of financial
condition or state other "forward-looking" information. When considering such
forward-looking statements, holders of our securities should keep in mind the
factors described in "Risk Factors" and other cautionary statements appearing
in Item 5 -- "Operating and Financial Review and Prospects" and elsewhere in
this annual report. These risk factors and statements describe circumstances
that could cause actual results to differ materially from those contained in
any forward-looking statement.
This annual report also includes statistical data regarding the
production, distribution, marketing and sale of cement, ready-mix concrete and
clinker. We generated some of these data internally, and some were obtained
from independent industry publications and reports that we believe to be
reliable sources. We have not independently verified these data nor sought the
consent of any organizations to refer to their reports in this annual report.
7
Mexican Peso Exchange Rates
Mexico has had no exchange control system in place since the dual
exchange control system was abolished on November 11, 1991. The Mexican Peso
has floated freely in foreign exchange markets since December 1994, when the
Mexican Central Bank (Banco de Mexico) abandoned its prior policy of having an
official devaluation band. Since then, the Peso has been subject to
substantial fluctuations in value. The Peso appreciated against the Dollar by
3.9% in 1999, depreciated against the Dollar by 1.2% in 2000, appreciated
against the Dollar by 4.7% in 2001, depreciated against the Dollar by 13% in
2002 and depreciated against the Dollar by 8.3% in 2003. These percentages are
based on the exchange rate that we use for accounting purposes, or the CEMEX
accounting rate. The CEMEX accounting rate represents the average of three
different exchange rates that are provided to us by Banco Nacional de Mexico,
S.A., Grupo Financiero, or Banamex. For any given date, the CEMEX accounting
rate may differ from the noon buying rate for Pesos in New York City published
by the U.S. Federal Reserve Bank of New York. We cannot predict the value of
the Peso or assure you that the Mexican government will not establish new
exchange controls in the future.
The following table sets forth, for the periods and dates indicated,
the end-of-period, average and high and low points of the CEMEX accounting
rate as well as the noon buying rate for Pesos, expressed in Pesos per
U.S.$1.00.
CEMEX Accounting Rate Noon Buying Rate
---------------------------------------- ------------------------------------------
End of End of
Year ended December 31, Period Average(1) High Low Period Average(1) High Low
------ ---------- ------ ------- ------ ---------- ------ ---------
1999....................... 9.510 9.547 10.607 9.263 9.480 9.562 10.600 9.240
2000....................... 9.620 9.461 10.098 9.189 9.618 9.459 10.087 9.183
2001....................... 9.170 9.332 9.988 8.954 9.156 9.337 9.972 8.946
2002....................... 10.380 9.755 10.350 9.016 10.425 9.664 10.425 9.000
2003....................... 11.240 10.840 11.385 10.101 11.242 10.846 11.406 10.113
Monthly (2003-2004)
October................ 11.000 -- 11.310 11.002 11.055 -- 11.318 10.969
November............... 11.380 -- 11.385 10.951 11.395 -- 11.395 10.979
December............... 11.240 -- 11.370 11.142 11.242 -- 11.406 11.173
January................ 11.080 -- 11.134 10.822 11.012 -- 11.097 10.805
February............... 11.070 -- 11.187 10.910 11.062 -- 11.245 10.910
March.................. 11.120 -- 11.230 10.931 11.183 -- 11.229 10.918
April.................. 11.420 -- 11.429 11.150 11.402 -- 11.432 11.157
(1) The average of the CEMEX accounting rate or the noon buying rate for Pesos,
as applicable, on the last day of each full month during the relevant
period.
On April 30, 2004, the noon buying rate for Pesos was Ps11.402 to
U.S.$1.00 and the CEMEX accounting rate was Ps 11.420 to U.S.$1.00.
The Mexican government does not currently restrict the ability of
Mexicans or others to convert Pesos to Dollars, or vice versa. The Mexican
Central Bank has consistently made foreign currency available to Mexican
private sector entities to meet their foreign currency obligations.
Nevertheless, if renewed shortages of foreign currency occur, the Mexican
Central Bank may not continue its practice of making foreign currency
available to private sector companies and we may not be able to purchase the
foreign currency we need to service our foreign currency obligations without
substantial additional cost.
For a discussion of the financial treatment of our operations
conducted in other currencies, See Item 3 -- "Key Information -- Selected
Consolidated Financial Information."
8
Selected Consolidated Financial Information
The financial data set forth below as of and for each of the five
years ended December 31, 2003 have been derived from our audited consolidated
financial statements. The financial data set forth below as of December 31,
2002 and 2003 and for each of the three years ended December 31, 2003, have
been derived from, and should be read in conjunction with, and are qualified
in their entirety by reference to, the consolidated financial statements and
the notes thereto included elsewhere in this annual report.
Our consolidated financial statements included elsewhere in this
annual report have been prepared in accordance with Mexican GAAP, which
differs in significant respects from U.S. GAAP. We are required, pursuant to
Mexican GAAP, to present our financial statements in constant Pesos
representing the same purchasing power for each period presented. Accordingly,
all financial data presented below and, unless otherwise indicated, elsewhere
in this annual report are stated in constant Pesos as of December 31, 2003.
See note 23 to our consolidated financial statements included elsewhere in
this annual report for a description of the principal differences between
Mexican GAAP and U.S. GAAP as they relate to us.
Non-Peso amounts included in the financial statements are first
translated into Dollar amounts, in each case at a commercially available or an
official government exchange rate for the relevant period or date, as
applicable, and those Dollar amounts are then translated into Peso amounts at
the CEMEX accounting rate, described under Item 3 - "Key Information - Mexican
Peso Exchange Rates," as of the relevant period or date, as applicable.
Under Bulletin B-15 of the Mexican Institute of Public Accountants,
each time we report results for the most recently completed period, the Pesos
previously reported in prior periods should be adjusted to Pesos of constant
purchasing power as of the most recent balance sheet by multiplying the
previously reported Pesos by a weighted average inflation index. This index is
calculated based upon the inflation rates of the countries in which we operate
and the changes in the exchange rates of each of these countries, weighted
according to the proportion our assets in each country represent of our total
assets. The following table reflects the factors that have been used to
restate the originally reported Pesos to Pesos of constant purchasing power as
of December 31, 2003:
Cumulative Weighted
Annual Weighted Average Factor to
Average Factor December 31, 2003
--------------------------------------------
1999............................. 1.0134 1.2100
2000............................. 0.9900 1.1940
2001............................. 1.0916 1.2061
2002............................. 1.1049 1.1049
- --------------------------------------------------------------------------------
The Dollar amounts provided below and, unless otherwise indicated,
elsewhere in this annual report are translations of constant Peso amounts at
an exchange rate of Ps11.24 to U.S.$1.00, the CEMEX accounting rate as of
December 31, 2003. However, in the case of transactions conducted in Dollars,
we have presented the Dollar amount of the transaction and the corresponding
Peso amount that is presented in our consolidated financial statements. These
translations have been prepared solely for the convenience of the reader and
should not be construed as representations that the Peso amounts actually
represent those Dollar amounts or could be converted into Dollars at the rate
indicated. The noon buying rate for Pesos on December 31, 2003 was Ps11.242 to
U.S.$1.00 and on April 30, 2004 was Ps11.402 to U.S.$1.00. From December 31,
2003 through April 30, 2004, the Peso depreciated by approximately 1.4%
against the Dollar, based on the noon buying rate for Pesos.
9
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
Selected Consolidated Financial Information
As of and for the year ended December 31,
--------------------------------------------------------------------------
1999 2000 2001 2002 2003 2003
--------- ---------- --------- ---------- --------- -----------
(in millions of constant Pesos as of December 31, 2003 and
Dollars, except ratios and share and per share amounts)
Income Statement Information:
Net sales............................. Ps 56,117 Ps 64,566 Ps 76,572 Ps 75,042 Ps 80,528 Ps 7,164
Cost of sales(1)...................... (31,266) (36,078) (43,070) (41,925) (46,422) (4,130)
Gross profit.......................... 24,851 28,488 33,502 33,117 34,106 3,034
Operating expenses.................... (8,154) (9,489) (15,216) (18,088) (17,750) (1,579)
Operating income...................... 16,697 18,999 18,286 15,029 16,356 1,455
Comprehensive financing income (cost), (336) (1,997) 2,927 (3,777) (3,006) (267)
net(2)................................
Other income (expense), net........... (3,450) (2,692) (4,611) (4,465) (5,133) (457)
Income before income tax, business
assets tax, employees' statutory
profit sharing and equity in income
of affiliates.................... 12,911 14,310 16,602 6,787 8,217 731
Minority interest(3).................. 655 896 1,696 425 342 30
Majority interest net income.......... 11,304 11,479 13,027 5,967 7,067 629
Earnings per share(4)(5).............. 2.99 2.78 3.05 1.33 1.49 0.13
Dividends per share(4)(6) (7)......... 0.62 0.72 0.77 0.80 0.78 0.07
Number of shares outstanding(4)(8).... 4,098 4,169 4,379 4,562 4,861 4,861
Balance Sheet Information:
Cash and temporary investments........ 3,794 3,539 4,738 4,142 3,275 291
Net working capital investment(9)..... 8,121 10,637 10,315 8,022 6,471 576
Property, machinery and equipment, net 80,453 103,772 98,881 102,797 104,143 9,265
Total assets.......................... 137,903 181,024 179,506 182,750 180,017 16,016
Short-term debt....................... 11,973 34,021 11,365 15,980 14,938 1,329
Long-term debt........................ 38,827 31,118 48,054 50,164 50,994 4,537
Minority interest(3)(10).............. 14,559 27,542 21,848 13,840 5,979 532
Stockholders' equity (excluding minority
interest)(11).................... 60,234 60,318 68,314 65,881 70,072 6,234
Book value per share(4)(8)............ 14.71 14.46 15.60 14.44 14.42 1.28
Other Financial Information:
Operating margin...................... 29.8% 29.4% 23.9% 20.0% 20.3% 20.3%
EBITDA(12)............................ 20,823 23,314 24,948 21,987 23,694 2,108
Ratio of EBITDA to interest expense,
capital securities dividends and
preferred equity dividends....... 3.50 4.00 4.39 5.23 5.27 5.27
Investment in property, machinery and
equipment, net................... 3,089 4,575 5,649 4,863 4,427 394
Depreciation and amortization......... 5,039 5,617 8,767 8,776 9,271 825
Net resources provided by operating
activities(13)................... 17,919 19,990 26,104 19,081 17,604 1,566
Basic earnings per CPO(4) (5)......... 8.98 8.35 9.15 3.98 4.47 0.40
As of and for the year ended December 31,
-----------------------------------------------------------------
2001 2002 2003 2003
------------- ------------- ------------- --------------
(in millions of constant Pesos as of December 31, 2003 and
Dollars, except per share amounts)
U.S. GAAP(14):
Income Statement Information:
Majority net sales.......................... Ps 69,031 Ps 69,882 Ps 79,749 U.S.$7,095
Operating income............................ 11,034 11,295 13,606 1,211
Majority net income......................... 11,044 5,867 8,274 736
Basic earnings per share.................... 2.76 1.39 1.75 0.16
Diluted earnings per share.................. 2.73 1.39 1.71 0.15
Balance Sheet Information:
Total assets................................ 169,643 176,118 184,471 16,412
Total long-term debt........................ 40,884 42,817 44,790 3,985
Shares subject to mandatory redemption (15). -- -- 742 66
Minority interest........................... 8,333 5,396 5,419 482
Other mezzanine items (15).................. 17,659 13,598 -- --
Total majority stockholders' equity......... 51,037 53,697 71,121 6,328
(footnotes on next page)
10
______________
(1) Cost of sales includes depreciation.
(2) Comprehensive financing income (cost), net, includes financial expenses,
financial income, gain (loss) from valuation and liquidation of
financial instruments, including derivatives and marketable securities,
foreign exchange result, net and monetary position result. See Item 5
-"Operating and Financial Review and Prospects."
(3) In connection with an equity swap transaction involving 24.8% of the
shares of our subsidiary, CEMEX Espana, S.A., the balance sheet item
minority interest in 1999 includes the value of these shares as if owned
by a third party. In September 2000, we terminated this transaction and
repurchased the shares of CEMEX Espana. See Item 5 -"Operating and
Financial Review and Prospects -Derivatives and Other Hedging
Instruments."
(4) Our capital stock consists of series A shares and series B shares. Each
of our CPOs represents two Series A shares and one Series B share. As of
December 31, 2003, approximately 96.5% of our outstanding share capital
was represented by CPOs.
(5) Earnings per share are calculated based upon the weighted average number
of shares outstanding during the year, as described in note 20 to the
consolidated financial statements included elsewhere in this annual
report. Basic earnings per CPO is determined by multiplying each year's
basic earnings per share by three (the number of shares underlying each
CPO). Basic earnings per CPO is presented solely for the convenience of
the reader and does not represent a measure under Mexican GAAP.
(6) Dividends declared at each year's annual shareholders' meeting are
reflected as dividends of the preceding year.
(7) In recent years, our board of directors has proposed, and our
shareholders have approved, dividend proposals, whereby our shareholders
have had a choice between stock dividends or cash dividends declared in
respect of the prior year's results, with the stock issuable to
shareholders who elect the stock dividend over the cash dividend being
issued at a 20% discount from then current market prices. The dividends
declared per share or per CPO in these years, expressed in constant
Pesos as of December 31, 2003, were as follows: 2000, Ps1.83 per CPO (or
Ps0.62 per share); 2001, Ps2.17 per CPO (or Ps0.72 per share); 2002,
Ps2.31 per CPO (or Ps0.77 per share); and 2003, Ps2.40 per CPO (or
Ps0.80 per share). As a result of dividend elections made by
shareholders, in 2000, Ps312 million in cash was paid and approximately
59 million additional CPOs were issued in respect of dividends declared
for the 1999 fiscal year; in 2001, Ps93 million in cash was paid and
approximately 70 million additional CPOs were issued in respect of
dividends declared for the 2000 fiscal year; in 2002, Ps257 million in
cash was paid and approximately 64 million additional CPOs were issued
in respect of dividends declared for the 2001 fiscal year; and in 2003,
Ps66.8 million in cash was paid and approximately 99 million additional
CPOs were issued in respect of dividends declared for the 2002 fiscal
year. For purposes of the table, dividends declared at each year's
annual shareholders' meeting for each period are reflected as dividends
for the preceding year. At our 2003 annual shareholders' meeting, which
was held on April 29, 2004, our shareholders approved a dividend of
Ps2.35 per CPO (Ps0.78 per share) for the 2003 fiscal year. Shareholders
will be entitled to receive the dividend in either stock or cash
consistent with our past practices.
(8) Based upon the total number of shares outstanding at the end of each
period, expressed in millions of shares, and includes shares subject to
financial derivative transactions, but does not include shares held by
our subsidiaries.
(9) Net working capital investment equals trade receivables plus inventories
less trade payables.
(10) In connection with a preferred equity transaction relating to the
financing of our acquisition of Southdown, Inc., now named CEMEX, Inc.,
the balance sheet item minority interest at December 31, 2000, 2001 and
2002 includes a notional amount of U.S.$1.5 billion (Ps16.9 billion),
U.S.$900 million (Ps10.1 billion) and U.S.$650 million (Ps7.3 billion),
respectively, of preferred equity issued in November 2000 by our Dutch
subsidiary. In October 2003, in connection with the establishment of a
new U.S.$1.15 billion senior unsecured term loan facility by our Dutch
subsidiary, we redeemed all of the U.S.$650 million of preferred equity
outstanding. The balance sheet item minority interest at December 31,
2003 includes an aggregate liquidation amount of U.S.$66 million (Ps742
million) of 9.66% Putable Capital Securities, which were initially
issued by one of our subsidiaries in May 1998 in an aggregate
liquidation amount of U.S.$250 million. In April 2002, approximately
U.S.$184 million in aggregate liquidation amount of these capital
securities were tendered to, and accepted by, us in a tender offer. In
addition, minority interest net income in 2003 includes preferred
dividends in the amount of approximately U.S.$12.5 million (Ps140
million) and capital securities dividends in the amount of approximately
U.S.$6.4 million (Ps72 million).
(11) In December 1999, we entered into forward contracts with a number of
banks covering 21,000,000 ADSs. In December 2002, we agreed with the
banks to settle those forward contracts for cash and simultaneously
entered into new forward contracts with the same banks on similar terms
to the original forward transactions. Under the new forward contracts
the banks retained the ADSs underlying the original forward contracts,
which had increased to 24,008,313 ADSs as of the settlement date as a
result of stock dividends and which further increased to 25,457,378 ADSs
as a result of stock dividends through June 2003. As a result of this
net settlement, we recognized in December 2002 a decrease of
approximately U.S.$98.3 million (Ps1,104.9 million) in our stockholders'
equity, arising from changes in the valuation of the ADSs. In October
2003, in connection with the non-dilutive equity offering by the banks
of all of the ADS underlying those forward contracts, we agreed with the
banks to settle those forward contracts for cash. As a result of the
final settlement in October 2003, we recognized an increase of
approximately U.S.$18.1 million (Ps203.4 million) in our stockholders'
equity, arising from changes in the valuation of the ADSs from December
2002 through October 2003. During the life of these forward contracts,
the underlying ADSs were considered to have been owned by the banks and
the forward contracts were treated as equity transactions, and,
therefore, changes in the fair value of the ADSs were not recorded until
settlement of the forward contracts.
(12) EBITDA equals operating income before amortization expense and
depreciation. Under Mexican GAAP, amortization of goodwill is not
included in operating income, but instead is recorded in other income
(expense). EBITDA and the ratio of EBITDA to interest expense, capital
securities dividends and preferred equity dividends are presented herein
because we believe that they are widely accepted as financial indicators
of the our ability to internally fund capital expenditures and service
or incur debt and preferred equity. EBITDA and such ratios should not be
considered as indicators of our financial performance, as alternatives
to cash flow, as measures of liquidity or as being comparable to other
similarly titled measures of other companies. EBITDA is reconciled below
to operating income, which we consider to be the most comparable measure
as determined under Mexican GAAP. We are not required to prepare a
statement of cash flows under Mexican GAAP and therefore do not have
such Mexican GAAP cash flow measures to present as comparable to EBITDA.
11
For the year ended December 31,
---------------------------------------------------------------------
1999 2000 2001 2002 2003 2003
---------- ------------ ---------- ---------- ---------- ------------
(in millions of constant Pesos as of December 31, 2003 and Dollars)
Reconciliation of EBITDA to operating
income
EBITDA............................... Ps 20,823 Ps 23,314 Ps 24,948 Ps 21,987 Ps 23,694 US$ 2,108
Less:
Depreciation and amortization
expense......................... 4,126 4,315 6,662 6,958 7,338 653
---------- ------------ ---------- ---------- ---------- ------------
Operating income..................... 16,697 18,999 18,286 15,029 16,356 1,455
========== ============ ========== ========== ========== ============
(13) Net resources provided by operating activities equals majority interest
net income plus items not affecting cash flow plus investment in working
capital excluding effects from acquisitions. In accordance with Mexican
GAAP, operating activities include gain and loss from trading in
marketable securities.
(14) We have restated the information at and for the years ended December 31,
2001 and 2002 under U.S. GAAP using the inflation factor derived from
the national consumer price index, or NCPI, in Mexico. See note 23 to
our consolidated financial statements included elsewhere in this annual
report for a description of the principal differences between Mexican
GAAP and U.S. GAAP as they relate to CEMEX.
(15) For financial reporting under U.S. GAAP, until December 31, 2002,
elements that did not meet either the definition of equity, or the
definition of debt, were presented under a third group, commonly
referred to as "mezzanine items." As of December 31, 2001 and 2002,
these elements, as they relate to us, included our preferred equity
described in note 10 above, our Putable Capital Securities described in
note 10 above and our obligation under the forward contracts described
in note 11 above. As of December 31, 2003, as a result of the adoption
of the SFAS 150 "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity," these elements, which
include our Putable Capital Securities described in note 10 above, are
presented as a separate line item within liabilities. For a more
detailed description of these elements, as they relate to us, see notes
14(E), 14(F) and 23(O) to our consolidated financial statements included
elsewhere in this annual report.
12
Item 4 - Information on the Company
--------------------------
Unless otherwise indicated, references in this annual report to our
sales and assets, including percentages, for a country or region are
calculated before eliminations resulting from consolidation, and thus include
intercompany balances between countries and regions. These intercompany
balances are eliminated when calculated on a consolidated basis.
Business Overview
We are a stock corporation with variable capital, or sociedad anonima
de capital variable, organized under the laws of the United Mexican States
("Mexico") with our principal executive offices in Av. Ricardo Margain Zozaya
#325, Colonia del Valle Campestre, Garza Garcia, Nuevo Leon, Mexico 66265. Our
main phone number is (011-5281) 8888-8888. CEMEX's agent for service,
exclusively for actions brought by the Securities and Exchange Commission
pursuant to the requirements of the United States Federal securities laws, is
CEMEX, Inc., located at 840 Gessner Road, Suite 1400, Houston, Texas 77024.
CEMEX was founded in 1906 and was registered with the Mercantile
Section of the Public Register of Property and Commerce in Monterrey, N.L.,
Mexico, on June 11, 1920 for a period of 99 years. At the 2002 annual
shareholders' meeting, this period was extended to the year 2100. CEMEX's full
legal and commercial name is CEMEX, S.A. de C.V.
CEMEX is the third largest cement company in the world, based on
installed capacity as of December 31, 2003 of approximately 81.5 million tons.
We are one of the world's largest traders of cement and clinker, having traded
over 9 million tons of cement and clinker in 2003. We are a holding company
primarily engaged, through our operating subsidiaries, in the production,
distribution, marketing and sale of cement, ready-mix concrete and clinker. We
are a global cement manufacturer with operations in North, Central and South
America, Europe, the Caribbean, Asia and Africa. As of December 31, 2003, we
had worldwide assets of approximately Ps180.0 billion (U.S.$16.0 billion). On
April 30, 2004, we had an equity market capitalization of approximately Ps108.7
billion (U.S.$9.5 billion).
As of December 31, 2003, our main cement production facilities were
located in Mexico, Spain, Venezuela, Colombia, the United States, Egypt, the
Philippines, Thailand, Costa Rica, the Dominican Republic, Panama, Nicaragua
and Puerto Rico. As of December 31, 2003, our assets, cement plants and
installed capacity, on an unconsolidated basis, were as set forth below.
Installed capacity, which refers to theoretical annual production capacity,
represents gray cement equivalent capacity, which counts each ton of white
cement capacity as approximately two tons of gray cement capacity. It also
includes our proportional interest in the installed capacity of companies in
which we hold a minority interest.
As of December 31, 2003
------------------------------------------------
Installed
Assets Number Capacity
(in billions of (millions
of constant Cement of tons
Pesos) Plants per annum)
------------ -------- -----------
North America
Mexico.............................................. Ps 55.8 15 27.2
United States....................................... 46.8 13 14.2
Europe, Asia and Africa
Spain............................................... 35.2 8 10.8
Asia................................................ 12.2 4 10.9
Egypt............................................... 4.1 1 4.9
South America, Central America and the Caribbean
Venezuela........................................... 8.7 3 4.6
Colombia............................................ 7.6 5 4.8
Central America and the Caribbean................... 12.2 5 4.1
Cement and Clinker Trading Assets and Other Operations... 73.9 -- --
13
In the above table, "Asia" includes our Asian subsidiaries, and, for
purposes of the columns labeled "Assets" and "Installed Capacity," includes
our 25.5% interest, as of December 31, 2003, in Gresik, an Indonesian cement
producer. In addition to the three cement plants owned by our Asian
subsidiaries, Gresik operated four cement plants with an installed capacity of
17.3 million tons, as of December 31, 2003. In the above table, "Central
America and the Caribbean" includes our subsidiaries in Costa Rica, the
Dominican Republic, Panama, Nicaragua, Puerto Rico and other assets in the
Caribbean region. In the above table, "Cement and Clinker Trading Assets and
Other Operations" includes in the column labeled "Assets" our 11.9% interest
in Cementos Bio Bio, a Chilean cement producer having three cement plants with
an installed capacity of approximately 2.25 million tons at December 31, 2003,
and intercompany accounts receivable of CEMEX (the parent company only) in the
amount of Ps35.3 billion, which would be eliminated if these assets were
calculated on a consolidated basis.
During the last decade, we embarked on a major geographic expansion
program to diversify our cash flows and enter markets whose economic cycles
within the cement industry largely operate independently from that of Mexico
and which offer long-term growth potential. We have built an extensive network
of marine and land-based distribution centers and terminals that give us
marketing access around the world. The following have been our most
significant acquisitions over the last five years:
o In August and September 2003, we acquired 100% of the outstanding
shares of Mineral Resource Technologies Inc., and the cement assets of
Dixon-Marquette Cement for a combined purchase price of approximately
U.S.$99.7 million, subject to adjustments. Located in Dixon,
Illinois, the single cement facility has an annual production
capacity of 560,000 metric tons.
o In July and August 2002, through a tender offer and subsequent
merger, we acquired 100% of the outstanding shares of Puerto Rican
Cement Company, Inc., or PRCC. The aggregate value of the transaction
was approximately U.S.$281.0 million, including approximately
U.S.$100.8 million of assumed net debt.
o On July 12, 2002, we purchased 25,429 shares of common stock
(approximately 0.3% of the outstanding share capital) of CEMEX Asia
Holdings, Ltd., or CAH, from a CAH investor for a purchase price of
approximately U.S.$2.3 million, increasing our equity interest in CAH
to 77.7%. CAH is a subsidiary originally created to co-invest with
institutional investors in Asian cement operations. At the same time,
we entered into agreements to purchase an additional 1,483,365 shares
of CAH common stock (approximately 14.6% of the outstanding share
capital) from several other CAH investors in exchange for 28,195,213
CEMEX CPOs (subject to anti-dilution adjustments), which exchange was
originally scheduled to take place in four equal quarterly tranches
commencing on March 31, 2003. The exchange of 84,763 of these CAH
shares took place in four quarterly tranches in 2003 as originally
scheduled. In April 2003, we amended the terms of the July 12, 2002
agreements with respect to the remaining 1,398,602 of the CAH shares.
Instead of purchasing those CAH shares in four equal quarterly
tranches during 2003, we agreed to purchase those CAH shares in four
equal quarterly tranches commencing on March 31, 2004. On March 31,
2004, the exchange of the first tranche of 349,650 CAH shares took
place as scheduled, and was settled on April 1, 2004. Notwithstanding
the amendments, for accounting purposes, the CAH shares to be
received by us in exchange for CEMEX CPOs are considered to be owned
by us effective as of July 12, 2002. As a result of these
transactions and pending their successful consummation, we will have
increased our stake in CAH to 92.3%.
o In May 2001, we acquired, through CAH, a 100% economic interest in
Saraburi Cement Company Ltd., a cement company based in Thailand with
an installed capacity of approximately 700,000 metric tons, for a
total consideration of approximately U.S.$73 million. In July 2002,
Saraburi Cement Company changed its legal name to CEMEX (Thailand)
Co. Ltd., or CEMEX (Thailand).
o In November 2000, through a tender offer and subsequent merger, we
acquired 100% of the outstanding shares of common stock of Southdown,
Inc., or Southdown, a U.S. cement producer. The total cost of the
acquisition of Southdown was approximately U.S.$2.8 billion. In March
2001,
14
through a corporate restructuring, we integrated the Southdown
operations with our other U.S. operations and "Southdown" changed its
legal name to CEMEX, Inc.
o In November 1999, we acquired a 77% interest in Assiut Cement
Company, or Assiut, an Egyptian cement producer, and in 2000, we
increased our interest to 92.9%. In January 2001, we further
increased our interest in Assiut to 95.8%.
o In June 1999, we acquired an 11.9% interest in Cementos Bio Bio,
Chile's largest cement producer.
o In April 1999, we acquired a 15.8% interest in Cementos del Pacifico,
now CEMEX (Costa Rica), S.A., or CEMEX Costa Rica, a Costa Rican
cement producer. In September 1999, we increased our interest in
CEMEX Costa Rica to 95.3%. As of December 31, 2003, we had increased
our interest in CEMEX Costa Rica to approximately 98.4%.
o In February 1999, we acquired a 99.9% economic interest in APO Cement
Corporation, or APO, a Philippine cement producer. In September 1999,
we contributed our interest in APO to CAH.
For the year ended December 31, 2003, our net sales, before
eliminations resulting from consolidation, were divided among the countries in
which we operate as follows:
United States 22% Central America
Mexico 34% and the Carribbean 8%
Spain 16% Philippines 2%
Venezuela 4% Egypt 2%
Colombia 3% Others 9%
For a description of a breakdown of total revenues by geographic markets for
each of the years ended December 31, 2001, 2002 and 2003, please see Item 5 --
"Operating and Financial Review and Prospects."
15
Our Production Process
Cement is a binding agent, which, when mixed with sand, stone or
other aggregates and water, produces either ready-mix concrete or mortar.
Mortar is the mixture of cement with finely ground limestone used in some
construction applications. Ready-mix concrete is the mixture of cement,
aggregates such as sand and gravel and water.
We manufacture cement through a closely controlled chemical process,
which begins with the mining and crushing of limestone and clay, and, in some
instances, other raw materials. The clay and limestone are then
pre-homogenized, a process which consists of combining different types of clay
and limestone in different proportions in a large storage area. The mix is
usually dried by the application of heat in order to remove humidity acquired
in the quarry. The crushed raw materials are fed in pre-established
proportions, which vary depending on the type of cement to be produced, into a
grinding process, which mixes the various materials more thoroughly and
reduces them further in size in preparation for the kiln. In the kiln, the raw
materials are calcined, or, processed at a very high temperature, to produce
clinker. Clinker is the intermediate product used in the manufacture of cement
obtained from the mixture of limestone and clay with iron oxide.
There are two primary processes used to manufacture cement, the dry
process and the wet process. The dry process is more fuel efficient. As of
December 31, 2003, 47 of our 54 operative production plants used the dry
process, five used the wet process and two used both processes. Three of the
seven production plants that use the wet process are located in Venezuela. The
remaining four production plants that use the wet process are located in
Colombia, Nicaragua, and the Philippines. In the wet process, the raw
materials are mixed with water to form slurry which is fed into the kiln. Fuel
costs are greater in the wet process than in the dry process because the water
that is added to the raw materials to form slurry must be evaporated during
the clinker manufacturing process. In the dry process, the addition of water
and the formation of slurry are eliminated, and clinker is formed by calcining
the dry raw materials. In the most modern application of this dry process
technology, the raw materials are first blended in a homogenizing silo and
processed through a pre-heater tower that utilizes exhaust heat generated by
the kiln to pre-calcine the raw materials before they are calcined to produce
clinker. Finally, clinker and gypsum are fed in pre-established proportions
into a cement grinding mill where they are ground into an extremely fine
powder to produce finished cement.
User Base
In most of the markets in which we compete, cement is the primary
building material in the industrial and residential construction sectors. The
lack of available cement substitutes further enhances the marketability of our
product. The primary end-users of cement in each region in which we operate
vary but usually include, among others, wholesalers, ready-mix concrete
producers, industrial customers and contractors in bulk.
Our Business Strategy
We seek to continue to strengthen our leadership position in the
cement industry and to maximize our overall performance by employing the
following strategies:
Reduce overall costs related to cement production.
By continuing to produce cement at a low cost we believe that we will
continue to generate the necessary cash flows to support our present and
future growth. We strive to reduce our overall cement production related costs
through strict cost management and a constant search for efficiencies. By
taking actions such as the use of alternative energy sources and the
incorporation of technological improvements at the plant level we have reduced
and expect to continue to reduce costs.
We plan to continue to eliminate redundancies at all levels,
streamline corporate structures and centralize administrative functions to
increase our efficiency and lower costs. In addition, in the last few years,
we have carried out various procedures to improve the environmental impact
of our activities as well as our overall product
16
quality. With each international acquisition, we have refined the
implementation of both the technological and managerial processes required to
rapidly integrate acquisitions into our existing corporate structure.
We have implemented the "CEMEX Way" as part of this process. The
CEMEX Way is a program designed to develop efficiencies and improved ways of
working, which will further reduce our costs, streamline our processes and
extract synergies from our global operations going forward. As a result, we
have developed centralized management information systems, including
administrative, accounting, purchasing, customer management, budget
preparation and control systems, which have been implemented throughout our
operations and that are expected to assist us in lowering costs.
Develop new competitive advantages.
We continue to focus on developing new competitive advantages that
will differentiate us from our competitors, and we are strengthening our
commercial and corporate brands in this highly competitive industry in an
effort to further enhance the value of our products for our final customers.
Our lower cost combined with our higher quality service has allowed us to make
significant inroads in these areas.
We believe our Construrama branding and our other marketing
strategies in Mexico will strengthen our distribution network, foster greater
loyalty among distributors and further fortify our commercial network. With
Construrama, we are enhancing the operating and service standards of our
distributors, providing them with training, a standard image and national
publicity, while our other strategy, which we call "Multiproductos," helps our
distributors offer a wider array of construction materials and reinforces the
subjective value of our products in their customers. In Spain, we have
implemented several initiatives to increase the value of our services to our
clients such as mobile access to account information, 24-hour bulk cement
dispatch capability, night delivery of ready-mix cement, and a customer
loyalty incentive program.
Expand into selected new markets.
Subject to economic conditions that may affect our ability to
consummate acquisitions, we intend to continue adding assets to our existing
portfolio. By selectively participating in markets that have long-term growth
potential, in most cases we have been able to increase our cash flow and
return on equity. We evaluate potential acquisitions in light of our three
primary investment principles:
o the potential for increasing the acquired entity's value should be
principally driven by factors that we can influence, particularly the
application of our management and turnaround expertise;
o the acquisition should not compromise our financial strength; and
o the acquisition should offer a higher long-term return on our
investment than our cost of capital.
In order to minimize our capital commitment and to maximize our
return on stockholders' equity, we will continue to analyze the potential
capital raising sources available in connection with acquisitions, including
sources of local financing and possible joint ventures. We normally consider
opportunities for, and routinely engage in preliminary discussions concerning,
acquisitions.
Strengthen our financial structure.
We believe our strategy of cost-cutting initiatives, increased value
proposition and geographic expansion will translate into growing operating
cash flows. Our objective is to strengthen our financial structure by:
o optimizing our borrowing costs and debt maturities;
o increasing our access to various capital sources; and
o maintaining the financial flexibility needed to pursue future growth
opportunities.
17
We intend to continue monitoring our credit risk while maintaining
the flexibility to support our business strategy.
Optimize distribution of our products through global coordination.
Through a worldwide import and export strategy, we will continue to
optimize capacity utilization and maximize profitability by directing our
products from countries experiencing downturns in their respective economies
to target export markets where demand may be greater. Our global trading
system enables us to coordinate our export activities globally and to take
advantage of demand opportunities and price movements worldwide.
Focus on attracting, retaining and developing a diverse, experienced
and motivated management team.
We will continue to focus on recruiting and retaining motivated and
knowledgeable professional managers.
Our senior management encourages managers to continually review our
processes and practices, and to identify innovative management and business
approaches to improve our operations. By rotating our managers from one
country to another and from one area of our operations to another, we increase
their diversity of experience. We provide our senior management with ongoing
training throughout their careers. In addition, through our stock-based
compensation program, our senior management has a stake in our financial
success.
The implementation of our business strategy demands effective
dynamics within our organization. Our corporate infrastructure is based on
internal collaboration and global management platforms. We will continue to
strengthen and develop this infrastructure to effectively support our
strategy.
18
Our Corporate Structure
We are a holding company and operate our business through
subsidiaries that, in turn, hold interests in our cement and ready-mix
concrete operating companies, as well as other businesses. The following chart
summarizes our corporate structure as of December 31, 2003. The chart also
shows, for each company, our approximate direct or indirect percentage equity
or economic ownership interest. The chart has been simplified to show only our
major holding companies in the principal countries in which we operate and
does not include our intermediary holding companies and our operating company
subsidiaries.
----------------------
| CEMEX, |
| S.A. de C.V. |
| (Mexico) |
----------------------
|
----------------------
| CEMEX Mexico, |
| S.A. de C.V. |
| (Mexico) |
| 100% |
---------------------
|
____________________________
| |
---------------------- - ---------------------
| Empresas Tolteca de | | Centro Distributor de |
| Mexico, S.A. de C.V. | | Cemento, S.A. de C.V. |
| (Mexico) | | (Mexico) |
| 100% | | 100% |
---------------------- ---------------------
|
----------------------
| CEMEX Espana, S.A. |
| (Spain) |
| 99.5% |
-----------------------
|
-------------------------- | -------------------------
| CEMEX Colombia, S.A. | | | CEMEX Corp. |
| (Colombia) |_______________________| (United States) |
| 98.2%(1) | | | 100% |
-------------------------- | -------------------------
| | ---------------------
| |________________| CEMEX, Inc.
| | (United States)
| | 100%
| ---------------------
|
-------------------------- | --------------------------
| Assiut Cement Company | | | CEMEX (Costa Rica), S.A.|
| (Egypt) | _______________________| (Costa Rica) |
| 95.8% | | | 98.4%(2) |
--------------------------- | --------------------------
| | -----------------------
| |________________| CEMEX Nicaragua, S.A. |
| | (Nicaragua) |
| | 100% |
| -----------------------
--------------------------- | ---------------------------
| CEMEX Asia Holdings Ltd. | | | CEMEX Venezuela, S.A.C.A. |
| (Singapore) |______________________| (Venezuela) |
| 92.3%(3) | | | 75.7% |
--------------------------- | ---------------------------
| ---------------------- |
| | Puerto Rican Cement | | ---------------------------
| | Company, Inc. | | | Cementos Nacionales, S.A. |
| | (Puerto Rico) | |____| (Dominican Republic) |
| | 100% | | | 99.9% |
| ---------------------- | ---------------------------
------------------- | --------------------------- |
|Solid Cement Corp. | | | CEMEX (Thailand) Co. Ltd. | |
| (Philippines) |_____| (Thailand) | ---------------------- | -------------------------
| 100%(4) | | | 100%(5) | | Cemento Bayano, S.A. |___| | Cementos Bio Bio, S.A. |
-------------------- | -------------------------- | (Panama) | |____| (Chile) |
| | 99.2% | | 11.9% |
| ---------------------- -------------------------
|
------------------ | -----------------------
| APO Cement | | | PT Semen Gresik |
| Corporation |______| (Persero) Tbk |
| (Philippines) | | (Indonesia) |
| 99.9%(5) | | 25.5% |
------------------ -----------------------
(1) Includes 98.2% of total shares and 99.3% of ordinary shares.
(2) Formerly, Cementos del Pacifico, S.A.
(3) In July 2002, we entered into a transaction with several CEMEX Asia
Holdings minority investors, which we amended in April 2003, pursuant to
which we will increase our interest in CEMEX Asia Holdings to 92.3% through
four quarterly share exchanges scheduled to take place in 2004. For
accounting purposes, such increase was effective as of July 2002. See Item
5 - "Operating and Financial Review and Prospects - Investments,
Acquisitions and Divestitures."
(4 )Formerly, Rizal Cement Co. Inc. Includes CEMEX Asia Holdings' 70%
economicinterest and a 30% economic interest held by a wholly-owned
subsidiary of CEMEX Espana, S.A.
(5) Represents CEMEX Asia Holdings' economic interest.
19
North America
As of and for the year ended December 31, 2003, North America, which
includes our operations in Mexico and the United States, represented
approximately 56% of our net sales, 50% of our total installed capacity and
40% of our total assets.
Our Mexican Operations
Overview
Our Mexican operations represented approximately 34% of our net sales
in 2003.
At December 31, 2003, we owned or had economic rights to 100% of the
outstanding capital stock of CEMEX Mexico. CEMEX Mexico is a direct subsidiary
of CEMEX and is both a holding company for some of our operating companies in
Mexico and an operating company involved in the manufacturing and marketing of
cement, plaster, gypsum, groundstone and other construction materials and
cement by-products in Mexico. CEMEX Mexico, indirectly, is also the holding
company for our international operations.
At December 31, 2003, CEMEX Mexico owned approximately 100% of the
outstanding capital stock of Empresas Tolteca de Mexico. Empresas Tolteca de
Mexico is a holding company for some of our operating companies in Mexico.
CEMEX Mexico and Empresas Tolteca de Mexico, together with their
subsidiaries, account for substantially all the revenues and operating income
of our Mexican operations.
Since the early 1970s, we have pursued a growth strategy designed to
strengthen our core operations and to expand our activities beyond our
traditional market in northeastern Mexico. This strategy has transformed our
Mexican operations from a regional participant into the leading Mexican cement
manufacturer. The process was largely completed with our acquisition of
Cementos Tolteca, S.A. de C.V. in 1989, which increased our installed capacity
for cement production by 6.5 million tons. Since the Cementos Tolteca
acquisition, we have added 7.0 million tons of installed capacity in Mexico
through acquisitions, expansion, modernization and the construction of new
plants. Our largest new construction project in Mexico in the 1990s was the
Tepeaca plant, which began operations in 1995 and had an installed capacity as
of December 31, 2003 of 3.3 million tons. During the second quarter of 2002,
the production operations at our oldest plant (Hidalgo) were temporarily
halted and remain suspended pending our review of the cost effectiveness of
continued production operations at this plant. We do not presently foresee any
significant capacity expansion in our Mexican operations in 2004.
In 2001, we launched the Construrama program, a registered brand name
for construction material stores. Through the Construrama program, we offer to
an exclusive group of our Mexican distributors the opportunity to sell a
variety of products under the Construrama brand name, a concept that includes
the standardization of stores, image, marketing, products and services. By the
end of 2003, 750 independent concessionaries with close to 2,100 stores were
integrated into the Construrama program in more than 700 towns and cities
throughout Mexico. By the end of 2004, we expect to have approximately 2,300
stores under the Construrama program.
The Mexican Cement Industry
Cement in Mexico is sold principally through distributors with the
remaining balance sold through ready-mix concrete producers, manufacturers of
pre-cast concrete products and construction contractors. Cement sold through
distributors is mixed with aggregates and water by the end user at the
construction site to form concrete. Ready-mix concrete producers mix the
ingredients of concrete in plants and deliver it to local construction sites
in mixer trucks, which pour the concrete. Unlike more developed economies,
where purchases of cement are concentrated in the commercial and industrial
sectors, retail sales of cement through distributors typically account for
around 75% of Mexico's demand. Individuals who purchase bags of cement for
self-construction and other basic construction needs are a significant
component of the retail sector. We estimate that as much as 50% of total
20
demand in Mexico comes from individuals who address their own construction
needs. We believe that this large retail sales base is a factor that
significantly contributes to the overall performance of the Mexican cement
market.
Competition. As recently as the early 1970s, the Mexican cement
industry was regionally fragmented. However, over the last 30 years, the
Mexican cement industry has consolidated into a national market, thus becoming
increasingly competitive. As of December 31, 2003, according to publicly
available information, the major cement producers in Mexico are CEMEX; Holcim
Apasco, an affiliate of Holcim; Sociedad Cooperativa Cruz Azul, a Mexican
operator; Cementos Moctezuma, an associate of Ciments Molins; and Lafarge.
Potential entrants into the Mexican cement market face various
impediments to entry including:
o the time-consuming and expensive process of establishing a
retail distribution network and developing the brand
identification necessary to succeed in the retail market, which
represents the bulk of the domestic market;
o the lack of port infrastructure and the high inland
transportation costs resulting from the low value-to-weight
ratio of cement;
o the distance from ports to major consumption centers and the
presence of significant natural barriers, such as mountain
ranges, which border Mexico's east and west coasts.
o the extensive capital investment requirements;
o the length of time required for construction of new plants
(approximately two years).
Our Mexican Operating Network
[MAP GRAPHIC OMITTED]
(1) In 2002, production operations at the Hidalgo cement plant were
temporarily halted and remain suspended pending our review of the cost
effectiveness of continued production operations at this plant.
Currently, we operate 14 plants (not including Hidalgo) and 76
distribution centers 68 land terminals and 8 marine terminals) located
throughout Mexico. We operate modern plants on Mexico's Atlantic and Pacific
coasts,
21
allowing us to take advantage of low-cost maritime transportation to
the Asian, Caribbean, Central and South American and U.S. markets.
We believe that geographic diversification in Mexico is important
because:
o it decreases the effect of regional cyclicality on total demand
for our Mexican operations' products;
o it places our Mexican operations in physical proximity to
customers in each major region of Mexico, allowing more
cost-effective distribution; and
o it allows us to optimize production processes by shifting
output to those facilities better suited to service the areas
with the highest demand and prices.
Products and Distribution Channels
Our domestic cement sales represented approximately 96% in 2001, 97%
in 2002 and 97% in 2003 of our total Mexican cement sales revenues.
Cement. As a result of the retail nature of the Mexican market, our
Mexican operations are not dependent on a limited number of large customers.
In 2003, our Mexican operations sold approximately 73% of their cement sales
volume through more than 5,900 distributors throughout the country, most of
whom work on a regional basis. The five most important distributors in the
aggregate accounted for approximately 4% of our Mexican operations' total
sales by volume for 2003.
The retail nature of the Mexican cement market also enables us to
foster brand loyalty, which distinguishes us from other worldwide producers
selling primarily in bulk in the commodity market. We own the registered
trademarks for our major brands in Mexico, such as "Monterrey," "Tolteca" and
"Anahuac." We believe that these brand names are important in Mexico since
cement is principally sold in bags to retail customers who may develop brand
loyalty based on differences in quality and service. Our domestic cement sales
volumes decreased 7% in 2001, increased 4% in 2002 and 4% in 2003. In
addition, we own the registered trademark for the "Construrama" brand name for
construction material stores. See "Our Mexican Operations - Overview" above
for a description of our recently launched Construrama program.
Ready-Mix Concrete. Ready-mix concrete sales volumes by our Mexican
operations decreased 3% in 2001, increased 10% in 2002 and 13% in 2003.
Although traditionally ready-mix concrete has not been an important product in
Mexico because of the availability of low-cost labor and the relatively small
size of private sector construction projects, for the year ended December 31,
2003, ready-mix concrete sales represented 12% of our Mexican operations'
total cement sales volume.
Demand for ready-mix concrete in Mexico depends on various factors
over which we have no control. These include the overall rate of growth of the
Mexican economy and plans of the Mexican government regarding major
infrastructure and housing projects.
Exports. Our Mexican operations export a portion of their cement
production. Exports of cement and clinker by our Mexican operations decreased
10% in 2001, 25% in 2002 and 24% in 2003. In 2003, approximately 71% of our
exports from Mexico were to the United States, 28% to Central America and the
Caribbean and 1% to South America.
Our Mexican operations' cement and clinker exports to the U.S. are
marketed through wholly-owned subsidiaries of CEMEX Corp., the holding company
of CEMEX, Inc. All transactions between CEMEX and the subsidiaries of CEMEX
Corp., which act as our U.S. importers, are conducted on an arm's-length
basis. Imports of cement and clinker into the U.S. from Mexico are subject to
anti-dumping duties. See "Regulatory Matters and Legal Proceedings -- U.S.
Anti-Dumping Rulings -- Mexico" below.
22
Production Costs
Our Mexican operations' cement plants primarily utilize pet coke, but
several are designed to switch to fuel oil and natural gas with minimum
downtime. We have entered into two 20-year contracts with Petroleos Mexicanos,
or Pemex, pursuant to which Pemex agreed to supply us with 1,750,000 tons of
pet coke per year, 850,000 tons per year commencing in 2002 with respect to the
first contract and 900,000 tons per year commencing in 2003 with respect to the
second contract. Pet coke is petroleum coke, a solid or fixed carbon substance
that remains after the distillation of hydrocarbons in petroleum and that may
be used as fuel in the production of cement. We expect the Pemex pet coke
contracts to reduce the volatility of our fuel costs and provide us with a
consistent source of pet coke throughout their 20-year terms. In addition,
since 1992, our Mexican operations have begun to use alternate fuels, to
further reduce the consumption of residual fuel oil and natural gas. These
alternate fuels represented 1.8% (based on a yearly average) of the total fuel
consumption for our Mexican operations in 2003, and we expect to increase it to
around 4% during 2004.
In 1999, we reached an agreement with ABB Alstom Power and Sithe
Energies, Inc. requiring Alstom and Sithe to finance, build and operate
"Termoelectrica del Golfo," a 230 megawatt energy plant in Tamuin, San Luis
Potosi, Mexico and to supply electricity to us for a period of 20 years. The
total cost of the project is approximately U.S.$360 million. Pursuant to the
agreement, we are obligated to purchase the full electric capacity generated
by the power plant during the 20-year period. We are also obligated to supply
Alstom and Sithe with 1,200,000 tons of pet coke per year for the 20-year
period for the consumption of this power plant and another power plant built
and operated by Alstom and Sithe for Penoles, a Mexican mining company. We
expect to meet our pet coke delivery requirements to Alstom and Sithe through
several pet coke supply agreements, including our pet coke supply contract
with Pemex. Pursuant to the agreement, we may be obligated to purchase the
Termoelectrica del Golfo plant upon the occurrence of specified material
defaults or events, such as failure to pay when due, bankruptcy or insolvency,
and revocation of permits necessary to operate the facility, and upon
termination of the 20 year period, we will have the right to purchase the
assets of the power plant. We expect this arrangement to reduce the volatility
of our energy costs and to provide approximately 80% of CEMEX Mexico's
electricity needs. The power plant commenced commercial operations on April
29, 2004.
We have from time to time purchased hedges from third parties to
reduce the effect of volatility in energy prices in Mexico. See Item 5 --
"Operating and Financial Review and Prospects -- Liquidity and Capital
Resources."
Description of Properties, Plants and Equipment
As of December 31, 2003, we operated 14 wholly-owned cement plants
(not including Hidalgo) located throughout Mexico, with a total installed
capacity of 27.2 million tons per year. Our Mexican operations' most
significant gray cement plants are the Huichapan, Tepeaca and Barrientos
plants, which serve the central region of Mexico, the Monterrey, Valles and
Torreon plants, which serve the northern region of Mexico, and the Guadalajara
and Yaqui plants, which serve the Pacific region of Mexico. We have exclusive
access to limestone quarries and clay reserves near each of our plant sites in
Mexico. We estimate that these limestone and clay reserves have an average
life of more than 60 years, assuming 2003 production levels. As of December
31, 2003, all our production plants in Mexico utilized the dry process.
As of December 31, 2003, we had a network of 68 land distribution
centers in Mexico, which are supplied through a fleet of our own trucks and
rail cars, as well as leased trucks and rail facilities and eight marine
terminals. In addition, we had 211 ready-mix concrete plants throughout 74
cities in Mexico and 1,367 ready-mix concrete delivery trucks.
Capital Investments
We made capital expenditures of approximately U.S.$109.4 million in
2003 in our Mexican operations. We currently expect to make capital
expenditures of approximately U.S.$79.0 million during 2004.
23
Our U.S. Operations
Overview
Our U.S. operations represented approximately 22% of our net sales in
2003. As of December 31, 2003, we had a cement manufacturing capacity of
approximately 14.2 million metric tons per year in our United States
operations, including nearly 600,000 metric tons in proportional interests
through minority holdings.
As of December 31, 2003, we operated a geographically diverse base of
13 cement plants located in Alabama, California, Colorado, Florida, Georgia,
Illinois, Kentucky, Michigan, Ohio, Pennsylvania, Tennessee and Texas. As of
that date, we also had 53 rail or water served active cement distribution
terminals in the United States and one in Canada. We also market ready-mix
concrete products in four of our largest cement markets, California, Arizona,
Texas, and Florida, and mine, process and sell construction aggregates in these
four states as well. In addition, with the acquisition of Mineral Resource
Technologies, Inc. in August 2003 through an indirect subsidiary, CEMEX, Inc.
has achieved a competitive position in the growing fly ash market. Fly ash is a
material having the properties of cement that is used in the production of
high-quality concrete. Mineral Resource Technologies, Inc. is one of the four
largest fly ash companies in the United States, providing fly ash to customers
in 26 states.
The Cement Industry in the United States
Competition. As a result of the lack of product differentiation and
the commodity nature of cement, the cement industry in the U.S. is highly
competitive. We compete with national and regional cement producers in the
U.S. CEMEX, Inc.'s principal competitors in the United States are Holcim,
Lafarge, Buzzi-Dyckerhoff, Heidelberg Cement and Ash Grove Cement.
The U.S. ready-mix concrete industry is highly fragmented, and few
producers have annual sales in excess of U.S.$3 million or have a fleet of
more than 20 mixers. Given that the concrete industry has historically
consumed approximately 70% of all cement produced annually in the U.S., many
cement companies choose to be vertically integrated.
Aggregates are widely used throughout the U.S. for all types of
construction because they are the most basic materials for building activity.
The U.S. aggregates industry is highly fragmented and geographically
dispersed. According to the U.S. Geological Survey, in 2003, approximately
4,000 companies operated approximately 6,400 quarries and pits.
24
Our United States Operating Network
[MAP GRAPHIC OMITTED]
In 2001, production operations at the Pittsburgh cement plant were
shut down. It now operates as a distribution terminal.
Products and Distribution Channels
CEMEX, Inc. delivers a substantial portion of cement by rail.
Occasionally, these rail shipments go directly to customers. Otherwise,
shipments go to distribution terminals where customers pick up the product by
truck or CEMEX, Inc. delivers the product by truck. The majority of our cement
sales are made directly to users of gray Portland and masonry cements,
generally within a radius of approximately 200 miles of each plant. As
discussed below, cement demand in the United States has become less dependent
upon the more cyclical residential and commercial sectors. Because of the
distribution of operations across the U.S., we are able to achieve stability
of cash flows should market conditions deteriorate in any one region of the
U.S.
Cement. Our cement operations represented approximately 62% of our
2003 U.S. operations revenues. Our U.S. operations sales volumes increased
183% in 2001, mainly as a result of our acquisition of Southdown, now named
CEMEX, Inc., decreased 5.3% in 2002 due to the economic downturn in the United
States, and increased 2% in 2003 due to strong demand from the public works
sector, in particular street and highway construction, and the residential
sector during the second half of 2003.
Demand for cement is derived from the demand for ready-mix concrete
and concrete products which, in turn, is dependent on the demand for
construction. According to estimates of the Portland Cement Association, the
three construction sectors that are the major components of cement consumption
are public works construction, commercial and industrial construction, and
residential construction.
Cement demand has recently been much less vulnerable to a downturn
than in previous cycles due to increased public infrastructure spending. In
2003, according to our estimates, public infrastructure spending accounted for
approximately 50% of the total cement consumption in the U.S. Strong cement
demand over the past decade has driven industry capacity utilization up to
maximum levels. According to the Portland Cement Association, domestic
capacity utilization reached 95.5% in 2001, 93.3% in 2002 and 90.7% in the
first 10 months of 2003.
25
Ready-Mix Concrete. Concrete operations represented approximately 27%
of our 2003 revenues in the U.S. We have ready-mix operations in California,
Arizona, Texas and Florida. Our concrete operations in those states purchase
most of their cement requirements from our cement operations in the U.S.
Aggregates. Our construction aggregates operations include mining,
processing and selling construction aggregates in California, Arizona, Texas
and Florida. Aggregates operations represented approximately 6% of our 2003
U.S. revenues. At 2003 production levels, it is anticipated that over 80% of
our construction aggregates reserves in the U.S. will last from 10 years to
more than 50 years.
Production Costs
The largest cost components of our plants are electricity and fuel,
which accounted for approximately 34% of CEMEX, Inc.'s total production costs
in 2003. CEMEX, Inc. is currently implementing an alternative fuels program to
gradually replace coal with more economic fuels such as petcoke and tires,
which has resulted in reduced energy costs. By retrofitting our cement plants
to handle alternative energy fuels, we have gained more flexibility in
supplying our energy needs and become less vulnerable to potential price
spikes. In 2003, the use of alternative fuels offset the effect on our fuel
costs of a significant increase in coal prices. Power costs in 2003
represented approximately 18% of the cash manufacturing cost, which represents
production cost before depreciation. We have improved the efficiency of CEMEX,
Inc.'s electricity usage, concentrating our manufacturing activities in
off-peak hours and negotiating lower rates with electricity suppliers.
Description of Properties, Plants and Equipment
As of December 31, 2003, we operated 13 cement manufacturing plants
in the U.S., with a total installed capacity of 14.2 million metric tons per
year, including nearly 600,000 metric tons in proportional interests through
minority holdings. All our cement production facilities are wholly owned
except for the Balcones plant, which is leased, and the Louisville plant and
Pittsburgh terminal. The Louisville and Pittsburgh facilities are owned by
Kosmos Cement Company, a joint venture in which CEMEX, Inc. owns 75% and a
subsidiary of Dyckerhoff AG owns 25% of the interests.
During the fourth quarter of 2001, we substantially completed a
capacity expansion project at our Victorville manufacturing facility, which
resulted in a net capacity increase of approximately one million metric tons
per year.
In September 2003, an indirect subsidiary of CEMEX, Inc. acquired a
cement plant in Dixon, Illinois. The Dixon plant has a production capacity of
560,000 metric tons per year and serves Illinois and Wisconsin as its main
markets.
As of December 31, 2003, we operated a distribution network of 86
ready-mix concrete plants, 54 cement terminals, five of which are deep-water
terminals, and 23 aggregate locations throughout the U.S. Also, we distributed
fly ash through 10 stand-alone terminals and 10 third-party-owned utility
plants. The latter operate both as sources of fly ash and distribution
terminals.
Capital Investment
We made capital expenditures of approximately U.S.$179.5 million in
2001, U.S.$95.9 million in 2002 and U.S.$96.6 million in 2003 in our U.S.
operations. We currently expect to make capital expenditures in our U.S.
operations of approximately U.S.$79.8 million during 2004.
26
Europe, Asia and Africa
As of December 31, 2003, our business in Europe, Asia and Africa,
which included our majority-owned operations in Spain, the Philippines,
Thailand and Egypt, as well as our minority interests in Indonesia and other
Asian investments, represented approximately 20% of our net sales, 32% of our
total installed capacity and 21% of our total assets.
Our Spanish Operations
Overview
Our Spanish operations represented approximately 16% of our net sales
in 2003. We conduct our Spanish operations through our operating subsidiary
CEMEX Espana, S.A. or CEMEX Espana. CEMEX Espana is also a holding company for
most of our international operations. Our cement activities are conducted by
CEMEX Espana itself and Cementos Especiales de las Islas, S.A. a joint venture
50% owned by Cemex Espana. Our ready-mix concrete activities and our
aggregates activities are conducted by Hormicemex, S.A. and Aricemex S.A.,
respectively.
The Spanish Cement Industry
In 2003, the construction sector of the Spanish economy grew 3.7%,
primarily as a result of the growth of construction in the residential sector
of the Spanish economy. Cement consumption in Spain increased approximately
9.7% in 2001, 4.7% in 2002 and 4.4% in 2003. Our domestic cement and clinker
sales volumes in Spain increased approximately 4.1% in 2001, 2.5% in 2002 and
4.5% in 2003.
During the past several years, the level of cement imports into Spain
has been influenced by the strength of domestic demand. Cement imports
increased 22.2% in 2001 and 5.5% in 2002 but decreased 25% in 2003. Clinker
imports have demonstrated an intense dynamism, with increases of 43.6% in
2001, 18.2% in 2002 and 25.6% in 2003. Imports primarily had an impact on
coastal zones, since transportation costs make it less profitable to sell
imported cement in inland markets. Nonetheless, sales from imports have been
increasing in the center of Spain.
In the past, Spain has traditionally been one of the leading
exporters of cement in the world exporting up to 6 million tons per year.
Nevertheless, exports of producers in Spain have been reduced in recent years
to 1.2 million tons in 2003 to meet strong domestic demand. Our Spanish
operations' cement and clinker export volumes decreased 42% in 2001, increased
5% in 2002 and decreased 21% in 2003.
Competition.
In 2003, the world's second largest producer, the Holcim group of
Switzerland, bought a cement plant of 0.75 million tons of total cement
capacity in the center of Spain from Dyckehoff group, a German company.
According to the Asociaciun de Fabricantes de Cemento de Espana, or OFICEMEN,
the Spanish cement trade organization, as of December 31, 2003, approximately
60% of installed capacity for production of cement in Spain was owned by five
multinational groups, including CEMEX.
Competition in the ready-mix concrete industry is particularly
intense in large urban areas. Our subsidiary Hormicemex has achieved a sizable
market presence in areas such as Baleares, Canarias, Levante and Aragon. In
other areas, such as the central and Cataluna regions, our market share is
smaller due to greater competition in the relatively larger urban areas. The
overall high degree of competition in the Spanish ready-mix concrete industry
has led to weak pricing, which, in turn, has affected Hormicemex's
profitability. Despite this fact, the distribution of ready-mix concrete
remains a key component of CEMEX Espana's business strategy.
OFICEMEN reported that, based on 2003 sales, CEMEX Espana had a
market share of 22.2% in gray and white cement, making us the leader in the
Spanish cement industry. We believe that we maintain this leading market
position because of our customer service and our geographic diversification,
which includes extensive
27
distribution channels that enable us to cope with downturns in demand more
effectively than many of our competitors because we are able to shift our
production to serve areas with the strongest demand and prices.
Our Spanish Operating Network
[MAP GRAPHIC OMITTED]
Products and Distribution Channels. CEMEX Espana offers various types
of cement, targeting specific products to specific markets and users. In 2003,
approximately 17% of CEMEX Espana's domestic sales volumes consisted of bagged
cement through distributors, and the remainder of CEMEX Espana's domestic
sales volumes consisted of bulk cement, primarily to ready-mix concrete
operators, which include CEMEX Espana's own subsidiaries, as well as
industrial customers that use cement in their production processes and
construction companies.
Exports. In general, despite increases in domestic demand in recent
years, we have been able to export excess capacity through collaboration
between CEMEX Espana and our trading network. Export prices, however, are
usually lower than domestic market prices, and costs are usually higher for
export sales. Of our total exports from Spain in 2003, 90% consisted of white
cement and 10% consisted of gray cement. In 2003, 61% of our exports from
Spain were to the United States, 14% to Europe and 25% to Africa.
Production Costs
We have improved the profitability of our Spanish operations by
introducing technological improvements that have significantly reduced our
energy costs, including the use of alternative fuels, in accordance with our
cost reduction policy. We have reduced the clinker-cement ratio (the
proportion of clinker used in the production of cement) by 4.6 percentage
points over the last five years. In 2003, we maintained the same
clinker-cement ratio. Additionally, the increased capacity in 2002 of the San
Vicente plant (approximately 400,000 tons) has allowed us to reduce the
clinker transportation costs between plants and the need for imported clinker.
In 2003, we burned meal flour and tires as fuel, achieving in December a 1.8%
substitution rate for petcoke. During 2004, in addition to those alternative
fuels, we expect to initiate the burning of organic waste and plastics.
28
Description of Properties, Plants and Equipment
As of December 31, 2003, our Spanish operations operated eight plants
located in Spain, with a cement equivalent capacity of 10.8 million tons,
including 860,000 tons of white cement. We also operated 77 ready-mix concrete
plants, including 16 aggregate and 10 mortar plants. CEMEX Espana also owns
two cement mills, one of which is operated through a joint venture 50%-owned
by CEMEX Espana, and 31 distribution centers, including 12 land and 19 marine
terminals.
As of December 31, 2003, CEMEX Espana owned 8 limestone quarries
located in close proximity to its plants, which have useful lives ranging from
10 to 30 years, assuming 2003 production levels. Additionally, we have rights
to expand those reserves to 50 years of limestone reserves, assuming 2003
production levels.
Capital Investments
We made capital expenditures of approximately U.S.$53.9 million in
2003 in our Spanish operations. We currently expect to make capital
expenditures in our Spanish operations of approximately U.S.$48.6 million
during 2004.
Our Asian Operations
As of December 31, 2003, our business in Asia, which includes our
operations in the Philippines and Thailand, as well as our minority interests
in Indonesia and other assets in Asia, represented approximately 3% of our net
sales, 13.4% of our total installed capacity and 5% of our total assets.
Our Philippine Operations
Overview
In 1997, we acquired a 30% economic interest in Rizal Cement Company,
or Rizal (now, Solid Cement Corporation, or Solid, as a result of the merger
of Rizal into Solid on December 23, 2002), a Philippine cement producer, and
in 1998, we increased our economic interest to 70%. In September 1999, we
contributed our interest in Rizal to CAH. On July 31, 2002, we purchased,
through a wholly-owned subsidiary, the remaining 30% economic interest that
was not previously acquired by CAH in Rizal (now, Solid), for approximately
U.S.$95 million. At December 31, 2003, as a consequence of these transactions
and the increase of our stake in CAH, as described under "Business Overview"
above, our proportionate economic interest in Solid (formerly, Rizal) was
approximately 94.6%.
The Philippine Cement Industry
During 2003, cement consumption in the Philippine market totaled 12.6
million tons. Since there is currently underutilization of existing capacity
in the Philippines, we intend to use our trading network to export a
substantial amount of our Philippine clinker and cement production.
The Philippine cement market is primarily retail, similar to Mexico.
During 2003, approximately 90% of our Philippine cement volume was sold in
bags through distributors and retailers. The balance was sold through
ready-mix concrete producers, large and small contractors and hollow block
manufacturers, among others.
After four years of continual decline since the 1997 Asian economic
recession, cement demand in the Philippines recovered during 2002 as the
overall economy showed a slight improvement. However, industry demand
decreased by 2.7% in 2003 compared to 2002. As such, demand growth is lagging
when compared to other countries in the region and is below pre-crisis levels
in Asia.
Competition. As of December 31, 2003, the Philippine cement industry
had a total of 20 cement plants and three cement grinding mills. Annual
installed capacity is 26.8 million tons, according to the Cement
Manufacturers' Association of the Philippines. Major global cement producers
own approximately 88% of this capacity.
29
Our major competitors in the Philippine cement market are Holcim,
which has interests in six local cement plants, and Lafarge, which has
interests in eight local cement plants.
Our Philippine Operating Network
[MAP GRAPHIC OMITTED]
*Solid consists of two plants in the Manila metropolitan region. The
operation of one of these plants has been suspended in 1999.
We have three cement plants in the Philippines with a total of eight
production lines, three utilizing the dry process (73% of our capacity) and
five wet process (27% of our capacity), as well as distribution centers in
Batangas and Iloilo. Only the dry production lines are currently in use. Three
of the five wet production lines are located in the plant that suspended
operations in 1999.
Production Costs
Costs of production include energy, labor, transportation, raw
materials, maintenance and packaging. The limestone mining license held by an
APO affiliate does not expire until 2022, and mining license for pozzolan,
another material used in making cement, held by the same APO affiliate does
not expire until 2018. A subsidiary of Solid holds a mining license that
expires in 2023. All three licenses are renewable for another 25 years upon
mutual agreement with the Philippine government. Other raw materials, such as
gypsum and iron ore, which are used in smaller quantities than limestone,
pozzolan and clay, are purchased from outside suppliers.
Our plants have their own electricity generating capacity, which
allows us to reduce our production costs since our self-generated electricity
cost is usually cheaper than electricity supplied by either government-owned
or privately-owned grids. However, one of our Manila plants can still avail
itself of electricity from local suppliers when production reaches its peak or
when rates are economically attractive.
30
Description of Properties, Plants and Equipment
Our Philippine operations include three plants with a total capacity
of 5.8 million tons per year and two marine distribution terminals. Our cement
plants include two Solid plants, with five wet process production lines and
one dry process production line and an installed capacity of 2.8 million tons,
serving the Manila metropolitan region; and the APO plant, with two dry
process production lines and a jetty terminal for local and export markets
with installed capacity of 3.0 million tons, serving the Visayas, North
Mindanao and South of Luzon regions.
Capital Investments
We made approximately U.S.$1.7 million of capital expenditures in
2003 in our Philippine operations. We currently expect to make capital
expenditures of approximately U.S.$1.9 million during 2004.
Our Indonesian Equity Investment
Overview
In October 1998, we purchased from the Republic of Indonesia a 14%
interest in PT Semen Gresik (Persero) Tbk., or Gresik, Indonesia's largest
cement producer. In 1999, we increased our interest in Gresik to approximately
25.5%. The Republic of Indonesia retains a 51% interest in Gresik. In October
2000, by means of capital contributions made by us and the minority investors,
CAH acquired our interest in Gresik. As a result of this transaction and the
increase of our stake in CAH, as described under "Business Overview" above, at
December 31, 2003, our proportionate economic interest through CAH in Gresik
was approximately 23.5%. Currently, we hold two seats on both the board of
directors and the board of commissioners of Gresik, as well as the right to
approve Gresik's business plan jointly with the Indonesian government.
Gresik owns (directly or indirectly through its subsidiaries) four
cement plants in Indonesia with a total installed capacity of 17.3 million
tons.
On October 31, 2001, certain individuals purporting to represent the
people of the Indonesian province of West Sumatra, in which Gresik's Padang
plant is located, issued a declaration which stated that, commencing November
1, 2001, PT Semen Padang , or Semen Padang, the 99.99%-owned subsidiary of
Gresik that owns and operates the Padang plant, was placed under the temporary
control of the people of West Sumatra. The declaration ordered the management
of Semen Padang to report to the local government of the West Sumatra
Province, under the supervision of the People's Representative Assembly of
West Sumatra, pending a "spin-off" of the Semen Padang subsidiary. On November
1, 2001, the People's Representative Assembly of West Sumatra issued a decree
approving this declaration. We believe the provincial administration lacks
legal authority to direct or interfere with the affairs of Semen Padang.
Since the attempt by the West Sumatra provincial administration in
November 2001 to arrogate to itself the management of Semen Padang, several
groups opposed to any further sale of Indonesia's stock ownership in Gresik
have threatened strikes and other actions that would affect our Indonesian
operations. We have discussed our concerns with the Indonesian government,
which agreed to implement management changes to seek to re-attain normality in
the Semen Padang plant's operations. Gresik, as the controlling shareholder of
Semen Padang, took steps to seek to convene a general meeting of shareholders
to replace the management of Semen Padang. The management of Semen Padang
refused to convene such a meeting, and such refusal was upheld by the Padang
District Court in September 2002.
After a protracted process that included several legal actions,
including proceedings before the Indonesian Supreme Court, the extraordinary
general meeting of shareholders of Semen Padang was finally convened on May
12, 2003 and Gresik, as the controlling shareholder of Semen Padang, approved
the replacement of Semen Padang's management.
The Semen Padang management that was replaced, however, refused to
recognize these management changes, and employees at Semen Padang physically
prevented the newly appointed management from entering the
31
facility. Finally, on September 8, 2003, the newly-appointed management was
permitted to enter the Semen Padang facility amid a police escort. However, we
believe that the newly-appointed management was admitted on condition that it
encourage a spin-off of Semen Padang, and in October 2003 the newly-appointed
management explicitly agreed to encourage a spin-off of Semen Padang.
Gresik has experienced other ongoing difficulties at Semen Padang,
including the effective loss of operational and financial control of Semen
Padang, the inability to prepare consolidated financial statements that
include Semen Padang's operations and the inability of its independent
auditors to provide an unqualified audit opinion on such financial statements.
As a result of these difficulties, we have not been able to independently
verify certain information with respect to Semen Padang's facilities and
operations and thus, the overall description of Gresik's facilities and
operations below assumes the validity of the information provided by Semen
Padang's management.
In March 2003, a lawsuit was filed in the Padang District Court
against Gresik, Semen Padang and several Indonesian government agencies. The
lawsuit, which was filed by a foundation purporting to act in the interest of
the people of West Sumatra, challenged the validity of the sale of Semen
Padang by the Indonesian government to Gresik in 1995 on the grounds that the
Indonesian government did not obtain the necessary approvals for such sale. On
May 9, 2003, the Padang District Court issued an interim decision suspending
Gresik's rights as a shareholder in Semen Padang on the grounds that ownership
of Semen Padang was an issue in dispute. On March 31, 2004, the Padang
District Court announced its final decision in favor of the foundation. On
April 12, 2004, Gresik filed an appeal of this decision with the Padang
District Court, which will in turn forward the appeal to the High Court of the
West Sumatra province.
After the failure of several attempts to reach a negotiated or
mediated solution to these problems involving Gresik, on December 10, 2003,
CAH filed a request for arbitration against the Republic of Indonesia and the
Indonesian government before the International Centre for Settlement of
Investment Disputes, or ICSID, based in Washington D.C. ICSID was established
by the Convention on the Settlement of Investment Disputes between States and
Nationals of other States, and is intended to facilitate the resolution of
international investment disputes. ICSID is an autonomous international
organization with close links to the World Bank. CAH is seeking, among other
things, rescission of the purchase agreement entered into with the Republic of
Indonesia in 1998, plus repayment of all costs and expenses, and compensatory
damages. ICSID has accepted and registered CAH's request for arbitration and
issued a formal notice of registration on January 27, 2004. As a result of the
registration, an Arbitral Tribunal will be established to hear the dispute. We
cannot predict, however, what effect, if any, this action will have on our
investment in Gresik or what the ruling of the Arbitral Tribunal will be.
The Indonesian Cement Industry
The Indonesian cement industry is one of the two largest in South
East Asia, accounting for about 26% of the approximately 106 million tons of
cement consumed in South East Asia in 2003, according to our estimates.
Despite the continuing economic and political problems experienced by
Indonesia and the difficulties involving Gresik described above, we believe
the Indonesian cement market is important to our Asian expansion strategy due
to its strategic location, size, potential as an anchor for our South East
Asian trading network and the significant growth potential of the Indonesian
economy.
Indonesian domestic cement demand increased approximately 14.2% in
2001, 6.8% in 2002 and 1.0% in 2003. However, as of December 31, 2003, the
Indonesian cement industry still had substantial excess capacity, which has
required Indonesian producers to seek export markets.
Competition. As of December 31, 2003, the Indonesian cement industry
had 13 cement plants, including the four plants owned by Gresik, with a
combined installed capacity of approximately 47.5 million tons. Foreign
companies continue their efforts to increase their participation in the
industry. Lafarge holds a majority position in P.T. Semen Andalas,
Heidelberger holds a majority interest in Indocement and Holcim holds a
majority interest in Cibinong.
32
Gresik's Indonesian Operating Network
[MAP GRAPHIC OMITTED]
Gresik, with an installed capacity of 17.3 million tons, is
Indonesia's largest cement producer. Gresik's production facilities include
four plants with twelve dry production lines and one wet production line, with
access to most of Indonesia's regions.
As of December 31, 2003, Gresik was operating at approximately 84%
capacity utilization, including export sales. In 1998, CEMEX reached an
agreement in principle with Gresik for the exportation of cement. Pursuant to
the agreement, Gresik had the option of requesting CEMEX's assistance in
exporting 1.5 million tons of cement during each of the years 2000, 2001 and
2002. A similar arrangement remained in place for 2003.
Exports. During 2003, Gresik exported approximately 17% of its total
sales volume, mainly through its own efforts. Gresik exports mainly to
Bangladesh and Africa.
Description of Properties, Plants and Equipment
As of December 31, 2003, Gresik had four cement plants with an
installed capacity of 17.3 million tons, and 27 land distribution centers and
10 marine terminals. Gresik's cement plants include the Padang plant, with one
production line that utilizes the wet process and four production lines that
utilize the dry process and an installed capacity of 5.6 million tons; the
Gresik plant, which has two production lines that utilize the dry process and
an installed capacity of 1.3 million tons; the Tuban plant, which has three
production lines that utilize the dry process and an installed capacity of 6.9
million tons; and the Tonasa plant, which has three production lines that
utilize the dry process and an installed capacity of 3.5 million tons.
Our Thai Operations
Overview
In May 2001, through CAH, we acquired a 100% economic interest in
Saraburi Cement Co. Ltd., a cement producer based in Thailand. The company was
later renamed CEMEX (Thailand) Co., Ltd. Our proportionate economic interest
in CEMEX (Thailand) through CAH is approximately 92.3% as of December 31,
2003.
33
The Thai Cement Industry
According to our estimates, at December 31, 2003, the cement industry
in Thailand had a total of 13 cement plants, with an aggregate annual
installed capacity of approximately 54.3 million tons. We estimate that there
are five major cement producers in Thailand, four of which represent 99% of
installed capacity and 97% of the market.
Competition. Our major competitors in the Thailand market, which have
a significantly larger presence than CEMEX (Thailand), are Siam Cement,
Holcim, TPI Polene and Italcementi.
Our Thai Operating Network
[MAP GRAPHIC OMITTED
Description of Properties, Plant and Equipment
CEMEX (Thailand) owns one dry process cement plant located north of
Bangkok and has been operating at full capacity. As of December 31, 2003,
CEMEX (Thailand) had an installed capacity of approximately 720,000 tons.
Capital Investments
We made approximately U.S.$1.72 million of capital expenditures in
our Thai operations in 2003. We currently expect to make capital expenditures
of approximately U.S.$2.4 million during 2004.
Other Asian Investments
As part of our strategy to strengthen our presence in South Asia,
between May 2000 and April 2001, we invested approximately U.S.$34 million in
the construction of a grinding mill near Dhaka, Bangladesh. The grinding mill
began operating in April 2001 and has a cement milling production capacity of
520,000 tons per year. A majority of the supply of clinker for the mill is
produced by our operations in the region.
In March 2001, we acquired a cement terminal in Sukematsu Port,
Izumiotsu City, near Osaka, Japan for U.S.$2.8 million. The terminal is
situated on land leased for a period of 30 years and has a storage capacity of
9,000 metric tons. Additional investments will be required to make the
terminal operational. We have not yet made these investments pending our
review of the Japanese cement industry. The terminal has potential annual
throughput volume of approximately 300,000 tons.
34
To further support our trading activities in the Asia region, as of
June 2001, we acquired a 100% interest in Tunwoo Co. Ltd., a company based in
Taiwan, for a total consideration of approximately U.S.$27 million. Tunwoo
owns a license to operate a cement terminal in the port of Taichung located on
the west coast of Taiwan. The import terminal has cement storage capacity of
60,000 tons.
Our Egyptian Operations
Overview
As of December 31, 2003, we had a 95.8% interest in Assiut, which has
an installed capacity of approximately 4.9 million tons.
The Egyptian Cement Industry
The Egyptian cement market consumed approximately 25.7 million tons
of cement during 2003. Cement consumption decreased by 4.6% in 2003, as a
result of a slowdown in the Egyptian economy and the diminishing availability
of foreign currency in Egypt, which has affected most sectors of the Egyptian
economy, in particular, the Egyptian construction sector.
Competition. As of December 31, 2003, the Egyptian cement industry
had a total of ten cement producers, with an aggregate annual installed
capacity of approximately 36 million tons. We estimate that during 2003,
Holcim (Egyptian Cement Company), Lafarge (Alexandria Portland Cement and Beni
Suef Cement) and CEMEX (Assiut Cement Company), the three largest cement
producers in the world, were responsible for 42% of the total cement sales in
Egypt. Other competitors in the Egyptian market are Suez and Tourah Cement
Companies (Italcementi) and Helwan Portland Cement Company. In addition,
cement prices in Egypt are influenced to a significant degree by the Egyptian
government, which controls almost 40% of the industry's capacity.
Our Egyptian Operating Network
[MAP GRAPHIC OMITTED
Distribution Channels
As a result of the retail nature of the Egyptian market, over 90% of
our cement sales volumes are typically sold in bags. Through our commercial
strategy we have been able to serve retail customers throughout the country
directly without having to depend on wholesalers and distributors.
35
Description of Properties, Plant and Equipment
As of December 31, 2003, Assiut operated one cement plant with an
installed capacity of approximately 4.9 million tons with three dry process
production lines. Assiut's cement plant serves upper Egypt as well as Cairo
and the Delta region, Egypt's main cement market.
Capital Investments
We made capital expenditures of approximately U.S.$14.1 million in
our Egyptian operations in 2003. We currently expect to make capital
expenditures of approximately U.S. $8.0 million during 2004.
South America, Central America and the Caribbean
As of December 31, 2003, our business in South America, Central
America and the Caribbean, which includes our operations in Venezuela,
Colombia, Costa Rica, the Dominican Republic, Panama, Nicaragua and Puerto
Rico, as well as other assets in the Caribbean, represented approximately 15%
of our net sales, 18% of our total installed capacity and 11% of our total
assets.
Our Venezuelan Operations
Overview
Our Venezuelan operations represented approximately 4% of our net
sales in 2003. As of December 31, 2003, we held a 75.7% interest in CEMEX
Venezuela, S.A.C.A., or CEMEX Venezuela, a company listed on the Caracas Stock
Exchange. CEMEX Venezuela also serves as the holding company for our interests
in Chile, the Dominican Republic and Panama. CEMEX Venezuela is the largest
cement producer in Venezuela, based on an installed capacity of 4.6 million
tons as of December 31, 2003.
The Venezuelan Cement Industry
Cement consumption in Venezuela fell 17.5% in 2003 compared to 2002
according to the Venezuelan Cement Producer Association (AVPC), primarily due
to Venezuela's political and economic turmoil. A nation-wide general strike
that began in December 2002 caused a significant reduction in oil production
and has had a material adverse effect on Venezuela's oil-dependent economy. As
a consequence, in 2003, average inflation in Venezuela reached 31.1%, the
Venezuelan Bolivar depreciated 14.0% against the Dollar and gross domestic
product (GDP) decreased 9.2%. In February 2003, Venezuelan authorities imposed
foreign exchange controls and implemented price controls on many products,
including cement. The adverse economic situation in Venezuela has dampened the
construction sector, which declined 37.4% in 2003.
Competition. As of December 31, 2003, the Venezuelan cement industry
included five cement producers, with a total installed capacity of
approximately 9.5 million tons, according to our estimates. We estimate that
CEMEX Venezuela's installed capacity in 2003 represented approximately 49% of
that total, almost twice that of its next largest competitor.
Our global competitors, Holcim and Lafarge, have acquired controlling
interests in Venezuela's second and third largest cement producers,
respectively.
In 2003, the ready-mix concrete market accounted for only about 10%
of cement consumption in Venezuela, according to our estimates. We believe
that Venezuela's construction companies, which typically prefer to install
their own ready-mix concrete plants on-site, are the most significant barrier
to penetration of the ready-mix concrete sector, with the result that on-site
ready-mix concrete mixing represents a high percentage of total ready-mix
concrete production.
36
Other than CEMEX Venezuela, the ready-mix concrete market is
concentrated in two companies, Premezclado Caribe, which is owned by Holcim,
and Premex, which is owned by Lafarge. The rest of the ready-mix concrete
sector in Venezuela is highly fragmented.
Our Venezuelan Operating Network
As shown below, CEMEX Venezuela's three cement plants and one
grinding facility are located near the major population centers and the coast
of Venezuela.
[MAP GRAPHIC OMITTED
As of December 31, 2003, CEMEX Venezuela was the leading Venezuelan
domestic supplier of cement, based on our estimates of sales of gray and white
cement in Venezuela. In addition, CEMEX Venezuela was the leading domestic
supplier of ready-mix concrete in 2003 with 30 ready-mix production plants
throughout Venezuela. During 2003, CEMEX Venezuela achieved production of 3.3
million tons of clinker.
Distribution Channels
Transport by land is handled primarily by CEMEX Venezuela. During
2003, approximately 30% of CEMEX Venezuela's total domestic sales were
transported through its own fleet of trucks. CEMEX Venezuela also serves a
significant number of its retail customers directly through its wholly-owned
distribution centers.
Exports
During 2003, exports from Venezuela represented approximately 21% of
CEMEX Venezuela's net sales. CEMEX Venezuela's main export markets
historically have been the Caribbean and the east coast of the United States.
In 2003, 63.6% of our exports from Venezuela were to the United States, and
36.4% were to the Caribbean and South America.
Description of Properties, Plants and Equipment
As of December 31, 2003, CEMEX Venezuela operated three wholly-owned
cement plants, Lara, Mara and Pertigalete, with a combined installed capacity
of clinker production of approximately 4.3 million tons. CEMEX Venezuela also
operates the Guayana grinding facility with a cement capacity of 360,000 tons.
All the plants are strategically located to serve both domestic areas with the
highest levels of cement consumption and export markets. CEMEX Venezuela also
owns 30 ready-mix concrete production facilities and 12 distribution centers.
CEMEX Venezuela owns 4 limestone quarries with reserves sufficient for over
100 years at 2003 production levels.
37
The Lara and Mara plants and one production line at the Pertigalete
plant utilize the wet process; the other production line at the Pertigalete
plant utilizes the dry process. All the plants utilize natural gas as fuel.
CEMEX Venezuela has its own electricity generating facilities, which are
powered by natural gas and diesel fuel.
As of December 31, 2003, CEMEX Venezuela owned and operated four port
facilities, three marine terminals and one river terminal. One port facility
is located at the Pertigalete plant, one at the Mara plant, one at the Catia
La Mar terminal on the Caribbean Sea near Caracas, and one at the Guayana
Plant on the Orinoco River in the Guayana Region. CEMEX Venezuela's cement is
transported either in bulk or in bags.
Capital Investments
We made capital expenditures of approximately U.S.$10.8 million in
2003 in our Venezuelan operations. We currently expect to make capital
expenditures of approximately U.S.$7.9 million during 2004.
Our Colombian Operations
Overview
In 1996, we acquired controlling interests in Cementos Diamante, S.A.
and Industrias e Inversiones Samper, S.A., which combined are Colombia's
second largest cement producer. In 1998, we increased our equity interest in
Cementos Diamante (now, CEMEX Colombia, S.A., or CEMEX Colombia, as a result
of a legal name change in August 2002), to approximately 78% and integrated
the operations of CEMEX Colombia and Industrias e Inversiones Samper, S.A.,
into a single company, making CEMEX Colombia the second largest cement
producer in Colombia. In 1999 and 2000, we increased our equity interest in
CEMEX Colombia to approximately 98.2% of total shares and 99.3% of ordinary
shares.
Our Colombian operations represented approximately 3% of our net
sales in 2003.
As of December 31, 2003, CEMEX Colombia was the second-largest cement
producer in Colombia, based on installed capacity of 4.8 million tons,
according to the Colombian Institute of Cement Producers, or ICPC.
CEMEX Colombia has a significant market share in the cement and
ready-mix concrete market in the so-called "Urban Triangle" of Colombia
comprising the cities of Bogota, Medellin and Cali. During 2003, these three
metropolitan areas accounted for approximately 49.4% of Colombia's cement
consumption. CEMEX Colombia's Ibague plant, which uses the dry process and is
strategically located between Bogota, Cali and Medellin, is Colombia's largest
and had an installed capacity of 2.5 million tons as of December 31, 2003.
CEMEX Colombia, through its Bucaramanga and Cucuta plants, is also an active
participant in Colombia's northeastern market. CEMEX Colombia's strong
position in the Bogota ready-mix concrete market is largely due to its access
to a ready supply of aggregate deposits in the Bogota area.
The Colombian Cement Industry
Competition. The Sindicato Antioqueno, or Argos, which either owns or
has interests in eight of Colombia's eighteen cement plants, has dominated the
Colombian cement industry. Argos has established a leading position in the
Colombian coastal markets through Cementos Caribe in Barranquilla, Compania
Colclinker in Cartagena and Tolcemento in Sincelejo. The other principal
cement producer is Cementos Boyaca, an affiliate of Holcim.
38
Our Colombian Operating Network
[MAP GRAPHIC OMITTED
CEMEX Colombia owns quarries with minimum reserves sufficient for
over 100 years at 2003 production levels. In addition to mining its own raw
materials, CEMEX Colombia also purchases raw materials from third parties. The
majority of CEMEX Colombia's cement is distributed through independent
distributors.
CEMEX Colombia's principal concrete product is ready-mix concrete,
produced to client specifications and delivered directly to job sites. CEMEX
Colombia also produces other specialized cement-based building materials,
including mortars, antibacterial concrete, shotcrete (sprayable concrete) and
pre-fabricated concrete construction products.
CEMEX Colombia operates its ready-mix concrete business through 21
ready-mix plants. CEMEX Colombia also uses 12 portable ready-mix plants, which
allow concrete to be mixed at major building sites, reducing transportation
costs and eliminating the need to acquire additional permanent ready-mix
concrete sites.
Description of Properties, Plants and Equipment
As of December 31, 2003, CEMEX Colombia owned five cement plants, one
clinker facility, and one grinding mill, having a total installed capacity of
4.8 million tons per year. Two of these plants and the clinker facility
utilize the wet process and three plants utilize the dry process. The Ibague
plant serves the Urban Triangle, while Cucuta and Bucaramanga plants, located
in the northeastern part of the country, serve local and coastal markets. The
La Esperanza cement plant and the Santa Rosa clinker mill are close to Bogota.
CEMEX Colombia also has an internal electricity generating capacity of 24.7
megawatts through a leased facility. In addition, CEMEX Colombia owns two land
distribution centers, one mortar plant, 21 ready-mix concrete plants, one
concrete products plant, eight aggregate mines and six aggregate operations.
Capital Investments
We made capital expenditures of approximately U.S.$6.0 million in
2003 in our Colombian operations. We currently expect to make capital
investments of approximately U.S.$6.2 million during 2004.
39
Other South American Investments
Our Equity Investment in Chile
We hold a 11.9% interest in Cementos Bio Bio, S.A., Chile's largest
cement producer according to our estimates, with an installed capacity as of
December 31, 2003 of approximately 2.3 million tons. Cementos Bio Bio owns and
operates three cement plants. Two of the cement plants are located in the
Santiago-Concepcion corridor, and the third plant is located in the northern
Antofogasta region. Cementos Bio Bio's primary market is the Concepcion
market. In addition, Cementos Bio Bio has 1.2 million cubic meters of
ready-mix concrete production capacity.
Central America and the Caribbean
As for the year ended December 31, 2003, Central America and the
Caribbean, which includes our operations in Costa Rica, the Dominican
Republic, Panama, Nicaragua, Puerto Rico and other assets in the Caribbean,
represented approximately 8% of our net sales, 5% of our total installed
capacity and 5% of our total assets.
Through our investments in Costa Rica, Panama and Nicaragua, we have
established a strategic presence in the mainland markets of Central America.
Our Costa Rican Operations
Overview. As of December 31, 2003, we held a 98.4% interest in CEMEX
(Costa Rica), S.A., or CEMEX Costa Rica, which was formerly named Cementos del
Pacifico, S.A. until it changed its legal name in August 2003.
The Costa Rican Cement Industry
Approximately 1.109 million tons of cement were sold in Costa Rica
during 2003, according to Camara de la Construccion de Costa Rica, the Costa
Rican construction industry association. The Costa Rican cement market is a
predominantly retail market, and we estimate that over three quarters of
cement sold is bagged cement.
Competition. The Costa Rican cement industry includes two producers,
CEMEX Costa Rica and Industria Nacional de Cemento, an affiliate of Holcim. We
estimate that the two companies control roughly equal proportions of the
market.
Our Costa Rican Operating Network. CEMEX Costa Rica owns and operates
one grinding mill and cement plant in northwest Costa Rica and one grinding
mill in San Jose.
[MAP GRAPHIC OMITTED
40
Products and Distribution Channels. CEMEX Costa Rica has five
strategically located distribution centers, two on the Pacific coast and three
in metropolitan areas, where 72% of total 2003 sales were made.
Exports. During 2003, exports of cement by our Costa Rican operations
represented approximately 40% of our total cement production in Costa Rica. In
2003, 26% of our exports from Costa Rica were to Nicaragua, 13% to El
Salvador, 53% to Guatemala and 8% to Panama.
Production Costs. In January 2001, we commenced using pet coke as
fuel in the production of cement to reduce our production costs. During 2003,
our energy costs decreased approximately 2.0% in Costa Rica.
Description of Properties, Plant and Equipment. Our Costa Rican
operations' cement plant has one dry process production line with an installed
capacity of 850,000 tons. Our grinding mill in northwest Costa Rica has a
grinding capacity of 657,000 tons. Our second grinding mill in San Jose has a
capacity of 201,480 tons.
Capital Investments. We made capital expenditures of approximately
U.S.$7.1 million in 2003 in our Costa Rican operations. We currently expect to
make capital expenditures of approximately U.S.$2.6 million during 2004.
Our Dominican Republic Operations
Overview
As of December 31, 2003, we owned 99.9% of Cementos Nacionales, a
cement producer in the Dominican Republic with an installed capacity of 2.4
million tons of cement, 10 distribution centers, and a concrete, aggregate and
gypsum operation through a 25 year lease with the Dominican Republic
government, which enables us to supply all local and regional gypsum
requirements.
In June 2003, Cementos Nacionales announced a U.S.$130 million
investment plan to install a new kiln for producing clinker with an annual
capacity of 1.6 million metric tons of clinker. This new kiln, which would
increase our total clinker production capacity in the Dominican Republic to
2.2 million metric tons per year, is expected to be completed in early 2005.
We invested approximately U.S.$12.3 million in this project in 2003 and expect
to invest approximately U.S.$57.7 million in 2004 and the remaining U.S.$60
million during 2005.
The Dominican Republic Cement Industry
In 2003, Dominican Republic cement consumption reached 3.0 million
metric tons, and some cement imports were necessary to fulfill domestic
demand. According to our estimates, about 28,000 metric tons were imported for
a special marine project in the east zone of the country.
Competition. Cementos Nacionales serves the cement market throughout
the Dominican Republic. Its principal competitors are Cementos Cibao, a local
competitor, and Cemento Colon, an affiliate of Holcim.
41
Our Dominican Republic Operating Network. As of December 31, 2003,
Cementos Nacionales was the leading cement producer in the Dominican Republic,
based on installed capacity as reported by International Cement Review in the
Global Cement Report. Cementos Nacionales' sales network covers the country's
main consumption areas, which are Santo Domingo, Santiago de los Caballeros,
La Vega, San Pedro de Macoris and Azua.
[MAP GRAPHIC OMITTED
Production Costs. Cementos Nacionales uses a dry production process
and has an internal electricity generating capacity of approximately 37.7
megawatts. This generating capacity covers our total demand for electricity at
2003 levels, providing Cementos Nacionales with a competitive cost advantage.
Cementos Nacionales maintains its own limestone and clay quarries,
which we expect will provide sufficient reserves for up to 150 years at 2003
production levels. Sand and other auxiliary raw materials are purchased on the
domestic market.
Description of Properties, Plant and Equipment. Cementos Nacionales
currently owns one dry process cement plant in San Pedro de Macoris with an
installed capacity of 0.7 million tons per year of clinker, in addition to six
ready-mix concrete production plants, three grinding mills with an installed
capacity of 2.4 million tons per year, 10 distribution centers located
throughout the country and two marine terminals. During 2003, our Dominican
Republic clinker production facilities operated at full capacity and our
grinding mills operated at 70% capacity.
Capital Investments. We made capital expenditures of approximately
U.S.$ 13.4 million in 2003 in our Dominican Republic operations. We currently
expect to make capital investments of approximately U.S.$57.6 million during
2004.
Our Panamanian Operations
Overview. As of December 31, 2003, we owned a 99.2% interest in
Cemento Bayano.
The Panamanian Cement Industry
Approximately 706,000 cubic meters of ready-mix concrete were sold in
Panama during 2003, according to the General Comptroller of the Republic of
Panama (Contraloria General de la Republica de Panama). Panamanian cement
consumption increased 15% in 2003, according to our estimates.
Competition. The Panamanian cement industry includes two cement
producers, Cemento Bayano and Cemento Panama, S.A., an affiliate of Holcim and
Cementos del Caribe.
42
Our Panamanian Operating Network. As of December 31, 2003, Cemento
Bayano had an installed capacity for cement production of approximately
402,000 tons per year. As of December 31, 2003, we operated a distribution
network of six ready-mix concrete plants. Our cement plant utilizes the dry
process.
[MAP GRAPHIC OMITTED
Production Costs. Panama has one of the highest energy costs of any
country in which CEMEX has operations. In response, Cemento Bayano has taken
significant steps to reduce energy costs. Cemento Bayano now runs on a more
cost-efficient mix of fuels (15% alternative fuels, which have completely
replaced fuel oil, and 85% petcoke). Currently, fuel oil is just used in start
up.
Cemento Bayano also reduced its energy cost per ton, a critical cost
of our manufacturing process, by securing a consistent supply of electric
energy and decreasing prices per kwh through negotiating the bulk purchase of
electric energy in the "spot market" as a "large consumer."
Description of Properties, Plant and Equipment. Our operations in
Panama include one dry production process cement plant, with an installed
clinker capacity of 382,000 tons per year. In addition, Cemento Bayano owns
and operates six ready-mix concrete facilities; three in Panama City, one in
Colon, one in Aguadulce and one in Chiriqui. In December 2003, Cemento Bayano
acquired for U.S.$4 million a new quarry to supply aggregates for its
ready-mix operations.
Capital Investments. We made capital expenditures of approximately
U.S.$7.6 million in 2003 in our Panamanian operations, including an investment
of approximately U.S.$2.5 million in a new kiln dust filter. We currently
expect to make capital expenditures of approximately U.S.$4.3 million during
2004.
Our Nicaragua Operations
Overview. According to our estimates, Nicaraguan cement production
during 2003 grew 7.8% compared to 2002. The increase was primarily due to
improved political and economic conditions in 2003 following political turmoil
in 2002, including the conviction of former President Aleman of corruption
charges. In addition, eighty percent of Nicaragua's external debt was forgiven
under the auspices of the HIPC (High Indebted Poor Countries) initiative, and
the government achieved some success in its fight against corruption.
Increases in the amount of public investment and the number of private
residential projects also contributed to the increase in cement consumption.
The Nicaraguan Cement Industry
According to our estimates, 560,000 tons of cement were sold in
Nicaragua during 2003.
43
Competition. Two participants compete in the Nicaraguan cement
industry: CEMEX Nicaragua and Holcim. Our market share in 2003 was 55.5%,
according to our estimates. Our product, "Cemento Canal", has a high brand
recognition because it has been 100% made in Nicaragua since 1942. Holcim
started its milling operations in Nicaragua in 1997 with two brands,
"Supernic" and "Cemenic." In 2003 Holcim discontinued these brand names and
introduced its worldwide cement brand, "Holcim."
Our Nicaraguan Operating Network. CEMEX Nicaragua leases and operates
one cement plant, located in San Rafael del Sur, approximately 45 kilometers
southwest of the capital Managua. Since March 2003 Cemex has leased a 100,000
ton milling plant in Managua, which has been used exclusively for pet-coke
milling.
[MAP GRAPHIC OMITTED
Description of Properties, Plant and Equipment. Our Nicaraguan leased
cement plant has five kilns utilizing the wet production process with an
installed milling capacity of 470,000 tons.
Capital Investments. We made capital expenditures of approximately
U.S.$4.6 million in 2003 in our Nicaraguan operations. We currently expect to
make capital expenditures of approximately U.S.$2.3 million during 2004.
Our Puerto Rico Operations
Overview. Our Puerto Rican operations, acquired in the third quarter
of 2002, represented approximately 22% of our cement sales volumes in the
Caribbean region in 2003.
As of December 31, 2003, we owned 100% of Puerto Rican Cement Company,
Inc., or PRCC.
The Puerto Rican Cement Industry
In 2003, Puerto Rican cement consumption reached 1.8 million tons.
Competition. PRCC serves the cement market throughout Puerto Rico. The
Puerto Rican cement industry in 2003 was comprised of two cement producers,
PRCC, which we estimate had 51% market share, and San Juan Cement Co., an
affiliate of Italcementi, which we estimate had 31% market share. In addition,
we estimate an independent cement importer, Antilles Cement Co., had a 18%
market share.
44
Our Puerto Rican Operating Network. As of December 31, 2003, PRCC had
an installed capacity for cement production of approximately 1.2 million tons
per year. PRCC utilizes the dry process. In addition, we operate a distribution
network of ten ready-mix concrete plants and one distribution center.
[MAP GRAPHIC OMITTED]
Production Costs. At the time of acquisition, PRCC had one of the
highest energy costs of any region in which CEMEX has operations. In response,
we have taken significant steps to reduce energy cost.
PRCC has focused on reducing its energy cost by:
o securing a consistent supply of electric energy and decreasing
prices per kwh through negotiating the bulk purchase of electric
energy;
o negotiating energy tariffs charged during both peak and off-peak
hours; and
o rationalizing the use of energy in accordance with CEMEX "best
practices" standards for low average energy consumption.
PRCC invested U.S.$750,000 during 2003 in an electric sub-station. This project
was completed in December 2003 and will allow us to decrease energy consumption
during off-peak hours starting in 2004.
Description of Properties, Plant and Equipment. Our operations in
Puerto Rico include one 100%-owned cement plant utilizing the dry production
process, with an installed clinker capacity of approximately 1.1 million tons
per year. In addition, PRCC owns and operates ten ready-mix concrete
facilities, mainly serving the sector of the Puerto Rican market located on the
eastern part of the island.
Capital Investments. We made capital expenditures of approximately
U.S.$26.0 million in 2003 in our Puerto Rican operations. We currently expect
to make capital investments of approximately U.S.$8.3 million during 2004.
Our Other Caribbean Operations
We are a party to a strategic alliance in Trinidad and Tobago, through
which we have the right to participate jointly in the production and sale of
cement from these islands and from the Arawak plant on the island of Barbados
to customers in various countries in the eastern Caribbean. We operate in the
Bahamas, Bermuda, the Cayman Islands and Haiti through one of our subsidiaries.
We believe that the Caribbean region holds considerable strategic
importance because of its geographic location, which facilitates exports from
our operations in Mexico, Venezuela, Costa Rica, Spain, Colombia and Panama as
well as other countries through a network of nine land distribution centers and
six marine terminals.
45
Our Trading Operations
We traded more than 9 million tons of cement and clinker in 2003.
Approximately 51% of this amount consisted of exports from our operations in
Venezuela, Mexico, Philippines, Costa Rica, Spain, Puerto Rico, Nicaragua and
Egypt. Approximately 49% was purchased from third parties in countries such as
Thailand, Turkey, South Korea, Taiwan, the United States, Peru, Lebanon, China,
Cyprus, Peru, Venezuela, Indonesia, Belgium, Portugal, Malaysia, France,
Colombia, Spain, Morocco and Egypt. During 2003, we conducted trading
activities in 70 countries.
To enhance our trading operations in the Mediterranean region, we are
currently building three grinding mills in Italy, each with a capacity of
approximately 350 thousand tons per year. The mills are expected to begin
operating during the second half of 2004. With respect to these operations, we
made capital investments of approximately U.S.$13 million during 2003, and we
currently expect to make capital investments of approximately U.S.$41 million
during 2004.
Our trading network enables us to maximize the capacity utilization of
our facilities worldwide while reducing our exposure to the inherent
cyclicality of the cement industry. We are able to distribute excess capacity
to regions around the world where there is demand.
46
Regulatory Matters and Legal Proceedings
A description of material regulatory and legal matters affecting us is
provided below.
Tariffs
Mexican tariffs on imported goods vary by product and have been as
high as 100%. In recent years, import tariffs have been substantially reduced,
and currently range from none at all for raw materials to over 20% for finished
products, with an average weighted tariff for Mexican industry of approximately
10%. As a result of the North American Free Trade Agreement, or NAFTA, as of
January 1, 1998, the tariff on cement imported into Mexico from the United
States or Canada was eliminated. However, a tariff in the range of 13% ad
valorem will continue to be imposed on cement produced in all other countries
unless tariff reduction treaties are implemented or the Mexican government
unilaterally reduces that tariff. While the reduction in tariffs could lead to
increased competition from imports in our Mexican markets, we anticipate that
the cost of transportation from most producers outside Mexico to central
Mexico, the region of highest demand, will remain an effective barrier to
entry.
Spain, as a member of the European Union, is subject to the uniform
European Union commercial policy. There is no tariff on cement imported into
Spain from another European Union country or on cement exported from Spain to
another member country. For cement imported into a member country from a
non-member country, the tariff is currently 1.7% of the customs value. Any
country with preferential treatment with the European Union is subject to the
same tariffs as members of the European Union. Most Eastern European producers
who export cement into Spain currently pay no tariff.
Environmental Matters
We use processes that are designed to protect the environment
throughout all the production stages in all our operations worldwide. We
believe that we are in substantial compliance with all material environmental
laws applicable to us.
European Union directives imposing stricter environmental standards
are expected to be implemented in Spain by 2007. For the purpose of adopting
the directives, on July 3, 2002, Spain promulgated Law 16/2002, which
establishes mechanisms for the prevention and integrated control of pollution.
The new law requires that factories operating in Spain receive an integrated
environmental authorization from the relevant regulatory body at the autonomous
region level, generally the department of the environment. This new law came
into force on July 3, 2002; however, due to a transitional period, existing
industries need not comply until October 30, 2007. In anticipation of our
compliance by this date, one of our eight plants in Spain has already received
the required authorization. With respect to our other plants, we already comply
or believe that we would be able to comply with the requisite standards, if
necessary, without significant expenditures. In addition, we are not aware of
any material environmental liabilities with respect to our Spanish operations.
CEMEX Venezuela's cement production plants are subject to and comply
with Venezuelan environmental regulations. The Ministerio del Ambiente y los
Recursos Naturales, or Ministry of the Environment and Natural Resources, is
the regulatory body in Venezuela with jurisdiction over environmental matters.
CEMEX Venezuela has decreased the emission levels of cement dust, through dust
extraction equipment installed in all its cement plants.
We were one of the first industrial groups in Mexico to sign an
agreement with the Secretaria del Medio Ambiente y Recursos Naturales, or
SEMARNAT, the Mexican government's environmental ministry, to carry out
voluntary environmental audits in our 15 Mexican cement plants, including our
Hidalgo plant, which temporarily halted operations in 2002, under a
government-run program. In 2001, the Mexican environmental agency in charge
of the voluntary environmental auditing program, the Procuraduria Federal de
Proteccion al Ambiente, or PROFEPA, which is part of SEMARNAT, completed
auditing our 15 cement plants and awarded all our plants, including our
Hidalgo plant, a Certificado de Industria Limpia, Clean Industry Certificate,
certifying that our plants are in compliance with environmental laws. The
Clean Industry Certificates are strictly renewed every two years. For over a
decade, the technology for recycling used tires into an energy source has
been employed in our Ensenada
47
and Huichapan plants. Our Monterrey plant and our Hermosillo plant started
using tires as an energy source in September 2002 and November 2003,
respectively. Collection centers in Tijuana, Mexicali and Ensenada currently
enable us to recycle an estimated one million tires per year. During 2003,
approximately 4.1% of the total fuel consumed in the Ensenada plant was
provided by this alternative fuel. The Huichapan, Monterrey and Hermosillo
plants substituted approximately 1.6%, 2.3% and 0.3%, respectively, of their
total fuel used with this alternative fuel.
Between 1998 and 2003, our Mexican operations have invested
approximately U.S.$19.1 million in the acquisition of environmental protection
equipment and the implementation of the ISO 14001 environmental management
standards of the International Organization for Standardization, or ISO.
Currently, 14 of our cement plants in Mexico have been awarded the ISO 14001
certification for environmental management systems.
As of December 31, 2003, our eight cement plants in Spain and our
cement mill in Tenerife, Spain have received the ISO 14001 certification for
environmental management systems.
CEMEX, Inc. is subject to a wide range of U.S. Federal, state and
local laws, regulations and ordinances dealing with the protection of human
health and the environment. These laws are strictly enforced and can lead to
significant monetary penalties for noncompliance. These laws regulate water
discharges, noise, and air emissions, including dust, as well as the handling,
use and disposal of hazardous and non-hazardous waste materials. These laws
also create a shared liability by responsible parties for the cost of cleaning
up or correcting releases to the environment of designated hazardous
substances. We therefore may have to remove or mitigate the environmental
effects of the disposal or release of these substances at CEMEX, Inc.'s various
operating facilities or elsewhere. We believe that our current procedures and
practices for handling and managing materials are generally consistent with the
industry standards and legal and regulatory requirements and that we take
appropriate precautions to protect employees and others from harmful exposure
to hazardous materials.
Several of CEMEX, Inc.'s previously owned and currently owned
facilities have become the subject of various local, state or Federal
environmental proceedings and inquiries in the past. While some of these
matters have been settled, others are in their preliminary stages and may not
be resolved for years. The information developed to date on these matters is
not complete. CEMEX, Inc. does not believe it will be required to spend
significantly more on these matters than the amounts already recorded in our
consolidated financial statements included elsewhere in this annual report.
However, it is impossible for CEMEX, Inc. to determine the ultimate cost that
it might incur in connection with such environmental matters until all
environmental studies and investigations, remediation work, negotiations with
other parties that may be responsible, and litigation against other potential
sources of recovery have been completed. With respect to known environmental
contingencies, CEMEX, Inc. has recorded provisions for estimated probable
liabilities and does not believe that the ultimate resolution of such matters
will have a material adverse effect on CEMEX's financial results.
U.S. Anti-Dumping Sunset Reviews
Under the U.S. anti-dumping and countervailing duty laws, the Commerce
Department and the International Trade Commission, or ITC, are required to
conduct "sunset reviews" of outstanding anti-dumping and countervailing duty
orders and suspension agreements every five years. At the conclusion of these
reviews, the Commerce Department is required to terminate the order or
suspension agreement unless the agencies have found that termination is likely
to lead to continuation or recurrence of dumping, or a subsidy in the case of
countervailing duty orders, and material injury. Under special transition
rules, the first sunset reviews commenced in August 1999 for cases involving
gray Portland cement and clinker from Mexico and Venezuela (described below),
which had orders and agreements issued before 1995, and were concluded by the
Commerce Department in July 2000 and by the ITC in October 2000.
In July 2000, the Commerce Department determined not to revoke the
anti-dumping order on imports from Mexico. On October 5, 2000, the ITC found
likelihood of injury to the U.S. industry and determined not to revoke this
anti-dumping order. Thus, the order remains in place. On September 19, 2001,
CEMEX filed a petition for a "changed circumstances" review. The International
Trade Commission decided in December 2001 not to initiate such a review. CEMEX
has appealed the ITC's decision in the "sunset review" and the "changed
circumstances" review to NAFTA. As of March 1, 2004, no NAFTA Panel has been
formed to review the ITC's decision to initiate a "changed circumstances"
review.
48
On October 5, 2000, the ITC determined that terminating the
Anti-Dumping Suspension Agreement involving imports from Venezuela would not
likely lead to a continuation or recurrence of injury to the U.S. market, and
voted to terminate the agreement. Consequently, on November 8, 2000, the
Commerce Department issued a notice terminating the Anti-Dumping Suspension
Agreement covering imports of cement from Venezuela. On July 28, 2003, the
United States Court of International Trade upheld the Commerce Department's
decision to terminate the Suspension Agreement. The U.S. cement industry has
appealed the decision of the Court of International Trade to the Court of
Appeals for the Federal Circuit. The appeal is currently pending before the
appellate court.
U.S. Anti-Dumping Rulings--Mexico
Our exports of Mexican gray cement from Mexico to the United States
are subject to an anti-dumping order that was imposed by the Commerce
Department on August 30, 1990. Pursuant to this order, firms that import gray
Portland cement from us in the United States must make cash deposits with the
U.S. Customs Service to guarantee the eventual payment of anti-dumping duties.
Mexican importers' deposits are being liquidated in stages, as appeals
are exhausted for each annual review period. When the final anti-dumping rate
for any review period causes the amount due to exceed the amount that was
deposited, the Mexican importers are required to pay the difference with
interest. When the final anti-dumping rate for any review period is lower than
the amount that was deposited, the U.S. Customs Service refunds the difference,
with interest, to the Mexican importers.
As of December 31, 2003, CEMEX Corp., as the parent company to our
U.S. subsidiaries that import Mexican cement into the United States, had
accrued liabilities of U.S.$132.9 million, including accrued interest, for the
difference between the amount of anti-dumping duties paid on imports and the
latest findings by the Commerce Department in its administrative reviews.
The Commerce Department has published its final dumping determinations
for the first, second, third, fourth, fifth and seventh review periods. The
Commerce Department's final results of its final determinations for the sixth,
eighth, ninth, tenth, eleventh and twelfth review periods have also been
published, but have been suspended pending review by NAFTA panels.
On October 20, 2003, the NAFTA Extraordinary Challenge Committee
upheld the NAFTA Panel reviewing the final results of the fifth administrative
review, covering the period August 1, 1994 - July 1, 1995. The NAFTA Panel
upheld the Commerce Department's remand results which lowered the antidumping
duty margin for imports during the fifth review period to 44.9% ad valorem. The
Customs Service has begun liquidating entries of cement from Mexico made during
the fifth review period.
On November 25, 2003, the NAFTA Panel reviewing the final results of
the seventh review period upheld the Commerce Department's remand results of
the seventh review period. The remand results lowered the antidumping margin
for imports made during the seventh review period to 37.3% ad valorem.
The latest final determination by the Commerce Department covering
twelfth review period, commencing on August 1, 2001 and ending on July 31,
2002, was issued on September 16, 2003. The Commerce Department determined that
the antidumping margin was 80.8% ad valorem. The final results for the twelfth
review period establish the cash deposit rate for imports of gray Portland
cement and cement clinker from Mexico made on or after September 16, 2003. The
cash deposit rate was established at $52.41 per metric ton, which will remain
in effect until the final results of the thirteenth review period are
published.
49
The status of each period still under review or appeal is as follows:
Period Cash Deposits Status
------ ------------- ------
8/1/95-7/31/96 61.85% 37.49% determined by the Commerce Department upon review.
(effective 5/5/1997) Liquidation suspended pending NAFTA panel review.
8/1/97-7/31/98 73.69%, 35.88% and 37.49% 45.98% determined by the Commerce Department upon review.
(effective 5/4/1998) Liquidation suspended pending NAFTA panel review.
8/1/98-7/31/99 37.49%, 49.58% (effective 38.65% determined by the Commerce Department upon review.
3/17/1999) Liquidation suspended pending NAFTA panel review.
8/1/99-7/31/00 49.58%, 45.98% (effective 50.98% determined by the Commerce Department upon review.
3/16/2000) Liquidation suspended pending appeal to NAFTA panel review.
8/1/00-7/31/01 49.58%, 38.65% (effective 73.74% determined by the Commerce Department upon review.
5/14/2001) Liquidation suspended pending appeal to NAFTA panel review.
8/1/01-7/31/02 38.65%, 50.98% 80.75% determined by the Commerce Department upon review.
(effective 3/19/2002) Liquidation suspended pending appeal to NAFTA panel review.
8/1/02 - 7/31/03 50.98%, 73.74% (effective Currently under review by the Commerce Department.
1/14/2003)
8/1/03 - to date 73.74%, U.S.$52.41 per Subject to review by the Commerce Department.
metric ton
(effective 10/15/2003)
U.S. Anti-Dumping Rulings--Venezuela
On May 21, 1991, U.S. producers of gray cement and clinker filed
petitions with the Commerce Department and the ITC claiming that imports of
gray cement and clinker from Venezuela were subsidized by the Venezuelan
government and were being dumped into the U.S. market. The producers asked the
U.S. government to impose anti-dumping and countervailing duties on these
imports. These claims arose prior to our acquisition of our Venezuelan
operations in 1994, but for purposes of the following discussion, we refer to
the actions taken by the predecessor company as actions taken by CEMEX
Venezuela. CEMEX Venezuela contested the dumping claim and the countervailing
duty claim, and both cases were suspended.
The Commerce Department's preliminary determination regarding the
dumping claim was published on November 4, 1991. The Commerce Department
initially found that CEMEX Venezuela had a dumping margin of 49.2%. Rather than
proceeding with the final Commerce Department and ITC determinations, CEMEX
Venezuela and the Commerce Department entered into an Anti-Dumping Suspension
Agreement on February 11, 1992. Under the Anti-Dumping Suspension Agreement,
CEMEX Venezuela agreed not to sell gray cement or clinker in the United States
at a price less than the "foreign market value." The foreign market value was
determined by the Commerce Department based on information provided by CEMEX
Venezuela each quarter. CEMEX Venezuela was required to report to the Commerce
Department sales in the U.S. market, costs of production and related data.
During its sunset review of the Anti-Dumping Suspension Agreement, the ITC
determined that terminating the agreement would not likely lead to a
continuation or recurrence of injury to the U.S. market, and voted to terminate
the Anti-Dumping Suspension Agreement on October 5, 2000. Consequently, on
November 8, 2000, the Commerce Department issued a notice terminating the
Anti-Dumping Suspension Agreement.
On July 28, 2003, the Court of International Trade upheld the Commerce
Department's termination of the Suspension Agreement. The domestic petitioners
have appealed the court's decision to the U.S. Court of Appeals for the Federal
Circuit. No decision is expected until the second quarter of 2004 at the
earliest.
50
Anti-Dumping in Taiwan
Five Taiwanese cement producers--Asia Cement Corporation, Taiwan
Cement Corporation, Lucky Cement Corporation, Hsing Ta Cement Corporation and
China Rebar--filed before the Tariff Commission under the Ministry of Finance
(MOF) of Taiwan an anti-dumping case involving imported gray Portland cement
and clinker from the Philippines and Korea.
In a letter dated July 19, 2001, the MOF informed the petitioners and
the respondent producers in exporting countries that a formal investigation had
been initiated. Among the respondents in the petition are APO Cement
Corporation or APO, Rizal and Solid, indirect subsidiaries of CEMEX, which
received their anti-dumping questionnaires from the International Trade
Commission under the Ministry of Economic Affairs (ITC-MOEA) on August 2, 2001,
and from the MOF on August 16, 2001.
Rizal and Solid replied to the ITC-MOEA by confirming that they were
not exporting cement/clinker during the covered period. On the other hand, in
its position paper filed on August 18, 2001 and in the public hearing held on
August 20, 2001, APO contested the allegation of "injury" in the anti-dumping
proceedings before the ITC-MOEA.
In a letter dated October 2, 2001, the ITC-MOEA notified the
respondent producers about the result of the preliminary injury investigation
and its determination that there is a reasonable indication that the domestic
industry in Taiwan was materially injured by reason of imports of Portland
cement and clinker from South Korea and the Philippines that are alleged to be
sold in Taiwan at less than normal value. In keeping with the implementing
regulations on the imposition of antidumping duties in Taiwan, the ITC-MOEA has
transferred the case to the MOF for further investigation.
On October 12, 2001 and November 2, 2001, APO filed its replies to the
MOF questionnaire to contest the allegation of "dumping" in the anti-dumping
proceedings before the MOF. In a letter dated January 22, 2002, the MOF
notified the petitioner and respondents that it adopted on January 15, 2002 a
resolution preliminarily finding that there was "dumping" and resolving that
investigation on the issue of "dumping" would continue, but that no provisional
anti-dumping duty would be imposed.
In a letter dated June 26, 2002, the ITC-MOEA notified respondent
producers that its final injury investigation concluded that the imports from
South Korea and the Philippines have caused material injury to the domestic
industry in Taiwan.
In a letter dated July 12, 2002, the MOF notified the respondent
producers that a dumping duty would be imposed on Portland cement and clinker
imports from the Philippines and South Korea commencing from July 19, 2002. The
duty rate imposed on imports from APO, Rizal and Solid was 42%.
On September 17, 2002, APO, Rizal and Solid filed before the Taipei
High Administrative Court an appeal in opposition to the anti-dumping duty
imposed by the MOF. As of April 30, 2004, there have been no material
developments. We anticipate further hearings to be conducted with respect to
this appeal.
Tax Matters
As of December 31, 2003, we and some of our Mexican subsidiaries have
been notified of several tax assessments determined by the Mexican tax office
with respect to the tax years from 1992 through 1996 in a total amount of
Ps4,885 million. With respect to the tax years from 1993 through 1996, the tax
assessments are based primarily on: (i) recalculations of the inflationary tax
deduction, since the tax authorities claim that "Advance Payments to Suppliers"
and "Guaranty Deposits" are not by their nature credits, (ii) disallowed
restatement of tax loss carryforwards in the same period in which they
occurred, (iii) disallowed determination of tax loss carryforwards, and (iv)
disallowed amounts of business asset tax, commonly referred to as BAT,
creditable against the controlling entity's income tax liability on the grounds
that the creditable amount should be in proportion to the equity interest that
the controlling entity has in its relevant controlled entities. We have filed
an appeal for each of these tax claims before the Mexican federal tax court,
and the appeals are pending resolution.
51
As of December 31, 2003, the Philippene Bureau of Internal Revenue, or
BIR, assessed APO for a deficiency in the amount of income tax paid in the tax
years 1998 through 2001 amounting to PhP832.1 million (U.S.$15.0 million as of
December 31, 2003, based on an exchange rate of PhP55.569 to U.S.$1.00, which
was the Philippine Peso/Dollar exchange rate on December 31, 2003 as published
by the Bangko Sentral ng Pilipinas, the central bank of the Republic of the
Philippines). The assessment disallows APO's income tax holiday related income.
We have contested BIR's findings with the Court of Tax Appeal, or CTA. We
believe that these claims will not have a material adverse effect on us.
However, an adverse resolution of these claims could have a material adverse
effect on our results of operations in the Philippines.
The BIR also finalized its tax assessments for Solid's 1999 tax year
amounting to PhP387.6 million (U.S.$7.0 million as of December 31, 2003, based
on an exchange rate of PhP55.569 to U.S.$1.00) and APO's 1999 tax year
amounting to PhP833.3 million (U.S.$15.0 million as of December 31, 2003, based
on an exchange rate of PhP55.569 to U.S.$1.00). We continue to submit relevant
evidence to the BIR to contest these assessments. Our next recourse is to
contest these assessments with the CTA if the BIR issues a final collection
letter.
In addition, Solid's 1998 tax year and APO's 1997-1998 tax years are
under preliminary review for deficiency taxes. Finalization of the assessment
was held in abeyance by the BIR as we continue to present evidence to dispute
their findings. We intend to contest any and all assessments if they arise.
Other Legal Proceedings
In May 1999, several companies filed a civil liability suit in the
civil court of the circuit of Ibague, Colombia, against two of our Colombian
subsidiaries, alleging that these subsidiaries were responsible for
deterioration in the rice production capacity of land of the plaintiffs, caused
by pollution emanating from our cement plants located in Ibague, Colombia. On
December 15, 2003, a judgment was entered against us under which we were
ordered to pay to the plaintiffs an amount equal to CoP21,114 million (U.S.$7.6
million as of December 31, 2003, based on an exchange rate of CoP2,778.21 to
U.S.$1.00, which was the Colombian Peso/Dollar exchange rate on December 31,
2003 as published by the Banco de la Republica de Colombia, the central bank of
Colombia). We filed an appeal on January 13, 2004, and the case will be sent to
the Superior Court of Ibague for review.
In March 2001, 42 transporters filed a civil liability suit in the
civil court of Ibague, Colombia, against three of our Colombian subsidiaries.
The plaintiffs contend that these subsidiaries are responsible for the alleged
damages caused by breach of raw material transportation contracts. The
plaintiffs asked for relief in the amount of CoP127,242 million (U.S.$45.8
million as of December 31, 2003, based on an exchange rate of CoP2,778.21 to
U.S.$1.00). As of April 30, 2004, this proceeding had not reached the
evidentiary stage. Typically, proceedings of this nature continue for several
years before final resolution.
As of December 31, 2003, CEMEX, Inc. had accrued liabilities
specifically relating to environmental matters in the aggregate amount of U.S.$
32.4 million. The environmental matters relate to (i) the disposal of various
materials in accordance with past industry practice, which might be categorized
as hazardous substances or wastes, and (ii) the cleanup of sites used or
operated by CEMEX, Inc., including discontinued operations, in regard to the
disposal of hazardous substances or wastes, either individually or jointly with
other parties. Most of the proceedings are in the preliminary stage, and a
final resolution might take several years. For purposes of recording the
provision, CEMEX, Inc. considers that it is probable that a liability has been
incurred and the amount of the liability is reasonably estimable, whether or
not claims have been asserted, and without giving effect to any possible future
recoveries. Based on information developed to date, CEMEX, Inc. does not
believe it will be required to spend significant sums on these matters in
excess of the amounts previously recorded. Until all environmental studies,
investigations, remediation work, and negotiations with or litigation against
potential sources of recovery have been completed, the ultimate cost that might
be incurred to resolve these environmental issues cannot be assured.
In December 2002, an ex-maritime broker for PRCC filed a civil
liability lawsuit in Puerto Rico against CEMEX, S.A. de C.V., PRCC and other
unaffiliated entities, including Puerto Rican authorities. The plaintiff
contends that the defendants conspired to violate state and federal antitrust
laws so that one of the defendants, who is not affiliated with us, could gain
control of the maritime broker market in Port of Ponce,
52
Puerto Rico. The plaintiff has asked for relief in the amount of approximately
U.S.$18 million. In September 2003, the United States District Court for the
District of Puerto Rico dismissed all claims against us, and entered judgment
accordingly. The plaintiff has subsequently filed two post-judgment motions
requesting reconsideration of the court's opinion, and we have requested the
denial of such motions. Resolution of these motions is still pending before the
court.
In March 2003, a lawsuit was filed in the Indonesian province of West
Sumatra in the Padang District Court against (i) Gresik, an Indonesian cement
producer in which we own a 25.5% interest through CAH and the Republic of
Indonesia owns a 51% interest, (ii) Semen Padang, a 99.9%-owned subsidiary of
Gresik that owns and operates Gresik's Padang cement plant, and (iii) several
Indonesian government agencies. The lawsuit, which was filed by a foundation
purporting to act in the interest of the people of West Sumatra, challenged the
validity of the sale of Semen Padang by the Indonesian government to Gresik in
1995 on the grounds that the Indonesian government did not obtain the necessary
approvals for such sale. On May 9, 2003, the Padang District Court issued an
interim decision suspending Gresik's rights as a shareholder in Semen Padang on
the grounds that ownership of Semen Padang was an issue in dispute. On March
31, 2004, the Padang District Court announced its final decision in favor of
the foundation. On April 12, 2004, Gresik filed an appeal of this decision with
the Padang District Court, which will in turn forward the appeal to the High
Court of the West Sumatra province.
After the failure of several attempts to reach a negotiated or
mediated solution to these problems involving Gresik, on December 10, 2003, CAH
filed a request for arbitration against the Republic of Indonesia and the
Indonesian government before the International Centre for Settlement of
Investment Disputes, or ICSID, based in Washington D.C. CAH is seeking, among
other things, rescission of the purchase agreement entered into with the
Republic of Indonesia in 1998, plus repayment of all costs and expenses, and
compensatory damages. ICSID has accepted and registered CAH's request for
arbitration and issued a formal notice of registration on January 27, 2004. As
a result of the registration, an Arbitral Tribunal will be established to hear
the dispute. We cannot predict, however, what effect, if any, this action will
have on our investment in Gresik or what the ruling of the Arbitral Tribunal
will be. For a more detailed description of our investment in Gresik and the
ongoing difficulties with Semen Padang, please see "Europe, Asia and
Africa--Our Asian Operations--Our Indonesian Equity Investment" above.
On April 27, 2004, a subsidiary of CEMEX Colombia received notice as a
co-defendant, along with a government agency in charge of urban development in
Bogota, another supplier, and a ready-mix industry association, in an action
brought by a Colombian law firm on "public interest" grounds. The lawsuit
alleges that the use of a certain type of cement-based material in the
construction of roads for the "Transmilenio" public transport system and for
regular traffic resulted in defects that impede the proper functioning of the
"Transmilenio" system and hamper traffic flow. The lawsuit argues that CEMEX
Colombia's subsidiary, the other supplier, and the ready mix-industry
association promoted the use of the material, and seeks damages to pay for the
repair of the defects or, if repair is not possible, the rebuilding of the
defective road sections. We are currently evaluating the potential impact of
this matter on our Colombian operations. Because it is very early in the
process, we cannot estimate the financial implications of an adverse
resolution, but we believe that it is unlikely to have a material adverse
effect on our results of operations. We believe that this will be a protracted
matter that may result in additional lawsuits or actions. We intend to defend
our interests vigorously.
In the ordinary course of our business, we are party to various legal
proceedings. Other than as disclosed herein, we are not currently involved in
any litigation or arbitration proceedings, including any such proceedings which
are pending, which we believe will have, or have had, a material adverse effect
on us, nor, so far as we are aware, are any proceedings of that kind
threatened.
53
Item 5 - Operating and Financial Review and Prospects
--------------------------------------------
The following discussion should be read in conjunction with our
consolidated financial statements included elsewhere in this annual report. Our
financial statements have been prepared in accordance with Mexican GAAP, which
differ in significant respects from U.S. GAAP. See note 23 to our consolidated
financial statements, included elsewhere in this annual report, for a
description of the principal differences between Mexican GAAP and U.S. GAAP as
they relate to us.
Mexico experienced annual inflation rates of 4.6% in 2001, 5.6% in
2002 and 3.9% in 2003. Mexican GAAP requires that our consolidated financial
statements recognize the effects of inflation. Consequently, financial data for
all periods in our consolidated financial statements and throughout this annual
report, except as otherwise noted, have been restated in constant Mexican Pesos
as of December 31, 2003. See note 2B to our consolidated financial statements
included elsewhere in this annual report.
The percentage changes in cement sales volumes described in this
annual report for our operations in a particular country include the number of
tons of cement sold to our operations in other countries. Likewise, unless
otherwise indicated, the net sales financial information presented in this
annual report for our operations in each country include the Mexican Peso
amount of sales derived from sales of cement to our operations in other
countries, which have been eliminated in the preparation of our consolidated
financial statements included elsewhere in this annual report.
The following table sets forth selected financial information as of
and for each of the three years ended December 31, 2001, 2002, and 2003 by
principal geographic area expressed as an approximate percentage of our total
consolidated group before eliminations resulting from consolidation. We operate
in countries with economies in different stages of development and structural
reform, some of which are subject to fluctuations in exchange rates, inflation
and interest rates. These economic factors may affect our results of operations
and financial condition depending upon the depreciation or appreciation of the
exchange rate of each country in which we operate compared to the Mexican Peso
and the rate of inflation of each of these countries. The variations in (1) the
exchange rates used in the translation of the local currency to Mexican Pesos,
and (2) the rates of inflation used for the restatement of our financial
information to constant Mexican Pesos, as of the latest balance sheet
presented, may affect the comparability of our results of operations and
consolidated financial position from period to period.
%
Central
% America
% United % % % % % and the %
Mexico States Spain Venezuela Colombia Egypt Philippines Caribbean Others Combined Elimination Consolidated
(in millions of constant Mexican Pesos as of December 31, 2003, except percentages)
Net Sales For
the
Period Ended:
December 31, 2001 35% 26% 10% 6% 3% 2% 2% 6% 10% 85,330 (8,758) 76,572
December 31, 2002 34% 24% 14% 4% 3% 2% 2% 7% 10% 83,192 (8,150) 75,042
December 31, 2003 34% 22% 16% 4% 3% 2% 2% 8% 9% 87,849 (7,321) 80,528
Operating Income
For the Period
Ended:
December 31, 2001 65% 19% 12% 9% 6% 2% 1% 4% -18% 18,286 -- 18,286
December 31, 2002 72% 21% 18% 8% 6% 1% -- 7% -33% 15,029 -- 15,029
December 31, 2003 70% 14% 18% 7% 6% 2% -- 7% -24% 16,356 -- 16,356
Total Assets at:
December 31, 2001 22% 17% 7% 4% 3% 3% 3% 3% 38% 312,550 (133,044) 179,506
December 31, 2002 24% 19% 9% 3% 3% 2% 4% 5% 31% 262,488 (79,738) 182,750
December 31, 2003 22% 18% 14% 3% 3% 2% 3% 5% 30% 256,442 (76,425) 180,017
54
Critical Accounting Policies
We have identified below the accounting policies we have applied under
Mexican GAAP that are critical to understanding the overall financial reporting
of CEMEX.
Income Taxes
Our operations are subject to taxation in many different jurisdictions
throughout the world. Under Mexican GAAP, we recognize deferred tax assets and
liabilities using a balance sheet methodology which requires a determination of
the permanent and temporary differences between the financial statements
carrying amounts and the tax basis of assets and liabilities. Our worldwide tax
position is highly complex and subject to numerous laws that require
interpretation and application and that are not consistent among the countries
in which we operate. Our overall strategy is to structure our worldwide
operations to take greatest advantage of opportunities provided under the tax
laws of the various jurisdictions to minimize or defer the payment of income
taxes on a consolidated basis.
Many of the activities we undertake in pursuing this tax reduction
strategy are highly complex and involve interpretations of tax laws and
regulations in multiple jurisdictions and are subject to review by the relevant
taxing authorities. It is possible that the taxing authorities could challenge
our application of these regulations to our operations and transactions. The
taxing authorities have in the past challenged interpretations that we have
made and have assessed additional taxes. Although we have from time to time
paid some of these additional assessments, in general we believe that these
assessments have not been material and that we have been successful in
sustaining our positions. No assurance can be given, however, that we will
continue to be as successful as we have been in the past or that pending
appeals of current tax assessments will be judged in our favor. Significant
judgment is required to appropriately assess the amounts of tax assets. We
record tax assets when we believe that the recoverability of the asset is
determined to be more likely than not in accordance with established accounting
principles. If this determination cannot be made, a valuation allowance is
established to reduce the carrying value of the asset.
Recognition of the effects of inflation
Under Mexican GAAP, the financial statements of each subsidiary are
restated to reflect the loss of purchasing power (inflation) of its functional
currency. The inflation effects arising from holding monetary assets and
liabilities are reflected in the income statements as monetary position result.
Inventories, fixed assets and deferred charges, with the exception of fixed
assets of foreign origin and the equity accounts, are restated to account for
inflation using the consumer price index applicable in each country. The result
is reflected as an increase in the carrying value of each item. Fixed assets of
foreign origin are restated using the inflation index of the assets' origin
country and the variation in the foreign exchange rate between the country of
origin currency and the functional currency. The difference between the
inflation of the country and the factor utilized to restate a fixed asset of
foreign origin is presented in consolidated stockholders' equity in the line
item Effects from Holding Non-Monetary Assets. Income statement accounts are
also restated for inflation into constant Mexican Pesos as of the reporting
date.
In the event of a sudden increase in the rate of inflation in Mexico,
the adjustment that the market makes on the exchange rate of the Mexican Peso
against other currencies resulting from such inflation is not immediate and may
take several months, if it occurs at all. In this situation, the value
expressed in the consolidated financial statements for fixed assets of foreign
origin will be understated in terms of Mexican inflation, given that the
restatement factor arising from the inflation of the assets' origin country and
the variation in the foreign exchange rate between the country of origin
currency and the Mexican Peso will not offset the Mexican inflation.
A sudden increase in inflation could also occur in other countries in
which we operate.
Foreign currency translation
As mentioned above, the financial statements of consolidated foreign
subsidiaries are restated for inflation in their functional currency based on
the subsidiary country's inflation rate. Subsequently, the restated financial
55
statements are translated into Mexican Pesos using the foreign exchange rate at
the end of the corresponding reporting period for balance sheet and income
statement accounts.
In the event of an abrupt and deep depreciation of the Mexican Peso
against the U.S. Dollar, which would not be aligned with a corresponding
inflation of the same magnitude, the carrying amounts of the Mexican assets,
when presented in convenience translation into U.S. Dollars, will show a
decrease in value, in terms of Dollars, by the difference between the rate of
depreciation against the U.S. Dollar and the Mexican inflation rate.
Derivative financial instruments
As mentioned in note 2N to our consolidated financial statements
included elsewhere in this annual report, in compliance with the controls and
procedures established by our risk management committee, we use derivative
financial instruments such as interest rate and currency swaps, currency and
stock forward contracts, options and futures, in order to reduce risks
associated with changes in interest rates and foreign exchange rates of debt
agreements and as a vehicle to reduce financing costs, as well as: (i) hedges
of contractual cash flows and forecasted transactions, (ii) hedges of CEMEX's
net investments in foreign subsidiaries, and (iii) hedges of the future
exercise of options under our stock option programs. These instruments have
been negotiated with institutions and corporations with significant financial
capacity; therefore, we consider the risk of non-compliance with the
obligations agreed to by such counterparties to be minimal. Some of these
instruments have been designated as hedges of CEMEX's raw materials costs as
well as debt or equity instruments. In other cases, although some derivatives
comprise part of our financial strategy, they have not been designated as hedge
instruments because accounting hedge requirements were not met.
Effective January 1, 2001, in accordance with Bulletin C-2 "Financial
Instruments", we recognize all derivative financial instruments as assets or
liabilities in the balance sheet at their estimated fair value and the changes
in such values in the income statement for the period in which they occurred.
There are several exemptions to the general rule when derivatives are qualified
as accounting hedges (see note 2N to our consolidated financial statements
included elsewhere in this annual report). Premiums paid or received on hedge
derivative instruments are deferred and amortized over the life of the
underlying hedged instrument or immediately when they are settled; in other
cases, premiums are recorded in the income statement, at the time that they are
received or paid. See notes 11 and 16 to our consolidated financial statements
included elsewhere in this annual report.
Pursuant to the accounting principles established by Bulletin C-2, our
balance sheets and income statements are subject to volatility arising from
variations in interest rates, exchange rates, share prices and other conditions
established in our derivative instruments. The estimated fair value represents
a valuation effect at the reporting date, and the final cash inflows or
outflows that we will receive or make to our counterparties will not be known
until settlement of the derivative instruments occurs. The estimated fair
values of derivative instruments, used by us for recognition and disclosure
purposes in the financial statements and their notes, are supported by
confirmations of these values received from the counterparties to these
financial instruments; nonetheless, significant judgment is required to account
appropriately for the effects of derivative financial instruments in the
financial statements.
The estimated fair values of derivative financial instruments may
fluctuate over time, and are based on estimated settlement costs or quoted
market prices. These values should be viewed in relation to the fair values of
the underlying instruments or transactions, and as part of our overall exposure
to fluctuations in foreign exchange rates, interest rates and prices of shares.
The notional amounts of derivative instruments do not necessarily represent
amounts exchanged by the parties and, therefore, are not a direct measure of
our exposure through our use of derivatives. The amounts exchanged are
determined on the basis of the notional amounts and other items included in the
derivative instruments.
Impairment of long-lived assets
Our balance sheet reflects significant amounts of long-lived assets
(mainly fixed assets and goodwill) associated with our operations throughout
the world. Many of these amounts have resulted from past acquisitions, which
have required us to reflect these assets at their fair market values at the
dates of acquisition. We assess the recoverability of our long-lived assets
periodically or whenever events or circumstances arise that we believe trigger
a requirement to review such carrying values. This determination requires
substantial judgment and is highly complex when considering the myriad of
countries in which we operate, each of which has its own economic circumstances
that have to be monitored. Additionally, we monitor the lives assigned to these
long-lived assets for purposes of depreciation and amortization, when
applicable. This determination is subjective and is integral to the
determination of whether an impairment has occurred.
Valuation reserves on accounts receivable and inventories
On a periodic basis, we analyze the recoverability of our accounts
receivable and our inventories (supplies, raw materials, work-in-process and
finished goods), in order to determine if due to credit risk or other factors
in the case of our receivables and due to weather or other conditions in the
case of our inventories, some receivables may not be recovered or certain
materials in our inventories may not be utilizable in the production process
or for sale purposes. If we determine such a situation exists, the book value
related to the non-recoverable assets are adjusted and charged to the income
statement through an increase in the doubtful accounts reserve or the
inventory obsolescence reserve, as appropriate. These determinations require
substantial management judgment and are highly
56
complex when considering the various countries in which we have operations,
each having its own economic circumstances that requires continuous
monitoring, and our numerous plants, deposits, warehouses and quarries. As a
result, final losses from doubtful accounts or inventory obsolescence could
differ from our estimated reserves.
Transactions in our own stock
We have entered into various transactions involving our own stock.
These transactions have been designed to achieve various financial goals but
were primarily executed to give us a means of satisfying future transactions
that may require us to deliver significant numbers of shares of our own stock.
These transactions are described in detail in the notes to our consolidated
financial statements included elsewhere in this annual report. We view these
transactions as hedges against future exposure even though they do not meet the
definition of hedges under accounting principles. There is significant judgment
necessary to properly account for these transactions. Also, in some cases, the
obligations underlying the related transactions are required to be reflected at
market value, with the changes in such value reflected in our income statement.
There is the possibility that we could be required to reflect losses on the
transactions in our own shares without having a converse reflection of gains on
the transactions under which we would deliver such shares to others.
Results of Operations
Consolidation of Our Results of Operations
Our consolidated financial statements, included elsewhere in this
annual report, include those subsidiaries in which we hold a majority interest
or which we otherwise exercise control. All significant intercompany balances
and transactions have been eliminated in consolidation.
For the periods ended December 31, 2001, 2002 and 2003, our
consolidated results reflect the following transactions:
o In August and September 2003, we acquired 100% of the
outstanding shares of Mineral Resource Technologies Inc., and
the cement assets of Dixon-Marquette Cement for a combined
purchase price of approximately U.S.$99.7 million, subject to
adjustments. Located in Dixon, Illinois, the single cement
facility has an annual production capacity of 560,000 metric
tons.
o In July and August 2002, through a tender offer and subsequent
merger, we acquired 100% of the outstanding shares of PRCC. The
aggregate value of the transaction was approximately U.S.$281.0
million, including approximately U.S.$100.8 million of assumed
net debt.
o On July 12, 2002, we purchased 25,429 shares of common stock
(approximately 0.3% of the outstanding share capital) of CAH
from a CAH investor for a purchase price of approximately
U.S.$2.3 million, increasing our equity interest in CAH to
77.7%. At the same time, we entered into
57
agreements to purchase an additional 1,483,365 shares of CAH
common stock (approximately 14.6% of the outstanding share
capital) from several other CAH investors in exchange for
28,195,213 CEMEX CPOs (subject to anti-dilution adjustments),
which exchange was originally scheduled to take place in four
equal quarterly tranches commencing on March 31, 2003. The
exchange of 84,763 of these CAH shares took place in four
quarterly tranches in 2003 as originally scheduled. In April
2003, we amended the terms of the July 12, 2002 agreements with
respect to the remaining 1,398,602 of the CAH shares. Instead of
purchasing those CAH shares in four equal quarterly tranches
during 2003, we agreed to purchase those CAH shares in four
equal quarterly tranches commencing on March 31, 2004. On March
31, 2004, the exchange of the first tranche of 349,650 CAH
shares took place as scheduled, and was settled on April 1, 2004.
Notwithstanding the amendments, for accounting purposes, the
CAH shares to be received by us in exchange for CEMEX CPOs are
considered to be owned by us effective as of July 12, 2002. As
a result of these transactions and pending their successful
consummation, we will have increased our stake in CAH to 92.3%.
o On July 31, 2002, we purchased, through a wholly-owned indirect
subsidiary, the remaining 30% economic interest that was not
previously acquired by CAH in Solid, for approximately U.S.$95
million. At December 31, 2003, as a consequence of this
transaction and the increase of our stake in CAH, as described
above, our diluted economic interest in Solid was approximately
94.6%.
o In May 2001, we acquired through CAH a 100% economic interest in
Saraburi Cement Company, now known as CEMEX (Thailand) Co. Ltd.
or CEMEX (Thailand), a cement company based in Thailand with an
installed capacity of approximately 700,000 metric tons, for a
total consideration of approximately U.S.$73 million.
o In November 2000, we acquired 100% of the outstanding shares of
common stock of Southdown, now CEMEX, Inc., in the United States
for a total cost of approximately U.S.$2.8 billion.
o In October 2000, CAH acquired our interest in Gresik. As a
result of these transactions and the increase of our stake in
CAH as described above, at December 31, 2003, our diluted
economic interest in Gresik was 23.5%.
o In November 1999, we acquired a 77% interest in Assiut for
approximately U.S.$318.8 million. In 2000, we increased our
interest in Assiut to 92.9%. In March 2001, we further increased
our interest in Assiut to 95.8%.
o In April 1999, we acquired a 15.8% interest in Cementos del
Pacifico, now CEMEX (Costa Rica), S.A., or CEMEX Costa Rica, a
Costa Rican cement producer. In September 1999, we increased our
interest in CEMEX Costa Rica to 95.3%. As of December 31, 2003,
we had increased our interest in CEMEX Costa Rica to
approximately 98.4%.
58
Selected Consolidated Income Statement Data
The following table sets forth selected consolidated income statement
data for CEMEX for each of the three years ended December 31, 2001, 2002, and
2003 expressed as a percentage of net sales.
Year Ended December 31,
------------------------------------
2001 2002 2003
-------- -------- --------
Net sales....................................................... 100.0 100.0 100.0
Cost of sales................................................... (56.2) (55.9) (57.6)
-------- -------- --------
Gross profit............................................... 43.8 44.1 42.4
Operating expenses:
Administrative............................................... (11.4) (12.6) (11.1)
Selling...................................................... (8.5) (11.5) (11.0)
-------- -------- --------
Total operating expenses................................... (19.9) (24.1) (22.1)
-------- -------- --------
Operating income............................................. 23.9 20.0 20.3
Net comprehensive financing income (cost):
Financial expense............................................ (5.9) (5.1) (5.3)
Financial income............................................. 0.6 0.7 0.2
Foreign exchange gain (loss), net............................ 2.2 (1.2) (2.4)
Gain (loss) on valuation of marketable securities and other
investments................................................ 2.9 (4.8) (0.8)
Monetary position gain....................................... 4.0 5.4 4.6
-------- -------- --------
Net comprehensive financing income (cost).................... 3.8 (5.0) (3.7)
-------- -------- --------
Other expenses, net............................................. (6.0) (5.9) (6.4)
Income before income tax, business assets tax, employees'
statutory profit sharing and equity in income of affiliates 21.7 9.0 10.2
-------- -------- --------
Income tax and business assets tax, net......................... (2.4) (0.8) (1.3)
Employees' statutory profit sharing............................. (0.4) (0.2) (0.2)
-------- -------- --------
Total income taxes, business assets tax and employees' statutory
profit sharing............................................. (2.8) (1.0) (1.5)
Income before equity in income of affiliates................. 18.9 8.0 8.7
Equity in income of affiliates.................................. 0.3 0.5 0.5
-------- -------- --------
Consolidated net income......................................... 19.2 8.5 9.2
-------- -------- --------
Minority interest net income.................................... 2.2 0.6 0.4
-------- -------- --------
Majority interest net income.................................... 17.0 8.0 8.8
-------- -------- --------
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
Overview
Summarized in the table below are the percentage (%) increases (+) and
decreases (-) in 2003 compared to 2002 in our net sales, before eliminations
resulting from consolidation, sales volumes and prices for the major countries
in which we have operations. Variations in net sales determined on the basis of
constant Mexican Pesos include the appreciation or depreciation which occurred
during the period between the country's local currency vis-a-vis the Mexican
Peso, as well as the effects of inflation as applied to the Mexican Peso
amounts using our weighted average inflation factor; therefore, such variations
differ substantially from those based solely on the country's local currency:
59
- ----------------- ------------------------------------------ ------------------------ ------------- -----------------------
Net Sales
- ----------------- ------------- --------------- ------------ ------------------------ ------------- -----------------------
Approximate
currency
fluctuations, Variations
-------------- in
Variations net of constant Export Average Domestic
in local inflation Mexican Sales Prices in local
currency effects Pesos Domestic Sales Volumes Volumes currency
------------- --------------- ------------
Country Cement Ready-Mix Cement Cement Ready-Mix
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
Mexico +15.3% -11.6% +3.7% +4% +13% -24% +2% -2%
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
United States -1.0% -2.0% -3.0% +2% +4% N/A -2% Flat
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
Spain +3.5% +17.5% +21.0% +5% +5% -21% -1% Flat
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
Venezuela -5.7% +8.7% +3.0% -13% -6% +17% +3% +6%
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
Colombia +11.4% +0.2% +11.6% +1% +34% N/A +6% +4%
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
Central America
and the
Caribbean +14.1% +1.90% +16.0% +7% +72% N/A -1% -4%
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
Philippines +6.1% -5.3% +0.8% -2.3% +86% +44% +4% -9%
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
Egypt +20.6% -32.5% -11.9% -12% +193% N/A +22% +13%
- ----------------- ------------- --------------- ------------ --------- -------------- ------------- ---------- ------------
N/A = Not Applicable
On a consolidated basis, our cement sales volumes increased
approximately 5%, from 61.8 million tons in 2002 to 64.7 million tons in 2003,
and our ready-mix concrete sales volumes increased approximately 13%, from 19.2
million cubic meters in 2002 to 21.7 million cubic meters in 2003. Our net
sales increased approximately 7% from Ps75,042 million in 2002 to Ps80,528
million in 2003 in constant Peso terms, and our operating income increased
approximately 9% from Ps15,029 million in 2002 to Ps16,356 million in 2003 in
constant Peso terms.
Net Sales
Our net sales increase of 7% in constant Peso terms during 2003 was
primarily attributable to higher sales volumes in most of our markets, and the
consolidation of the results of operations of PRCC for the entire year in 2003
compared to just five months in 2002, which were partially offset by a decrease
in domestic cement sales volumes in Venezuela, Philippines and Egypt and lower
domestic cement prices in the United States and Central America and the
Caribbean. Of our consolidated net sales in constant Peso terms in 2002 and
2003, approximately 76% and 73%, respectively, were derived from sales of
cement, approximately 19% and 22%, respectively, from sales of ready-mix
concrete and approximately 5% in both years from sales of other construction
materials and services.
Additionally, set forth below is a quantitative and qualitative
analysis of the effects of the various factors affecting our net sales on a
country-by-country basis.
Mexico
------
Our Mexican operations' domestic gray cement sales volumes increased
approximately 4% in 2003 compared to 2002, and ready-mix concrete sales volumes
increased approximately 13% during the same period. The increase in sales
volumes resulted primarily from increased demand in the public sector,
particularly from infrastructure projects and social housing, while the
industrial and commercial sectors remained stable during the year. However, the
sales volumes increases were partially offset by a significant decrease in
cement export volumes. Our Mexican operations' cement export volumes, which
represented 5% of our Mexican cement sales volumes in 2003, decreased
approximately 24% in 2003 compared to 2002, despite stable exports to the U.S.
market, due mainly to a reduction in our exports from Mexico to the Caribbean
region. Responsibility for exports to the Caribbean region has been assumed by
our Venezuelan operations. Of our Mexican operations' cement export volumes
during 2003, 71.4% was shipped to the United States, 27.4% to Central America
and the Caribbean and 1.2% to South America. The average cement price in Mexico
increased approximately 2% in constant Peso terms in 2003 compared to 2002, and
the average ready-mix concrete price decreased approximately 2% in constant
Peso terms over the same period (these prices increased 6% and 0.1%,
respectively, in nominal Peso terms).
As a result of the increases in cement and ready-mix concrete sales
volumes and the increase in the average domestic cement price, partially offset
by a decrease in the average ready-mix prices, net sales in Mexico, in
60
constant Peso terms reflecting Mexican inflation, increased approximately 4% in
2003 compared to 2002, despite the decline in cement export volumes.
United States
-------------
Our United States operations' cement sales volumes, which include
cement purchased from our other operations, increased approximately 2% in 2003
compared to 2002, and ready-mix concrete sales volumes increased approximately
4% over the same period. The increases in sales volumes is primarily
attributable to strong demand from the cement-intensive public works sector, in
particular street and highway construction, and the residential sector during
the second half of 2003, while the industrial and commercial sectors reversed
their downward trend and are now more stable. The average sales price of cement
decreased approximately 2% in Dollar terms during 2003 compared to 2002. The
average price of ready-mix concrete remained flat during 2003 compared to 2002.
As a result of the decrease in the average sales price of cement and
the sale of some of our mineral products businesses, net sales in the United
States declined approximately 1% in U.S. Dollar terms in 2003 compared to 2002,
despite the increases in cement and ready-mix concrete sales volumes.
Spain
-----
Our Spanish operations' domestic cement sales volumes increased
approximately 5% in 2003 compared to 2002, and ready-mix concrete sales volumes
increased approximately 5% during the same period. The increase in sales
volumes was primarily driven by strong residential construction activity and
increased spending in public works due to Spain's infrastructure program. Our
Spanish operations' cement export volumes, which represented 3% of our Spanish
cement sales volumes in 2003, decreased approximately 21% in 2003 compared to
2002 primarily due to increased domestic demand. Of our Spanish operations'
total cement export volumes during 2003, 47.8% was shipped to the United
States, 31.4% to Africa and 20.8% to Europe and the Middle East. The average
sales price of cement decreased approximately 1% in Euro terms during 2003
compared to 2002, and the average price of ready-mix concrete remained flat in
Euro terms over the same period.
As a result of the increases in cement and ready-mix concrete sales
volumes, net sales in Spain, in Euro terms, increased approximately 3.5% in
2003 compared to 2002, despite the decline in cement export volumes and in
domestic cement prices.
Venezuela
---------
Our Venezuelan operations' domestic cement sales volumes decreased
approximately 13% in 2003 compared to 2002, while ready-mix concrete sales
volumes decreased approximately 6% during the same period. The decreases in
sales volumes and ready-mix concrete sales volumes were mainly driven by the
downturn in construction activity in Venezuela and limited government spending
on infrastructure as a result of the continuing political and economic turmoil
in Venezuela, which were partially offset by increased demand from the
self-construction sector.
Our Venezuelan operations' cement export volumes, which represented
56% of our Venezuelan cement sales volumes in 2003, increased approximately 17%
in 2003 compared to 2002. The increase in cement export volumes was due to an
increased focus on the export market to offset the contraction of the local
market. Of our Venezuelan operations' total cement export volumes during 2003,
63.6% was shipped to the United States and 36.4% to the Caribbean and South
America.
Our Venezuelan operations' average domestic sales price of cement
increased approximately 3% in constant Bolivar terms in 2003 compared to 2002,
while the average domestic sales price of ready-mix concrete increased
approximately 6% in constant Bolivar terms over the same period.
As a result of the decreases in domestic cement and ready mix sales
volumes, net sales in Venezuela, in constant Bolivar terms, decreased
approximately 5.7% in 2003 compared to 2002.
61
Colombia
--------
Our Colombian operations' domestic cement sales volumes increased
approximately 1% in 2003 compared to 2002, primarily as a result of increased
demand from the private residential construction sector. Our Colombian
operations' ready-mix concrete sales volumes increased approximately 34% in
2003 compared to 2002, primarily as a result of an increase in government
spending on infrastructure, particularly on transportation. For the year ended
December 31, 2003, sales of ready-mix concrete in Colombia represented
approximately 33% of our Colombian operations' net sales.
Our Colombian operations' average sales price of cement increased 6%
in Colombian Peso terms in 2003 compared to 2002, while the average domestic
sales price of ready-mix concrete increased approximately 4% in Colombian Peso
terms over the same period.
As a result of the increases in domestic cement and ready-mix concrete
sales volumes and the increases in the average domestic sales prices of cement
and ready-mix concrete, net sales in Colombia, in Colombian Peso terms,
increased approximately 11.4% in 2003 compared to 2002.
Central America and the Caribbean
---------------------------------
Our Central American and Caribbean operations consist of our
operations in Costa Rica, the Dominican Republic, Panama, Nicaragua and Puerto
Rico, as well as several cement terminals in other Caribbean countries and our
trading operations in the Caribbean region. Most of these trading operations
consist of the resale in the Caribbean region of cement produced by our
operations in Venezuela and Mexico. Our Central American and Caribbean
operations' domestic cement sales volumes increased approximately 8% in 2003
compared to 2002, primarily as a result of the inclusion of our Puerto Rican
operations in our consolidated results for the entire year in 2003
(representing approximately 22% of our total cement sales volume in the region
during 2003) and just five months (August through December) for 2002. Excluding
our trading operations in the Caribbean region, domestic cement sales volumes
increased 7% in 2003 compared to 2002. Our Caribbean region trading operations'
cement sales volumes increased approximately 36% in 2003 compared to 2002,
primarily as a result of exports to the United States from the Caribbean region
instead of from Venezuela for several months in the beginning of 2003 due to
the political and economic turmoil and general labor strikes in Venezuela at
that time, as well as increased sales of white cement to several Central
American countries during the third quarter of 2003. Our Central American and
Caribbean operations' ready-mix concrete sales volumes increased approximately
72% in 2003 compared to 2002, primarily due to the inclusion of our Puerto
Rican operations for the entire year in 2003, which operations represented
approximately 60% of our total ready-mix concrete sales volumes in the region.
We also benefited from higher volumes in most of our markets in the region
during 2003 and the inclusion of a full year of ready-mix concrete sales in
Costa Rica, since these ready-mix operations in Costa Rica only began in the
third quarter of 2002.
Our Central American and Caribbean operations' average domestic cement
sales price decreased approximately 1% in Dollar terms in 2003 compared to
2002, while the average ready-mix concrete sales price decreased approximately
4% in Dollar terms over the same period.
As a result of the increases in domestic cement and ready-mix concrete
sales volumes, net sales in our Central American and Caribbean region, in
Dollar terms, increased approximately 14.1% in 2003 compared to 2002, despite
the decline in the average sales price of both domestic cement and ready-mix
concrete prices.
The Philippines
---------------
Our Philippine operations' domestic cement sales volumes decreased
approximately 2.3% in 2003 compared to 2002, primarily as a result of decreased
demand in the public works sector due to reductions in government spending on
infrastructure, which was offset by a 4% increase, in Philippine Peso terms, in
the average domestic sales price of cement over the same periods. Our ready-mix
concrete sales volumes in the Philippines increased approximately 86% in 2003
compared to 2002, while the average ready-mix concrete price decreased
approximately 9% in Philippine Peso terms over the same periods. The increase
in ready-mix concrete sales volumes was primarily attributable to a weak
economic environment during 2002 and new construction contracts in
62
2003. Our Philippine operations' ready-mix concrete business, which began in
2001, is still under development and represents a relatively small portion of
our overall Philippine operations. For the year ended December 31, 2003, sales
of ready-mix concrete in the Philippines represented approximately 1% of our
Philippine operations' net sales.
As a result of the increases in ready-mix concrete sales volumes and
in the average cement sales price, which were partially offset by decreases in
domestic cement volumes and in the average ready-mix concrete sales price, net
sales in the Philippines, in Philippine Peso terms, increased approximately 6%
in 2003 compared to 2002.
Thailand
--------
Our Thai operations' domestic cement sales volumes increased
approximately 10% in 2003 compared to 2002, primarily due to increased
government spending on infrastructure projects. Our Thai operations' average
sales price of cement increased approximately 16% in Baht terms in 2003
compared to 2002. Cement prices in Thailand are indirectly controlled by the
Thai government.
As a result of the increases in domestic cement sales volumes and the
average cement sales price, net sales in Thailand, in Baht terms, increased
approximately 28% in 2003 compared to 2002.
Egypt
-----
Our Egyptian operations' domestic cement sales volumes decreased
approximately 12% in 2003 compared to 2002, primarily as a result of
exceptionally high cement volumes in 2002 and decreased demand in the
commercial and tourism sectors. These factors, however, were partially offset
by increased government spending on infrastructure and a strong
self-construction sector. The decrease in domestic sales volumes was also
partially offset by a 22% increase, in Egyptian pound terms, in the average
domestic sales price of cement in 2003 compared to 2002, which was primarily
due to our commercial strategy. Our Egyptian operations' cement export volumes
represented 13% of our Egyptian cement sales volumes in 2003. We only began
exporting cement from Egypt during the second quarter of 2003. Of our Egyptian
operations' cement export volumes during 2003, 61% was shipped to Africa and
39% was shipped to Europe and the Middle East. Our Egyptian operations'
ready-mix sales volumes increased 193% in 2003 compared to 2002, primarily
because sales volumes in 2002 were negligible. Our ready-mix operations in
Egypt, which began in 2002, are still under development and constitute a
relatively minor portion of our overall Egyptian operations. For the year ended
December 31, 2003, sales of ready-mix concrete in Egypt represented
approximately 3% of our Egyptian operations' net sales.
As a result of the decrease in cement sales volumes combined with the
offsetting increase in domestic cement sales prices, net sales in Egypt, in
Egyptian pound terms, increased approximately 21% in 2003 compared to 2002.
Cost of Sales
Our cost of sales, including depreciation, increased 11% from Ps41,925
million in 2002 to Ps46,422 million in 2003 in constant Peso terms, primarily
as a result of a higher percentage of sales of ready-mix concrete and other
products, which have a higher cost of sales as compared to cement, as well as
increased energy and insurance costs, and the consolidation of our Puerto Rican
operations for the entire year in 2003 compared to just five months in 2002,
which represented approximately 13% of the increase. As a percentage of sales,
cost of sales increased 1.7% from 55.9% in 2002 to 57.6% in 2003.
Gross Profit
Our gross profit increased by 3% from Ps33,117 million in 2002 to
Ps34,106 million in 2003 in constant Peso terms. Our gross margin decreased
from 44.1% in 2002 to 42.4% in 2003, as a result of the changes in our product
mix described above. The increase in our gross profit is primarily attributable
to the 7% increase in our net sales in 2003 compared to 2002, partially offset
by the 11% increase in our cost of sales in 2003 compared to 2002.
63
Operating Expenses
Our operating expenses decreased 2% from Ps18,088 million in 2002 to
Ps17,750 million in 2003 in constant Peso terms, primarily as a result of our
continuing cost-reduction efforts, including reductions in corporate overhead
and travel expenses. As a percentage of sales, our operating expenses decreased
from 24.1% in 2002 to 22.1% in 2003.
Operating Income
For the reasons mentioned above, our operating income increased 9%
from Ps15,029 million in 2002 to Ps16,356 million in 2003.
Comprehensive Financing Income (Expense)
Pursuant to Mexican GAAP, the comprehensive financing result should
measure the real cost (gain) of an entity's financing, net of the foreign
currency fluctuations and the inflationary effects on monetary assets and
liabilities. In periods of high inflation or currency depreciation, significant
volatility may arise and is reflected under this caption. For presentation
purposes, comprehensive financing income (expense) includes:
o financial or interest expense on borrowed funds;
o financial income on cash and temporary investments;
o appreciation or depreciation resulting from the valuation of
financial instruments, including derivative instruments and
marketable securities, as well as the realized gain or loss from
the sale or liquidation of such instruments or securities;
o foreign exchange gains or losses associated with monetary assets
and liabilities denominated in foreign currencies; and
o gains and losses resulting from having monetary liabilities or
assets exposed to inflation (monetary position result).
Year Ended December 31,
--------------------------------
2002 2003
-------------- -------------
(in millions of constant Pesos)
Net comprehensive financing income (expense):
Financial expense....................................... Ps (3,814) Ps (4,278)
Financial income........................................ 512 188
Foreign exchange gain (loss), net....................... (884) (1,929)
Gain (loss) on valuation and liquidation of financial
instruments.......................................... (3,630) (670 )
Monetary position gain.................................. 4,039 3,683
---------- ------------
Net comprehensive financing income (expense)........ Ps (3,777) Ps (3,006)
========== ============
Our net comprehensive financing result improved from an expense of
Ps3,777 million in 2002 to an expense of Ps3,006 million in 2003. The
components of the change are shown above. Our financial expense was Ps4,278
million for 2003, an increase of 12% from Ps3,814 million in 2002. The increase
was primarily attributable to a higher level of interest rates swaps at a level
above current market rates during 2003, which were entered into in an effort to
shift our interest rate profile to more fixed rates. Our financial income
decreased 63% from Ps512 million in 2002 to Ps188 million in 2003 as a result
of the decline in interest rates. Our net foreign exchange results deteriorated
from a loss of Ps884 million in 2002 to a loss of Ps1,929 million in 2003. The
foreign exchange loss in 2003 is primarily attributable to the depreciation of
the Peso against the Dollar and the appreciation of the Japanese Yen against
the Dollar as compared to the foreign exchange loss in 2002, which also was
primarily attributable to the depreciation of the Peso against the Dollar, but
was partially offset by the depreciation of the Japanese Yen against the
Dollar. Our gain (loss) from valuation and liquidation of financial instruments
improved from a loss of
64
Ps3,630 million in 2002 to a loss of Ps670 million in 2003, primarily
attributable to valuation improvements from our derivative financial
instruments portfolio (discussed below) during 2003. See notes 11 and 16 to our
consolidated financial statements included elsewhere in this annual report. Our
monetary position gain (generated by the recognition of inflation effects over
monetary assets and liabilities) decreased from a gain of Ps4,039 million
during 2002 to a gain of Ps3,683 million during 2003, mainly as a result of the
decrease in the weighted average inflation index used in the determination of
the monetary position result, combined with the decrease in our monetary
liabilities in 2003 compared to 2002.
Derivative Financial Instruments
Our derivative financial instruments that have a potential impact on
our comprehensive financing result consist of equity forward contracts
designated as hedges of our executive stock option programs (see notes 15 and
16 to our consolidated financial statements included elsewhere in this annual
report), foreign exchange derivative instruments, excluding our foreign
exchange forward contracts designated as hedges of our net investment in
foreign subsidiaries, interest rate swaps, cross currency swaps, interest rate
swap options (swaptions), other interest rate derivatives, fuel and energy
derivatives and third party equity forward contracts. Of the loss of Ps670
million in 2003 recognized in the item gain (loss) on valuation and liquidation
of financial instruments, an approximate loss of Ps984 million is attributable
to changes in the fair value of our interest rate derivatives, while an
approximate loss of Ps80 million resulted from changes in the fair value of our
foreign currency derivatives. These losses were partially offset by a net
valuation gain of approximately Ps343 million resulting from changes in the
fair value of our equity forward contracts that hedge our stock option
programs, net of the costs generated by such programs, and an approximate
valuation gain of Ps51 million resulting from changes in the fair value of our
marketable securities. These valuation effects accounted for substantially all
the loss recorded in 2003 under the line item gain (loss) on valuation and
liquidation of financial instruments presented above. Despite the overall
valuation loss, we experienced valuation improvements in most of these
financial derivatives in 2003 compared to 2002. See "Qualitative and
Quantitative Market Disclosure --Our Derivative Financial Instruments" and
"Qualitative and Quantitative Market Disclosure -- Interest Rate Risk, Foreign
Currency Risk and Equity Risk." See also notes 11 and 16 to our consolidated
financial statements included elsewhere in this annual report. The estimated
net gain mentioned above, determined by the excess between the fair value gain
of our equity forward contracts that hedge the potential exercise of our
executive stock option programs over the costs associated with the intrinsic
value of our executives' options, is primarily attributable to slight
differences in the strike price established in the forward contracts as
compared to those of the options. The fair value gain of our equity forward
contracts and the costs associated with the stock options both are attributable
to the increase, during 2003, in the market price of our listed securities
(ADSs and CPOs) as compared to 2002. The estimated fair value loss of our
interest rate derivatives is primarily attributable to the continuing decline
in market interest rates, as we had fixed our interest rate profile at a level
above current market rates.
Other Expenses, Net
Our other expenses for 2003 were Ps5,133 million, a 15% increase from
Ps4,465 million in 2002. The increase was primarily attributable to the
recognition of impairment charges on several long-lived assets during 2003 of
approximately Ps1,118.3 million compared with Ps102.9 million in 2002. See
notes 9 and 10 to our consolidated financial statements included elsewhere in
this annual report.
Excluding impairment charges, other expenses decreased approximately
8% in 2003 as compared to 2002, mainly as a result of lower anti-dumping duty
expense during 2003 compared to 2002 and also the absence of the extraordinary
expense incurred during 2002 as a result of the premium paid on our cash tender
offer for our 12 3/4% notes due 2006, the consent fee paid in connection with
our consent solicitation for our 9.625% notes due 2009 and a non-recurring
expense related to the termination of our distribution agreement in Taiwan. See
notes 11 and 21F to our consolidated financial statements included elsewhere in
this annual report.
Income Taxes, Business Assets Tax and Employees' Statutory Profit Sharing
Our effective tax rate was 12.3% in 2003 compared to 9.3% in 2002. Our
tax expense, which primarily consists of income taxes and business assets tax,
increased 60% from Ps629 million in 2002 to Ps1,007 million in
65
2003. The increase was attributable to higher taxable income in 2003 as
compared to 2002. Our average statutory income tax rate was approximately 34%
in 2003 and approximately 35% in 2002.
Employees' statutory profit sharing increased from Ps118 million
during 2002 to Ps191 million during 2003 due to higher taxable income for
profit sharing purposes in Mexico. See note 17B to our consolidated financial
statements included elsewhere in this annual report.
Majority Interest Net Income
Majority interest net income represents the difference between our
consolidated net income and minority interest net income, which is the portion
of our consolidated net income attributable to those of our subsidiaries in
which non-affiliated third parties hold interests. Changes in minority interest
net income in any period reflect changes in the percentage of the stock of our
subsidiaries held by non-affiliated third parties as of the end of each month
during the relevant period and consolidated net income attributable to those
subsidiaries.
For the reasons described above, our consolidated net income (before
deducting the portion allocable to minority interest) for 2003 increased 16%,
from Ps6,392 million in 2002 to Ps7,409 million in 2003. The percentage of our
consolidated net income allocable to minority interests decreased from 6.6% in
2002 to 4.6% in 2003, as a result of our prepayment in October 2003 of the
remaining portion of the preferred equity balance of the preferred equity
transaction related to the financing of our acquisition of Southdown, Inc., now
CEMEX, Inc., in 2000. Majority interest net income increased by 18%, from
Ps5,967 million in 2002 to Ps7,067 million in 2003, mainly as a result of our
increase in net sales, the decrease in our valuation losses on derivative
financial instruments and a lower portion of consolidated net income allocable
to minority interests, partially offset by the increases in our foreign
exchange loss, the decrease in our monetary position gain, the increase in our
other expenses and higher income taxes. As a percentage of net sales, majority
interest net income increased from 8.0% in 2002 to 8.8% in 2003.
Year Ended December 31, 2002 Compared to Year Ended December 31, 2001
Overview
During 2002, we experienced significant declines in our consolidated
results of operations as a consequence of unfavorable market conditions in
several of the countries in which we have operations. In addition, as a result
of the general decline in global capital markets as well as the volatility in
the interest rate and currency markets, during 2002, we experienced significant
valuation losses in our income statement, arising from our derivative financial
instruments portfolio.
These unfavorable economic conditions have been partially offset by:
o our ability to enter into new markets in the Caribbean, through
our acquisition of PRCC in July 2002, and
o favorable markets in several of the countries in which we
operate, particularly in Spain, which experienced robust
spending in public works and strong residential construction
activity.
Summarized in the table below are the percentage (%) increases (+) and
decreases (-) in 2002 compared to 2001 in our net sales, before eliminations
resulting from consolidation, sales volumes and prices for the major countries
in which we have operations. Variations in net sales determined on the basis of
constant Mexican Pesos include the appreciation or depreciation occurred during
the period between the country's local currency vis-a-vis the Mexican Peso, as
well as the effects of inflation as applied to the Mexican Peso amounts using
CEMEX's weighted average inflation factor; therefore, such variations
substantially differ from those based solely on the country's local currency:
66
- --------------- ----------------------------------------- --------------------------- ------------ ------------------------
Net Sales
- --------------- ------------ --------------- ------------ --------------------------- ------------ ------------------------
Approximate Domestic Sales Volumes Export Average Domestic
Variations currency Variations Sales Prices in local
in local fluctuations, in Volumes currency
currency net of constant
inflation Mexican
effects Pesos
Country Cement Ready-Mix Cement Cement Ready-Mix
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
Mexico -1.0% -3.0% -4.0% +4% +10% -25% -6% -8%
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
United States -7.7% -2.0% -9.7% -5% Flat N/A -1% +1%
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
Spain +3.5% +25.8% +29.3% +2% +6% +5% +1% -1%
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
Venezuela -7.8% -24.4% -32.2% -17% -23% -15% +12% +5%
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
Colombia +9.4% -16.4% -7.0% +2% -3% N/A +9% +3%
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
Central +16.5% +0.8% +17.3% +14% +152% N/A +5% N/A
America and
the Caribbean
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
Philippines -8.2% +8.3% +0.1% +36% -68% -33% -23% Flat
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
Egypt +10.1% +1.0% +11.1% +18% N/A N/A -8% N/A
- --------------- ------------ --------------- ------------ ------------ -------------- ------------ ----------- ------------
N/A = Not Applicable
On a consolidated basis, our cement sales volumes increased 1%, from
61.2 million tons in 2001 to 61.8 million tons in 2002, and our ready-mix
concrete sales volumes increased 6%, from 18.2 million cubic meters in 2001 to
19.2 million cubic meters in 2002. However, our net sales decreased 2% from
Ps76,572 million in 2001 to Ps75,042 million in 2002 in constant Peso terms,
and our operating income decreased 18% from Ps18,286 million in 2001 to
Ps15,029 million in 2002 in constant Peso terms.
Net Sales
Our net sales decrease of 2% in constant Peso terms during 2002 was
primarily attributable to unfavorable economic conditions in many of our
markets, which affected cement sales volumes and prices in those markets. A
decrease in weighted average cement prices and weighted average ready-mix
concrete prices in 2002 compared to 2001 accounted for approximately, 4% and
1%, respectively, of our various markets' negative impact on net sales. These
decreases were partially offset by a 1% positive effect resulting from the
increase in cement sales volumes, a 1% positive effect resulting from the
increase in ready-mix concrete sales volumes and a 1% positive effect resulting
from the consolidation of our newly acquired operations in Puerto Rico.
Additionally, set forth below is a quantitative and qualitative analysis of the
effects of the various factors affecting our net sales on a country-by-country
basis.
Mexico
------
Our Mexican operations' domestic gray cement sales volumes increased
4% in 2002 compared to 2001, and ready-mix concrete sales volumes increased 10%
during the same period. The increase in sales volumes resulted primarily from
increased demand in the public sector, while the self-construction sector
remained stable during the year. However, lower cement prices and lower
ready-mix concrete prices in Mexico offset the sales volumes increases. The
average cement price in Mexico decreased 6% in constant Peso terms in 2002
compared to 2001, and the average ready-mix concrete price decreased 8% in
constant Peso terms over the same period (1.5% and 3.5% in nominal Peso terms,
respectively). The principal reason for the decrease in our average cement
price and our average ready-mix concrete price, both in constant Peso terms and
nominal Peso terms, is due to increased competition.
The increase in our domestic cement sales volumes was also offset by a
significant decrease in cement export volumes. Our Mexican operations' cement
export volumes, which represented 7% of our Mexican cement sales volumes in
2002, decreased 25% in 2002 compared to 2001 due mainly to the weakness of the
U.S. market, our most important foreign consumer. Of our Mexican operations'
cement export volumes during 2002, 36% was shipped to Central America and the
Caribbean, 63% to the United States and 1% to South America.
67
As a result of the decline in average cement and ready-mix prices and
the decline in cement export volumes, net sales in Mexico, in constant Peso
terms using Mexican inflation, declined approximately 1% in 2002 compared to
2001, despite increases in domestic cement sales volumes and ready-mix concrete
sales volumes.
United States
-------------
Our United States operations' cement sales volumes, which include
cement purchased from our other operations decreased 5% in 2002 compared to
2001. Ready-mix concrete sales volumes remained flat. The decrease in cement
sales volumes is attributable to the general weakness of the United States
economy. Industrial and commercial construction declined as a result of
continued weakness in the manufacturing and commercial sectors of the economy,
while the cement-intensive public works sector, in particular highway
construction, our strongest source of cement demand, did not grow as much as in
prior years. In addition, the average sales price of cement decreased 1% in
Dollar terms during 2002 compared to 2001. This decrease was only partially
offset by a corresponding 1% increase in the average price of ready-mix
concrete.
As a result of the decline in cement sales volumes and average cement
prices, net sales in the United States declined approximately 7.7% in U.S.
Dollar terms in 2002 compared to 2001.
Spain
-----
Our Spanish operations' domestic cement sales volumes increased 2% in
2002 compared to 2001, and ready-mix concrete sales volumes increased 6% during
the same period. The increase in sales volumes was primarily driven by
increased spending in public works and strong residential construction
activity, combined with the effects of a strong Euro. Our Spanish operations'
cement export volumes, which represented 3% of our Spanish cement sales volumes
in 2002, increased 5% in 2002 compared to 2001 (despite the strong Euro) due to
our Spanish operations' expansion into new markets in Mauritania (Africa) and
the Caribbean during the second half of 2002. Of our Spanish operations' total
cement export volumes during 2002, 20% was shipped to Europe and the Middle
East, 39% to Africa, 37% to the United States and 4% to the Caribbean region.
In addition, the average sales price of cement increased 1% in Euro terms
during 2002 compared to 2001. This increase was only partially offset by a
corresponding 1% decrease in the average price of ready-mix concrete.
As a result of the increase in cement sales volumes and prices, net
sales in Spain, in Euro terms, increased 3.5% in 2002 compared to 2001.
Venezuela
---------
Our Venezuelan operations' domestic cement sales volumes decreased 17%
in 2002 compared to 2001, while ready-mix concrete sales volumes decreased 23%
during the same period. The decreases in sales volumes and ready-mix concrete
sales volumes were mainly driven by the downturn in construction activity in
Venezuela, which was the direct consequence of the political and economic
turmoil in Venezuela during 2002. In addition, the on-going nation-wide general
strike that began in early December 2002 caused significant reduction in oil
production in Venezuela and brought Venezuela's oil-dependent economy virtually
to a halt.
Our Venezuelan operations' cement export volumes, which represented
50% of our Venezuelan cement sales volumes in 2002, decreased 15% in 2002
compared to 2001. The decrease was due in part to the weakness of the economy
in the United States, which is the main destination of Venezuelan exports. Of
our Venezuelan operations' total cement export volumes during 2002, 65% was
shipped to North America and 35% to the Caribbean and South America.
Our Venezuelan operations' average domestic sales price of cement
increased 12% in constant Bolivar terms in 2002 compared to 2001, while the
average domestic sales price of ready-mix concrete increased approximately 5%
in constant Bolivar terms over the same period. However, these increases in
average prices were not sufficient to offset the decrease in sales volumes;
therefore, net sales in Venezuela, in constant Bolivar terms, declined
approximately 7.8% in 2002 compared to 2001.
68
During the end of the second and beginning of the third quarter of
2002, we experienced a 36 day labor strike in the Pertigalete plant, our major
cement plant in Venezuela. However, local market supply was met by existing
inventory, and our trading network covered volumes which otherwise would have
been exported from Venezuela.
Colombia
--------
Our Colombian operations' domestic sales volumes increased 2% in 2002
compared to 2001. This increase was primarily attributable to a recovery in the
public works sector, which increased toward the end of 2002, and our increased
penetration in the residential construction sector. Ready-mix concrete sales
volumes decreased 3% in 2002 compared to 2001, due primarily to reduced
construction activity during the first half of 2002.
Our Colombian operations' average sales price of cement increased 9%
in Colombian Peso terms in 2002 compared to 2001, while the average domestic
sales price of ready-mix concrete increased 3% in Colombian Peso terms over the
same period. As a result of the increases in cement sales volumes and average
cement and ready-mix concrete prices, slightly offset by the decrease in
ready-mix concrete volumes, our net sales in Colombia, in Colombian Peso terms,
increased 9.4% in 2002 compared to 2001.
Central America and the Caribbean
---------------------------------
Our Central American and Caribbean operations consist of our
operations in Costa Rica, the Dominican Republic, Panama, Nicaragua and Puerto
Rico, as well as our trading operations in the Caribbean region. Most of these
trading operations consist of the resale in the Caribbean region of cement
produced by our operations in Spain, Venezuela and Mexico. Our Central American
and Caribbean operations' domestic cement sales volumes increased approximately
12% (or approximately 15%, excluding our trading operations in the Caribbean
region) in 2002 compared to 2001, primarily as a result of our acquisition of
PRCC in July 2002, which represented 9% of our total cement sales volume in
that region during 2002. Our Central American and Caribbean operations'
ready-mix concrete sales volumes increased approximately 152% in 2002 compared
to 2001, primarily due to the inclusion of our Puerto Rican operations, and the
beginning of ready-mix concrete sales in Costa Rica in the third quarter of
2002.
Our operations in Panama and in the Dominican Republic increased their
ready-mix sales volumes by 23% and 7%, respectively, in 2002 compared to 2001,
and our Caribbean region trading operations' cement sales volumes increased
approximately 2% in 2002 compared to 2001, despite the political and economic
turmoil in Venezuela because we were able to supply the Caribbean trading
market with exports from Spain.
Lastly, our Central American and Caribbean operations' average
domestic cement sales price increased 5% in Dollar terms in 2002 compared to
2001, primarily due to increases in the average sales prices of cement in Costa
Rica, the Dominican Republic and Nicaragua of 5%, 9% and 12%, respectively, as
a result of strong domestic demand, while the average sales price of cement
decreased 5% in Panama.
As a result of the increase in cement sales volumes and prices,
combined with the inclusion of our Puerto Rican operations, net sales in the
Central American and Caribbean region, in U.S. Dollar terms, increased 16.5% in
2002 compared to 2001.
The Philippines
---------------
Our Philippines domestic cement sales volumes increased 36% in 2002
compared to 2001, which was partially offset by a 23% decrease in Philippine
Peso terms in the average domestic sales price of cement during the same
period. Our Philippine operations' domestic cement sales volumes increase was
primarily a result of our commercial marketing programs and our increased
market participation in the country due to fewer cement imports from our
competitors. The construction sector of the economy, however, remained weak as
a result of reductions in public spending and private investments. Our
Philippines ready-mix concrete business, which began in 2001, is still under
development. Our ready-mix sales volumes in the Philippines decreased 68% in
2002 compared to 2001, but,
69
in contrast to sharply declining prices for cement, the average ready-mix
concrete price remained flat. The decrease in ready-mix concrete sales volumes
was also attributable to the weak economic environment in the country.
Principally as a result of the decrease in the average cement prices
and the weak ready-mix concrete operations, which was partially offset by the
increase in domestic cement sales volumes, our net sales in the Philippines, in
Philippine Peso terms, decreased 8.2% in 2002 compared to 2001.
Thailand
--------
Our Thai operations include Saraburi, now named CEMEX (Thailand),
which we acquired in May 2001 through our 92.3%-owned subsidiary CEMEX Asia
Holdings, Ltd. Accordingly, CEMEX (Thailand)'s results of operations are
consolidated in our results of operations for all of 2002, but only for seven
months in 2001. CEMEX (Thailand)'s net sales accounted for approximately 0.2%
of our consolidated net sales for the seven-month period ended December 31,
2001 and approximately 0.3% of our consolidated net sales for the year ended
December 31, 2002.
Egypt
-----
Our Egyptian operations' domestic cement sales volumes increased 18%
in 2002 compared to 2001, primarily as a result of our higher penetration in
Lower Egypt and a strong self-construction sector. The increase in domestic
sales volumes was partially offset by a 8% decrease, in Egyptian pound terms,
in the average domestic sales price of cement, also the result of increased
sales in Lower Egypt, where prices are lower due to the high concentration of
competitors in the region. In addition to being subject to market pressures,
cement prices in Egypt are controlled to a significant degree by the Egyptian
government as a result of the government's control of almost 50% of the
industry's capacity.
In addition, the Egyptian pound has undergone four devaluations since
late 2000 (most recently, in February 2003 when it began trading as a freely
floating currency). Devaluations of the Egyptian pound relative to the U.S.
dollar create inflationary pressures in Egypt by generally increasing the price
of imported products and requiring recessionary government policies to curb
aggregate demand.
As a result of the increase in cement sales volumes combined with the
offsetting decline in domestic cement sales prices, net sales in Egypt, in
Egyptian pound terms, increased 10.1% in 2002 compared to 2001.
Cost of Sales
Our cost of sales, including depreciation, decreased 3% from Ps43,070
million in 2001 to Ps41,925 million in 2002 in constant Peso terms, as a result
of the reclassification of the expenses related to distribution of our products
as operating expenses in the income statement for the full year in 2002 and
partially in 2001. During 2001, approximately Ps1,725 million of such expenses
were included in cost of sales. During 2002, the reclassification of expenses
accounted for substantially all the 3% decrease in cost of sales. As a
percentage of sales, cost of sales decreased from 56.2% in 2001 to 55.9% in
2002.
Gross Profit
Our gross profit decreased by 1% from Ps33,502 million in 2001 to
Ps33,117 million in 2002 in constant Peso terms. Our gross margin increased
slightly from 43.8% in 2001 to 44.1% in 2002, reflecting the reclassification
of distribution expenses discussed above. The decrease in our gross profit is
mainly attributable to the 2% decrease in net sales, partially offset by the 3%
decrease in cost of sales from 2001 to 2002.
Operating Expenses
Our operating expenses increased 19% from Ps15,216 million in 2001 to
Ps18,088 million in 2002 in constant Peso terms. This increase was primarily a
result of our rollout expenses related to the implementation of the CEMEX Way,
which included increased efforts to strengthen our commercial and distribution
network
70
worldwide in an effort to lower our costs in the future and make our business
processes more efficient. Also affecting operating expenses was the
reclassification of the expenses related to distribution of our products as
operating expenses in the income statement for the full year in 2002 and
partially in 2001; during 2001, approximately Ps1,725 million of such expenses
were included in cost of sales, representing approximately 37% of the increase
in operating expenses discussed above. As a percentage of sales, our
administrative and selling expenses increased from 19.9% in 2001 to 24.1% in
2002.
Operating Income
The 18% decrease in our operating income in 2002 compared to 2001 is a
result of a 2% decrease in net sales combined with a 19% increase in operating
expenses, partially offset by a 3% decrease in our cost of sales from 2001 to
2002.
Comprehensive Financing Income (Expense)
Pursuant to Mexican GAAP, the comprehensive financing result should
measure the real cost (gain) of an entity's financing, net of the foreign
currency fluctuations and the inflationary effects on monetary assets and
liabilities. In periods of high inflation or currency depreciation, significant
volatility may arise and is reflected under this caption. For presentation
purposes, comprehensive financing income (expense) includes:
o financial or interest expense on borrowed funds;
o financial income on cash and temporary investments;
o appreciation or depreciation resulting from the valuation of
financial instruments, including derivative instruments and
marketable securities, as well as the realized gain or loss from
the sale or liquidation of such instruments or securities;
o foreign exchange gains or losses associated with monetary assets
and liabilities denominated in foreign currencies; and
o gains and losses resulting from having monetary liabilities or
assets exposed to inflation (monetary position result).
Year Ended December 31,
--------------------------------
2001 2002
-------------- -------------
(in millions of constant Pesos)
Net comprehensive financing income (expense):
Financial expense....................................... Ps (4,554) Ps (3,814)
Financial income........................................ 451 512
Foreign exchange gain (loss), net....................... 1,701 (884)
Gain (loss) on valuation and liquidation of financial
instruments............................................ 2,209 (3,630)
Monetary position gain.................................. 3,120 4,039
---------- -----------
Net comprehensive financing income (expense)........ Ps 2,927 Ps (3,777)
========== ===========
Our net comprehensive financing income (expense) decreased from income
of Ps2,927 million in 2001 to an expense of Ps3,777 million in 2002. The
components of the change are shown above. Our financial expense was Ps3,814
million for 2002, a decrease of 16% from Ps4,554 million in 2001. The decrease
was primarily attributable to lower average interest rates as a result of
market conditions. Our financial income increased 14% from Ps451 million in
2001 to Ps512 million in 2002 as a result of a higher level of investments in
fixed rate instruments during the year. Our net foreign exchange results
amounted to a loss of Ps884 million in 2002 compared to a gain of Ps1,701
million in 2001. The foreign exchange loss in 2002 is primarily attributable to
the appreciation of the Japanese Yen and the Dollar against the Peso and the
effect that such appreciation had in our Japanese Yen and Dollar denominated
debt. Our gain (loss) from valuation and liquidation of financial instruments
decreased from a gain of Ps2,209 million in 2001 to a loss of Ps3,630 million
in 2002, primarily attributable to a non-recurring gain
71
obtained in 2001 through the sale of marketable securities of approximately
Ps1,474 million, combined with valuation losses in 2002 on our derivative
financial instruments portfolio (discussed below). See notes 11, 12, and 16 to
our consolidated financial statements included elsewhere in this annual report.
Our monetary position gain (generated by the recognition of inflation effects
over monetary assets and liabilities) increased from Ps3,120 million during
2001 to Ps4,039 million during 2002, as a result of the increase in the
weighted average inflation index in 2002 compared to 2001.
Derivative Financial Instruments
Our derivative financial instruments that have a potential impact on
our Comprehensive Financing Result consist of equity forward contracts
designated as hedges of our executive stock option programs (see notes 15 and
16 to our consolidated financial statements included elsewhere in this annual
report), foreign exchange derivative instruments, excluding our foreign
exchange forward contracts designated as hedges of our net investment in
foreign subsidiaries, interest rate swaps, cross currency swaps, interest rate
swap options (swaptions), other interest rate derivatives, fuel and energy
derivatives and third party equity forward contracts. We suffered valuation
losses in most of these financial derivatives in 2002 compared to 2001, which
accounted for substantially all the loss recorded in 2002 under the line item
valuation and liquidation of financial instruments presented above. See
"Qualitative and Quantitative Market Disclosure --Our Derivative Financial
Instruments" and "Qualitative and Quantitative Market Disclosure -- Interest
Rate Risk, Foreign Currency Risk and Equity Risk." See also note 16A to our
consolidated financial statements included elsewhere in this annual report. The
decline in the estimated fair value of our equity forward contracts that hedge
the potential exercise of our executive stock option programs is primarily
attributable to a decrease in the market price of our listed securities (ADSs
and CPOs). The decline in the estimated fair market value of our interest rate
derivatives is primarily attributable to the continuing decline in market
interest rates, as CEMEX has fixed its interest rate profile in a level above
current market rates. With respect to our cross currency swaps, the decrease in
our estimated fair value is primarily attributable to the appreciation of the
Yen against the Mexican Peso during 2002.
Other Expenses, Net
Our other expenses for 2002 were Ps4,465 million, a 3% decrease from
Ps4,611 million in 2001. The decrease was primarily attributable to expenses
related to a voluntary exchange program of options under our stock option
program during 2001. See note 15C to our consolidated financial statements
included elsewhere in this annual report. This decrease was partially offset by
the expense incurred during 2002 as a result of the premium paid on our cash
tender offer for our 12 3/4% notes due 2006, the consent fee paid in connection
with our consent solicitation for our 9.625% notes due 2009 and a non-recurring
expense related to the termination of our distribution agreement in Taiwan. See
note 21F to our consolidated financial statements included elsewhere in this
annual report.
Income Taxes, Business Assets Tax and Employees' Statutory Profit Sharing
Our effective tax rate was 9.3% in 2002 compared to 11.1% in 2001. Our
tax expense, which primarily consists of income taxes and business assets tax,
decreased 66% from Ps1,845 million in 2001 to Ps629 million in 2002.
Approximately 32% of the decrease was attributable to lower taxable income in
2002 as compared to 2001, and 34% of the decrease resulted from the recognition
of the deferred income taxes for the year that was an income of Ps434.8 million
in 2002 as compared to an expense of Ps221.1 million in 2001 due mainly to the
change in the enacted income tax ratio in Mexico which decreased to 34% in 2002
from 35% in 2001, and also to variations in temporary differences between book
and taxable amounts that occurred during 2002. Our average statutory income tax
rate was approximately 34% in 2002 and approximately 35% in 2001.
Employees' statutory profit sharing decreased from Ps261 million
during 2001 to Ps118 million during 2002 due to lower taxable income for profit
sharing purposes in Mexico and Venezuela. See note 17B to our consolidated
financial statements included elsewhere in this annual report.
72
Majority Interest Net Income
Majority interest net income represents the difference between our
consolidated net income and minority interest net income, which is the portion
of our consolidated net income attributable to those of our subsidiaries in
which non-affiliated third parties hold interests. Changes in minority interest
net income in any period reflect changes in the percentage of the stock of our
subsidiaries held by non-affiliated third parties as of the end of each month
during the relevant period and consolidated net income attributable to those
subsidiaries.
For the reasons described above, our consolidated net income (before
deducting the portion allocable to minority interest) for 2002 decreased 57%,
from Ps14,723 million in 2001 to Ps6,392 million in 2002. The percentage of our
consolidated net income allocable to minority interests decreased from 12% in
2001 to 7% in 2002, as a result of our prepayment of a portion of the preferred
equity balance of the preferred equity transaction related to the financing of
our acquisition of Southdown, now renamed CEMEX, Inc., in 2000. Majority
interest net income decreased by 54%, from Ps13,027 million in 2001 to Ps5,967
million in 2002, mainly as a result of our decrease in net sales, the increase
in operating expenses and the increase in our valuation losses on derivative
financial instruments, partially offset by our reductions in cost of sales,
interest expense and income taxes and the increase in our monetary position
gain. As a percentage of net sales, majority interest net income decreased from
17% in 2001 to 8% in 2002.
Liquidity and Capital Resources
Operating Activities
We have satisfied our operating liquidity needs primarily through
operations of our subsidiaries and expect to continue to do so for both the
short-term and long-term. Although cash flow from our operations has
historically overall met our liquidity needs for operations, servicing debt and
funding acquisitions, our subsidiaries are exposed to risks from changes in
foreign currency exchange rates, price and currency controls, interest rates,
inflation, governmental spending, social instability and other political,
economic or social developments in the countries in which they operate, any one
of which may materially reduce our net income and cash from operations.
Consequently, we also rely on cost-cutting and continual operating improvements
to optimize capacity utilization and maximize profitability as well as to
offset the risks associated with having worldwide operations. Our consolidated
net resources provided by operating activities were Ps26.1 billion in 2001,
Ps19.1 billion in 2002 and Ps17.6 billion in 2003. (See our Statement of
Changes in the Financial Position included elsewhere in this annual report.)
Our Indebtedness
As of December 31, 2003, we had approximately U.S.$5.9 billion (Ps65.9
billion) of total debt, of which approximately 23% was short-term and 77% was
long-term. Approximately 22% of our long-term debt, or U.S.$1.0 billion (Ps11.4
billion), is to be paid in 2005, unless extended. As of December 31, 2003, 68%
of our consolidated debt was Dollar-denominated, 18% was Euro-denominated, 14%
was Japanese Yen-denominated and immaterial amounts were denominated in other
currencies, after giving effect to our cross currency swap arrangements
discussed elsewhere in this annual report. The weighted average interest rates
paid by us in 2003 in our main currencies were 5.4% on our Dollar-denominated
debt, 3.1% on our Euro-denominated debt and 0.9% on our Yen-denominated debt.
The ratio of total indebtedness, including certain transactions that do not
qualify as debt instruments under Mexican GAAP and that are used to calculate
this ratio for financial covenant purposes, to total capitalization as of
December 31, 2003 was approximately 46.7% and as of December 31, 2002 was
approximately 47.5%.
From time to time, as part of our financing activities, we and our
subsidiaries have entered into various financing agreements, including bank
loans, credit facilities, sale-leaseback transactions, forward contracts,
forward lending facilities and equity swap transactions. Additionally, we and
our subsidiaries have issued notes, commercial paper, bonds, preferred equity
and putable capital securities.
73
Most of our outstanding indebtedness has been incurred to finance our
acquisitions and to finance our capital investment programs. CEMEX Mexico and
Empresas Tolteca de Mexico, two of our principal Mexican subsidiaries, have
provided guarantees of our indebtedness in the amount of U.S.$3.1 billion
(Ps35.3 billion), as of December 31, 2003. See Item 3 -- "Key Information --
Risk Factors -- Our ability to pay dividends and repay debt depends on our
ability to transfer income and dividends from our subsidiaries," "--We have
incurred and will continue to incur debt, which could have an adverse effect on
the price of our CPOs, ADSs, appreciation warrants and ADWs," and note 23(x) to
our consolidated financial statements included elsewhere in this annual report.
As of December 31, 2003, we and our subsidiaries had lines of credit
totaling Ps43.7 billion at annual rates of interest ranging from 0.6% to 13.5%,
in accordance with the currency in which they were negotiated. The unused
amounts of those lines of credit totaled approximately Ps25.7 billion as of
December 31, 2003. In addition to these lines of credit, from time to time we
borrow money from banks and other financial institutions.
Some of the debt instruments in respect of our and our subsidiaries'
indebtedness contain various covenants, which, among other things, require us
and them to maintain specific financial ratios, restrict asset sales and
dictate the use of proceeds from the sale of assets. These restrictions may
adversely affect our ability to finance our future operations or capital needs
or to engage in other business activities, such as acquisitions, which may be
in our interest. From time to time, we have sought and obtained waivers and
amendments to some of our and our subsidiaries' debt agreements, principally in
connection with acquisitions. Our failure to obtain any required waivers may
result in the acceleration of the affected indebtedness and could trigger our
obligations to make payments of principal, interest and other amounts under our
other indebtedness, which could have a material adverse effect on our financial
condition. We believe that we have good relations with our lenders and the
lenders to our subsidiaries, and nothing has come to our attention that would
lead us to believe that any future waivers, if required, would not be
forthcoming. However, we cannot assure you that future waivers would be
forthcoming, if requested. As of December 31, 2003, we were in compliance with
all the financial covenants in our own and our subsidiaries' debt instruments.
In addition, a considerable amount of our debt is subject to credit
ratings triggers that require us to pay a step-up in the coupon rate of the
affected notes in the event that certain minimum credit ratings are not
maintained. Significantly, the CEMEX, Inc. Note and Guarantee Agreement, dated
March 15, 2001, described under Item 10 "-- Additional Information -- Material
Contracts," requires us to make all reasonable efforts to ensure that the notes
issued pursuant to that agreement maintain a private letter rating of at least
BBB- by Standard & Poor's and Baa3 by Moody's. If the notes fail to maintain
this required rating, we would have to pay a step-up in the coupon rate and,
if, after a continuous period of two years, the notes have not re-attained
these ratings, we would have to repay them or obtain a waiver of this
requirement. As of December 31, 2003, the notes were rated BBB- by Standard &
Poor's and Baa3 by Moody's.
Our Preferred Equity Arrangements
In November 2000, we formed a Dutch subsidiary which issued preferred
equity for an amount of U.S.$1.5 billion (Ps16.9 billion) to provide funds for
our acquisition of Southdown on terms we believe are advantageous. This
structure was designed to strengthen our capital structure while providing
financing on favorable terms. The preferred equity granted its holders 10% of
the subsidiary's voting rights, as well as the right to receive a preferred
dividend. Under the terms of the preferred equity financing arrangements,
Sunward Acquisitions N.V., or Sunward Acquisitions, our indirect Dutch
subsidiary, contributed its 85.2% interest in CEMEX Espana to New Sunward
Holding B.V., or New Sunward Holding in exchange for all its ordinary shares. A
special purpose entity, which was neither owned nor controlled by us, borrowed
U.S.$1.5 billion from a syndicate of banks and New Sunward Holding issued
preferred equity to the special purpose entity in exchange for the U.S.$1.5
billion, which was used to subscribe for further shares in CEMEX Espana. During
2001, we redeemed a portion of the then-outstanding preferred equity in the
amount of U.S.$600 million, and at year-end 2001, the balance outstanding was
U.S.$900 million. In February 2002, we refinanced this preferred equity
transaction, pursuant to which we redeemed U.S.$250 million of the outstanding
preferred equity and extended the termination date on the remaining U.S.$650
million with U.S.$195 million due in February 2004 and U.S.$455 million due in
August 2004. In October 2003, in connection with the establishment of the new
U.S.$1.15 billion senior unsecured term loan facility by our Dutch subsidiary
described under Item 10 "-- Additional Information -- Material Contracts," we
redeemed before maturity all of the U.S.$650 million (Ps7,306.0) of preferred
equity outstanding.
74
Until its liquidation, for accounting purposes under Mexican GAAP, the
preferred equity was recorded as a minority interest on our balance sheet until
its liquidation. Dividends paid on the preferred equity were recorded as a
minority interest on our income statement. For the years ended December 31,
2001, 2002 and 2003, preferred equity dividends amounted to approximately
U.S.$76 million, U.S.$23.2 million and U.S.$12.5 million, respectively.
In May 1998, a subsidiary of CEMEX Espana issued U.S.$250 million
aggregate liquidation amount of 9.66% Putable Capital Securities. In April
2002, approximately U.S.$184 million in aggregate liquidation amount of these
capital securities were tendered to, and accepted by, us in a tender offer. The
Putable Capital Securities are guaranteed on a subordinated basis by CEMEX
Espana. We have an option to repurchase the Putable Capital Securities from the
holders on November 15, 2004, or on any subsequent dividend payment date. We
are required to make an offer to purchase the Putable Capital Securities from
their holders on May 15, 2005 and after the occurrence of specified put events,
which include, among other things, a payment default or a deferral of dividends
by the issuer of the Putable Capital Securities. Our obligation to purchase the
Putable Capital Securities is guaranteed by CEMEX Mexico and Empresas Tolteca
de Mexico. As of December 31, 2003, we had U.S.$66 million of the Putable
Capital Securities outstanding.
For accounting purposes under Mexican GAAP, the Putable Capital
Securities are recorded as a minority interest on our balance sheet. Dividends
paid on the Putable Capital Securities are recorded as a minority interest on
our income statement. For the years ended December 31, 2001, 2002 and 2003,
Putable Capital Securities dividends amounted to approximately U.S.$24.2
million, U.S.$11.9 million and U.S.$6.4 million, respectively.
Our Equity Arrangements
In December 1995, we entered into a transaction in which one of our
Mexican subsidiaries transferred some of its cement assets to a trust, while,
simultaneously, a third party purchased a beneficial interest in the trust for
approximately U.S.$123.5 million in exchange for notes issued by the trust. We
had the right to reacquire these assets on various dates until 2007. In
December 2003, we acquired the remaining assets for approximately U.S. $75.9
million.
From inception of the transaction until repurchase of the assets, the
assets related to this transaction were considered as owned by third parties;
therefore, for accounting purposes under Mexican GAAP, this transaction was
included as minority interest in our balance sheet. For the years ended
December 31, 2001, 2002 and 2003, the expense generated by retaining the option
to re-acquire the assets amounted to approximately U.S.$13.8 million, U.S.$13.2
million and U.S.$14.5 million, respectively, and was included as financial
expense in our income statements.
In December 1999, we issued to our shareholders, members of our board
of directors and other executives 105 million appreciation warrants maturing on
December 13, 2002, at a subscription price in pesos of Ps3.2808 per
appreciation warrant. A portion of the appreciation warrants was subscribed as
American Depositary Warrants, or ADWs, each ADW representing five appreciation
warrants.
In November 2001, we launched a voluntary public exchange offer of new
appreciation warrants and new ADWs maturing on December 21, 2004, for our
existing appreciation warrants and our existing ADWs on a one-for-one basis. Of
the total 105 million appreciation warrants originally issued, 103,790,945, or
98.9%, were tendered in exchange for the new appreciation warrants. Both the
old appreciation warrants and the new appreciation warrants were designed to
allow the holder to benefit from future increases in the market price of our
CPOs, with any appreciation value to be received in the form of our CPOs or
ADSs, as applicable. The old appreciation warrants expired on December 13, 2002
in accordance with their terms without any payments to the holders. See note
14F to our consolidated financial statements included elsewhere in this annual
report and "-- Our Equity Derivative Forward Arrangements."
In November 2003, we launched a modified "Dutch Auction" cash tender
offer to purchase up to 90,018,042 of the new appreciation warrants (including
appreciation warrants represented by ADWs) at a single price in Pesos not
greater than Ps8.10 per appreciation warrant (Ps40.50 per ADW) nor less than
Ps5.10 per appreciation warrant (Ps25.50 per ADW), as specified by tendering
holders. Holders of appreciation warrants and
75
ADWs tendered 96,641,388 appreciation warrants (including 23,575,907
appreciation warrants represented by ADWs) at prices at or below Ps8.10 per
appreciation warrant (Ps40.50 per ADW) in the offer, which expired on January
26, 2004. In accordance with the terms of the offer, CEMEX purchased 90,018,042
appreciation warrants (including appreciation warrants represented by ADWs),
representing approximately 86.7% of the 103,790,945 new appreciation warrants
outstanding immediately prior to the commencement of the offer, on a pro rata
basis (except for odd lot tenders, which were purchased on a priority basis) at
a final purchase price of Ps8.10 per appreciation warrant (Ps40.50 per ADW).
The final proration factor for the offer was 93.146058%. All appreciation
warrants and ADWs not accepted because of proration were promptly returned.
Following the completion of the offer, approximately 11,668,132 new
appreciation warrants (including appreciation warrants represented by ADWs)
were held by persons other than CEMEX and its subsidiaries.
Our Equity Derivative Forward Arrangements
In connection with our appreciation warrants transaction, during 1999,
we entered into equity forward contracts with a number of banks and other
financial institutions with an original maturity in December 2002, pursuant to
which the banks purchased our ADSs and shares of common stock of CEMEX Espana
(formerly Compania Valenciana de Cementos Portland, S.A.), our Spanish
subsidiary. In December 2002, we agreed with the banks to settle the forward
transactions for cash and simultaneously enter into new forward transactions
with the same banks on similar terms to the original forward transactions with
respect to the underlying ADSs and CEMEX Espana shares, maturing on December
12, 2003. Under the new forward contracts, the banks retained the 24,008,313
ADSs and 33,751,566 CEMEX Espana shares underlying the original forward
contracts, for which they agreed to pay us an aggregate price of approximately
U.S.$828.5 million, or the notional amount. We agreed with the banks that the
purchase price payable to us under the new forward contracts would be netted
against the adjusted forward settlement price of the original forward contracts
and any advance payments made by us in connection with the closing of the new
forward contracts. Upon closing of the new forward transactions, we made an
advance payment to the banks of approximately U.S.$380.1 million of the forward
purchase price, U.S.$285 million of which represented payment in full of the
portion of the forward purchase price relating to the CEMEX Espana shares and
U.S.$95.1 million of which was an advance payment against the final forward
purchase price. As of December 13, 2002, the adjusted forward settlement price
of the new forward contracts was U.S.$448.4 million. In December 2002, as a
result of the net settlement and renegotiation of the forward contracts, we
recognized, in accordance with Mexican GAAP, a loss of approximately U.S.$98.3
million (Ps1,104.9 million) in our stockholders' equity, arising from changes
in the valuation of the underlying shares.
In October 2003, in connection with the non-dilutive equity offering
by the banks of all of the ADS underlying those forward contracts, which had
increased to 25,457,378 ADSs as a result of stock dividends through June 2003,
we agreed with the banks to settle those forward contracts for cash. As a
result of the final settlement in October 2003, we recognized a gain of
approximately U.S.$18.1 million (Ps203.4 million) in our stockholders' equity,
arising from changes in the valuation of the ADSs from December 2002 through
October 2003.
For accounting purposes under Mexican GAAP, during the life of these
forward contracts, the underlying ADSs were considered to have been owned by
the banks and the forward contracts were treated as equity transactions, and,
therefore, changes in the fair value of the ADSs were not recorded until
settlement of the forward contracts. With respect to the portion of the forward
contracts relating to CEMEX Espana shares, the sale of the CEMEX Espana shares
to the banks was not considered to be a sale under Mexican GAAP because we
continued to retain the economic and voting rights associated with these shares
and were obligated to repurchase them upon termination of the forward
contracts, and because our obligations to the banks relating to those shares
were prepaid. As a result, the transaction did not have any effect on minority
interests, in either our income statements or our balance sheets.
As of December 31, 2002 and 2003, we were also subject to equity
forward contracts with different maturities until October 2006, for a
notional amount of U.S.$436.1 million and U.S.$789.3 million, respectively,
covering a total of 16,005,620 ADSs in 2002 and 29,314,561 ADSs in 2003,
negotiated to hedge the future exercise of options granted under our
executive stock option programs and voluntary employee stock option
programs. See note 15 to our consolidated financial statements included
elsewhere in this annual report. Starting in 2001, we recorded the changes
in the estimated fair value of these contracts in the balance sheet as
assets or liabilities against the income statement, in addition to the
costs originated by our option programs, which these forwards are hedging.
76
As of December 31, 2002 and 2003, the estimated fair value of these contracts
was a loss of approximately U.S.$47.0 million (Ps539 million) and a gain of
approximately U.S.$28 million (Ps314.7 million), respectively.
As of December 31, 2003, in relation to the acquisition of 1,483,365
shares of CAH common stock, we had forward contracts for a notional amount of
U.S.$122.9 million, covering 23,622,500 CPOs, maturing in August, September and
October 2004 hedging the acquisition of CAH shares to be acquired in exchange
for CEMEX CPOs. The effects to be generated upon settlement of the forward
contracts will be recognized as an adjustment to the acquisition cost of the
CAH shares. As of December 31, 2003, the estimated fair value of these
contracts, which is not periodically recorded, had an approximate gain of
U.S.$1.8 million (Ps20.2 million). See note 8A to our consolidated financial
statements included elsewhere in this annual report.
Finally, as of December 31, 2002 and 2003, we had forward contracts
with different maturities until February 2006, for an approximate notional
amount of U.S.$ 452.4 million and U.S.$172.8 million, respectively, covering a
total of 15,316,818 ADSs in 2002 and 5,268,939 ADSs in 2003. Based on our
intention to settle these contracts physically at maturity, the estimated fair
value of these contracts is not periodically recognized. The effects originated
by these contracts will be recognized at maturity as an adjustment to our
stockholders' equity. As of December 31, 2002 and 2003, the estimated fair
value of these contracts represented a loss of approximately U.S.$110.6 million
(Ps1, 243.1 million) and approximately U.S.$27.1 million (Ps304.6 million),
respectively.
Our Receivables Financing Arrangements
We have established sales of trade accounts receivable programs with
financial institutions, referred to as securitization programs. These programs
were negotiated by CEMEX Mexico and CEMEX Concretos, S.A. de C.V. during 2002,
by CEMEX, Inc. in the United States during 2001 and by CEMEX Espana in 2000.
Through the securitization programs, our subsidiaries effectively surrender
control, risks and the benefits associated to the accounts receivable sold;
therefore, the amount of receivables sold is recorded as a sale of financial
assets and the balances are removed from the balance sheet at the moment of
sale, except for the amounts that the counterparties have not paid, which are
reclassified to other accounts receivable. See notes 4 and 5 to our
consolidated financial statements included elsewhere in this annual report. The
balances of receivables sold pursuant these securitization programs as of
December 31, 2002 and 2003 were Ps5,575 million (U.S.$496 million) and Ps6,125
million (U.S.$545 million), respectively. The accounts receivable qualifying
for sale do not include amounts over certain days past due or concentrations
over certain limit to any one customer, according to the terms of the programs.
Expenses incurred under these programs, originated by the discount granted to
the acquirers of the accounts receivable, are recognized in the income
statements and were approximately Ps120 million (U.S.$10.7 million) in 2002 and
Ps107 million (U.S.$9.5 million) in 2003. The proceeds obtained through these
programs have been used primarily to reduce net debt.
Stock Repurchase Program
Under Mexican law, our shareholders may authorize a stock repurchase
program at our annual shareholders meeting. Unless otherwise instructed by our
shareholders, we are not required to purchase any minimum number of shares
pursuant to such program.
In connection with our 2001 annual shareholders' meeting held on April
25, 2002, our shareholders approved a stock repurchase program in an amount of
up to Ps5 billion (approximately U.S.$482 million) to be implemented between
April 2002 and April 2003. See note 14A to our consolidated financial
statements included elsewhere in this annual report. During 2002, we purchased
7.6 million CPOs for a total of Ps392.2 million.
In connection with our 2002 annual shareholders' meeting held on April
24, 2003, our shareholders approved a stock repurchase program in an amount of
up to Ps6 billion (approximately U.S.$534 million) to be implemented between
April 2003 and April 2004. See note 14A to our consolidated financial
statements included elsewhere in this annual report. During 2003, we did not
purchase any CPOs under this program.
In connection with our 2003 annual shareholders' meeting held on April
29, 2004, our shareholders approved a stock repurchase program in an amount of
up to Ps6 billion (approximately U.S.$534 million) to be implemented between
April 2004 and the date of the 2004 annual shareholders' meeting.
77
Recent Developments
On March 30, 2004, CEMEX Espana, with Sandworth Plaza Holding B.V.,
Cemex Caracas Investments B.V., Cemex Caracas II Investments B.V., Cemex Manila
Investments B.V. and Cemex Egyptian Investments, B.V., as guarantors, entered
into a Term and Revolving Facilities Agreement with Banco Bilbao Vizcaya
Argentaria, S.A. and Societe Generale, as mandated lead arrangers, relating to
three credit facilities with an aggregate amount of (euro)250,000,000 and
(Y)19,308,000,000. The first facility is a five-year multi-currency term loan
facility with a variable interest rate; the second facility is a 364-day
multi-currency revolving credit facility; and the third facility is a five-year
Yen-denominated term loan facility with a fixed interest rate. The proceeds of
these facilities will be used to prepay CEMEX Espana's outstanding revolving
credit facility and for general corporate purposes.
On April 15, 2004, CEMEX Espana Finance LLC, as issuer, CEMEX Espana
S.A., Sandworth Plaza Holding B.V., Cemex Caracas Investments B.V., Cemex
Caracas II Investments B.V., Cemex Manila Investments B.V. and Cemex Egyptian
Investments B.V., as guarantors, and several institutional purchasers, entered
into a Note Purchase Agreement in connection with a private placement by CEMEX
Espana Finance, LLC. CEMEX Espana Finance, LLC issued to the institutional
purchasers (Y)4,980,600,000 aggregate principal amount of 1.79% Senior Notes
due 2010 and (Y)6,087,400,000 aggregate principal amount of 1.99% Senior Notes
due 2011. The proceeds from the private placement were used to repay debt.
Research and Development, Patents and Licenses, etc.
Our research and development, or R&D, efforts help us in achieving our
goal of increasing market share in the markets in which we operate. The
department of the Vice President of Technology is responsible for developing
new products for our cement and ready-mix businesses that respond to our
clients needs. The department of the Vice President of Energy also has
responsibility for developing of new processes, equipment and methods to
optimize operational efficiencies and reduce our costs. For example, we have
developed methods that allow us to use alternative fuel sources, which, in
turn, reduce our fuel costs.
We have five laboratories dedicated to our research and development
efforts. Four of these laboratories are strategically located in close
proximity to our plants to assist our operating subsidiaries with
troubleshooting, optimization techniques and quality assurance methods. One of
our laboratories is located in Switzerland where we are constantly improving
and consolidating our research and development efforts in the areas of cement
technology, information technology and energy management. We have several
patent registrations and pending applications in different countries, related
mainly to the cement production process, including methods for increasing
energy efficiencies.
Our Information Technology divisions have developed information
management systems and software relating to cement and ready-mix operational
practices, automation and maintenance. These new systems have helped us to
better serve our clients with respect to purchasing, delivery and payment.
R&D activities comprise part of the daily routine of the departments
and divisions mentioned above; therefore, the costs associated with such
activities are expensed as incurred. However, the costs incurred in the
development of software for internal use are capitalized and amortized to
operating results over the estimated useful life of the software, which is
approximately 4 years.
In 2002 and 2003, the combined total expense of the departments of the
Vice President of Energy and the Vice President of Technology, which includes
research and development activities, amounted to U.S.$52.9 million and
U.S.$40.9 million, respectively. In addition, in 2002 and 2003, we capitalized
approximately U.S.$90.1 million and U.S.$11.3 million, respectively, related to
internal use software development. See note 10 to our consolidated financial
statements included elsewhere in this annual report.
78
Trend Information
Overview
We believe 2003 was a very challenging, but ultimately successful year
for CEMEX. In the beginning of 2003, we faced a global economy burdened by
uncertainty and volatility that offered few visible growth opportunities and
was subject to significant downside risks. Our year-end results, however, were
better than we expected as demand in markets such as the United States, for
which our outlook was negative a year ago, grew significantly during the second
half of 2003.
Led by the U.S. economic expansion, we believe the global economic
environment has also moderately improved and offers better prospects for 2004.
For example, cement demand in Mexico and Spain, our two other major markets,
grew at twice the rate of gross domestic product (GDP) growth or more during
2003. Also, we believe visibility has improved for most of the markets in our
portfolio. We believe that these are growth markets on an upward trend, and
that we are well prepared to capitalize on their accelerating development
during 2004.
In contrast to 2003, during which cement demand grew in only half of
the largest markets in which we operate, we expect cement volume growth in 2004
in most of the markets in our portfolio. We expect this growth to be
accompanied by a gradual price recovery.
Outlook for Our Major Markets
The following is a discussion of our outlook for our three major
markets, Mexico, the United States and Spain, which together generated
approximately 72% of our net sales in 2003.
In Mexico, we are optimistic about the positive trend in cement
consumption in 2003, and we believe it will extend well into 2004. We expect
our cement volumes in Mexico to increase in 2004 over 2003, primarily as a
result of continued government spending on infrastructure projects, increased
demand in the low- and middle-income housing sectors and a stable but growing
self-construction sector. In addition, due the upward trend in Mexico's GDP, we
expect a recovery in the industrial sector during 2004, which we expect will
lead to increased employment levels and renewed growth in the self-construction
sector, which remained relatively flat during 2003. We expect cement prices in
Mexico will remain flat in constant Peso terms for 2004.
In the United States, we expect cement consumption in the industrial
and commercial sectors to grow in 2004 following a reversal of their downward
trend during the second half of 2003, primarily as a result of improved vacancy
rates and increased economic activity. We also expect cement demand from the
streets and highways sector to grow in 2004, due to the improving economic
environment. As a result, we expect our cement volumes in the United States to
increase in 2004 over 2003, despite an expected slowdown in cement consumption
in the residential sector due to a likely increase in interest rates. In
addition, we believe the U.S. government's proposed new highway construction
program, the Safe, Accountable, Flexible, and Efficient Transportation Equity
Act of 2003 (SAFETEA), will be a positive factor that will influence cement
demand in 2005 and beyond. With respect to our national average pricing, we
expect a slight increase in Dollar terms in 2004 over 2003.
In Spain, we expect cement demand from the housing sector to remain
strong due to a favorable mortgage environment and the immigration of northern
Europeans. We also expect demand from the public works sector, which is
primarily driven by Spain's infrastructure program, to be an important
component of cement consumption. Although we expect to see slower activity in
this sector through the transitional phase that will follow the recent
elections, we expect government spending on infrastructure programs to continue
through 2007. As a result, we expect our cement volumes in Spain to remain flat
or decrease slightly in 2004 compared to 2003. We expect cement prices in Spain
will remain flat in Euro terms for 2004.
Summary of Material Contractual Obligations and Commercial Commitments
As of December 31, 2003, our subsidiaries have future commitments for
the purchase of raw materials for an approximate amount of U.S.$113.0 million.
79
In March 1998, we entered into a 20-year contract with Pemex providing
that Pemex's refinery in Cadereyta would supply us with 900,000 tons of petcoke
per year, commencing in 2003. In July 1999, we entered into a second 20-year
contract with Pemex providing that Pemex's refinery in Madero would supply us
with 850,000 tons of petcoke per year, commencing in 2002. We expect the Pemex
petcoke contracts to reduce the volatility of our fuel costs and provide us
with a consistent source of petcoke throughout their 20-year terms.
In 1999, we reached an agreement with ABB Alstom Power and Sithe
Energies, Inc. requiring Alstom and Sithe to finance, build and operate
"Termoelectrica del Golfo," a 230 megawatt energy plant in Tamuin, San Luis
Potosi, Mexico and to supply electricity to us for a period of 20 years.
Pursuant to the agreement, we are obligated to purchase the full electric
capacity generated by the power plant during the 20-year period. We are also
obligated to supply Alstom and Sithe with 1,200,000 tons of pet coke per year
for the 20-year period for the consumption of this power plant and another
power plant built and operated by Alstom and Sithe for Penoles, a Mexican
mining company. We expect to meet our pet coke delivery requirements to Alstom
and Sithe through several pet coke supply agreements, including our pet coke
supply contract with Pemex. Pursuant to the agreement, we may be obligated to
purchase the Termoelectrica del Golfo plant upon the occurrence of specified
material defaults or events, such as failure to pay when due, bankruptcy or
insolvency, and revocation of permits necessary to operate the facility, and
upon termination of the 20 year period, we will have the right to purchase the
assets of the power plant. We expect this arrangement to reduce the volatility
of our energy costs and to provide approximately 80% of CEMEX Mexico's
electricity needs. The power plant commenced commercial operations on April 29,
2004.
For purposes of presenting the approximate cash flows that will be
required to meet our other material contractual obligations, the following
table presents a summary of those obligations, as of December 31, 2003:
Payments Due by Period
--------------------------------------------------------------
(In millions of U.S. Dollars)
Within 2-3 4-5 After
Contractual Obligations (1) Total 1 Year Years Years 5 Years
- -------------------------------------------------- -------- -------- ------ ------- -------
Long-Term Bank Loans and Notes Payable............ 5,346 840 2,881 950 675
Capital Lease Obligations......................... 34 3 4 2 25
-------- -------- ------ ------- -------
Total Debt (2).............................. 5,380 843 2,885 952 700
Operating Leases (3).............................. 343 65 110 82 86
Shares Subject to Mandatory Redemption (4)........ 66 - 66 - -
Unconditional Purchase Obligations Under Equity
Forward Contracts (5)......................... 1,085 561 524 - -
(1) The data set forth in this table are expressed in nominal terms and do
not include financing expenses or preferred dividends on Putable Capital
Securities.
(2) Total long-term debt including maturities is presented in note 11 to our
consolidated financial statements included elsewhere in this annual
report. In addition, as of December 31, 2003, we had lines of credit
totaling approximately U.S.$3.9 billion, of which the available portion
amounts to approximately U.S.$2.3 billion.
(3) Operating leases have not been calculated on the basis of net present
value instead they are presented in the basis of nominal future cash
flows. See note 21D to our consolidated financial statements included
elsewhere in this annual report. Our operating leases include the lease
of a cement plant in New Braunfels, Texas, which expires on September 9,
2009. We have an option to purchase this plant at the termination of the
lease for fair value and an early buy-out option that can be exercised in
January 2007 for a fixed amount.
(4) Refers to the Putable Capital Securities issued by our subsidiary in
Spain. See note 14E to our consolidated financial statements included
elsewhere in this annual report.
(5) The scenario under which the amounts presented under this line item are
determined assumes that, upon settlement of our equity forward contracts,
we will repurchase all the underlying CPOs or ADSs. Even when this
scenario is possible, we consider that it is not probable considering
that in order for such a repurchase to take place, all the underlying
transactions to which the equity forward contracts are related, such as
our employee stock option programs, would expire unexercised (out of the
money). Also, the scenario does not take into account that we may elect
net cash settlement at maturity of the equity forward contracts and
permit our counterparties to sell the underlying CPOs into the market, in
which case, the expected cash flow would be materially different. As of
December 31, 2003, the aggregate estimated fair value of these contracts
was a gain of approximately U.S.$16.4 million.
Of the total amount of U.S.$561 million due in the short-term,
approximately U.S.$122.9 million is related to the contracts that hedge
our forward exchange transaction of CAH shares, and approximately
U.S.$413.3 million is related to the contracts that hedge our employee
stock option programs. We expect that these contracts will be refinanced
from time to time relative to the underlying hedged items.
80
In addition, we have provided third party standby letters of credit for
the benefit of our counterparties in the equity forward contracts and
other financial transactions in the amount of U.S.$55 million at December
31, 2003. For accounting purposes these letters of credit represent
contingent obligations. See note 21A to our consolidated financial
statements included elsewhere in this annual report.
Off-Balance Sheet Arrangements
The only off-balance sheet arrangements we have that are reasonably
likely to have a material effect on our financial condition, operating results,
liquidity or capital resources are the equity forward contracts described above
under "Liquidity and Capital Resources -- Our Equity Derivative Financing
Transactions" (other than those equity forward contracts negotiated to hedge
the future exercise of options granted under our stock option programs), the
receivables financing arrangements described above under "Liquidity and Capital
Resources -- Our Receivables Financing Arrangements" and the electricity supply
agreement described above under "Liquidity and Capital Resources -- Summary of
Material Contractual Obligations and Commercial Commitments."
Qualitative and Quantitative Market Disclosure
Our Derivative Financial Instruments
In compliance with the procedures and controls established by our risk
management committee, we have entered into various derivative financial
instrument transactions in order to manage our exposure to market risks
resulting from changes in interest rates, foreign exchange rates and the price
of our common stock. We actively evaluate the creditworthiness of the financial
institutions and corporations that are counterparties to our derivative
financial instruments, and we believe that they have the financial capacity to
meet their obligations in relation to these instruments.
The fair value of derivative financial instruments is based on
estimated settlement costs or quoted market prices and are supported by
confirmations of these values received from the counterparties to these
financial instruments. The notional amounts of derivative financial instrument
agreements are used to measure interest to be paid or received and do not
represent the amount of exposure to credit loss.
(U.S.$ millions)
----------------------------------------------------------------
At December 31, 2002 At December 31, 2003
-------------------- --------------------
Notional Estimated Notional Estimated
Derivative Instruments amount fair value amount fair value Maturity Date
- -------------------------------- -------- ---------- -------- ---------- -------------
Equity forward contracts...... 1,445.1 (90.6) 1,085.0 16.4 Feb 04-Oct 06
Foreign exchange forward
contracts..................... 1,325.7 (201.4) 1,445.9 (191.6) Jan 04-Jun 05
Interest rates swaps.......... 1,106.0 (72.5) 1,850.0 (228.1) Jan 08-Feb 09
Cross currency swaps.......... 1,847.9 234.6 1,446.6 262.0 Jan 04-Dec 08
Interest rate swap options.... 1,000.0 (140.9) 200 (24.9) Oct 04
Other interest rate derivatives 1,361.0 (157.7) -- -- --
Fuel and energy derivatives... 177.0 (.5) 174.5 (7.4) May 2017
Third party equity forward
contracts..................... 7.1 (.1) -- -- --
Our Equity Derivative Forward Contracts
Our equity derivative forward contracts in the table above, including
the appreciation warrant-related forward contracts at December 31, 2002, are
accounted for as equity instruments, and gains and losses are recognized as an
adjustment to stockholders' equity upon settlement, with the exception of a
portion of our equity forward contracts as of December 31, 2002 and 2003 with a
notional amount of U.S.$436.1 million and U.S.$789.3 million, respectively,
which, beginning in 2001, have been designed as hedges of a portion of our
executive stock option plans, and for which changes in their estimated fair
value have been recognized through the income statement, in addition to the
costs generated by the stock option programs. The estimated fair value of these
forward contracts represented a loss of U.S.$47.0 million a gain of
approximately U.S.$28.0 million, as of December 31, 2002 and 2003, respectively.
See "-- Liquidity and Capital Resources -- Our Equity Derivative Forward
81
Arrangements" and notes 15 and 16 to our consolidated financial statements
included elsewhere in this annual report.
Our Foreign Exchange Forward Contracts
The foreign exchange forward contracts are accounted for at their
estimated market value as hedge instruments for our net investments in foreign
subsidiaries. Gains or losses are recognized as an adjustment to stockholders'
equity within the related foreign currency translation adjustment. In addition,
as of December 31, 2002 and 2003, we held foreign exchange options for notional
amounts of U.S.$59.7 million and U.S.$886.6 million, respectively, maturing on
different dates until June 2005, which accounted for estimated fair value
losses of approximately U.S.$44.4 million (Ps509.2 million) in 2002 and
approximately U.S.$57.2 million (Ps642.9 million) in 2003, recorded in the
income statement. See note 16B to our consolidated financial statements
included elsewhere in this annual report.
Our Interest Rate Swaps
As of December 31, 2002 and 2003, we were parties to interest rate
swaps for a notional amount of U.S.$1,106 million and U.S.$1,850.0 million,
respectively, entered into in order to reduce the financial cost of debt
negotiated at fixed rates and, in some cases, hedge contractual cash flows
(interest payments) of underlying debt negotiated at floating rates. These
interest rate swaps, with the exception of contracts for a notional amount of
U.S. $1,050 million in 2003, are accounted for as hedge instruments for
contractual cash flows (interest payments) of the underlying short-term and
long-term debt transactions, and periodic payments under the contracts are
recognized in the income statements as an adjustment to the effective interest
rate of the related debt. For the year ended December 31, 2002 and 2003,
changes in the estimated fair value of the interest rate swaps resulted in
losses of approximately U.S.$72.5 million and U.S.$228.1 million, respectively.
From the amount recorded in 2003, a loss of approximately U.S.$124.4 million,
related to those interest rate swaps not designated as hedges, was recorded in
earnings. In addition, a loss of approximately U.S.$103.7 million, related to
those swaps designated as hedge instruments, was recorded in the balance sheet
as liabilities against stockholders' equity. This amount will be reversed
through the income statement as the financial expense of the related financing
debt is accrued. See note 11A to our consolidated financial statements included
elsewhere in this annual report.
During 2003, in agreement with our financial counterparty and
resulting from changes in the interest rate mix of our financial debt
portfolio, we settled all the interest rate swap contracts we held as of
December 31, 2002. At settlement, the fair value of such instruments was
received or paid, representing losses of U.S.$41.9 million (Ps471 million).
These losses were recorded in earnings as part of the comprehensive financing
result.
Our Cross Currency Swaps
As of December 31, 2002 and 2003, we held cross currency swap
contracts related to our short-term and long-term financial debt portfolio for
notional amounts of U.S$1,743.4 million and U.S.$1,446.6 million, respectively.
Through these contracts, we carried out the exchange of the originally
contracted currencies and interest rates, over a determined amount of
underlying debt. During the life of these contracts, the cash flows originated
by the exchange of interest rates under the cross currency swap contracts match
the interest payment dates and conditions of the underlying debt. Likewise, at
maturity of the contracts and the underlying debt, we will exchange with the
counterparty notional amounts provided by the contracts so that we will receive
an amount of cash flow equal to cover our primary obligation under the
underlying debt. In exchange, we will pay the notional amount in the exchanged
currency. As a result, we have effectively exchanged the risks related to
interest rates and foreign exchange variations of the underlying debt to the
rates and currencies negotiated in the cross currency swap contracts. See note
11B to our consolidated financial statements included elsewhere in this annual
report.
The periodic cash flows on the cross currency swap instruments arising
from the exchange of interest rates are recorded in the comprehensive financing
result as part of the effective interest rate of the related debt. We recognize
the estimated fair value of the cross currency swap contracts as assets or
liabilities in the balance sheet, with changes in the estimated fair value
being recognized through the income statement. All financial assets and
liabilities with the same maturity, for which our intention is to
simultaneously realize or settle, have been offset for
82
presentation purposes, in order to reflect the cash flows that we
expect to receive or pay upon settlement of the financial instruments.
In respect of the estimated fair value recognition of the cross
currency swap contracts, as of December 31, 2002 and 2003, we recognized net
assets of U.S.$241.4 million (Ps2,713.3 million) and U.S.$262.0 million
(Ps2,944.9 million), respectively, related to the estimated fair value of the
short-term and long-term cross currency swap contracts, of which,
o U.S.$194.2 million (Ps2,182.8 million) as of December 31, 2002
and U.S.$364.5 million (Ps4,097.0 million) as of December 31,
2003 relate to prepayments made to Yen and Dollar obligations
under our cross currency swaps, thereby decreasing the carrying
amounts of the related debt, and
o A gain of approximately U.S.$47.2 million (Ps530.5 million) in
2002 and a loss of approximately U.S.$102.5 million (Ps1,152.1
million) in 2003 represented the contracts' estimated fair value
before prepayment effects and includes:
o Losses of approximately U.S.$ 20.0 million (Ps224.8
million) in 2002 and approximately U.S.$171.9 million
(Ps1,932.2 million) in 2003, which are directly related to
variations in exchange rates between the inception of the
contracts and the balance sheet date, and which were offset
for presentation purposes as part of the related debt
carrying amount,
o Gains of approximately U.S.$25.9 million (Ps291.1 million)
in 2002 and approximately U.S.$12.2 million (Ps137.1
million), identified with the periodic cash flows for the
interest rates swap, and which were recognized as an
adjustment of the related financing interest payable, and
o Remaining net assets of approximately U.S.$41.3 million
(Ps464.2 million) in 2002 and approximately U.S.$57.2
million (Ps642.9 million) in 2003, which were recognized
within other short-term and long-term assets and
liabilities, as applicable. See note 11B to our
consolidated financial statements included elsewhere in
this annual report.
As of December 31, 2002 and 2003, the effect on our balance sheet
arising from the accounting assets and liabilities offset, was that the book
value of the financial liabilities directly related to the cross currency swap
contracts is presented as if such financial liabilities had been effectively
negotiated in the exchange currency instead of in the originally contracted
currency. For the years ended December 31, 2002 and 2003, the changes in the
estimated fair value of our cross currency swap contracts, excluding prepayment
effects in 2002 and 2003, resulted in a loss of approximately U.S.$192.2
million (Ps2,204 million) and a loss of approximately U.S.$ 149.7 million
(Ps1,682.6 million), respectively, which were recognized within the
comprehensive financing result.
Our Interest Rate Swap Options
As of December 31, 2002 and 2003, we held call option contracts
negotiated with financial institutions to exchange floating for fixed interest
rates (swaptions) for a notional amount of U.S.$1,000 million and U.S.$200
million, respectively. For the sale of these options, we received premiums of
approximately U.S.$57.6 million (Ps647.4 million) in 2002 and U.S.$25 million
(Ps281 million) in 2003. During 2003, U.S.$800 million of the U.S.$1,000
million notional amount of the swaptions held by us as of December 31, 2002
matured, and we entered into interest rate swaps for a notional amount of
U.S.$800 million in connection with the counterparties' election under the
swaptions to receive from us fixed interest rates and pay to us floating
interest rates for a five-year period. The remaining swaptions for a notional
amount of U.S.$200 million mature in October 2004, and grant the counterparties
the option to elect, at maturity of the options and at current market rates, to
receive from us fixed rates and pay to us variable rates for a five-year period
or request net settlement in cash. As of December 31, 2002 and 2003, premiums
received, as well as the changes in the estimated fair value of these
contracts, which represented a loss of approximately U.S.$110.9 million
(Ps1,271.9 million) and a gain of approximately U.S.$1.6 million (Ps18.0
million), respectively, were recognized in the comprehensive financing result.
During 2002 and 2003, the call options that expired resulted in losses of
approximately U.S.$92.3 million (Ps1,037.5) and U.S.$23.9
83
million (Ps268.6 million), respectively, which were recognized in the
comprehensive financing result. See note 11A to our consolidated financial
statements included elsewhere in this annual report.
Our Other Interest Rate Derivatives
As of December 31, 2003, we did not hold any interest rate derivative
instruments other than the swaptions described above. As of December 31, 2002,
we held forward rate agreement contracts for a notional amount of U.S.$650
million that we entered into to fix the interest rate of debt that had not been
incurred as of December 31, 2002, but was expected to be incurred in early
2003. These contracts expired in June 2003, and new interest rate swaps were
negotiated. As of December 31, 2002, we also held floor and cap option
contracts for a notional amount of U.S.$711 million linked to an interest rate
swap with an equal notional amount that was settled during 2002. These floor
and cap option contracts, which were scheduled to mature in March 2008, were
settled in May 2003. The changes in the estimated fair value of the forward
rate agreement contracts and the floor and cap option contracts until
expiration or settlement represented a loss of approximately U.S.$88.9 million
(Ps999.2 million) in 2002, and solely with respect to the floor and cap option
contracts, a loss of U.S.$0.1 million (Ps1.5 million) in 2003. These losses
were recognized against the comprehensive financing result, except for a loss
in 2002 of approximately U.S.$42.4 million (Ps476.6 million) related solely to
the forward rate agreement contracts, which was recognized in stockholders'
equity given that it corresponded to the change in valuation after the forward
rate agreement contracts were designated as an accounting hedge of forecasted
cash flows (interest payments) related to new debt issuances. The U.S.$42.4
million (Ps476.6 million) that was recognized in stockholders equity in 2002
was recognized in the income statement during 2003 as the effects of the
related debt had an impact on the financial expense. See note 11A to our
consolidated financial statements included elsewhere in this annual report.
Our Fuel and Energy Derivatives
As of December 31, 2002 and 2003, we had an interest rate swap
maturing in May 2017, for a notional amount of U.S.$177 million and U.S.$162.1
million, respectively, negotiated to exchange floating for fixed interest
rates, in connection with agreements we entered into for the acquisition of
electric energy for a 20-year period commencing in 2003. See note 21F to our
consolidated financial statements included elsewhere in this annual report.
During the life of the derivative contract and over its notional amount, we
will pay LIBOR rates and receive a 7.5% fixed rate until maturity in May 2017.
In addition, during 2001 we sold a floor option for a notional amount of
U.S.$177 million and U.S.$174.5 million in 2002 and 2003, respectively, related
to the interest rate swap contract, pursuant to which, commencing in 2003 and
until 2017, we pay the difference between the 7.5% fixed rate and the LIBOR
rates. Through the sale of this option, we received a premium of approximately
U.S.$22 million (Ps247.3 million) in 2001. As of December 31, 2002 and 2003,
the combined estimated fair value of the swap and floor contracts, amounting to
approximate losses of U.S.$0.5 million and U.S.$7.4 million, respectively, were
recorded in the comprehensive financing result for each period. As of December
31, 2002 and 2003, the notional amount of both contracts is not aggregated,
considering that there is only one notional amount with exposure to changes in
interest rates and the effects of one instrument are proportionally inverse to
the changes in the other one. See note 16D to our consolidated financial
statements included elsewhere in this annual report.
Our Third Party Equity Forwards
As of December 31, 2002, we had a third party equity forward contract
for a notional amount of U.S.$7.1 million, and the estimated fair value of this
contract was an approximate gain of U.S.$0.1 million (Ps)1.1 million). During
January 2003, this contract was settled, resulting in a gain of U.S.$0.6
million (Ps$6.7 million) that was recognized in earnings.
Interest Rate Risk, Foreign Currency Risk and Equity Risk
Interest Rate Risk
The table below presents tabular information of our fixed and
floating rate long-term foreign currency-denominated debt as of December 31,
2003. It includes the effects generated by the interest rate swaps and the
cross currency swap contracts that we have entered into, covering a portion
of our financial debt originally negotiated in
84
Mexican Pesos and U.S. Dollars. See note 11 to our consolidated financial
statements included elsewhere in this annual report. Average floating interest
rates are calculated based on forward rates in the yield curve as of December
31, 2003. Future cash flows represent contractual principal payments. The fair
value of our floating rate long-term debt is determined by discounting future
cash flows using borrowing rates currently available to us as of December 31,
2003 and is summarized as follows:
Expected maturity dates as of December 31, 2003
----------------------------------------------------------------------
After Fair
Debt 2004 2005 2006 2007 2008 2009 Total Value
- ------------------------------ ------ ------- ------- -------- ------- ------ ------- -------
(Millions of U.S. Dollars equivalents of debt denominated in foreign currencies)
Variable rate................. 813 831 765 158 3 27 2,597 2,598
Average interest rate......... 3.71% 4.99% 5.83% 6.21% 6.29% 6.48% -- --
Fixed rate.................... 30 188 1.101 71 719 673 2,782 3,129
Average interest rate......... 6.51% 6.45% 5.98% 5.99% 6.19% 5.81% -- --
As of December 31, 2003, we were subject to the volatility of the
floating interest rates, which, if such rates were to increase, may adversely
affect our financing cost and our net income. As of December 31, 2003, 48% of
our foreign currency-denominated long-term debt bears floating rates at a
weighted average interest rate of LIBOR plus 86 basis points, after giving
effect to our interest rate swaps and cross currency swaps.
As previously mentioned, as of December 31, 2003, we had entered into
interest rate swaps as part of a strategy intended to reduce our overall
financing cost. See "-- Our Derivative Financial Instruments." At that date the
estimated fair value of all of our interest rate swaps was a loss of
approximately U.S.$ 228.1 million. The potential change in the fair value as of
December 31, 2003 of these contracts that would result from a hypothetical,
instantaneous decrease of 50 basis points in the interest rates would be a loss
of approximately U.S.$15.4 million (Ps173.1 million).
In addition, as mentioned above, we have entered into interest rate
swap options. See "-- Our Derivative Financial Instruments." As of December 31,
2003, the estimated fair value of these instruments was a loss of approximately
U.S.$24.9 million. The potential change in the fair value as of December 31,
2003 of these contracts that would result from a hypothetical, instantaneous
decrease of 50 basis points in the interest rates would be a loss of
approximately U.S.$4.6 million (Ps51.7 million).
Foreign Currency Risk
Due to our geographic diversification, our revenues are generated in
various countries and settled in different currencies. However, some of our
production costs, including fuel and energy, and some of our cement prices, are
periodically adjusted to take into account fluctuations in the Dollar/Peso
exchange rate. For the year ended December 31, 2003, approximately 34% of our
sales, before eliminations resulting from consolidation, were generated in
Mexico, 22% in the United States, 16% in Spain, 4% in Venezuela, 8% in Central
America and the Caribbean, 3% in Colombia, 2% in the Philippines, 2% in Egypt
and 9% from other regions and our cement and clinker trading activities. As of
December 31, 2003, our debt, considering the effects in the original currencies
generated by our cross currency swaps, amounted to Ps65.9 billion, of which
approximately 68% was Dollar-denominated, 14% was Yen-denominated and 18% was
Euro-denominated; therefore, we have a foreign currency exposure arising from
the Dollar-denominated debt, the Yen-denominated debt and the Euro-denominated
debt, versus the currencies in which our revenues are settled in most countries
in which we operate. See "-- Liquidity and Capital Resources -- Our
Indebtedness," Item 10 -- "Additional Information -- Material Contracts" and
"Risk Factors -- We have to pay our Dollar and Yen denominated debt with
revenues generated in Pesos or other currencies, as we do not generate
sufficient revenue in Dollars and Yen from our operations to service all our
Dollar and Yen denominated debt, which could adversely affect our ability to
service our debt in the event of a devaluation or depreciation in the value of
the Peso, or any of the other currencies of the countries in which we operate."
Although we also have a small portion of our debt in other currencies, we have
generated enough cash flow in those currencies to service that debt. Therefore,
we believe there is no material foreign currency risk exposure with respect to
that debt.
As previously mentioned, we have entered into cross currency swap
contracts, designed to change the original profile of interest rates and
currencies over a portion of our financial debt. See "-- Our Derivative
85
Financial Instruments." As of December 31, 2003, the estimated fair value of
these instruments was a gain of approximately U.S.$262 million (Ps2,944.9
million). The potential change in the fair value of these contracts as of
December 31, 2003 that would result from a hypothetical, instantaneous
appreciation of 10% in the exchange rate of the Yen against the Dollar,
combined with a depreciation of 10% of the Mexican Peso against the Dollar,
would be a loss of approximately U.S.$135.7 million (Ps1,525.3 million).
Additionally, as previously mentioned, we have entered into foreign
exchange forward contracts designed to hedge our net investment in foreign
subsidiaries, as well as other currency derivative instruments. See "-- Our
Derivative Financial Instruments." The combined estimated fair value of our
foreign exchange forwards and our other currency derivatives as of December 31,
2003 was a loss of approximately U.S.$191.6 million. The potential change in
the fair value as of December 31, 2003 that would result from a hypothetical,
instantaneous depreciation of 10% in the exchange rate of the Peso against the
Dollar would be a loss of approximately U.S.$124.9 million (Ps1,403.9 million),
which would be offset by a corresponding foreign translation gain as a result
of our net investment in foreign subsidiaries.
Equity Risk
We have entered into equity forward contracts on our own stock. Upon
liquidation and at our option, the equity forward contracts provide for
physical settlement or net cash settlement of the estimated fair value, and the
effects are recognized in the income statement or as part of the stockholders'
equity, depending upon their designation and the underlying instrument or
program being hedged. At maturity, if these forward contracts are not settled
or replaced, or if we default on these agreements, our counterparties may sell
the shares underlying the contracts. Such sales may have an adverse effect on
our stock market price and our subsidiaries' stock market price. It may also
reduce the amount of dividends and other distributions that we would receive
from our subsidiaries and/or may create a public minority interest that may
adversely affect our ability to realize operating efficiencies as a combined
group.
As previously discussed, we have entered into equity forward contracts
on our own stock, pursuing different goals such as hedging our old and new
appreciation warrants program and our several stock option plans. See "--
Liquidity and Capital Resources." As of December 31, 2003, the estimated fair
market value of our equity forward contracts was a gain of approximately
U.S.$16.4 million. The potential change in the fair value as of December 31,
2003 that would result from a hypothetical, instantaneous decrease of 10% in
the market value of our stock would be a loss of approximately U.S.$93.6
million (Ps1,052.1 million).
Investments, Acquisitions and Divestitures
The transactions described below represent our principal investments,
acquisitions and divestitures completed during 2001, 2002, and 2003.
Investments and Acquisitions
In August and September 2003, we acquired 100% of the outstanding
shares of Mineral Resource Technologies Inc., and the cement assets of
Dixon-Marquette Cement for a combined purchase price of approximately U.S.$99.7
million, subject to adjustments. Located in Dixon, Illinois, the single cement
facility has an annual production capacity of 560,000 metric tons.
In June 2003, Cementos Nacionales announced a U.S.$130 million
investment plan to install a new kiln for producing clinker with an annual
capacity of 1.6 million metric tons of clinker. This new kiln, which would
increase our total clinker production capacity in the Dominican Republic to 2.2
million metric tons per year, is expected to be completed in early 2005. We
invested approximately U.S.$12.3 million in this project in 2003 and we expect
to invest approximately U.S.$57.7 million in 2004 and the remaining U.S.$60
million during 2005.
In July and August 2002, through a tender offer and subsequent merger,
we acquired 100% of the outstanding shares of PRCC. The aggregate value of the
transaction was approximately U.S.$281.0 million, including approximately
U.S.$100.8 million of assumed net debt.
86
On July 12, 2002, we purchased 25,429 shares of common stock
(approximately 0.3% of the outstanding share capital) of CAH from a CAH investor
for a purchase price of approximately U.S.$2.3 million, increasing our equity
interest in CAH to 77.7%. At the same time, we entered into agreements to
purchase an additional 1,483,365 shares of CAH common stock (approximately 14.6%
of the outstanding share capital) from several other CAH investors in exchange
for 28,195,213 CEMEX CPOs (subject to anti-dilution adjustments), which exchange
was originally scheduled to take place in four equal quarterly tranches
commencing on March 31, 2003. The exchange of 84,763 of these CAH shares took
place in four quarterly tranches in 2003 as originally scheduled. In April 2003,
we amended the terms of the July 12, 2002 agreements with respect to the
remaining 1,398,602 of the CAH shares. Instead of purchasing those CAH shares in
four equal quarterly tranches during 2003, we agreed to purchase those CAH
shares in four equal quarterly tranches commencing on March 31, 2004. On March
31, 2004, the exchange of the first tranche of 349,650 CAH shares took place as
scheduled, and was settled on April 1, 2004. Notwithstanding the amendments, for
accounting purposes, the CAH shares to be received by us in exchange for CEMEX
CPOs are considered to be owned by us effective as of July 12, 2002. As a result
of these transactions and pending their successful consummation, we will have
increased our stake in CAH to 92.3%.
On July 31, 2002, we purchased, through a wholly-owned subsidiary, the
remaining 30% economic interest that was not previously acquired by CAH in
Solid, for approximately U.S.$95 million. At December 31, 2003, as a
consequence of this transaction and the increase of our stake in CAH, as
described above, our proportionate economic interest in Solid was approximately
94.6%.
In May 2001, we acquired through CAH a 100% economic interest in
Saraburi Cement Company, now known as CEMEX (Thailand) Co. Ltd. or CEMEX
(Thailand), a cement company based in Thailand with an installed capacity of
approximately 700,000 metric tons, for a total consideration of approximately
U.S.$73 million. As a result of the increase of our stake in CAH, as described
above, at December 31, 2003, our proportionate economic interest in CEMEX
(Thailand) through CAH was approximately 92.3%.
In addition to the above-mentioned acquisitions, our net investment in
property, machinery and equipment, as reflected in our consolidated statements
of changes in financial position included elsewhere in this annual report,
excluding acquisitions of equity interests in subsidiaries and affiliates, was
approximately Ps5,649 million (U.S.$502.6 million) in 2001, Ps4,863 million
(U.S.$432.6 million) in 2002 and Ps4,427 million (U.S.$393.9 million) in 2003.
This net investment in property, machinery and equipment has been applied to
the construction and upgrade of plants and equipment, to the maintenance of
plants and equipment, including environmental controls and technology updates.
Divestitures
During 2001 CEMEX, Inc., our subsidiary in the United States, sold its
Eastern aggregates business, composed of several quarries in Kentucky and one
in Missouri, and other related assets for approximately U.S.$42 million. During
2002, CEMEX, Inc. sold its specialty mineral products business, composed of one
quarry in each of Virginia, New Jersey and Massachusetts and two quarries in
Pennsylvania, and other related assets for approximately U.S.$49 million.
See note 8A to our consolidated financial statements included
elsewhere in this annual report.
The Euro Conversion
We have operations in Spain, which adopted the common Euro currency on
January 1, 1999. Since January 1, 2002, the Euro is the official currency of
all Euro zone countries.
We have examined the risks of the Euro for our Spanish operations'
business and markets. We do not believe that the Euro conversion has had a
material short-term impact on our business, our Spanish operations' exposure to
currency risk, or our market position, although we believe that the Euro will
contribute to the ongoing convergence of prices in Europe over the longer term.
In 2003, our Spanish sales amounted to 16% of our net sales. As of December 31,
2003, 18% of our consolidated debt was Euro-denominated.
87
U.S. GAAP Reconciliation
Our consolidated financial statements included elsewhere in this
annual report have been prepared in accordance with Mexican GAAP, which differ
in some significant respects from U.S. GAAP. The Mexican GAAP consolidated
financial statements include the effects of inflation as provided for under
Bulletin B-10 and Bulletin B-15 and are presented in constant Pesos
representing the same purchasing power for each period presented, whereas
financial statements prepared under U.S. GAAP are presented on a historical
cost basis. The reconciliation to U.S. GAAP included as note 23 to our
consolidated financial statements presented elsewhere in this annual report
includes (i) a reconciling item for the reversal of the effect of applying
Bulletin B-15 for the restatement to constant pesos for the years ended
December 31, 2001 and 2002, and (ii) a reconciling item to reflect the
difference in the carrying value of machinery and equipment of foreign origin
and related depreciation between the methodology set forth by Bulletin B-10
(integrated document) and the amounts that would be determined by using the
historical cost/constant currency method. As described below, these provisions
of inflation accounting under Mexican GAAP do not meet the requirements of Rule
3-20 of Regulation S-X of the Securities and Exchange Commission. Our
reconciliation does not include the reversal of other Mexican GAAP inflation
accounting adjustments as these adjustments represent a comprehensive measure
of the effects of price level changes in the inflationary Mexican economy and,
as such, is considered a more meaningful presentation than historical
cost-based financial reporting for both Mexican and U.S. accounting purposes.
Majority net income under U.S. GAAP for the years ended December 31,
2001, 2002, and 2003 amounted to Ps11,044 million, Ps5,867 million and Ps8,274
million, respectively, compared to majority net income under Mexican GAAP for
the years ended December 31, 2001, 2002 and 2003 of approximately Ps13,027
million, Ps5,967 million and Ps7,067 million, respectively. See note 23 to our
consolidated financial statements included elsewhere in this annual report for
a description of the principal differences between Mexican GAAP and U.S. GAAP
as they relate to us and the effects that newly issued accounting
pronouncements have had in our financial position.
Newly Issued Accounting Pronouncements Under U.S. GAAP
Effective January 1, 2003, for purposes of the reconciliation to U.S.
GAAP, we adopted SFAS 143 "Accounting for Asset Retirement Obligations." SFAS
No. 143 requires an entity to record the fair value of an asset retirement
obligation as a liability in the period in which it incurs a legal obligation
associated with the retirement of tangible long lived assets that result from
the acquisition, construction, development, and/or normal use of the assets.
Such liability would be recorded against a corresponding asset that is
depreciated over the life of the long lived asset. Subsequent to the initial
measurement of the asset retirement obligation, the obligation will be adjusted
at the end of each period to reflect the passage of time and changes in the
estimated future cash flows underlying the obligation. See note 23(k) to our
consolidated financial statements included elsewhere in this annual report for
a description of the effects of the new accounting principle.
In November 2002, the FASB issued Interpretation 45 "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements 5,
57 and 107 and a rescission of FASB Interpretation 34." This interpretation
elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under guarantees issued. The
interpretation also clarifies that a guarantor is required to recognize, at
inception of a guarantee, a liability for the fair value of the obligation
undertaken. The initial recognition and measurement provisions of the
interpretation are applicable to guarantees issued or modified after December
31, 2002 and are not expected to have a material effect on our financial
statements. The disclosure requirements are effective for financial statements
of interim or annual periods ending after December 15, 2002. See note 23(u) to
our consolidated financial statements included elsewhere in this annual report
for a description of the effects of this interpretation.
In December 2002, the FASB issued SFAS 148 "Accounting for Stock Based
Compensation - Transition and Disclosure, an amendment of FASB Statement No.
123." This statement amends FASB Statement 123 "Accounting for Stock Based
Compensation" to provide alternative methods of transition for a voluntary
change to the fair value method of accounting for stock based employee
compensation. In addition, this statement amends the disclosure requirements of
Statement 123 to require prominent disclosures in both annual and interim
financial statements. Certain of the disclosure modifications are required for
fiscal years ending after December 15, 2002 and are included in the notes to
our consolidated financial statements included elsewhere in this annual report.
As of
88
December 31, 2003, for purposes of our consolidated financial statements,
we account for our executive stock option programs under APB Opinion No. 25,
Accounting for Stock Issued to Employees ("APB 25"). See note 23(r) to our
consolidated financial statements included elsewhere in this annual report for
the fair value disclosures pertaining to our programs.
In January 2003, the FASB issued Interpretation 46 "Consolidation of
Variable Interest Entities, an interpretation of ARB 51". This interpretation
addresses the consolidation by business enterprises of variable interest
entities as defined in the interpretation. The interpretation applies
immediately to variable interests in variable interest entities created after
January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. The interpretation requires certain
disclosures in financial statements issued after January 31, 2003 if it is
reasonably possible that we will consolidate or disclose information about
variable interest entities when the interpretation becomes effective. See note
23(u) to our consolidated financial statements included elsewhere in this
annual report for a description of the effects of this interpretation.
In December 2003, FASB issued SFAS 132 (revised) Employers'
Disclosures about Pensions and Other Postretirement Benefits--an amendment of
FASB Statements No. 87, 88, and 106. This statement revises requirements
pertaining to employers' disclosures about pension plans and other
postretirement benefit plans, retaining the disclosures required by previous
SFAS 132, but requiring additional disclosures describing the types of plan
assets, investment strategy, measurement date(s), plan obligations, cash flows,
and components of net periodic benefit cost recognized during interim periods.
The required information should be provided separately for pension plans and
for other postretirement benefit plans. This statement does not change the
measurement or recognition methods. The new requirements are effective for
periods beginning after December 15, 2003.
89
Item 6 - Directors, Senior Management and Employees
------------------------------------------
Senior Management and Directors
Senior Management
Set forth below is the name and position of each of our executive
officers as of December 31, 2003. The terms of office of the executive officers
are indefinite.
Lorenzo H. Zambrano, Joined CEMEX in 1968. During his
Chief Executive Officer career with CEMEX, Mr. Zambrano
has been involved in all
operational aspects of our
business. He held several
positions in CEMEX prior to his
appointment as director of
operations in 1981. In 1985, Mr.
Zambrano was appointed chief
executive officer, and in 1995 he
was elected chairman of the board
of directors. Mr. Zambrano is a
graduate of Instituto Tecnologico
y de Estudios Superiores de
Monterrey, A.C., or ITESM, with a
degree in mechanical engineering
and administration and holds an
M.B.A. from Stanford University.
Mr. Zambrano has been a member of
our board of directors since 1979
and chairman of our board of
directors since 1995. He is a
member of the board of directors
of IBM, the International
Advisory Board of Citigroup, and
the Chairman's Council of Daimler
Chrysler AG. He is also a member
of the board of directors of
Fomento Economico Mexicano, S.A.
de C.V., Empresas ICA, S.A. de
C.V., Alfa, S.A. de C.V., Grupo
Financiero Banamex, S.A. de C.V.,
Vitro, S.A. and Grupo Televisa,
S.A. Mr. Zambrano is chairman of
the board of directors of Consejo
de Ensenanza e Investigacion
Superior, A.C., which manages
ITESM and a member of the
Stanford Business School's
advisory board.
In addition, he is member of the
board of directors of Museo de
Arte Contemporaneo de Monterrey
A.C (MARCO), Conservacion
Internacional, and the Americas
Society, Inc. Lorenzo H. Zambrano
is a first cousin of Lorenzo
Milmo Zambrano and Rogelio
Zambrano Lozano, both members of
our board of directors, as well
as of Rodrigo Trevino, our chief
financial officer. He is also a
second cousin of Roberto Zambrano
Villareal and Mauricio Zambrano
Villareal, both members of our
board of directors.
Hector Medina, Joined CEMEX in 1988. He has held
Executive Vice President of several positions in CEMEX,
Planning and Finance including director of strategic
planning from 1991 to 1994,
president of CEMEX Mexico from
1994 to 1996, and has served as
executive vice president of
planning and finance since 1996.
He is a graduate of ITESM with a
degree in chemical engineering and
administration. He also received a
Masters of Science degree in
management studies from the
management Center of the
University of Bradford in England
and a Masters of Science diploma
in Operations Research from the
Escuela de Organizacion Industrial
in Spain in 1975. Among the
positions he previously held are
those of Project Director at Grupo
Protexa, S.A. de C.V.,
Administrative Director at Grupo
Xesa, S.A. de C.V., Commercial
Director at Direcplan, S.A. and
Industrial Relations Sub-Director
at Hylsa, S.A. de C.V. Mr. Medina
is a member of the board of
Cementos Chihuahua, Cia Minera
Autlan, Mexifrutas, S.A. de C.V.
and Chocota Productos del Mar,
S.A. de C.V. and member of the
"consejo de vigilancia" of
Ensenanza e Investigacion Superior
A.C. and ITESM.
90
Armando J. Garcia Segovia, Initially joined CEMEX in 1975 and
Executive Vice President of rejoined CEMEX in 1985. He has
Development served as director of operational
and strategic planning from 1985
to 1988, director of operations
from 1988 to 1991, director of
corporate services and affiliate
companies from 1991 to 1994,
director of development from 1994
to 1996, general director of
development from 1996 to 2000, and
executive vice president of
development since 2000. He is a
graduate of ITESM with a degree in
mechanical engineering and
administration and holds an M.B.A.
from the University of Texas. He
was employed at Cydsa, S.A. from
1979 to 1981 and at Conek, S.A. de
C.V. from 1981 to 1985 . He is a
brother of Jorge Garcia Segovia,
an alternate member of our board
of directors, and a first cousin
of Rodolfo Garcia Muriel, a member
of our board of directors.
Armando J. Garcia Segovia has been
a member of our board of directors
since 1983. He also serves as a
member of the board of directors
of Materiales Industriales de
Chihuahua, S.A. de C.V., Calhidra
y Mortero de Chihuahua, S.A. de
C.V., Grupo Cementos de Chihuahua,
S.A. de C.V., Construcentro de
Chihuahua, S.A. de C.V., Control
Administrativo Mexicano, S.A. de
C.V., Compania Industrial de
Parras, S.A. de C.V., Fabrica La
Estrella, S.A. de C.V., Prendas
Textiles, S.A. de C.V., Telas de
Parras, S.A. de C.V., Canacem,
Confederacion Patronal de la
Republica Mexicana, Centro
Patronal de Nuevo Leon, and
Instituto Mexicano del Cemento y
del Concreto. He is a member of
the board and former chairman of
Centro de Estudios del Sector
Privado para el Desarrollo
Sostenible, and member of the
board of the World Environmental
Center.
He is also founder and chairman of
the board of Comenzar de Nuevo,
A.C.
Victor Romo, Joined CEMEX in 1985 and has
Executive Vice President of served as director of
Administration administration of CEMEX Espana
from 1992 to 1994, general
director of administration and
finance of CEMEX Espana from 1994
to 1996, president of CEMEX
Venezuela from 1996 to 1998,
president of the South American
and Caribbean region from 1998 to
May 2003, and executive vice
president of administration since
May 2003. He is a graduate in
public accounting and holds a
master's degree in administration
and finance from ITESM.
Previously, he worked for Grupo
Industrial Alfa, S.A. de C.V. from
1979 to 1985.
Francisco Garza, Joined CEMEX in 1988 and has
President of CEMEX served as director of trading from
North America Region 1988 to 1992, president of CEMEX
and Trading Corp. from 1992 to 1994, president
of CEMEX Venezuela and Cemento
Bayano from 1994 to 1996,
president of CEMEX Mexico
and CEMEX Corp. from 1996 to 1998,
when he was appointed president of
the North American region and
trading. He is a graduate in
business administration of ITESM
and holds an M.B.A. from the
Johnson School of Management at
Cornell University.
Jose Luis Saenz de Miera, Joined CEMEX Espana in 1993 as
President of CEMEX Europe, general manager of administration
Africa and Asia and finance, and in 1994 he was
appointed president of CEMEX
Espana. Mr. Saenz de Miera has
served as president of the Europe,
Africa and Asia region since
October 1998. He studied economic
sciences in Universidad
Complutense de Madrid and is a
certified public accountant from
Instituto de Censores Jurados de
Cuentas in Spain. Previously, he
was employed from 1973 to 1993 at
KPMG Peat Marwick, since 1982 as
91
partner and between 1988 and 1993
as deputy senior partner. Mr.
Saenz de Miera is a citizen of
Spain.
Fernando Gonzalez, Joined CEMEX in 1989 and has
President of CEMEX South served as vice-president-human
America and the Caribbean resources from 1992 to 1994,
vice-president-strategic planning
from 1994 to 1998, president of
CEMEX Venezuela from 1998 to 2000,
president of CEMEX Asia from 2000
to May 2003, and president of the
South American and Caribbean
region since May 2003. He is a
graduate in business
administration and holds a
master's degree in administration
from ITESM. Previously, he worked
for Grupo Industrial Alfa, S.A. de
C.V. from 1976 to 1989.
Rodrigo Trevino, Joined CEMEX in 1997 and has
Chief Financial Officer served as chief financial officer
since then. He holds both bachelor
and master of science degrees in
industrial engineering from
Stanford University. Prior to
joining CEMEX, he served as the
country corporate officer for
Citicorp/Citibank Chile from 1995
to 1996, and prior to that, he
worked at Citibank, N.A. from 1979
to 1994. Rodrigo Trevino is a
first cousin of Lorenzo H.
Zambrano, our chief executive
officer and chairman of our board
of directors.
Ramiro G. Villarreal, Joined CEMEX in 1987 and has
General Counsel served as general counsel since
then, and also has served as
secretary of our board of
directors since 1995. He is a
graduate of the Universidad
Autonoma de Nuevo Leon with a
degree in law. He also received a
masters of science degree in
finance from the University of
Wisconsin. Prior to joining CEMEX,
he served as assistant general
director of Grupo Financiero
Banpais from 1985 to 1987.
Board of Directors
Set forth below are the names of the members of the our board of
directors. The members of our board of directors serve for one-year terms. At
our 2003 annual shareholders' meeting held on April 29, 2004, our shareholders
re-elected all the members of our board of directors to serve until the next
annual shareholders' meeting.
Lorenzo H. Zambrano, See "--Senior Management."
Chairman
Lorenzo Milmo Zambrano Has been a member of our board of
directors since 1977. He is also
general director of Inmobiliaria
Ermiza, S.A. de C.V. He is a
first cousin of Lorenzo H.
Zambrano, chairman of our board of
directors and our chief executive
officer, and a first cousin of
Rogelio Zambrano Lozano, a member
of our board of directors.
Armando J. Garcia Segovia See "--Senior Management."
Rodolfo Garcia Muriel Has been a member of our board of
directors since 1985. He is also
the chief executive officer of
Compania Industrial de Parras,
S.A. de C.V. and Parras Cone de
Mexico, S.A. de C.V. He is member
of the board of directors of
Parras Williamson, S.A. de C.V.,
Telas de Parras, S.A. de C.V.,
IUSA-GE, S. de R.L., and
Industrias Unidas, S.A. Mr. Garcia
Muriel is also vice president of
Camara Nacional de la Industria
Textil. Rodolfo Garcia Muriel is a
first cousin of Armando J. Garcia
Segovia, executive vice president
of development of CEMEX and a
member of our board of directors,
and Jorge Garcia Segovia, an
alternate member of our board of
directors.
92
Rogelio Zambrano Lozano Has been a member of our board of
directors since 1987. He is also a
member of the advisory board of
Grupo Financiero Banamex Accival,
S.A. de C.V. Zona Norte, director
of Carza, S.A. de C,V. and Parque
Plaza Sesamo, S.A. de C.V., and a
member of the board of directors
of Hospital San Jose. Rogelio
Zambrano Lozano is a first cousin
of Lorenzo H. Zambrano, chairman
of our board of directors and our
chief executive officer, and of
Lorenzo Milmo Zambrano, a member
of our board of directors.
Roberto Zambrano Villarreal Has been a member of our board of
directors since 1987. He is
chairman of the board of directors
of Desarrollo Integrado, S.A. de
C.V., Administracion Ficap, S.A.
de C.V., Aero Zano, S.A. de C.V.,
Ciudad Villamonte, S.A. de C.V.,
Focos, S.A. de C.V., C & I
Capital, S.A. de C.V., Industrias
Diza, S.A. de C.V., Inmobiliaria
Sanni, S.A. de C.V., Inmuebles
Trevisa, S.A. de C.V., Servicios
Tecnicos Hidraulicos, S.A. de
C.V., Mantenimiento Integrado,
S.A. de C.V., , Pilatus PC-12
Center de Mexico, S.A. de C.V.,
and Pronatura, A.C. He is a member
of the board of directors of
S.L.I. de Mexico, S.A. de C.V.,
and Compania de Vidrio Industrial,
S.A. de C.V. He is a brother of
Mauricio Zambrano Villarreal, a
member of our board of directors.
Bernardo Quintana Isaac Has been a member of our board of
directors since 1990. He is chief
executive officer and chairman of
the board of directors of Empresas
ICA Sociedad Controladora, S.A. de
C.V., and a member of the board of
directors of Telefonos de Mexico,
S.A. de C.V., Grupo Financiero
Banamex Accival, S.A. de C.V.,
Grupo Financiero Inbursa, S.A. de
C.V., Grupo Carso, S.A. de C.V.,
and Grupo Maseca, S.A. de C.V. He
is also a member of Consejo
Mexicano de Hombres de Negocios,
Fundacion UNAM, Fundacion ICA and
Patronato UNAM. He is a founding
associate of Fundacion Octavio
Paz.
Dionisio Garza Medina Has been a member of our board of
directors since 1995. He is also
chairman of the board and chief
executive officer of Alfa, S.A. de
C.V. He is a member of the board
of directors of Vitro, S.A.,
Cydsa, S.A., ING Mexico, and
Autoliv. He is also chairman of
the executive board of the
Universidad de Monterrey, A.C.,
and a member of Consejo Mexicano
de Hombres de Negocios, the
advisory committee of the David
Rockefeller Center for Latin
American Studies of Harvard
University, the board of Harvard
Business School, and the advisory
committee of the New York Stock
Exchange.
Alfonso Romo Garza Has been a member of our board of
directors since 1995. He is
chairman of the board and chief
executive officer of Savia, S.A.
de C.V. and Seminis, Inc., and
chairman of the board of ING
Mexico. He is also a member of the
board of Nacional de Drogas, S.A.
de C.V., Grupo Maseca, S.A. de
C.V., and Grupo Comercial
Chedraui, S.A. de C.V. He is an
external advisor of the World Bank
Board for Latin America and the
Caribbean, and a member of the
board of The Donald Danforth Plant
Science Center.
Mauricio Zambrano Villarreal Has been a member of our board of
directors since 2001. Mr. Zambrano
Villarreal served as an alternate
member of our board of directors
from 1995 to 2001. He is also
general vice-president of
Desarrollo Integrado, S.A. de
C.V., chairman of the board of
directors of Empresas Falcon, S.A.
de C.V. and Trek Associates, Inc.,
93
secretary of the board of
directors of Administracion Ficap,
S.A. de C.V., Aero Zano, S.A. de
C.V., Ciudad Villamonte, S.A. de
C.V., Focos, S.A. de C.V.,
Compania de Vidrio Industrial,
S.A. de C.V., C & I Capital, S.A.
de C.V., Industrias Diza, S.A. de
C.V., , Inmuebles Trevisa, S.A. de
C.V., and Servicios Tecnicos
Hidraulicos, S.A. de C.V., and a
member of the board of directors
of Sylvania Lighting International
Mexico, S.A. de C.V. and Invercap,
S.A. de C.V. He is a brother of
Roberto Zambrano Villarreal, a
member of our board of directors.
Tomas Brittingham Longoria Has been a member of our board of
directors since 2002. Previously
served as an alternate member of
our board of directors from 1987
until 2002. He is also the chief
executive officer of Laredo Autos,
S.A. de C.V. He is a son of
Eduardo Brittingham Sumner, an
alternate member of our board of
directors.
Jose Manuel Rincon Gallardo Has been a member of our board of
directors since 2003. He is also
the board's "financial expert" and
a member of our Audit Committee.
He is president of the board of
directors of Sonoco de Mexico,
S.A. de C.V., member of the board
of directors and audit committee
of Grupo Financiero Banamex, S.A.
de C.V., Grupo Herdez, S.A. de
C.V., and Grupo Celanese Mexicana
, S.A. de C.V., and member of the
board of directors of Grupo
Transportacion Ferroviaria
Mexicana, S.A. de C.V., Grupo
Cuervo, S.A. de C.V., Laboratorio
Sanfer-Hormona, and Alexander
Forbes Mexico. Mr. Rincon Gallardo
is a member of Pro-Dignidad, A.C.,
Organizacion Monte Fenix, A.C.,
Instituto Mexicano de Contadores
Publicos, A.C., Instituto Mexicano
de Ejecutivos de Finanzas, A.C.,
and member of the board of Consejo
Mexicano de Normas de Informacion
Financiera. Mr. Rincon Gallardo
was managing partner of KPMG
Mexico, and was a member of the
board of directors of KPMG United
States and KPMG International.
Alternate Directors
Set forth below are the names of the alternate members of our board of
directors. The alternate members of our board serve for one-year terms.
Eduardo Brittingham Sumner Has been an alternate member of
our board of directors since 2002.
Previously served as a regular
member of our board of directors
from 1967 until 2002. He is also
general director of Laredo Autos,
S.A. de C.V., Auto Express Rapido
Nuevo Laredo, S.A. de C.V,
Consorcio Industrial de
Exportacion, S.A. de C.V., and an
alternate member of the board of
directors of Vitro, S.A. He is the
father of Tomas Brittingham
Longoria, a member of our board of
directors.
Tomas Milmo Santos Has been an alternate member of
our board of directors since 2001.
He is Chief Executive Officer and
member of the board of directors
of Axtel, S.A. de C.V., a
telecommunications company that
operates in the local, long
distance and data transfer market.
He is also a member of the board
of directors of Coparmex, Cemex
Mexico and the Universidad de
Monterrey. Mr. Milmo Santos is a
nephew of Lorenzo H. Zambrano, our
chief executive officer and
chairman of our board of
directors, and a nephew of Lorenzo
Milmo Zambrano, a member of our
board of directors.
94
Jorge Garcia Segovia Has been an alternate member of
our board of directors since 1985.
He is also a member of the board
of directors of Compania
Industrial de Parras, S.A. de
C.V. He is a brother of Armando
J. Garcia Segovia and a first
cousin of Rodolfo Garcia Muriel,
both members of our board of
directors.
Board Practices
In compliance with amendments to Mexican securities laws enacted in
2001, our shareholders approved, at a general extraordinary meeting of
shareholders held on April 25, 2002, a proposal to amend various articles of
CEMEX's by-laws, or estatutos sociales, in order to improve our standards of
corporate governance and transparency, among other matters. The amendments
require that at least 25% of our directors qualify as independent directors;
that our board of directors, at its first meeting after the adoption of the
amendments, establish an audit committee; and that shareholders representing at
least 10% of our shares have the right to designate an examiner and an
alternate examiner.
We have not entered into any service contracts with our directors that
provide for benefits upon termination of employment.
The Audit Committee
The audit committee is responsible for reviewing related party
transactions and is required to submit an annual report of its activities to
our board of directors. The audit committee is also responsible for the
appointment, compensation and oversight of our external auditors. The audit
committee has also adopted procedures for handling complaints regarding
accounting and auditing matters, including anonymous and confidential methods
for addressing concerns raised by employees. Under our by-laws, the majority of
the members of the audit committee, including its president, are required to be
independent directors.
Set forth below are the names of the members of CEMEX's audit
committee. The terms of the members of our audit committee are indefinite, and
they may only be removed by a resolution of the board of directors. Jose Manuel
Rincon Gallardo qualifies as an "audit committee financial expert." See "Item
16A--Audit Committee Financial Expert."
Roberto Zambrano Villarreal See "--Board of Directors."
President
Jose Manuel Rincon Gallardo See "--Board of Directors."
Lorenzo Milmo Zambrano See "--Board of Directors."
Alfonso Romo Garza See "--Board of Directors."
Tomas Brittingham Longoria See "--Board of Directors."
Compensation of Our Directors and Members of Our Senior Management
For the year ended December 31, 2003, the aggregate amount of
compensation we paid, or our subsidiaries paid, to all members of our board of
directors, alternate members of our board of directors and senior managers, as
a group, was approximately U.S.$17,388,739. Approximately U.S.$5,085,279 of
this amount was paid pursuant to a bonus plan based on our performance. During
2003, as part of the compensation, the members of our board of directors,
alternate members of our board of directors and senior managers, as a group,
received options to acquire 5,400,074 CPOs at a weighted average nominal
exercise price of U.S.$4.18 per CPO. These options expire in 2012
95
and 2013. As of December 31, 2003, anti-dilution provisions in these options
increased the number of underlying CPOs to 5,516,655 and the adjusted weighted
average exercise price per CPO was U.S.$4.29.
In addition, approximately U.S.$178,873 was set aside or accrued to
provide pension, retirement or similar benefits.
Employee Stock Option Plan (ESOP)
In 1995, we adopted an employee stock option plan, or ESOP, under
which we were authorized to grant members of our board of directors, members of
our senior management and other eligible employees options to acquire our CPOs.
Our obligations under the plan are covered by shares held in a trust created
for such purpose (initially 216,300,000 shares). As of December 31, 2003, after
giving effect to the exchange program implemented in November 2001 described
below, a total of 4,689,335 options to acquire 5,778,308 CPOs remain
outstanding under this program, with a weighted average nominal exercise price
of approximately Ps29.33 per CPO. As of December 31, 2003, the outstanding
options under this program had a weighted average remaining tenure of
approximately 3.7 years.
In November 2001, we implemented a voluntary exchange program to offer
participants in our ESOP new options intended to better align employee
interests with those of shareholders in exchange for their existing options.
The new options have an escalating strike price in U.S. Dollars and are hedged
by our equity forward contracts, while the old options have a fixed strike
price in Pesos. The executives who participated in this program exchanged their
options to purchase CPOs at a weighted average strike price of Ps34.11 per CPO,
for cash equivalent to the intrinsic value on the exchange date and new options
to purchase CPOs with an escalating dollar strike price set at U.S.$4.93 per
CPO as of December 31, 2001, growing by 7% per annum less dividends on the
CPOs. Of the old options, 57,448,219 (approximately 90.1%) were exchanged for
new options in the voluntary exchange program and 8,695,396 were not exchanged.
In the context of the program, 81,630,766 new options were issued, in addition
to 7,307,039 of the new options that were purchased by participants under a
voluntary purchase option that was also part of the exchange. As of December
31, 2003, considering the options granted as a result of the exchange program
implemented in November 2001, the options granted thereunder and the exercise
of options through that date, a total of 120,916,763 options to acquire
130,831,601 CPOs remain outstanding under this program, with a weighted average
exercise price of approximately U.S.$5.02 (Ps56.43) per CPO. As of December 31,
2003, the outstanding options under this program had a weighted average
remaining tenure of approximately 9.1 years.
As a result of the acquisition of CEMEX, Inc. (formerly Southdown), we
established a stock option program for CEMEX, Inc.'s executives for the
purchase of our ADSs. The options granted under the program have a fixed
exercise price in U.S. Dollars equivalent to the market price of one ADS as of
the grant date and have a 10-year term. Twenty-five percent of the options vest
annually during the first four years after having been granted. The options are
hedged using shares currently owned by our subsidiaries, thus potentially
increasing stockholders' equity and the number of shares outstanding. As of
December 31, 2003, considering the options granted as a result of the exchange
program implemented in 2001, the options granted thereunder and the exercise of
options that has occurred through that date, a total of 7,629,260 options to
acquire the same number of CPOs, or 1,525,582 ADSs, remain outstanding under
this program. These options have a weighted average exercise price of
approximately U.S.$4.62 (Ps51.93) per CPO or U.S.$23.09 (Ps259.49) per ADS as
each ADS represents five CPOs. The number of options under these ADS programs
are presented below in terms of CPO equivalents.
Stock options activity during 2002 and 2003, the balance of options
outstanding as of December 31, 2002 and 2003 and other general information
regarding our stock option programs is presented in note 15 to our consolidated
financial statements included elsewhere in this annual report.
Certain key executives also participate in a plan that distributes a
bonus pool based on actual business results. This bonus is calculated and paid
annually, 50% in cash and 50% under an ESOP.
As of December 31, 2003, the following ESOP options to purchase our
securities were outstanding:
96
Number of CPOs or Range of exercise prices
Title of security CPO equivalents per CPOs or CPO
underlying options underlying options Expiration Date equivalents
------------------ ------------------ --------------- -------------------------
CPOs (Pesos) 5,778,308 2005-2011 Ps15.60 - 39.44
CPOs (Dollars) 130,831,601 2011-2013 U.S.$5.12 - 5.66
ADSs 7,629,260 2011-2013 U.S.$3.89 - 5.44
As of December 31, 2003, our senior management and directors held the
following ESOP options to acquire our securities:
Number of CPOs or Range of exercise prices
Title of security CPO equivalents per CPOs or CPO
underlying options underlying options Expiration Date equivalents
------------------ ------------------ --------------- -------------------------
CPOs (Pesos) 2,191,817 2005-2011 Ps15.60 - 39.44
CPOs (Dollars) 39,291,397 2011-2013 U.S.$5.12 - 5.66
ADSs 0 2011-2013 U.S.$3.89 - 5.44
As of December 31, 2003, our employees and former employees, other
than senior management and directors, held the following ESOP options to
acquire our securities:
Number of CPOs or Range of exercise prices
Title of security CPO equivalents per CPOs or CPO
underlying options underlying options Expiration Date equivalents
------------------ ------------------ --------------- -------------------------
CPOs (Pesos) 3,586,491 2005-2011 Ps15.60 - 39.44
CPOs (Dollars) 91,540,204 2011-2013 U.S.$5.12 - 5.66
ADSs 7,629,260 2011-2013 U.S.$3.89 - 5.44
In February 2004, we implemented a voluntary exchange program to offer
participants in our ESOP new options intended to better align employee
interests with those of shareholders in exchange for their existing options.
Under the terms of the exchange offer, participating employees surrendered
their options in exchange for new options with an initial strike price of
U.S.$5.05 and a life of 8.4 years, representing the weighted average strike
price and maturity of existing options. The strike price of the new options
will increase annually at a 7% rate. The new options may be exercised at
anytime at the holders option and will be automatically exercised if, at any
time during the life of the options, the CPO market price reaches U.S.$7.50.
Any gain realized through the exercise of the new options will be
invested in restricted CPOs at a 20% discount to market. The restricted CPOs
received upon exercise of the new options will be held in a trust on behalf of
the employee until the CPOs are vested, at which time the restriction expires
and the CPOs will be freely transferable. A percentage of the restricted CPOs
will vest on a monthly basis, which percentage varies based on when the
restricted CPOs are received.
Holders of the new options will also receive an annual payment of
$U.S.0.10 per CPO covered by the option outstanding as of the payment date
until exercise or maturity of the options. This payment will grow annually at a
10% rate.
The exchange period expired on February 13, 2004. As of March 31,
2004, as a result of the voluntary exchange offer, 122,708,146 new options were
issued in exchange for 113,906,002 existing options, which were subsequently
cancelled. All existing options not exchanged in the offer maintained their
existing terms and conditions.
For accounting purposes under Mexican and U.S. GAAP, we will account
for the new options, including the $U.S.0.10 per option payment made to
employees, under the intrinsic value method through earnings in the same
97
manner as we currently do under existing plans. See notes 2W and 15 to our
consolidated financial statements included elsewhere in this annual report.
This exchange offer is part of our new strategy, beginning in 2004, of
migration away from stock options and into restricted stock as compensation for
eligible employees.
Voluntary Employee Stock Option Plan (VESOP)
During 1998 and 1999, we established voluntary employee stock option
plans, or VESOPs, pursuant to which managers and senior executives elected to
purchase options to acquire up to 36,468,375 CPOs. These VESOP options,
exercisable quarterly over a period of five years, have a predefined exercise
price which increases quarterly in U.S. Dollars, thereby taking into account
the funding cost in the market. As of December 31, 2003, options to acquire
3,927,693 CPOs were outstanding.
During 2002, we established an additional VESOP, pursuant to which
managers and senior executives elected to purchase, on a monthly basis, new
options for up to a number equivalent to those exercised in the same period
within the new program initiated in November 2001. During 2002, we sold
2,120,395 options and received a premium equivalent to a percentage of the CPO
price, which amounted to approximately U.S.$1.5 million (Ps16.9 million). As of
December 31, 2003, anti-dilution provisions in these options increased the
number of underlying CPOs to 2,335,191 CPOs with a weighted average exercise
price of approximately U.S.$5.68 (Ps63.80) per CPO.
In January 2003, we established a new VESOP through which our
employees who held options under our old VESOPs, as well as members of our
senior management and other eligible executives, elected to purchase 38,583,989
new options for a premium of approximately U.S.$9.7 million (Ps101.5 million).
The new options, which had an increasing U.S. Dollar exercise price of
approximately U.S.$3.58 per CPO, equal to the market price of one CPO at the
date of sale, and a five-year term, contained an automatic mandatory exercise
condition that would be triggered when the CPO market price reached a certain
level. The CPO market price reached this level in September 2003 and, as a
result, all of the options were exercised. Employees and directors who
exercised their options under the new VESOP received the corresponding gain in
CPOs, which they are obligated to hold in their entirety for a period of two
years after exercise. Following the second anniversary of the exercise date,
one half of the CPOs acquired under the VESOP may be sold by the holder, and
the remaining CPOs may be sold following the third anniversary of the exercise
date.
In connection with the new VESOP, in March 2003, we repurchased
29,001,358 appreciation warrants from several of the eligible executives, at a
price per appreciation warrant of Ps3.70, the market price for our appreciation
warrants on February 6, 2003, the date of the offer to purchase appreciation
warrants from the executives. Executives with outstanding loans from CEMEX used
the proceeds from the repurchase of 5,942,724 appreciation warrants to repay
these loans. The remaining proceeds were used to partially pay for the
subscription for options under our new VESOP program. Also, as part of the new
VESOP program, in March 2003, we repurchased from some of the eligible
employees and directors 294,074 options under our old VESOPs at a price per
option of U.S.$ 0.0096, and 8,158,574 options under our old VESOPs at a price
per option of U.S.$0.1164. These prices represented a fraction of the
theoretical value of the options on January 6, 2003, the date of the offer to
purchase the options from the employees and directors. The proceeds from the
repurchase of the options under the old VESOPs were used to subscribe for
options under our new VESOP, as mandated by the new VESOP program.
As of December 31, 2003, all options under the new VESOP had been
exercised so that no options remained outstanding thereunder.
As of December 31, 2003, the following VESOP options to acquire our
securities were outstanding:
Title of security Number of CPOs Range of exercise
underlying options underlying options Expiration Date Purchase Price price per CPO
------------------ ------------------ --------------- -------------- -------------
CPOs 3,927,693 2004 U.S.$.19 U.S.$3.3069
CPOs 2,335,191 2011 U.S.$0.76 - 0.63 U.S.$5.76 - 5.53
98
As of December 31, 2003, our senior management and directors held the
following VESOP options to acquire our securities:
Title of security Number of CPOs Range of exercise
underlying options underlying options Expiration Date Purchase Price price per CPO
------------------ ------------------ --------------- -------------- -------------
CPOs 3,266,158 2004 U.S.$.19 U.S.$3.3069
CPOs 1,228,390 2011 U.S.$0.76 - 0.63 U.S.$5.76 - 5.53
As of December 31, 2003, our employees, other than senior management
and directors, held the following VESOP options to acquire our securities:
Title of security Number of CPOs Range of exercise
underlying options underlying options Expiration Date Purchase Price price per CPO
------------------ ------------------ --------------- -------------- -------------
CPOs 661,535 2004 U.S.$.19 U.S.$3.3069
CPOs 1,106,801 2011 U.S.$0.76 - 0.63 U.S.$5.76 - 5.53
Employees
As of December 31, 2003, we had approximately 25,965 employees
worldwide, which represented a decrease of 1.8% from year-end 2002.
The following table sets forth the number of our full-time employees
and a breakdown of their geographic location at the end of each of the last
three fiscal years:
Central
America
United and the
Mexico States** Spain Venezuela Colombia Egypt Philippine Thailand Caribbean* Others Total
2001 8,740 5,056 3,114 2,576 932 749 734 221 1,512 2,285 25,919
2002 9,184 4,608 3,035 2,334 858 891 692 220 2,569 2,361 26,452
2003 8,942 4,709 2,963 1,700 800 873 669 224 2,599 2,486 25,965
* 2002 and 2003 include Puerto Rico
** 2003 includes Dixon-Marquette Cement
Employees in Mexico have collective bargaining agreements on a
plant-by-plant basis, which are renewable on an annual basis with respect to
salaries and on a biannual basis with respect to benefits. Approximately one
fourth of our employees in the United States are represented by unions, with the
largest number being members of the International Brotherhood of Boilermakers.
With the exception of the non-union facility located in Florida, collective
bargaining agreements are in effect at all our U.S. cement plants and have
various expiration dates ending from 2004 through 2009. Our Spanish union
employees have contracts that are renewable every two to three years on a
company-by-company basis. Each of our subsidiary companies operating CEMEX
Venezuela's plants has its own union, and each company has separately negotiated
three-year labor contracts with the union employees of the relevant plants.
Except during January and February, when the political situation in Venezuela
deteriorated and the operations of most companies in Venezuela were suspended,
the labor situation in Venezuela in 2003 remained normal. A single union
represents the union employees of all of CEMEX Colombia's plants and negotiates
labor contracts on their behalf. Our Panamanian union employees have one labor
contract that is renewable every four years. Our Philippine union employees are
represented by four unions and have collective bargaining agreements that have a
term of five years, which are typically renegotiated in the third and fifth
years of the term. Our Egyptian union employees are represented by one union.
Assiut has adopted new internal regulations that govern the labor union
arrangements. We consider labor relations with our employees to be satisfactory,
but we have experienced minor disruptions of our operations in a few plants in
Mexico and internationally as a result of labor disagreements from time to time.
Approximately 1,800 former union employees in Egypt filed individual lawsuits
against Assiut, claiming unfair employment practices relating to the
implementation of an employee early retirement program. A
99
total of 660 of these lawsuits have already been dismissed by the court, and we
do not consider the amount sought by the remaining plaintiffs to be material to
our operations.
Share Ownership
As of March 19, 2004, our senior management and directors and their
immediate families owned, collectively, approximately 5.76% of our outstanding
shares, including shares underlying CPOs. This percentage does not include
shares held by the extended families of members of our senior management and
directors, since to the best of our knowledge, no voting arrangements or other
agreements exist with respect to those shares. No individual director or member
of our senior management beneficially owned one percent or more of any class of
our outstanding capital stock.
100
Item 7 - Major Shareholders and Related Party Transactions
-------------------------------------------------
Major Shareholders
Based upon information contained in a statement on Schedule 13G filed
with the SEC on February 17, 2004, as of December 31, 2003, Brandes Investment
Partners, LLC, an investment adviser registered under the Investment Advisers
Act of 1940, as amended, beneficially owned 27,247,403 ADSs, representing
136,237,015 CPOs or approximately 7.7% of our outstanding capital stock.
Brandes Investment Partners, LLC does not have different voting rights than our
other shareholders.
Other than Brandes Investment Partners, LLC, the CPO trust and the
shares and CPOs owned by our subsidiaries, we are not aware of any person that
is the beneficial owner of five percent or more of any class of our voting
securities.
As of March 31, 2004, our outstanding capital stock consisted of
3,548,893,516 Series A shares and 1,774,446,758 Series B shares, in each case
including shares held by our subsidiaries.
As of March 31, 2004, a total of 3,423,890,668 Series A shares and
1,711,945,334 Series B shares were held by the CPO trust. Each CPO represents
two Series A shares and one Series B share. A portion of the CPOs is
represented by ADSs. Under the terms of the CPO trust agreement, non-Mexican
holders of CPOs and ADSs have no voting rights with respect to the A shares
underlying those CPOs and ADSs. All ADSs are deemed to be held by non-Mexican
nationals. At every shareholders' meeting, the A shares held in the CPO trust
are voted in accordance with the vote cast by holders of the majority of A
shares held by Mexican nationals and B shares voted at that meeting of
shareholders.
As of March 31, 2004, through our subsidiaries, we owned approximately
153 million CPOs, representing approximately 8.9% of our outstanding CPOs and
8.6% of our outstanding voting stock An additional 197 million CPOs,
representing approximately 11.5% of our outstanding CPOs and 11.1% of our
outstanding voting stock, were held subject to equity derivative and other
transactions. These CPOs are voted at the direction of our management. From
time to time, our subsidiaries are active participants in the trading market
for our capital stock; as a result, the levels of our CPO and share ownership
by those subsidiaries are likely to fluctuate. Our voting rights over those
CPOs are the same as those of any other CPO holder.
Our by-laws, or estatutos sociales, provide that our board of directors
must authorize in advance any transfer of voting shares of our capital stock
that would result in any person, or group acting in concert, becoming a holder
of 2% or more of our voting shares.
In addition, as of March 31, 2004, through our subsidiaries, we owned
approximately 2 million appreciation warrants, representing approximately 15.3%
of our outstanding appreciation warrants. If the average price of our CPOs
reaches specified levels on or prior to December 21, 2004, the appreciation
warrants will be redeemed for CPOs or ADSs at specified appreciation values. See
Item 5 -- "Operating and Financial Review and Prospects -- Liquidity and Capital
Resources -- Our Equity Derivative Financing Transactions" for a description of
the appreciation warrants.
Mexican securities authority regulations provide that our
majority-owned subsidiaries may neither directly or indirectly invest in our
CPOs nor other securities representing our capital stock. The Mexican
securities authority could require any disposition of the CPOs or of other
securities representing our capital stock so owned and/or impose fines on us if
it were to determine that the ownership of our CPOs or of other securities
representing our capital stock by our subsidiaries, in most cases, negatively
affects the interests of our shareholders. Notwithstanding the foregoing, the
exercise of all rights pertaining to our CPOs or to other securities
representing our capital stock in accordance with the instructions of our
subsidiaries does not violate any provisions of our bylaws or the bylaws of our
subsidiaries. The holders of these CPOs or of other securities representing our
capital stock are entitled to exercise the same rights relating to their CPOs
or their other securities representing our capital stock, including all voting
rights, as any other holder of the same series.
101
As of March 31, 2004, we had 263 ADS holders of record in the United
States, holding approximately 55.8% of our outstanding CPOs and 12 ADW holders
of record in the United States, holding approximately 39.4% of our outstanding
appreciation warrants. Since a substantial number of ADSs and ADWs are held in
nominee form, including the nominee of the Depository Trust Company, the number
of beneficial owners of our ADSs and ADWs is substantially greater than the
number of record holders of these securities.
Related Party Transactions
Mr. Bernardo Quintana Isaac, a member of our board of directors, is
chief executive officer and chairman of the board of directors of Grupo ICA,
S.A. de C.V., or Grupo ICA, a large Mexican construction company. In the
ordinary course of business, we extend financing to Grupo ICA for varying
amounts at market rates, as we do for our other customers.
In the past, we have extended loans of varying amounts and interest
rates to our directors and executives. During 2003, the largest aggregate
amount of loans we had outstanding to our directors and members of senior
management was Ps13,138,985. As of March 9, 2004, the amount outstanding was
Ps585,467, with an average interest rate of 1.1% per annum. See "Compensation
of Our Directors and Members of Our Senior Management - Voluntary Employee
Stock Option Plan (VESOP)."
102
Item 8 - Financial Information
---------------------
Consolidated Financial Statements and Other Financial Information
See Item 18-- "Financial Statements" and "Index to Consolidated
Financial Statements."
Legal Proceedings
See Item 4 -- "Information on the Company -- Regulatory Matters and
Legal Proceedings."
Dividends
A declaration of any dividend by CEMEX is made by our shareholders at
a general ordinary meeting. Any dividend declaration is usually based upon the
recommendation of our board of directors. However, the shareholders are not
obligated to approve the board's recommendation. We may only pay dividends from
retained earnings included in financial statements that have been approved by
our shareholders and after all losses have been paid for, a legal reserve equal
to 5% of our paid-in capital has been created and our shareholders have
approved the relevant dividend payment. According to 1999 Mexican tax reforms,
all shareholders, excluding Mexican corporations, that receive a dividend in
cash or in any other form are subject to a withholding tax. See Item 10 --
"Additional Information -- Taxation -- Mexican Tax Considerations." Since we
conduct our operations through our subsidiaries, we have no significant assets
of our own except for our investments in those subsidiaries. Consequently, our
ability to pay dividends to our shareholders is dependent upon our ability to
receive funds from our subsidiaries in the form of dividends, management fees,
or otherwise. Some of our credit agreements and debt instruments and some of
those of our subsidiaries contain provisions restricting our ability, and that
of our subsidiaries, as the case may be, to pay dividends if financial
covenants are not maintained. As of December 31, 2003, we and our subsidiaries
were in compliance with, or had obtained waivers in connection with, those
covenants. See Item 3 -- "Key Information -- Risk Factors -- We have incurred
and will continue to incur debt, which could have an adverse effect on the
price of our CPOs, ADSs, appreciation warrants and ADWs" and "-- Our use of
equity derivative financing may have adverse effects on the market for our
securities and our subsidiaries' securities and may adversely affect our
ability to achieve operating efficiencies as a combined group."
Although our board of directors currently intends to continue to
recommend an annual dividend on the common stock, the recommendation whether to
pay and the amount of those dividends will continue to be based upon, among
other things, earnings, cash flow, capital requirements and our financial
condition and other relevant factors.
Owners of ADSs on the applicable record date will be entitled to
receive any dividends payable in respect of the A shares and the B shares
underlying the CPOs represented by those ADSs. The ADS depositary will fix a
record date for the holders of ADSs in respect of each dividend distribution.
Unless otherwise stated, the ADS depositary has agreed to convert cash
dividends received by it in respect of the A shares and the B shares underlying
the CPOs represented by ADSs from Pesos into Dollars and, after deduction or
after payment of expenses of the ADS depositary, to pay those dividends to
holders of ADSs in Dollars. We cannot assure holders of our ADSs that the ADS
depositary will be able to convert dividends received in Pesos into Dollars.
103
The following table sets forth the amounts of annual cash dividends
paid in Pesos, on a per share basis, and a convenience translation of those
amounts into Dollars based on the CEMEX accounting rate as of December 31,
2003.
Dividends Per Share
----------------------------
Constant Pesos Dollars
-------------- -------
1999...................................... 0.54 0.05
2000...................................... 0.62 0.06
2001...................................... 0.72 0.06
2002...................................... 0.77 0.07
2003...................................... 0.80 0.07
Dividends declared at each year's annual shareholders' meeting are in
respect of dividends for the preceding year. In recent years, our board of
directors has proposed, and our shareholders have approved, dividend proposals,
whereby our shareholders have had a choice between stock dividends or cash
dividends declared in respect of the prior year's results, with the stock
issuable to shareholders who elect the stock dividend over the cash dividend
being issued at a 20% discount from then current market prices. The dividends
declared per share or per CPO in recent years, expressed in constant Pesos as
of December 31, 2003, were as follows: 1999, Ps.54 per share (or Ps1.62 per
CPO); 2000, Ps1.83 per CPO (or Ps0.62 per share); 2001, Ps2.17 per CPO (or
Ps0.72per share); 2002, Ps2.31 per CPO (or Ps0.77 per share); and 2003, Ps2.40
per CPO (or Ps0.80 per share). As a result of dividend elections made by
shareholders, in 1999, Ps318 million in cash was paid and 142 million
additional shares were issued in respect of dividends declared for the 1998
fiscal year; in 2000, Ps312 million in cash was paid and 59 million additional
CPOs were issued in respect of dividends declared for the 1999 fiscal year; in
2001, Ps93 million in cash was paid and 70 million additional CPOs were issued
in respect of dividends declared for the 2000 fiscal year; and in 2002, Ps257
million in cash was paid and 64 million additional CPOs were issued in respect
of dividends declared for the 2001 fiscal year; and in 2003, Ps66.8 million in
cash was paid and 99 million additional CPOs were issued in respect of
dividends declared for the 2002 fiscal year.
At our 2003 annual shareholders' meeting, which was held on April 29,
2004, our shareholders approved a dividend of Ps2.35 per CPO (Ps0.78 per share)
for the 2003 fiscal year. Shareholders will be entitled to receive the dividend
in either stock or cash consistent with our past practices. In order to have
sufficient shares to issue to those shareholders who choose to receive the
dividend in stock, our shareholders approved an increase in the variable part of
our capital stock through the capitalization of retained earnings in an amount
up to Ps4,169,029,880, through the issuance of up to 400 million series A shares
and 200 million series B shares, to be represented by new CPOs. Our shareholders
delegated to our board of directors the determination of the final amount of the
capital increase, which will be determined once the final number of CPOs
required to be issued in connection with the dividend is established and will be
based on the then current market price of our CPO on the Mexican Stock Exchange,
minus the 20% discount at which those CPOs will be issued.
Significant Changes
No significant change has occurred since the date of our consolidated
financial statements included in this annual report.
104
Item 9 - Offer and Listing
-----------------
Market Price Information
Our CPOs and appreciation warrants are listed on the Mexican Stock
Exchange. Our CPOs trade under the symbol "CEMEX.CPO," and our appreciation
warrants trade under the symbol "CMX412E-DC062." As a result of the 1999
exchange offer of CPOs for A shares and B shares, the trading of our A shares
and B shares substantially declined and were last traded on the Mexican Stock
Exchange on December 28, 1999, under the symbols "CEMEX.A" and "CEMEX.B,"
respectively. On September 28, 2001, the A shares and B shares were delisted
from the Mexican Stock Exchange due to the lack of trading volume. Our ADSs,
each of which represents five CPOs, and our ADWs, each of which represents five
appreciation warrants, are listed on the NYSE. Our ADSs trade under the symbol
"CX" and our ADWs trade under the symbol "CX.WSB." Following our November 2001
exchange offer of new appreciation warrants and new ADWs for our old
appreciation warrants and old ADWs, the trading of our old appreciation
warrants and old ADWs substantially declined and formally ceased upon their
expiration on December 13, 2002. The following table sets forth, for the
periods indicated, the reported highest and lowest market quotations in nominal
Pesos for CPOs, old appreciation warrants and new appreciation warrants on the
Mexican Stock Exchange and the high and low sales prices in Dollars for ADSs,
old ADWs and new ADWs on the NYSE.
Old New
Calendar appreciation appreciation
Period A Shares(1) B Shares(1) CPOs(1) ADSs(2) warrants(3) Old ADWs(4) warrants(5) New ADWs(6)
Yearly High Low High Low High Low High Low High Low High Low High Low High Low
Ps Ps Ps Ps Ps Ps U.S.$ U.S.$ Ps Ps U.S.$ U.S.$
1999....... 16.60 5.97 16.77 6.63 53.10 17.90 28.13 19.25 8.26 5.00 4.13 2.56 -- -- -- --
2000....... -- -- -- -- 53.80 32.50 28.75 17.19 8.50 2.00 4.75 1.00 -- -- -- --
2001....... -- -- -- -- 51.65 34.50 28.30 17.63 4.85 2.00 2.85 1.00 -- -- -- --
Ps Ps U.S.$ U.S.$
2002....... -- -- -- -- 61.82 39.10 33.00 19.25 6.00 3.00 3.88 0.01 8.50 3.00 4.60 1.22
2003....... -- -- -- -- 59.50 35.65 26.64 16.31 -- -- -- -- 7.00 2.50 3.20 0.95
Quarterly
2002
First
quarter... -- -- -- -- 55.01 43.90 30.37 24.00 6.00 3.00 2.50 1.00 7.60 3.80 4.40 2.35
Second
quarter... -- -- -- -- 61.82 51.50 33.00 25.70 5.00 5.00 3.88 2.52 8.50 6.50 4.60 3.30
Third
quarter... -- -- -- -- 53.80 40.25 27.27 19.71 4.60 4.50 2.60 0.20 6.50 3.00 3.30 1.35
Fourth
quarter... -- -- -- -- 48.64 39.10 24.07 19.25 0.25 0.01 4.20 3.00 2.05 1.22
2003
First
quarter... -- -- -- -- 48.66 35.65 23.35 16.31 -- -- -- -- 4.00 2.50 1.80 0.95
Second
quarter... -- -- -- -- 48.58 37.62 23.10 17.44 -- -- -- -- 3.80 2.50 1.65 1.00
Third
quarter... -- -- -- -- 57.70 46.20 26.12 22.46 -- -- -- -- 5.30 3.10 2.25 1.35
Fourth
quarter... -- -- -- -- 59.50 51.49 26.64 23.02 -- -- -- -- 7.00 4.90 3.20 2.05
Monthly
2003-2004
October... -- -- -- -- 56.60 51.49 25.72 23.02 -- -- -- -- 6.00 4.90 2.30 2.20
November.. -- -- -- -- 58.00 52.21 25.75 24.02 -- -- -- -- 6.98 5.10 2.70 2.05
December.. -- -- -- -- 59.50 54.52 26.64 24.20 -- -- -- -- 7.00 6.50 3.20 2.65
January(7) -- -- -- -- 65.00 58.30 29.28 26.20 -- -- -- -- 7.70 6.80 3.50 2.80
February.. -- -- -- -- 65.49 62.00 29.96 28.07 -- -- -- -- 8.50 7.20 3.75 3.20
March..... -- -- -- -- 66.50 60.00 29.82 27.20 -- -- -- -- 9.40 8.52 3.60 2.90
April..... -- -- -- -- 70.50 64.50 31.35 28.45 -- -- -- -- 11.00 9.50 4.10 3.50
______________
Source: Based on data of the Mexican Stock Exchange and the NYSE.
(1) As of December 31, 2003, approximately 96.5% of our outstanding share
capital was represented by CPOs.
(2) The ADSs began trading on the NYSE on September 15, 1999.
(3) The old appreciation warrants began trading on the Mexican Stock Exchange
on December 13, 1999 and expired on December 13, 2002.
(4) The old ADWs began trading on the NYSE on December 13, 1999 and expired on
December 13, 2002.
(5) The new appreciation warrants began trading on the Mexican Stock Exchange
on December 24, 2001.
(6) The new ADWs were initially listed for trading on the NYSE on December 24,
2001, but were not actually traded until January 4, 2002.
(7) In January 2004, we purchased 90,018,042 appreciation warrants (including
appreciation warrants represented by ADWs) through a modified "Dutch
Auction" cash tender offer we launched in November 2003, which allowed
holders to tender their appreciation warrants and ADWs at a price in Pesos
not greater than Ps8.10 per appreciation warrant (Ps40.50 per ADW) nor less
than Ps5.10 per appreciation warrant (Ps25.50 per ADW), as specified by
them. Pursuant to the terms of the offer, which expired on January 26,
2004, we purchased such appreciation warrants and ADWs on a pro rata basis
(except for odd lot tenders, which were purchased on a priority basis) at a
final purchase price of Ps8.10 per appreciation warrant (Ps40.50 per ADW).
All appreciation warrants and ADWs not accepted because of proration were
promptly returned. Following the completion of the offer, approximately
11,668,132 new appreciation warrants (including appreciation warrants
represented by ADWs), which expire on December 21, 2004, were held by
persons other than CEMEX and its subsidiaries.
On April 30, 2004, the last reported closing price for CPOs on the
Mexican Stock Exchange was Ps66.84 per CPO and the last reported closing price
for ADSs on the NYSE was U.S.$29.45 per ADS. On April 30, 2004, the last
reported closing price for appreciation warrants on the Mexican Stock Exchange
was Ps11.00 per appreciation warrant and the last reported closing price for
ADWs on the NYSE was U.S.$3.75 per ADW.
105
Item 10 - Additional Information
----------------------
Articles of Association and By-laws
General
Pursuant to the requirements of Mexican corporation law, our articles
of association and by-laws, or estatutos sociales, have been registered with
the Mercantile Section of the Public Register of Property and Commerce in
Monterrey, Mexico, under the entry number 21 since June 11, 1920. We are a
holding company engaged, through our operating subsidiaries, primarily in the
production, distribution, marketing and sale of cement, ready-mix concrete and
clinker. Our objectives and purposes can be found in article 2 of our by-laws.
We are a global cement manufacturer, with operations in North, Central and
South America, Europe, the Caribbean, Asia and Africa. We plan to continue
focusing on the production and sale of cement and ready-mix concrete, as we
believe that this strategic focus has enabled us to grow our existing
businesses and to expand our operations internationally.
We have two series of common stock, the series A common stock, with no
par value, or A shares, which can only be owned by Mexican nationals, and the
series B common stock, with no par value, or the B shares, which can be owned
by both Mexican and non-Mexican nationals. Our by-laws state that the A shares
may not be held by non-Mexican persons, groups, units or associations that are
foreign or have participation by foreign governments or their agencies. Our
by-laws also state that the A shares shall at all times account for a minimum
of 64% of our total outstanding voting stock. Other than as described herein,
holders of the A shares and the B shares have the same rights and obligations.
In 1994, we changed from a fixed capital corporation to a variable
capital corporation in accordance with Mexican corporation law and effected a
three-for-one split of all our outstanding capital stock. As a result, we
changed our corporate name from CEMEX, S.A. to CEMEX, S.A. de C.V., established
a fixed capital account and a variable capital account and issued one share of
variable capital stock of the same series for each eight shares of fixed
capital stock held by any shareholder, after giving effect to the stock split.
Each of our fixed and variable capital accounts are comprised of A
shares and B shares. Under Mexican law and our by-laws, any holder of shares
representing variable capital is entitled to have those shares redeemed at that
holder's option for a price equal to the lower of:
o 95% of the market value of those shares based on the weighted
average trading price of our CPOs on the Mexican Stock Exchange
during the latest period of 30 trading days preceding the date
on which the exercise of the redemption option is effective, for
a period not to exceed six months; and
o the book value of those shares at the end of the fiscal year
immediately prior to the effective date of the redemption option
exercise by that shareholder as set forth in our annual
financial statements approved at the ordinary meeting of
shareholders.
If the period used in calculating the quoted share price as described
above consists of less than 30 trading days, the number of days when shares
were actually traded will be used. If shares have not been traded during this
period, the redemption price will be the book value of those shares as
described above. If a shareholder exercises its redemption option during the
first three quarters of a fiscal year, that exercise is effective at the end of
that fiscal year, but if a shareholder exercises its redemption option during
the fourth quarter, that exercise is effective at the end of the next
succeeding fiscal year. The redemption price is payable as of the day following
the annual ordinary meeting of shareholders at which the relevant annual
financial statements were approved.
Shareholder authorization is required to increase or decrease either
the fixed capital account or the variable capital account. Shareholder
authorization to increase or decrease the fixed capital account must be
obtained at an extraordinary meeting of shareholders. Shareholder authorization
to increase or decrease the variable capital account must be obtained at an
ordinary general meeting of shareholders.
106
On September 15, 1999, we effected a further stock split. For every
one of our shares of any series we issued two series A shares and one series B
share. Concurrently with this stock split, we also consummated an exchange
offer to exchange new CPOs and new ADSs representing the new CPOs for our then
existing A shares, B shares and ADSs and converted our then existing CPOs into
the new CPOs. As of December 31, 2003, approximately 96.5% of our outstanding
share capital was represented by CPOs, a portion of which is represented by
ADSs.
As of December 31, 2003, our capital stock consisted of 5,921,739,375
issued shares. As of December 31, 2003, series A shares represented 66.6% of
our capital stock, or 3,947,826,250 shares, of which 3,547,614,432 shares were
subscribed and paid, 287,097,712 shares were treasury shares and 113,114,106
shares were issued pursuant to our employee stock option plans and subscribed
to by Banamex as trustee thereunder, but had not yet been paid. These shares
have been and will continue to be gradually paid upon exercise of the
corresponding stock options. As of December 31, 2003, series B shares
represented 33.4% of our capital stock, or 1,973,913,125 shares, of which
1,773,807,216 shares were subscribed and paid, 143,548,856 shares were treasury
shares and 56,557,053 shares were issued pursuant to our employee stock option
plans and subscribed to by Banamex as trustee thereunder, but had not yet been
paid. These shares have been and will continue to be gradually paid upon
exercise of the corresponding stock options. Of the total of our A shares and B
shares outstanding as of December 31, 2003, 3,267,000,000 shares corresponded
to the fixed portion of our capital stock and 2,654,739,375 shares corresponded
to the variable portion of our capital stock.
At the 2003 annual shareholders' meeting held on April 29, 2004, in
connection with their approval of a dividend for the 2003 fiscal year, our
shareholders approved an increase in the variable part of our capital stock
through the capitalization of retained earnings in an amount up to
Ps4,169,029,880, through the issuance of up to 400 million series A shares and
200 million series B shares, to be represented by new CPOs. The final amount
of the capital increase will be determined by our board of directors once the
final number of CPOs required to be issued in connection with the dividend is
established and will be based on the then current market price of our CPO on
the Mexican Stock Exchange, minus the 20% discount at which those CPOs will be
issued. See Item 8 - "Financial Information - Dividends" above. In addition,
at the 2003 annual shareholders' meeting, our shareholders approved the
cancellation of our 287,097,712 series A treasury shares and 143,548,856
series B treasury shares outstanding as of December 31, 2003, as described in
the preceding paragraph.
As of June 1, 2001, the Mexican securities law (Ley de Mercado de
Valores) was amended to increase the protection granted to minority
shareholders of Mexican listed companies and to commence bringing corporate
governance procedures of Mexican listed companies in line with international
standards.
On February 6, 2002, the Mexican securities authority (Comision
Nacional Bancaria y de Valores) issued an official communication numbered
DGA-13813138, authorizing the amendment of our by-laws to incorporate
additional provisions to comply with the new provisions of the Mexican
securities law. Following approval from our shareholders at our 2002 annual
shareholders meeting, we amended and restated our by-laws to incorporate these
additional provisions, which consist of, among other things, protective
measures to prevent share acquisitions, hostile takeovers, and direct or
indirect changes of control. As a result of the amendment and restatement of
our by-laws, the expiration of our corporate term of existence was extended
from 2019 to 2100.
On March 19, 2003, the Mexican securities authority issued new
regulations designed to (i) further implement minority rights granted to
shareholders by the Mexican securities law and (ii) simplify and comprise in a
single document provisions relating to securities offerings and periodic
reports by Mexican listed companies.
On April 24, 2003, our shareholders approved changes to our by-laws,
incorporating additional provisions and removing some restrictions. The changes
were as follows:
o The restriction that prohibits our subsidiaries from acquiring
shares in companies that own our shares was amended to remove a
condition that our subsidiaries have knowledge of such
ownership.
o The limitation on our variable capital was removed. Formerly,
our variable capital was limited to ten times our minimum fixed
capital, which is currently set at Ps36.3 million.
107
o Increases and decreases in our variable capital now require the
notarization of the minutes of the ordinary general
shareholders' meeting that authorize such increase or decrease,
as well as the filing of these minutes with the Mexican National
Securities Registry (Registro Nacional de Valores), except when
such increase or decrease results from (i) shareholders
exercising their redemption rights or (ii) stock repurchases.
o Amendments were made to the calculation of the redemption price
for our variable capital shares, which is described above.
o Approval by the board of directors is now required for
transactions by us or any of our subsidiaries involving: (i)
transactions not in the ordinary course of business with third
parties related to us or to any of our subsidiaries, (ii)
purchases or sales of assets having a value equal to or
exceeding 10% or more of our total consolidated assets, (iii)
the granting of security interests in an amount exceeding 30% of
our total consolidated assets, and (iv) any other transaction
that exceeds 1% of our total consolidated assets.
o The cancellation of registration of our shares in the Securities
Section of the Mexican National Securities Registry now involves
an amended procedure, which is described below under "Repurchase
Obligation." In addition, any amendments to the article
containing these provisions no longer require the consent of the
Mexican securities authority and 95% approval by shareholders
entitled to vote.
Changes in Capital Stock and Preemptive Rights
Our by-laws allow for a decrease or increase in our capital stock if
it is approved by our shareholders at a shareholders' meeting. Additional
shares of our capital stock, having no voting rights or limited voting rights,
are authorized by our by-laws and may be issued upon the approval of our
shareholders at a shareholders' meeting, with the prior approval of the Mexican
securities authority.
Our by-laws provide that shareholders have preemptive rights in
proportion to the number of shares of our capital stock they hold, before any
increase in the number of outstanding A shares, B shares, or any other existing
series of shares, as the case may be, except in the case of shares previously
acquired by us or if the shareholders waive their preemptive rights, in the
context of a public offer, as set forth in the Mexican Securities law.
Preemptive rights give shareholders the right, upon any issuance of shares by
us, to purchase a sufficient number of shares to maintain their existing
ownership percentages. Preemptive rights must be exercised within the period
and under the conditions established for that purpose by the shareholders, and
our by-laws and applicable law provide that this period must be 15 days
following the publication of the notice of the capital increase in the
Periodico Oficial del Estado. With the prior approval of the Mexican securities
authority, an extraordinary shareholders' meeting may approve the issuance of
our stock in connection with a public offering, without the application of the
preemptive rights described above. At that meeting, holders of our stock must
waive preemptive rights by the affirmative vote of 50% of the capital stock,
and the resolution duly adopted in this manner will be effective for all
shareholders. If holders of at least 25% of our capital stock vote against the
resolution, the issuance without the application of preemptive rights may not
be effected. The Mexican securities authority may only approve the issuance if
we maintain policies that protect the rights of minority shareholders. Any
shareholder voting against the relevant resolution will have the right to have
its shares placed in the public offering together with our shares and at the
same market price.
Pursuant to our by-laws, significant acquisitions of shares of our
capital stock and changes of control of CEMEX require prior approval from our
board of directors. Our board of directors must authorize in advance any
transfer of voting shares of our capital stock that would result in any person
or group becoming a holder of 2% of more of our shares. If our board of
directors denies that authorization, it must designate an alternative buyer for
those shares, at a price equal to the price quoted on the Mexican Stock
Exchange. Any acquisition of shares of our capital stock representing 20% or
more of our capital stock by a person or group of persons requires prior
approval from our board of directors and, in the event approval is granted, the
acquiror has an obligation to make a public offer to purchase all of the
outstanding shares of that class of capital stock being purchased. In the event
the requirements described above for significant acquisitions of shares of our
capital stock are not met, the persons acquiring such shares will not be
entitled to any corporate rights with respect to such shares, such shares will
not be
108
taken into account for purposes of determining a quorum for shareholder meetings
and we will not record such persons as holders of such shares in our shareholder
ledger.
Our by-laws require the stock certificates representing shares of our
capital stock to make reference to the provisions in our by-laws relating to the
prior approval of the board of directors for significant share transfers and the
requirements for recording share transfers in our shareholder ledger. In
addition, shareholders are responsible for informing us whenever their
shareholdings exceed 5%, 10%, 15% and 20% of the outstanding shares of a
particular class of our capital stock. We are required to maintain a shareholder
ledger that records the names, nationality and domicile of all significant
shareholders, and any shareholder that meets or exceeds these thresholds must be
recorded in this ledger if such shareholder is to be recognized or represented
at any shareholders' meeting. If a shareholder fails to inform us of its
shareholdings reaching a threshold as described above, we will not record the
transactions that cause such threshold to be met or exceeded in our shareholder
ledger, and such transaction will have no legal effect and will not be binding
on us.
Repurchase Obligation
In accordance with Mexican securities authority regulations, our
majority shareholders are obligated to make a public offer for the purchase of
stock to the minority shareholders if the listing of our stock with the Mexican
Stock Exchange is canceled, either by resolution of CEMEX or by an order of the
Mexican securities authority. The price at which the stock must be purchased by
the majority shareholders is the higher of:
o the weighted average price per share based on the weighted
average trading price of our CPOs on the Mexican Stock Exchange
during the latest period of 30 trading days preceding the date
of the offer, for a period not to exceed six months; or
o the book value per share, as reflected in the last quarterly
report filed with the Mexican securities authority and the
Mexican Stock Exchange.
Five business days prior to the commencement of the offering, our
board of directors must make a determination with respect to the fairness of
the offer, taking into account the interests of the minority shareholders and
disclose its opinion, which must refer to the justifications of the offer
price; if the board of directors is precluded from making such determination as
a result of a conflict of interest, the resolution of the board of directors
must be based upon a fairness opinion issued by an expert selected by the audit
committee in which emphasis must be placed on minority rights.
Following the expiration of this offer, if the majority shareholders
do not acquire 100% of the paid-in share capital, such shareholders must place
in a trust set up for that purpose for a six-month period an amount equal to
that required to repurchase the remaining shares held by investors who did not
participate in the offer. The majority shareholders are not obligated to make
the repurchase if shareholders representing 95% of our share capital waive that
right, and the amount offered for the shares is less than 300,000 UDIs
(Unidades de Inversion), which are investment units in Mexico that reflect
inflation variations. If these conditions are met, we must create a trust as
described above and provide electronic notice to the Mexican Stock Exchange.
For purposes of these provisions, majority shareholders are shareholders that
own a majority of our shares, have voting power sufficient to control decisions
at general shareholder meetings, or that may elect a majority of our board of
directors.
Shareholders' Meetings and Voting Rights
Shareholders' meetings may be called by:
o our board of directors or statutory auditors;
o shareholders representing at least 10% of the then outstanding
shares of our capital stock by requesting our board of directors
or the statutory auditors to call a meeting;
o any shareholder if no meeting has been held for two consecutive
years or when the matters referred to in Article 181 of the
General Law of Commercial Companies (Ley General de Sociedades
Mercantiles) have not been dealt with; or
109
o a Mexican court in the event our board of directors or the
statutory auditors do not comply with the valid request of the
shareholders indicated above.
Notice of shareholders' meetings must be published in the official
gazette for the State of Nuevo Leon, Mexico or any major newspaper published and
distributed in the City of Monterrey, Nuevo Leon, Mexico. The notice must be
published at least 15 days prior to the date of any shareholders' meeting.
Consistent with Mexican law, our by-laws further require that all information
and documents relating to the shareholders meeting be available to shareholders
from the date the notice of the meeting is published.
General shareholders' meetings can be ordinary or extraordinary. At
every general shareholders' meeting, each holder of A shares and B shares is
entitled to one vote per share. Shareholders may vote by proxy duly appointed
in writing. Under the CPO trust agreement, holders of CPOs who are not Mexican
nationals cannot exercise voting rights corresponding to the A shares
represented by their CPOs.
An annual general ordinary shareholders' meeting must be held during
the first four months after the end of each of our fiscal years to consider the
approval of a report of our board of directors regarding our performance and
our financial statements for the preceding fiscal year and to determine the
allocation of the profits for the preceding year. At the annual general
shareholders' meeting, any shareholder or group of shareholders representing
10% or more of our outstanding voting stock has the right to appoint one
regular and one alternate director in addition to the directors elected by the
majority and the right to appoint a statutory auditor. The alternate director
appointed by the minority holders may only substitute for the director
appointed by that minority.
A general extraordinary shareholders' meeting may be called at any
time to deal with any of the matters specified by Article 182 of the General
Law of Commercial Companies, which include, among other things:
o extending our corporate existence;
o our early dissolution;
o increasing or reducing our fixed capital stock;
o changing our corporate purpose;
o changing our country of incorporation;
o changing our form of organization;
o a proposed merger;
o issuing preferred shares;
o redeeming our own shares;
o any amendment to our by-laws; and
o any other matter for which a special quorum is required by law
or by our by-laws.
The above-mentioned matters may only be dealt with at extraordinary
shareholders' meetings.
In order to vote at a meeting of shareholders, shareholders must
appear on the list that Indeval, the Mexican securities depositary, and the
Indeval participants holding shares on behalf of the shareholders, prepare
prior to the meeting or must deposit prior to that meeting the certificates
representing their shares at our offices or in a Mexican credit institution or
brokerage house, or foreign bank approved by our board of directors to serve
this function. The certificate of deposit with respect to the share
certificates must be presented to our company secretary at least 48 hours
before a meeting of shareholders. Our company secretary verifies that the
person in whose favor any certificate of deposit was issued is named in our
share registry and issues an admission pass authorizing that person's
attendance at the meeting of shareholders.
110
Our by-laws provide that a shareholder may only be represented by
proxy in a shareholders' meeting with a duly completed form provided by us
authorizing the proxy's presence. In addition, our by-laws require that the
secretary acting at the shareholders' meeting publicly affirm the compliance by
all proxies with this requirement.
A shareholders' resolution is required to take action on any matter
presented at a shareholders' meeting. At an ordinary meeting of shareholders,
the affirmative vote of the holders of a majority of the shares present at the
meeting is required to adopt a shareholders' resolution. At an extraordinary
meeting of shareholders, the affirmative vote of at least 50% of the capital
stock is required to adopt a shareholders' resolution, except that when
amending Article 22 of our by-laws (which specifies the list of persons who are
not eligible to be appointed as a director or a statutory auditor) the
affirmative vote of at least 75% of the voting stock is needed. Our by-laws
also require the approval of 75% of the voting shares of our capital stock to
amend provisions in our by-laws relating to the prior approval of the board of
directors for share transfers and the requirements for recording share
transfers in our corporate ledger.
The quorum for a first ordinary meeting of shareholders is 50% of our
outstanding and fully paid shares, and for the second ordinary meeting of
shareholders is any number of our outstanding and fully paid shares. The quorum
for the first extraordinary shareholders meeting is 75% of our outstanding and
fully paid shares, and for the second extraordinary shareholders meeting the
quorum is 50% of our outstanding and fully paid shares.
Rights of Minority Shareholders
Our by-laws provide that holders of at least 10% of our capital stock
are entitled to demand the postponement of the voting on any resolution of
which they deem they have not been adequately informed.
Under Mexican law, holders of at least 20% of our outstanding capital
stock entitled to vote on a particular matter may seek to have any shareholder
action with respect to that matter set aside, by filing a complaint with a
court of law within 15 days after the close of the meeting at which that action
was taken and showing that the challenged action violates Mexican law or our
by-laws. Relief under these provisions is only available to holders who were
entitled to vote on, or whose rights as shareholders were adversely affected
by, the challenged shareholder action and whose shares were not represented
when the action was taken or, if represented, voted against it.
Under Mexican law, an action for civil liabilities against directors
may be initiated by a shareholders' resolution. In the event shareholders
decide to bring an action of this type, the persons against whom that action is
brought will immediately cease to be directors. Additionally, shareholders
representing not less than 15% of the outstanding shares may directly exercise
that action against the directors; provided that:
o those shareholders shall not have voted against exercising such
action at the relevant shareholders' meeting; and
o the claim covers all of the damage alleged to have been caused
to CEMEX and not merely the damage suffered by the plaintiffs.
Any recovery of damage with respect to these actions will be for the
benefit of CEMEX and not that of the shareholders bringing the action.
Registration and Transfer
Our common stock is evidenced by share certificates in registered form
with registered dividend coupons attached. Our shareholders may hold their
shares in the form of physical certificates or through institutions that have
accounts with Indeval. Accounts may be maintained at Indeval by brokers, banks
and other entities approved by the Mexican securities authority. We maintain a
stock registry, and, in accordance with Mexican law, only those holders listed
in the stock registry and those holding certificates issued by Indeval and by
Indeval participants indicating ownership are recognized as our shareholders.
111
Redemption
Our capital stock is subject to redemption upon approval of our
shareholders at an extraordinary shareholders' meeting.
Share Repurchases
If our shareholders decide at a general shareholders' meeting that we
should do so, we may purchase our outstanding shares for cancellation. We may
also repurchase our equity securities on the Mexican Stock Exchange at the then
prevailing market prices in accordance with the Mexican securities law. If we
intend to repurchase shares representing more than 1% of our outstanding shares
at a single trading session, we must inform the public of such intention at
least ten minutes before submitting our bid. If we intend to repurchase shares
representing 3% or more of our outstanding shares during a period of twenty
trading days, we would be required to conduct a public tender offer for such
shares. We must conduct share repurchases through the person or persons
approved by our board of directors, through a single broker dealer during the
relevant trading session without submitting bids during the first and the last
30 minutes of each trading session and we must inform the Mexican Stock
Exchange of the results of any share repurchase no later than the business day
following any such share repurchase.
Directors' and Shareholders' Conflict of Interest
Under Mexican law, any shareholder that has a conflict of interest
with CEMEX with respect to any transaction is obligated to disclose such
conflict and is prohibited from voting on that transaction. A shareholder who
violates this prohibition may be liable for damages if the relevant transaction
would not have been approved without that shareholder's vote.
Under Mexican law, any director who has a conflict of interest with
CEMEX in any transaction must disclose that fact to the other directors and is
prohibited from voting on that transaction. Any director who violates this
prohibition will be liable for damages. Additionally, our directors and
statutory auditors may not represent shareholders in the shareholders'
meetings.
Withdrawal Rights
Whenever our shareholders approve a change of corporate purpose,
change of nationality or transformation from one form of corporate organization
to another, Mexican law provides that any shareholder entitled to vote on that
change that has voted against it may withdraw from CEMEX and receive the amount
calculated as specified by Mexican law attributable to its shares, provided
that it exercises that right within 15 days following the adjournment of the
meeting at which the change was approved. For further details on the
calculation of the withdrawal right, see "- General."
Dividends
At the annual ordinary general meeting of shareholders, our board of
directors submits our financial statements together with a report on them by
our board of directors and the statutory auditors, to our shareholders for
approval. The holders of our shares, once they have approved the financial
statements, determine the allocation of our net income, after provision for
income taxes, legal reserve and statutory employee profit sharing payments, for
the preceding year. All shares of our capital stock outstanding and fully paid
at the time a dividend or other distribution is declared are entitled to share
equally in that dividend or other distribution.
Liquidation Rights
In the event we are liquidated, the surplus assets remaining after
payment of all our creditors will be divided among our shareholders in
proportion to the respective shares held by them. The liquidator may, with the
approval of our shareholders, distribute the surplus assets in kind among our
shareholders, sell the surplus assets and divide the proceeds among our
shareholders or put the surplus assets to any other uses agreed to by a
majority of our shareholders voting at an extraordinary shareholders' meeting.
112
Material Contracts
On March 30, 2004, CEMEX Espana, with Sandworth Plaza Holding B.V.,
Cemex Caracas Investments B.V., Cemex Caracas II Investments B.V., Cemex Manila
Investments B.V. and Cemex Egyptian Investments, B.V., as guarantors, entered
into a Term and Revolving Facilities Agreement with Banco Bilbao Vizcaya
Argentaria, S.A. and Societe Generale, as mandated lead arrangers, relating to
three credit facilities with an aggregate amount of (euro)250,000,000 and
(Y)19,308,000,000. The first facility is a five-year multi-currency term loan
facility with a variable interest rate; the second facility is a 364-day
multi-currency revolving credit facility; and the third facility is a five-year
Yen-denominated term loan facility with a fixed interest rate. The proceeds of
these facilities will be used to prepay CEMEX Espana's outstanding revolving
credit facility and for general corporate purposes.
On October 15, 2003, New Sunward Holding B.V. entered into a U.S.$1.15
billion multi-tranche Term Loan Agreement. The indebtedness incurred under the
agreement is guaranteed by CEMEX, S.A. de C.V., CEMEX Mexico, S.A. de C.V. and
Empresas Tolteca de Mexico, S.A. de C.V and is composed of three different
tranches. The first tranche is a two-year Euro denominated loan in the amount
of (euro)256,365,000. The second tranche is a three-year Dollar denominated
loan in the amount of U.S.$550,000,000. The third tranche is a three-year Yen
denominated loan in the amount of (Y)32,688,000,000. The terms of the second
and third tranches can be extended for an additional period of six months,
subject to certain conditions. The proceeds were used to repurchase U.S.$650
million of preferred equity and to refinance other outstanding debt.
On June 23, 2003, CEMEX Espana Finance LLC, as issuer, CEMEX Espana,
Sandworth Plaza Holding B.V., Cemex Caracas Investments B.V., Cemex Caracas II
Investments B.V., Cemex Manila Investments B.V. and Cemex Egyptian Investments
B.V., as guarantors, and several institutional purchasers, entered into a Note
Purchase Agreement in connection with a private placement by CEMEX Espana
Finance, LLC. CEMEX Espana Finance, LLC issued to the institutional purchasers
U.S.$103,000,000 aggregate principal amount of 4.77% Senior Notes due 2010,
U.S.$96,000,000 aggregate principal amount of 5.36% Senior Notes due 2013 and
U.S.$201,000,000 aggregate principal amount of 5.51% Senior Notes due 2015. The
proceeds of the private placement were used to repay debt.
On August 8, 2003, in connection with an increase in the amount
available under our U.S. commercial paper program from U.S.$275 million to
U.S.$400 million, we entered into a First Amended and Restated Reimbursement
and Credit Agreement and a related Depositary Agreement with several lenders.
Under the First Amended and Restated Reimbursement and Credit Agreement, the
issuing bank agreed to issue an irrevocable direct-pay letter of credit in the
amount of U.S.$400 million to provide credit support for the commercial paper
program, and the lenders committed to make loans to us in the event of certain
market disruptions of up to the same amount. In addition, under the First
Amended and Restated Reimbursement and Credit Agreement we obtained a U.S.$200
million standby letter of credit facility for the issuance of standby letters
of credit in support of certain of our and any of our subsidiaries'
obligations, including in support of contingent liabilities arising in
connection with forward sale contracts, leases, insurance contracts and
arrangements, service contracts, equipment contracts, financing transactions
and other payment obligations. The total amount available under the U.S.
commercial paper program, the letters of credit and any loans under the First
Amended and Restated Reimbursement and Credit Agreement cannot exceed U.S.$400
million. CEMEX Mexico and Empresas Tolteca de Mexico, two of our Mexican
subsidiaries, are guarantors of our obligations under the First Amended and
Restated Reimbursement and Credit Agreement.
On July 11, 2002, we entered into an Agreement and Plan of Merger with
Puerto Rican Cement Company, Inc., or PRCC, pursuant to which we acquired,
through a tender offer and subsequent merger, 100% of the outstanding shares of
PRCC. The aggregate value of the transaction was approximately U.S.$180.2
million, not including the amount of net debt assumed of approximately
U.S.$100.8 million.
On October 29, 2001, CEMEX Espana signed a three-year revolving credit
facility arranged by Banco Bilbao Vizcaya Argentaria, S.A., Salomon Brothers
International Limited, and Deutsche Bank AG as mandated lead arrangers. The
facility amounts to (euro)800 million. The proceeds of the facility must be
used for general corporate purposes. As of December 31, 2003, the total
commitment under this credit facility was reduced by CEMEX Espana to (euro)500
million, and during February 2004 it was further reduced to (euro)300 million.
113
On March 15, 2001, CEMEX, Inc., as issuer, CEMEX Espana, as parent
guarantor and Sandworth Plaza Holding B.V., Cemex Caracas Investments B.V.,
Cemex Caribe Investments B.V., Cemex Manila Investments B.V., Valcem
International B.V., as subsidiary guarantors, and several institutional
purchasers, entered into a Note and Guarantee Agreement in connection with the
private placement and issuance by CEMEX, Inc. of U.S.$315,000,000 aggregate
principal amount of Series A 7.66% Guaranteed Senior Notes due 2006,
(euro)50,000,000 aggregate principal amount of Series B 6.89% Guaranteed Senior
Notes due 2006 and U.S.$396,000,000 aggregate principal amount of Series C
7.91% Guaranteed Senior Notes due 2008 to the institutional purchasers. The
proceeds of the private placement were used to repay debt.
Exchange Controls
See Item 3-- "Key Information-- Mexican Peso Exchange Rates."
Taxation
Mexican Tax Considerations
General
The following is a summary of certain Mexican federal income tax
considerations relating to the ownership and disposition of our CPOs or ADSs,
and the ownership and disposition, mandatory redemption and maturity of the
appreciation warrants or ADWs.
This summary is based on Mexican income tax law that is in effect on
the date of this annual report, which is subject to change. This summary is
limited to non-residents of Mexico, as defined below, who own our CPOs, ADSs,
appreciation warrants or ADWs. This summary does not address all aspects of
Mexican income tax law. Holders are urged to consult their tax counsel as to
the tax consequences that the purchase, ownership, disposition, mandatory
redemption or redemption at maturity of the appreciation warrants or the ADWs,
or the purchase, ownership and disposition of our CPOs or ADSs, may have.
For purposes of Mexican taxation, an individual is a resident of
Mexico if he or she has established his or her home in Mexico. If the
individual also has a home in another country, he or she will be considered a
resident of Mexico if his or her center of vital interests is in Mexico. Under
Mexican law, an individual's center of vital interests is in Mexico if:
1. more than the 50% of the individual's total income in the relevant
year comes from Mexican sources; or
2. the individual's main center of professional activities is in
Mexico.
A legal entity is a resident of Mexico if it is organized under the
laws of Mexico or if it maintains the principal administration of its business
or the effective location of its management in Mexico. Under Mexican law, a
legal entity maintains the principal administration of its business in Mexico
if:
1. the meetings of shareholders or of the board of directors are held
in Mexico;
2. the individuals responsible for day-to-day decisions, control,
direction or management of the legal entity are residents in Mexico for tax
purposes or have their offices in Mexico;
3. the legal entity's management or control is carried out through an
office in Mexico, or
4. the accounting records are in Mexico.
A Mexican citizen is presumed to be a resident of Mexico for tax
purposes unless such person or entity can demonstrate otherwise. If a legal
entity or an individual is deemed to have a permanent establishment in Mexico
114
for tax purposes, such individual or entity shall be required to pay taxes in
Mexico on income attributable to such permanent establishment, in accordance
with relevant tax provisions.
Individuals or legal entities that cease to be residents of Mexico
must notify the tax authorities within 15 business days before their change of
residency.
A non-resident of Mexico is a legal entity or individual that does not
satisfy the requirements to be considered a resident of Mexico for Mexican
federal income tax purposes. The term U.S. Shareholder shall have the same
meaning ascribed below under the section "-- U.S. Federal Income Tax
Considerations."
Taxation of Dividends
Dividends, either in cash or in any other form, paid to non-residents
of Mexico with respect to A shares or B shares represented by the CPOs (or in
the case of holders who hold CPOs represented by ADSs), will not be subject to
withholding tax in Mexico.
Disposition of CPOs or ADSs
Gains on the sale or disposition of ADSs by a holder who is a
non-resident of Mexico will not be subject to Mexican taxation.
Gains on the sale or disposition of CPOs by a holder who is a
non-resident of Mexico generally will be exempt from Mexican taxation, provided
that such sale or disposition is executed on the Mexican Stock Exchange.
This exemption is not applicable to protected or registered
transactions, even though The Comision Nacional Banacaria y de Valores, the
Mexican National Banking and Securities Commission, views these protected or
registered transactions as if they were executed on the Mexican Stock Exchange.
Additionally, the exemption is not applicable to the sale or disposition of
CPOs through a public offer, where the offerees are not allowed to accept more
competitive offers to those received before or within the public offer, and
would be subject to a penalty were they to accept such offers.
If the exemption is not applicable, the non-resident of Mexico will be
subject to a 5% withholding tax on the gross proceeds. As an alternative to the
5% withholding tax on the gross proceeds, the non-resident of Mexico may elect
a 20% withholding tax on the gain upon the sale or disposition of the CPOs,
provided that the applicable rules and regulations promulgated under Mexican
law are followed.
Notwithstanding the above, under the Convention Between the United
States and Mexico for Avoidance of Double Taxation and Prevention of Fiscal
Evasion with Respect to Income Taxes, and a Protocol thereto, the U.S.-Mexico
Income Tax Treaty, a U.S. Shareholder who owns less than 25% of our stock and
is otherwise eligible for benefits under such tax treaty will not be subject to
Mexican tax on any gain derived from the disposition of ADSs or CPOs. In the
case of non-residents of Mexico, other than U.S. Shareholders, gains derived
from the disposition of ADSs or CPOs may also be exempt, in whole or in part,
from Mexican taxation under a treaty to which Mexico is a party.
Deposits of CPOs in exchange for ADSs and withdrawals of CPOs in
exchange for ADSs will not give rise to any Mexican tax or transfer duties.
Commissions paid in brokerage transactions for the sale of CPOs on the
Mexican Stock Exchange are subject to a value-added tax of 15%.
Estate and Gift Taxes
There are no Mexican inheritance, gift, succession or value-added
taxes applicable to the ownership, transfer, exchange or disposition of ADSs or
CPOs by holders that are non-residents of Mexico, although gratuitous transfers
of CPOs may, in some circumstances, cause a Mexican federal tax to be imposed
upon a recipient (who is a
115
Mexican resident). There are no Mexican stamp, issue, registration or
similar taxes or duties payable by holders of ADSs or CPOs.
Disposition of appreciation warrants or ADWs
Because the appreciation warrants have been registered for trading on
the Mexican Stock Exchange, gains on the sale or other disposition of
appreciation warrants by non-residents of Mexico will, under the Mexican Income
Tax Law, generally be subject to a 25% withholding tax on the gross sale price.
Alternative to the 25% withholding tax, the seller, resident of a qualifying
country, including, among others, the United States, who appoints a
representative in Mexico for income tax purposes related to the sale may elect
to pay Mexican federal income tax at a rate of 34% of the gain on the sale,
provided that certain conditions are met.
A foreign holder residing in a country with which Mexico has entered
into a treaty for the avoidance of double taxation may not be subject to
Mexican withholding taxes if such foreign holder provides evidence he is
subjest to tax in his own country.
We urge you to consult your tax advisor to determine the particular
tax consequences in your case.
Gains on the sale or disposition of ADWs by a holder who is a
non-resident of Mexico will not be subject to Mexican tax.
Mandatory redemption, maturity and purchase of appreciation warrants or ADWs
The Mexican tax consequences applicable to the disposition of
appreciation warrants or ADWs explained in the previous section, will be also
applicable to the mandatory redemption, maturity and purchase of appreciation
warrants or ADWs.
U.S. Federal Income Tax Considerations
General
The following is a summary of the material U.S. federal income tax
consequences relating to the ownership and disposition of our CPOs and ADSs,
including CPOs or ADSs received upon mandatory redemption or redemption at
maturity of our appreciation warrants or ADWs, and the ownership, disposition,
mandatory redemption, redemption at maturity of and lapse of appreciation
warrants or ADWs.
This summary is based on provisions of the U.S. Internal Revenue Code
of 1986, as amended (the "Code"), U.S. Treasury regulations promulgated under
the Code, and administrative rulings, and judicial interpretations of the Code,
all as in effect on the date of this annual report and all of which are subject
to change, possibly retroactively. This summary is limited to U.S. Shareholders
(as defined below) who hold our ADSs, CPOs, appreciation warrants, or ADWs, as
the case may be, as capital assets. This summary does not discuss all aspects
of U.S. federal income taxation which may be important to an investor in light
of its individual circumstances, for example, an investor subject to special
tax rules (e.g., banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
expatriates, tax-exempt investors, or holders whose functional currency is not
the Dollar or U.S. Shareholders who hold a CPO or an ADS, or appreciation
warrants or an ADW as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset). In addition, this summary does
not address any aspect of state, local or foreign taxation.
For purposes of this summary, a "U.S. Shareholder" means a beneficial
owner of CPOs, ADSs, appreciation warrants, or ADWs who is for U.S. Federal
income tax purposes:
o an individual who is a citizen or resident of the United States
for U.S. Federal income tax purposes;
116
o a corporation, or other entity taxable as a corporation that is
created or organized in the United States or under the laws of
the United States or any state thereof (including the District
of Columbia);
o an estate the income of which is includible in gross income for
U.S. Federal income tax purposes regardless of its source; or
o a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and
one or more United States persons have the authority to control
all substantial decisions of such trust.
If a partnership (including any entity treated as a partnership for
U.S. Federal income tax purposes) is the beneficial owner of CPOs, ADSs,
appreciation warrants, or ADWs, the U.S. Federal income tax treatment of a
partner in such partnership will generally depend upon the status of the
partner and the activities of the partnership.
Ownership of CPOs or ADSs in general
In general, for U.S. Federal income tax purposes, U.S. Shareholders
who own ADSs will be treated as the beneficial owners of the CPOs represented
by those ADSs, and each CPO will represent a beneficial interest in two A
shares and one B share.
Taxation of dividends with respect to CPOs and ADSs
Distributions of cash or property with respect to the A shares or B
shares represented by CPOs, including CPOs represented by ADSs, generally will
be includible in the gross income of a U.S. Shareholder as foreign source
dividend income on the date the distributions are received by the CPO trustee
or successor thereof, to the extent paid out of our current or accumulated
earnings and profits, as determined under U.S. Federal income tax principles.
These dividends will not be eligible for the dividends-received deduction
allowed to corporate U.S. Shareholders. To the extent, if any, that the amount
of any distribution by us exceeds our current and accumulated earnings and
profits as determined under U.S. Federal income tax principles, it will be
treated first as a tax-free return of the U.S. Shareholder's adjusted tax basis
in the CPOs or ADSs and thereafter as capital gain.
Dividends paid in Pesos, including the amount of Mexican withholding
tax thereon, will be includible in the income of a U.S. Shareholder in a Dollar
amount calculated by reference to the exchange rate in effect the day the Pesos
are received by the CPO trustee or successor thereof whether or not they are
converted into Dollars on that day. Generally, any gain or loss resulting from
currency exchange fluctuations during the period from the date the dividend
payment is includible in income to the date such payment is converted into U.S.
Dollars will be treated as ordinary income or loss. Such gain or loss will
generally be income from sources within the United States for foreign tax
credit limitation purposes.
A U.S. Shareholder may elect to deduct in computing its taxable income
or, subject to specific complex limitations on foreign tax credits generally,
credit against its U.S. Federal income tax liability, Mexican withholding tax
at the rate applicable to such shareholder. For purposes of calculating the
U.S. foreign tax credit, dividends paid by us generally will constitute foreign
source "passive income," or in the case of some U.S. Shareholders, "financial
services income." U.S. Shareholders should consult their tax advisors regarding
the availability of, and limitations on, any such foreign tax credit.
Taxation of capital gains on disposition of CPOs or ADSs
The sale or exchange of CPOs or ADSs will result in the recognition of
gain or loss by a U.S. Shareholder for U.S. Federal income tax purposes in an
amount equal to the difference between the amount realized and the U.S.
Shareholder's tax basis therein. That gain or loss recognized by a U.S.
Shareholder will be long-term capital gain or loss if the U.S. Shareholder's
holding period for the CPOs or ADSs exceeds one year at the time of disposition.
Gain from the sale or exchange of the CPOs or ADSs usually will be treated as
U.S. source for foreign tax credit purposes; losses will generally be allocated
against U.S. source income. Deposits and withdrawals of CPOs by U.S.
117
Shareholders in exchange for ADSs will not result in the realization of gain or
loss for U.S. Federal income tax purposes.
Ownership, disposition, mandatory redemption and maturity of appreciation
warrants or ADWs
In general, for U.S. Federal income tax purposes, a U.S. Shareholder
will be treated as the beneficial owner of the appreciation warrants
represented by the ADWs.
A U.S. Shareholder generally will recognize gain or loss on the sale
or exchange of appreciation warrants or ADWs measured by the difference between
the amount realized and the tax basis of the appreciation warrants or ADWs, as
applicable. Any gain or loss generally will be capital gain or loss and will be
long-term capital gain or loss if the U.S. Shareholder's holding period of the
appreciation warrants or ADWs exceeds one year at the time of the sale or
exchange.
A U.S. Shareholder generally should not recognize taxable income on
receipt of CPOs or ADSs upon the mandatory redemption or maturity of the
appreciation warrants or ADWs, except to the extent cash is received in lieu of
a fractional CPO or ADS. Such U.S. Shareholder's tax basis in the CPOs or ADSs
so acquired should be equal to the tax basis of the appreciation warrants or
ADWs redeemed, as applicable, less the portion of such tax basis, if any,
allocable to any fractional CPO or ADS for which cash is received. The holding
period of the CPOs and ADSs so acquired generally should include the holding
period of the appreciation warrants or ADWs redeemed therefor. The use of the
word "should" in this paragraph is intended to convey that the likelihood that
the receipt of CPOs or ADWs will be tax-free to participating U.S. Shareholders
is stronger than "more likely than not" but less than the degree of certainty
typically associated with a "will" opinion.
There can be no assurance that the U.S. Internal Revenue Service, or
IRS, will not take, and a court would not sustain the IRS in taking, the
position that the receipt of CPOs or ADSs upon a mandatory redemption or
maturity of appreciation warrants or ADWs results in the recognition of taxable
gain or loss. If a U.S. Shareholder is required to recognize gain or loss upon
a mandatory redemption or maturity of the appreciation warrants or ADWs, the
determination of the amount of gain or loss is uncertain, and such U.S.
Shareholder should consult its tax advisor for such determination.
A U.S. Shareholder who receives cash, including cash in lieu of
acquiring a fractional CPO or ADS upon the mandatory redemption or maturity of
the appreciation warrants or ADWs, generally will recognize gain or loss in an
amount equal to the difference between the amount of cash received and the U.S.
Shareholder's allocable tax basis in the fractional interest for which cash was
received. Any gain or loss generally will be capital gain or loss and will be
long-term if the U.S. Shareholder's holding period of the appreciation warrants
or ADWs exceeds one year at the time of the receipt of cash.
If the U.S. Shareholder's appreciation warrants or ADWs have not been
previously redeemed and expire on the maturity date without payment, the U.S.
Shareholder will recognize a loss equal to the amount of the basis of the
appreciation warrants or ADWs, as applicable. Such expiration will be deemed a
sale or exchange as of the maturity date and the loss, if any, will be
considered a loss from the sale or exchange of property which has the same
character as would the CPOs or ADSs if acquired by the U.S. Shareholder. Any
loss upon the expiration of the appreciation warrants or ADWs will be long-term
if the U.S. Shareholder's holding period of the appreciation warrants or ADWs
exceeds one year at the time of expiration.
Adjustments to the Strike Price
Certain adjustments to the strike price of the appreciation warrants
or ADWs may result in a deemed distribution taxable to U.S. Shareholders of
appreciation warrants or ADWs pursuant to Section 305 of the Code if the
Adjustments have the effect of increasing the U.S. Shareholder's proportionate
interest in the earnings and profits or assets of CEMEX. U.S. Shareholders
should consult their tax advisors with respect to the potential application of
Section 305 of the Code.
118
Recent Tax Legislation
The Jobs and Growth Tax Relief Reconciliation Act of 2003, or the Act,
which was enacted on May 28, 2003, reduced the maximum rate of tax imposed on
certain dividends received by U.S. Shareholders that are individuals to 15
percent (5 percent for individuals in the lower tax brackets and 0 percent for
these taxpayers in 2008), or the Reduced Rate. The Reduced Rate applies to
dividends received after December 31, 2002 and before January 1, 2009. In order
for dividends paid by a foreign corporation to be eligible for the Reduced
Rate, the foreign corporation must be a "qualified foreign corporation" within
the meaning of the Act. We believe that we are a "qualified foreign
corporation" within the meaning of the Act because we are eligible for the
benefits of the comprehensive income tax treaty between Mexico and the United
States which the IRS has determined is satisfactory for purposes of the Reduced
Rate and which includes an exchange of information program. There can be no
assurance, however, that we will continue to be considered a "qualified foreign
corporation" and that our dividends will continue to be eligible for the
Reduced Rate.
The Act also reduced the top individual tax rate on adjusted net
capital gains for sales and exchanges of capital assets on or after May 6, 2003
and before January 1, 2009 from 20 percent (10 percent for individuals in the
lower tax brackets) to 15 percent (5 percent for individuals in the lower tax
brackets and 0 percent for these taxpayers in 2008).
United States Backup Withholding and Information Reporting
A U.S. Shareholder may, under certain circumstances, be subject to
information reporting with respect to some payments to that U.S. Shareholder
such as dividends or the proceeds of a sale or other disposition of the CPOs,
appreciation warrants, ADSs or ADWs. Backup withholding also may apply to
amounts paid to such holder unless such holder (i) is a corporation or comes
within certain exempt categories, and demonstrates this fact when so required,
or (ii) provides a correct taxpayer identification number and otherwise
complies with applicable requirements of the backup withholding rules. Any
amount withheld under these rules will be creditable against the U.S.
Shareholder's Federal income tax liability.
Documents on Display
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance with these requirements, file reports
and information statements and other information with the Securities and
Exchange Commission. These reports and information statements and other
information filed by us with the Securities and Exchange Commission can be
inspected and copied at the Public Reference Section of the Securities and
Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
119
Item 11 - Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
See Item 5 -- "Operating and Financial Review and Prospects --
Derivatives and Other Hedging Instruments."
Item 12 - Description of Securities Other than Equity Securities
------------------------------------------------------
Not applicable.
120
PART II
Item 13 - Defaults, Dividend Arrearages and Delinquencies
-----------------------------------------------
None.
Item 14 - Material Modifications to the Rights of Security Holders and
Use of Proceeds
-----------------------------------------------------------
None.
Item 15 - Controls and Procedures
-----------------------
CEMEX, S.A. de C.V.
- -------------------
Disclosure Controls and Procedures. The Chief Executive Officer and
Executive Vice President of Planning and Finance of CEMEX, S.A. de C.V.
("CEMEX") have evaluated the effectiveness of CEMEX's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of
December 31, 2003. Based on such evaluation, such officers have concluded that
CEMEX's disclosure controls and procedures are effective in alerting them on a
timely basis to material information relating to CEMEX (including its
consolidated subsidiaries) required to be included in CEMEX's reports filed or
submitted under the Exchange Act.
CEMEX Mexico, S.A. de C.V.
- --------------------------
Disclosure Controls and Procedures. The Chief Executive Officer and
Executive Vice President of Planning and Finance of CEMEX Mexico, S.A. de C.V.
("CEMEX Mexico") have evaluated the effectiveness of CEMEX Mexico's disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of December 31, 2003. Based on such
evaluation, such officers have concluded that CEMEX Mexico's disclosure
controls and procedures are effective in alerting them on a timely basis to
material information relating to CEMEX Mexico (including its consolidated
subsidiaries) required to be included in CEMEX Mexico's reports filed or
submitted under the Exchange Act.
Empresas Tolteca de Mexico, S.A. de C.V.
- ----------------------------------------
Disclosure Controls and Procedures. The Chief Executive Officer and
Executive Vice President of Planning and Finance of Empresas Tolteca de Mexico,
S.A. de C.V. ("Empresas Tolteca") have evaluated the effectiveness of Empresas
Tolteca's disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2003. Based
on such evaluation, such officers have concluded that Empresas Tolteca's
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to Empresas Tolteca (including its
consolidated subsidiaries) required to be included in Empresas Tolteca's
reports filed or submitted under the Exchange Act.
Item 16A - Audit Committee Financial Expert
--------------------------------
Our board of directors has determined that it has an "audit committee
financial expert" (as defined in Item 16A of Form 20-F) serving on its audit
committee. Mr. Jose Manuel Rincon Gallardo meets the requisite qualifications.
Item 16B - Code of Ethics
--------------
We have adopted a written code of ethics that applies to all of our
employees, including our principal executive officer, principal financial
officer and principal accounting officer.
121
You may request a copy of our code of ethics, at no cost, by writing
to or telephoning us as follows:
CEMEX, S.A. de C.V.
Av. Ricardo Margain Zozaya #325
Colonia del Valle Campestre
Garza Garcia, Nuevo Leon, Mexico 66265.
Attn: Luis Hernandez or Daniel Azcona
Telephone: (011-5281) 8888-8888
Item 16C - Principal Accountant Fees and Services
--------------------------------------
Audit Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide charged us approximately Ps45.6 million in fiscal year 2003 in
connection with the professional services rendered for the audit of our annual
financial statements and services normally provided by them relating to
statutory and regulatory filings or engagements. In fiscal year 2002, KPMG
Cardenas Dosal, S.C. in Mexico and KPMG firms worldwide billed us approximately
Ps52.0 million for these services.
Audit-Related Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide billed us approximately Ps5.8 million in fiscal year 2003 for
assurance and related services reasonably related to the performance of our
audit. In fiscal year 2002, KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide charged us approximately Ps16.0 million for audit-related services.
These fees relate maimly to technical accounting support and guidance provided
by KPMG in connection with the implementation of newly issued accounting
standards.
Tax Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms worldwide
charged us approximately Ps29.8 million in fiscal year 2003 for tax compliance,
tax advice and tax planning. KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide billed us approximately Ps73.6 million for tax-related services in
fiscal year 2002.
All Other Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide billed us Ps6.7 million in fiscal year 2003 for products and services
other than those comprising audit fees, audit-related fees and tax fees. In
fiscal year 2002, KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms worldwide
charged us Ps11.6 million for products and services in this category. These
fees relate mainly to services provided by KPMG to us with respect to our due
diligence activities around the world.
Audit Committee Pre-approval Policies and Procedures
Our audit committee is responsible, among other things, for the
appointment, compensation and oversight of our external auditors. To assure the
independence of our independent auditors, our audit committee pre-approves
annually a catalog of specific audit and non-audit services in the categories
Audit Services, Audit-Related Services, Tax-Related Services, and Other
Services that may be performed by our auditors, as well as the budgeted fee
levels for each of these categories. All other permitted services must receive
a specific approval from our audit committee. Our external auditor periodically
provides a report to our audit committee in order for our audit committee to
review the services that our external auditor is providing, as well as the
status and cost of those services.
During 2003, none of the services provided to us by our external
auditors were approved by our audit committee pursuant to the de minimis
exception to the pre-approval requirement provided by paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.
122
PART III
Item 17 - Financial Statements
--------------------
Not applicable.
Item 18 - Financial Statements
--------------------
See pages F-1 through F-74, incorporated herein by reference.
Item 19 - Exhibits
---------
1.1 Amended and Restated By-laws of CEMEX, S.A. de C.V.(a)
2.1 Form of Trust Agreement between CEMEX, S.A. de C.V., as founder of the
trust, and Banco Nacional de Mexico, S.A. regarding the CPOs(b)
2.2 Amendment Agreement, dated as of November 21, 2002, amending the Trust
Agreement between CEMEX, S.A. de C.V., as founder of the trust, and
Banco Nacional de Mexico, S.A. regarding the CPOs(b)
2.3 Form of CPO Certificate(b)
2.4 Form of Second Amended and Restated Deposit Agreement (A and B share
CPOs), dated as of August 10, 1999, among CEMEX, S.A. de C.V.,
Citibank, N.A. and holders and beneficial owners of American Depositary
Shares(b)
2.5 Form of American Depositary Receipt (included in Exhibit 2.3)
evidencing American Depositary Shares. (b)
2.6 Form of Certificate for shares of Series A Common Stock of CEMEX, S.A.
de C.V. (b)
2.7 Form of Certificate for shares of Series B Common Stock of CEMEX, S.A.
de C.V. (b)
2.8 Form of appreciation warrant deed. (b)
2.9 Form of CPO Purchasing and Disbursing Agreement. (c)
2.10 Form of appreciation warrant certificate. (c)
2.11 Form of Warrant Deposit Agreement among CEMEX, S.A. de C.V., Depositary
and holders and beneficial owners of American Depositary Warrants. (c)
2.12 Form of American Depositary Warrant Receipt (included in Exhibit 2.10).
(c)
4.1 Note and Guarantee Agreement dated as of March 15, 2001, by and among
CEMEX, Inc., as issuer, Valenciana, as parent guarantor and Sandworth
Plaza Holding B.V., Cemex Caracas Investments B.V., Cemex Caribe
Investments B.V., Cemex Manila Investments B.V., Valcem International
B.V., as subsidiary guarantors, and the several purchasers named
therein, in connection with the offering and issuance by CEMEX, Inc. of
U.S.$315,000,000 aggregate principal amount of Series A Guaranteed
Senior Notes due 2006,(euro)50,000,000 aggregate principal amount of
Series B Guaranteed Senior Notes due 2006 and U.S.$396,000,000
aggregate principal amount of Series C Guaranteed Senior Notes due
2008. (d)
4.2 Credit facility dated as of October 29, 2001, by and among Compania
Valenciana de Cementos Portland, S.A., as borrower, Banco Bilbao
Vizcaya Argentaria, S.A., Salomon Brothers International Limited, and
Deutsche Bank AG as mandated lead arrangers and the several banks and
other financial institutions named therein, as lenders, for an
aggregate amount of(euro)800 million. (e)
4.3 Agreement and Plan of Merger, dated as of June 11, 2002, among CEMEX,
S.A. de C.V., Tricem Acquisition, Corp. and the Puerto Rican Cement
Company, Inc. (f)
4.4 ABN AMRO Special Corporate Services B.V. Forward Contract, dated as of
December 13, 2002. (g)
4.5 Citibank, N.A. Forward Contract, dated as of December 13, 2002. (g)
4.6 Credit Suisse First Boston International Forward Contract, dated as of
December 13, 2002. (g)
4.7 Deutsche Bank AG, London Branch, Forward Contract, dated as of December
13, 2002. (g)
4.8 ING Bank, N.V. Forward Contract, dated as of December 13, 2002. (g)
4.9 JPMorgan Chase Bank Forward Contract, dated as of December 13, 2002.
(g)
4.10 Societe Generale Forward Contract, dated as of December 13, 2002. (g)
4.11 Note Purchase Agreement dated June 23, 2003, by and among CEMEX Espana
Finance, LLC, as issuer, CEMEX Espana, Sandworth Plaza Holding B.V.,
Cemex Caracas Investments B.V., Cemex Caracas II Investments B.V.,
Cemex Manila Investments B.V. and Cemex Egyptian Investments B.V., as
guarantors, and several institutional purchasers named therein, in
connection with the issuance by CEMEX Espana Finance, LLC of U.S.$103
million aggregate principal amount of Senior Notes due 2010, U.S.$96
million aggregate principal amount of Senior Notes due 2013, U.S.$201
million aggregate principal amount of Senior Notes due 2015. (h)
123
4.12 First Amended and Restated Reimbursement and Credit Agreement dated as
of August 8, 2003, by and among, CEMEX, S.A. de C.V., as Issuer, CEMEX
Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de C.V., as
Guarantors, Barclays Bank PLC, New York Branch, as Issuing Bank,
Documentation Agent and Administrative Agent, the several lenders party
thereto and Barclays Capital, The Investment Banking Division of
Barclays Bank PLC, as Joint Arranger and Banc of America Securities
LLC, as Joint Arranger and Syndication Agent., for an aggregate
principal amount of U.S.$400,000,000. (h)
4.13 $1,150,000,000 Term Loan Agreement, dated October 15, 2003, by and
among New Sunward Holding B.V. as borrower, CEMEX, S.A. de C.V., CEMEX
Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de C.V. as
guarantors, and the several lenders named therein. (h)
4.14 Early Termination Amendment to ABN AMRO Special Corporate Services B.V.
Forward Contract, dated as of October 15, 2003. (h)
4.15 Early Termination Amendment to Citibank, N.A. Forward Contract, dated
as of October 15, 2003. (h)
4.16 Early Termination Amendment to Credit Suisse First Boston International
Forward Contract, dated as of October 15, 2003. (h)
4.17 Early Termination Amendment to Deutsche Bank AG, London Branch, Forward
Contract, dated as of October 15, 2003. (h)
4.18 Early Termination Amendment to ING Bank, N.V. Forward Contract, dated
as of October 15, 2003. (h)
4.19 Early Termination Amendment to JPMorgan Chase Bank Forward Contract,
dated as of October 15, 2003.(h)
4.20 Early Termination Amendment to Societe Generale Forward Contract, dated
as of October 15, 2003. (h)
4.21 Term and Revolving Facilities Agreement, dated as of March 30, 2004, by
and among CEMEX Espana, as borrower, Sandworth Plaza Holding B.V.,
Cemex Caracas Investments B.V., Cemex Caracas II Investments B.V.,
Cemex Manila Investments B.V. and Cemex Egyptian Investments, B.V., as
guarantors, Banco Bilbao Vizcaya Argentaria, S.A. and Societe Generale,
as mandated lead arrangers, and the several banks and other financial
institutions named therein, as lenders, for an aggregate amount
of(euro)250,000,000 and (Y)19,308,000,000. (h)
8.1 List of subsidiaries of CEMEX, S.A. de C.V. (h)
12.1 Certification of the Principal Executive Officer of CEMEX, S.A. de C.V.
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.2 Certification of the Principal Financial Officer of CEMEX, S.A. de C.V.
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.3 Certification of the Principal Executive Officer of CEMEX Mexico, S.A.
de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.4 Certification of the Principal Financial Officer of CEMEX Mexico, S.A.
de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.5 Certification of the Principal Executive Officer of Empresas Tolteca de
Mexico, S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. (h)
12.6 Certification of the Principal Financial Officer of Empresas Tolteca de
Mexico, S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. (h)
13.1 Certification of the Principal Executive and Financial Officers of
CEMEX, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h)
13.2 Certification of Principal Executive and Financial Officers of CEMEX
Mexico, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h)
13.3 Certification of Principal Executive and Financial Officers of Empresas
Tolteca de Mexico, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h)
14.1 Consent of KPMG Cardenas Dosal, S.C. to the incorporation by reference
into the effective registration statements of CEMEX, S.A. de C.V. under
the Securities Act of 1933 of their report with respect to the
consolidated financial statements of CEMEX, S.A. de C.V., which appears
in this Annual Report on Form 20-F. (h)
_______________
(a) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form F-3 of CEMEX, S.A. de C.V. (Registration
No. 333-11382), filed with the Securities and Exchange Commission on
August 27, 2003.
(b) Incorporated by reference to the Registration Statement on Form F-4 of
CEMEX, S.A. de C.V. (Registration No. 333-10682), filed with the
Securities and Exchange Commission on August 10, 1999.
(c) Incorporated by reference to Amendment No. 2 to the Registration
Statement on Form F-4 of CEMEX, S.A. de C.V. (Registration No.
333-13956), filed with the Securities and Exchange Commission on November
19, 2001.
124
(d) Incorporated by reference to Amendment No. 1 to the annual report on Form
20-F/A of CEMEX, S.A. de C.V. filed with the Securities and Exchange
Commission on November 19, 2001.
(e) Incorporated by reference to the annual report on Form 20-F of CEMEX,
S.A. de C.V. filed with the Securities and Exchange Commission on April
8, 2002.
(f) Incorporated by reference to the Tender Offer Statement on Schedule TO of
Tricem Acquisition, Corp. and CEMEX, S.A. de C.V. filed with the
Securities and Exchange Commission on July 1, 2002.
(g) Incorporated by reference to the annual report on Form 20-F of CEMEX,
S.A. de C.V. filed with the Securities and Exchange Commission on April
8, 2003.
(h) Filed herewith.
125
SIGNATURES
CEMEX, S.A. de C.V. hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
CEMEX, S.A. de C.V.
By: /s/ Lorenzo H. Zambrano
------------------------------
Name: Lorenzo H. Zambrano
Title: Chief Executive Officer
Date: May 11, 2004
SIGNATURES
CEMEX Mexico, S.A. de C.V. hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
CEMEX Mexico, S.A. de C.V.
By: /s/ Lorenzo H. Zambrano
------------------------------
Name: Lorenzo H. Zambrano
Title: Chief Executive Officer
Date: May 11, 2004
SIGNATURES
Empresas Tolteca de Mexico, S.A. de C.V. hereby certifies that it meets
all of the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.
Empresas Tolteca de Mexico, S.A. de C.V.
By: /s/ Lorenzo H. Zambrano
---------------------------------
Name: Lorenzo H. Zambrano
Title: Chief Executive Officer
Date: May 11, 2004
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page
----
CEMEX, S.A. de C.V. and subsidiaries:
Independent Auditors' Report--KPMG Cardenas Dosal, S.C..................... F-2
Audited consolidated balance sheets as of December 31, 2002 and 2003....... F-3
Audited consolidated statements of income for the years ended December 31,
2001, 2002 and 2003...................................................... F-4
Audited statements of changes in stockholders' equity for the years ended
December 31, 2001, 2002 and 2003......................................... F-5
Audited consolidated statements of changes in financial position for
the years ended December 31, 2001, 2002 and 2003......................... F-6
Notes to the audited consolidated financial statements..................... F-7
SCHEDULES
Independent Auditors' Report on Schedules - KPMG Cardenas Dosal, S.C....... S-1
Schedule I - Parent company financials only................................ S-2
Schedule II - Valuation and qualifying accounts............................ S-11
F-1
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
CEMEX, S.A. de C.V.:
We have audited the consolidated balance sheets of CEMEX, S.A. de C.V. and
subsidiaries as of December 31, 2002 and 2003, and the related consolidated
statements of income, changes in stockholders' equity and changes in financial
position for each of the years ended December 31, 2001, 2002 and 2003. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America and Mexico. Those standards require
that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatements and that
are prepared in accordance to accounting principles generally accepted in
Mexico. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, based upon our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of CEMEX, S.A. de C.V. and subsidiaries at December 31, 2002 and
2003, and the consolidated results of their operations, the changes in their
stockholders' equity and the changes in their financial position for each of
the years ended December 31, 2001, 2002 and 2003, in accordance with
accounting principles generally accepted in Mexico.
Accounting principles generally accepted in Mexico vary in certain significant
respects from accounting principles generally accepted in the United States of
America. Application of accounting principles generally accepted in the United
States of America would have affected results of operations for each of the
years ended December 31, 2001, 2002 and 2003, and stockholders' equity as of
December 31, 2002 and 2003, to the extent summarized in note 23 to the
consolidated financial statements.
KPMG Cardenas Dosal, S.C.
/s/ Leandro Castillo Parada
- --------------------------------
Leandro Castillo Parada
Monterrey, N.L., Mexico
January 15, 2004, except for note 23,
which is as of March 31, 2004
F-2
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Balance Sheets
(Millions of constant Mexican pesos as of December 31, 2003)
December 31,
------------------------------
Assets 2002 2003
--------------- --------------
Current Assets
Cash and investments (note 3)................................................. Ps 4,142.0 3,275.1
Trade accounts receivable, less allowance for doubtful accounts (note 4)...... 4,597.4 5,277.6
Other receivables (note 5).................................................... 4,634.2 4,543.4
Inventories (note 6).......................................................... 8,105.5 6,683.1
Other current assets (note 7)................................................. 915.9 749.5
--------------- --------------
Total current assets...................................................... 22,395.0 20,528.7
--------------- --------------
Investments and Noncurrent Receivables (note 8)
Investments in affiliated companies........................................... 6,419.2 6,917.6
Other noncurrent accounts receivable.......................................... 1,715.6 2,069.9
--------------- --------------
Total investments and noncurrent receivables.............................. 8,134.8 8,987.5
--------------- --------------
Properties, Machinery and Equipment (note 9)
Land and buildings ........................................................... 50,479.7 52,071.8
Machinery and equipment ...................................................... 139,512.6 149,380.0
Accumulated depreciation ..................................................... (91,925.6) (99,625.6)
Construction in progress...................................................... 4,730.2 2,317.1
--------------- --------------
Net properties, machinery and equipment................................... 102,796.9 104,143.3
--------------- --------------
Intangible Assets and Deferred Charges (note 10)................................. 49,423.6 46,357.9
--------------- --------------
Total Assets.............................................................. Ps 182,750.3 180,017.4
--------------- --------------
Liabilities and Stockholders' Equity
Current Liabilities
Bank loans (note 11).......................................................... Ps 4,958.3 2,479.4
Notes payable (note 11)....................................................... 3,560.0 2,986.6
Current maturities of long-term debt (note 11) ............................... 7,461.6 9,471.8
Trade accounts payable........................................................ 4,681.1 5,489.4
Other accounts payable and accrued expenses (note 5).......................... 13,218.6 11,374.6
--------------- --------------
Total current liabilities ................................................ 33,879.6 31,801.8
--------------- --------------
Long-Term Debt (note 11)
Bank loans ................................................................... 28,387.2 27,935.3
Notes payable ................................................................ 29,238.0 32,530.5
Current maturities of long-term debt ......................................... (7,461.6) (9,471.8)
--------------- --------------
Total long-term debt ..................................................... 50,163.6 50,994.0
--------------- --------------
Other Noncurrent Liabilities
Pension and other postretirement benefits (note 13)........................... - 625.1
Deferred income taxes (note 17)............................................... 12,504.6 11,841.6
Other noncurrent liabilities (note 12)........................................ 6,481.2 8,703.4
--------------- --------------
Total other noncurrent liabilities ....................................... 18,985.8 21,170.1
--------------- --------------
Total Liabilities......................................................... 103,029.0 103,965.9
--------------- --------------
Stockholders' Equity (note 14)
Majority interest:
Common stock-historical cost basis.......................................... 55.5 59.1
Common stock-accumulated inflation adjustments ............................. 3,435.9 3,436.1
Additional paid-in capital.................................................. 32,093.1 36,219.3
Deficit in equity restatement .............................................. (66,082.6) (69,125.6)
Cumulative initial deferred income tax effects (note 2K).................... (5,741.9) (5,741.9)
Retained earnings .......................................................... 96,153.9 98,157.8
Net income.................................................................. 5,966.9 7,067.4
--------------- --------------
Total majority interest .................................................. 65,880.8 70,072.2
Minority interest (note 14E).................................................. 13,840.5 5,979.3
--------------- --------------
Total stockholders' equity ............................................... 79,721.3 76,051.5
--------------- --------------
Total Liabilities and Stockholders' Equity................................ Ps 182,750.3 180,017.4
--------------- --------------
See accompanying notes to consolidated financial statements.
F-3
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Statements of Income
(Millions of constant Mexican pesos as of December 31, 2003, except for earnings per share)
Years ended December 31,
------------------------------------------
2001 2002 2003
------------- -------------- -------------
Net sales............................................................... Ps 76,572.1 75,042.0 80,527.7
Cost of sales........................................................... (43,070.5) (41,924.5) (46,421.7)
------------- -------------- -------------
Gross profit......................................................... 33,501.6 33,117.5 34,106.0
------------- -------------- -------------
Operating expenses:
Administrative .................................................... (8,735.3) (9,433.7) (8,926.0)
Selling............................................................ (6,480.2) (8,654.9) (8,823.4)
------------- -------------- -------------
Total operating expenses......................................... (15,215.5) (18,088.6) (17,749.4)
------------- -------------- -------------
Operating income..................................................... 18,286.1 15,028.9 16,356.6
------------- -------------- -------------
Comprehensive financing result:
Financial expense.................................................. (4,554.0) (3,813.7) (4,278.5)
Financial income................................................... 450.5 511.6 187.6
Results from valuation and liquidation of financial instruments.... 2,208.9 (3,629.7) (669.6)
Foreign exchange result, net....................................... 1,701.1 (884.2) (1,928.7)
Monetary position result........................................... 3,120.8 4,038.6 3,683.0
------------- -------------- -------------
Net comprehensive financing result............................... 2,927.3 (3,777.4) (3,006.2)
------------- -------------- -------------
------------- -------------- -------------
Other expense, net (notes 9 and 10 ).................................... (4,611.6) (4,464.6) (5,133.8)
------------- -------------- -------------
Income before income taxes, employees' statutory profit sharing and
equity in income of affiliates..................................... 16,601.8 6,786.9 8,216.6
------------- -------------- -------------
Income tax and business assets tax, net (note 17)...................... (1,845.0) (628.9) (1,007.2)
Employees' statutory profit sharing (note 17)........................... (261.2) (118.1) (191.0)
------------- -------------- -------------
Total income tax, business assets tax and employees' statutory profit
sharing........................................................... (2,106.2) (747.0) (1,198.2)
------------- -------------- -------------
Income before equity in income of affiliates ........................... 14,495.6 6,039.9 7,018.4
Equity in income of affiliates ......................................... 226.7 352.1 390.8
------------- -------------- -------------
Consolidated net income.............................................. 14,722.3 6,392.0 7,409.2
Minority interest net income......................................... 1,695.7 425.1 341.8
------------- -------------- -------------
Majority interest net income......................................... Ps 13,026.6 5,966.9 7,067.4
------------- -------------- -------------
Basic earnings per share (see notes 2A and 20)...................... Ps 3.05 1.33 1.49
Diluted earnings per share (see notes 2A and 20)..................... Ps 3.03 1.33 1.46
------------- -------------- -------------
See accompanying notes to consolidated financial statements.
F-4
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
Statements of Changes in Stockholders' Equity
(Millions of constant Mexican pesos as of December 31, 2003)
Cumulative
initial
Additional Deficit in deferred Total Total
Common paid-in equity income tax Retained majority Minority stockholders'
Stock capital restatement effects earnings interest interest equity
- ----------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2000.........Ps 3,486.8 25,687.9 (54,007.7) (5,741.9) 90,892.2 60,317.3 27,541.7 87,859.0
Dividends (Ps0.72 pesos per share).... 2.6 3,012.7 - - (3,369.1) (353.8) - (353.8)
Issuance of common stock (note 15A) .. 0.1 115.3 - - - 115.4 - 115.4
Share repurchase program (note 14A) .. (0.2) - - - (245.4) (245.6) - (245.6)
Restatement of investments and
other transactions relating to
minority interest .................. - - - - - - (7,389.1) (7,389.1)
Investment by subsidiaries (note 8) .. - - 66.1 - - 66.1 - 66.1
Comprehensive net income (loss)
(note 14G) ......................... - - (4,612.5) - 13,026.6 8,414.1 1,695.7 10,109.8
-----------------------------------------------------------------------------------------
Balances at December 31, 2001......... 3,489.3 28,815.9 (58,554.1) (5,741.9) 100,304.3 68,313.5 21,848.3 90,161.8
Dividends (Ps0.77 pesos per share) ... 2.3 3,201.5 - - (3,750.1) (546.3) - (546.3)
Issuance of common stock (note 15A) .. 0.1 75.7 - - - 75.8 - 75.8
Share repurchase program (note 14A) .. (0.3) - - - (400.3) (400.6) - (400.6)
Restatement of investments and
other transactions relating to
minority interest .................. - - - - - - (8,432.9) (8,432.9)
Investment by subsidiaries (note 8) .. - - 255.8 - - 255.8 - 255.8
Comprehensive net income (loss)
(note 14G).......................... - - (7,784.3) 5,966.9 (1,817.4) 425.1 (1,392.3)
-----------------------------------------------------------------------------------------
Balances at December 31, 2002......... 3,491.4 32,093.1 (66,082.6) (5,741.9) 102,120.8 65,880.8 13,840.5 79,721.3
Dividends (Ps0.80 pesos per share) ... 3.4 3,696.6 - - (3,963.0) (263.0) - (263.0)
Issuance of common stock (note 15A) .. 0.1 42.9 - - - 43.0 - 43.0
Share repurchase program (note 14A)... 0.3 386.7 - - - 387.0 - 387.0
Restatement of investments and
other transactions relating to
minority interest .................. - - - - - - (8,203.0) (8,203.0)
Investment by subsidiaries (note 8) .. - - (2,719.3) - - (2,719.3) - (2,719.3)
Comprehensive net income (loss)
(note 14G) ......................... - - (323.7) - 7,067.4 6,743.7 341.8 7,085.5
-----------------------------------------------------------------------------------------
Balances at December 31, 2003.........Ps 3,495.2 36,219.3 (69,125.6) (5,741.9) 105,225.2 70,072.2 5,979.3 76,051.5
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-5
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
Consolidated Statements of Changes in Financial Position
(Millions of constant Mexican pesos as of December 31, 2003)
Years ended December 31,
----------------------------------------------
2001 2002 2003
-------------- --------------- ---------------
Operating activities
Majority interest net income .................................... Ps 13,026.6 5,966.9 7,067.4
Charges to operations which did not require resources:
Depreciation of properties, machinery and equipment............ 5,951.7 5,989.3 6,462.7
Amortization of deferred charges and credits, net.............. 2,816.1 2,787.1 2,808.4
Impairment of properties and intangible assets................. - 102.9 1,181.3
Pensions, and other postretirement benefits.................... 348.9 228.1 462.4
Deferred income tax charged to results......................... 235.7 (455.2) (438.3)
Equity in income of affiliates................................. (226.7) (352.1) (390.8)
Minority interest.............................................. 1,695.7 425.1 341.8
------------ --------------- ---------------
Resources provided by operating activities.................. 23,848.0 14,692.1 17,494.9
------------ --------------- ---------------
Changes in working capital, excluding acquisition effects:
Trade accounts receivable, net................................ 846.2 2,458.7 (632.3)
Other accounts receivable and other assets.................... (2,504.8) 1,191.5 254.3
Inventories................................................... 639.6 (363.4) 1,532.8
Trade accounts payable........................................ (1,215.6) 582.9 800.0
Other accounts payable and accrued expenses................... 4,491.3 518.4 (1,846.1)
------------ --------------- ---------------
Net change in working capital............................... 2,256.7 4,388.1 108.7
------------ --------------- ---------------
Net resources provided by operating activities.............. 26,104.7 19,080.2 17,603.6
------------ --------------- ---------------
Financing activities
Proceeds from bank loans (repayments), net....................... (9,502.8) 2,877.7 (3,058.0)
Notes payable, net, excluding foreign exchange effect............ 4,268.8 (341.9) 1,214.2
Investment by subsidiaries....................................... (253.2) (5.0) (22.5)
Dividends paid................................................... (3,369.1) (3,750.1) (3,963.0)
Issuance of common stock from reinvestment of dividends.......... 3,015.3 3,203.8 3,700.0
Issuance of common stock under stock option programs............. 115.4 75.8 43.0
Repurchase of preferred stock by subsidiaries.................... (7,276.1) (4,631.2) (7,343.3)
(Acquisition) disposal of common stock under repurchase program. (245.6) (400.6) 387.0
Other financing activities, net.................................. (2,391.4) 3,383.5 3,523.3
------------ --------------- ---------------
Resources (used in) provided by financing activities....... (15,638.7) 412.0 (5,519.3)
------------ --------------- ---------------
Investing activities
Properties, machinery and equipment, net......................... (5,649.0) (4,862.8) (4,427.0)
Acquisition of subsidiaries and affiliates....................... (2,224.3) (3,022.3) (916.3)
Disposal of assets............................................... 808.9 615.4 157.3
Minority interest................................................ (112.9) (3,270.4) (859.7)
Deferred charges................................................. (4,486.2) (2,130.7) (568.6)
Other investments and monetary foreign currency effect........... 2,396.5 (7,417.3) (6,336.9)
------------ --------------- ---------------
Resources used in investing activities...................... (9,267.0) (20,088.1) (12,951.2)
------------ --------------- ---------------
Increase (decrease) in cash and investments 1,199.0 (595.9) (866.9)
Cash and investments at beginning of year................... 3,538.9 4,737.9 4,142.0
------------ --------------- ---------------
Cash and investments at end of year......................... Ps 4,737.9 4,142.0 3,275.1
------------ --------------- ---------------
See accompanying notes to consolidated financial statements.
F-6
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
1. DESCRIPTION OF BUSINESS
CEMEX, S.A. de C.V. ("CEMEX" or the "Company") is a Mexican holding company
(parent) of entities whose main activities are oriented to the construction
industry, through the production and marketing of cement and ready-mix
concrete.
2. SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION AND DISCLOSURE
The accompanying financial statements have been prepared in accordance with
Generally Accepted Accounting Principles in Mexico ("Mexican GAAP"), which
recognize the effects of inflation on the financial information.
When reference is made to "pesos" or "Ps", it means Mexican pesos. When
reference is made to "dollars" or "U.S.$", it means currency of the United
States of America. Except when specific references are made to "U.S. dollar
millions" and "earnings per share", the amounts in these notes are stated in
millions of constant Mexican pesos as of the balance sheet date.
When reference is made to "CPO" or "CPOs" it means the Ordinary Participation
Certificates of CEMEX. Each CPO represents the participation in two series "A"
shares and one series "B" share of the common stock. References to "ADS" or
"ADSs" refer to American Depositary Shares, listed on the New York Stock
Exchange ("NYSE"). Each ADS represents 5 CPOs.
Certain amounts reported in the consolidated financial statements and the
notes thereto as of December 31, 2001 and 2002 have been reclassified to
conform the 2003 presentation. In addition, partially during 2001, in 2002,
and 2003, the expenses related to the Company's products distribution were
classified as selling expenses in the income statement. During 2001, a portion
of such expenses was recognized as part of cost of sales for an approximate
amount of Ps1,724.3. This reclassification has no effect in operating income,
net income and/or earnings per share for the year ended December 31, 2001, if
the mentioned expenses had been recognized consistently with the 2002 and 2003
classification.
B) PRESENTATION OF COMPARATIVE FINANCIAL STATEMENTS
The restatement factors applied to the financial statements of prior periods
were calculated based upon the weighted average inflation and the fluctuation
in the exchange rate of each country in which the Company operates relative to
the Mexican peso.
2001 to 2002 2002 to 2003
----------------- -----------------
Restatement factor using weighted average inflation.................... 1.0916 1.1049
Restatement factor using Mexican inflation............................. 1.0559 1.0387
----------------- -----------------
Common stock and additional paid-in capital are restated by Mexican inflation.
The weighted average inflation factor is used for all other restatement
adjustments to stockholders' equity.
C) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include those of CEMEX and the
subsidiary companies in which the Company holds more than 50% of their common
stock and/or has control. All significant balances and transactions between
related parties have been eliminated in consolidation.
F-7
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
As of December 31, 2003, the main operating subsidiaries, ordered by holding
company, and the percentage of equity interest directly held by their
immediate holding company, are as follows:
Subsidiary Country % Equity Interest
- -------------------------------------------------------------------------------------------------
CEMEX Mexico, S. A. de C.V.........................1 Mexico 100.0
CEMEX Espana, S.A................................2 Spain 99.5
CEMEX Venezuela, S.A.C.A....................... Venezuela 75.7
CEMEX, Inc.....................................3 United States 100.0
CEMEX (Costa Rica), S.A........................4 Costa Rica 98.4
Assiut Cement Company.......................... Egypt 95.8
CEMEX Colombia, S.A. ..........................5 Colombia 98.2
Cemento Bayano, S.A. .......................... Panama 99.2
Cementos Nacionales, S.A....................... Dominican Republic 99.9
Puerto Rican Cement Company, Inc............... Puerto Rico 100.0
CEMEX Asia Holdings Ltd........................6 Singapore 92.3
Solid Cement Corporation.....................7 Philippines 94.6
APO Cement Corporation.......................7 Philippines 92.2
CEMEX (Thailand) Co. Ltd.....................8 Thailand 100.0
- -------------------------------------------------------------------------------------------------
1. CEMEX Mexico, S.A. de C.V. ("CEMEX Mexico") holds 100% of the shares of
Empresas Tolteca de Mexico, S.A. de C.V. ("ETM") and Centro Distribuidor
de Cemento, S.A. de C.V. ("Cedice"). Through Cedice, CEMEX Mexico
indirectly holds CEMEX Espana, S.A. and subsidiaries.
2. In June 2002, Compania Valenciana de Cementos Portland, S.A.
("Valenciana") changed its legal name to CEMEX Espana, S.A. ("CEMEX
Espana").
3. CEMEX, Inc. was created as a result the merger between Southdown, Inc.
and CEMEX USA, Inc. (see note 8A).
4. In July 2003, Cementos del Pacifico, S.A. changed its legal name to CEMEX
(Costa Rica), S.A.
5. In August 2002, Cementos Diamante, S.A. changed its legal name to CEMEX
Colombia, S.A. The 98.2% equity interest includes the Company's ownership
of 99.3% of the total ordinary shares.
6. Effective July 2002, as a result of a shares exchange transaction (see
note 8A), for accounting purposes, the Company's equity interest in CEMEX
Asia Holdings Ltd. ("CAH") increased to 92.25%.
7. Represents the Company's equity interest held through CAH. The direct
equity interest of CAH in Solid and APO Cement Corporation is 70% and
99.9%, respectively. On December 23, 2002, Rizal was merged with Solid,
its direct parent, where the surviving corporation was Solid.
8. In July 2002, Saraburi Cement Company Ltd. changed its legal name to
CEMEX (Thailand) Co. Ltd.
D) FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FOREIGN CURRENCY
FINANCIAL STATEMENTS
Transactions denominated in foreign currencies are recorded at the exchange
rates prevalent on the dates of their execution. Monetary assets and
liabilities denominated in foreign currencies are adjusted into pesos at the
exchange rates prevailing at the balance sheet date. The resulting foreign
exchange fluctuations are recognized in earnings, except for the exchange
fluctuations arising from foreign currency indebtedness directly related to
the acquisition of foreign entities and the fluctuations associated with
related parties balances denominated in foreign currency that are of a
long-term investment nature, which are recorded against stockholders' equity,
as part of the foreign currency translation adjustment of foreign
subsidiaries.
The financial statements of foreign subsidiaries are restated for inflation in
their functional currency based on the subsidiary country's inflation rate and
subsequently translated by using the foreign exchange rate at the end of the
reporting period for balance sheet and income statement accounts. The peso to
U.S. dollar exchange rate used by CEMEX is an average of the free market rates
available to settle its foreign currency transactions.
F-8
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
E) CASH AND INVESTMENTS (note 3)
Investments include fixed-income securities with original maturities of three
months or less, as well as marketable securities readily convertible into
cash.
Investments in fixed-income securities are recorded at cost plus accrued
interest. Investments in marketable securities are recorded at market value.
Gains or losses resulting from changes in market values, accrued interest and
the effects of inflation are included in the income statements as part of the
Comprehensive Financing Result.
F) INVENTORIES AND COST OF SALES (note 6)
Inventories are recognized at the lower of replacement cost or market value.
Replacement cost is based upon the latest purchase price or production cost.
Cost of sales reflects replacement cost of inventories at the time of sale,
expressed in constant pesos as of the balance sheet date.
G) INVESTMENTS AND NONCURRENT RECEIVABLES (note 8)
Investments in affiliated companies are accounted for by the equity method,
when the Company holds between 10% and 50% of the issuer's capital stock, and
does not have effective control. Under the equity method, after acquisition,
the investment's original cost is adjusted for the proportional interest of
the holding company in the affiliate's equity and earnings, considering the
effects of inflation.
H) PROPERTIES, MACHINERY AND EQUIPMENT (note 9)
Properties, machinery and equipment are presented at their restated value,
using the inflation index of the assets' origin country and the variation in
the foreign exchange rate between the country of origin currency and the
functional currency. These assets are depreciated using the straight-line
method over their estimated useful lives, which fluctuate from 50 years for
administrative buildings to between 10 to 35 years for industrial buildings,
machinery and equipment. Properties, machinery and equipment are subject to
periodic impairment valuations (see note 2U).
The Comprehensive Financing Results, arising from indebtedness incurred during
the construction or installation period of fixed assets, is capitalized as
part of the carrying value of such assets.
I) INTANGIBLE ASSETS, DEFERRED CHARGES AND AMORTIZATION (note 10)
Effective January 1, 2003, in accordance with new Bulletin C-8, Intangible
Assets, intangible assets acquired as well as costs incurred in the
development stages of intangible assets are capitalized when associated future
benefits are identified and the control on such benefits is demonstrated.
Expenditures not meeting these requirements are charged to earnings as
incurred. Intangible assets are presented at their restated value and are
classified as having a definite life, which are amortized over the benefited
periods, and as having an indefinite life, which are not amortized since it
cannot be accurately established the period in which the benefits associated
with such intangibles will terminate. Amortization of intangible assets,
except for goodwill, is calculated using the straight-line method.
Intangible assets acquired in a business combination are separately accounted
for at fair value as of the acquisition date, unless such value cannot be
reasonably estimated, in which case, such assets are included as part of
goodwill, an intangible asset of indefinite life, which is nevertheless
amortized in accordance with Bulletin B-8, Consolidated and Combined Financial
Statements and Valuation of Permanent Investments in Shares. The Company
amortizes goodwill under the present worth or sinking fund method, which is
intended to provide a better matching of goodwill amortization with the
revenues generated from the acquired companies. Goodwill generated before 1992
is amortized over a maximum of 40 years, while goodwill generated since 1992,
is amortized over a maximum period of 20 years. Preoperative expenses and
other deferred charges previously recognized under former Bulletin C-8 will
continue to be amortized in their original period. Intangible assets are
subject to periodic impairment evaluations (see note 2U). The adoption of new
Bulletin C-8 only implied grouping intangible assets in the categories
indicated above (see note 10).
Direct costs incurred in debt issuances are capitalized and amortized as part
of the effective interest rate of each transaction over its maturity. These
costs include discounts on debt issuance, bank fees, fees paid to attorneys,
agents, printers and consultants. Likewise, costs incurred in the development
stage of computer software for internal use are capitalized and amortized to
operating results over the estimated useful life of the software, which is
approximately 4 years.
F-9
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
J) PENSIONS AND OTHER POSTRETIREMENT BENEFITS (note 13)
The costs related to benefits to which employees are entitled by pension plans
and other postretirement benefits, including seniority premiums, legally or by
Company grant, are recognized in the operating results as services are
rendered, based on actuarial estimations of the benefits' present value. The
amortization of prior service cost (transition asset) and of changes in
assumptions and adjustments based on experience, is recognized over the
employee's estimated active service life. As part of the established pension
plans, in some cases, certain irrevocable trust funds have been created to
cover future benefit payments under these plans. The actuarial assumptions
upon which the Company's employee benefit liabilities are determined consider
the use of real rates (nominal rates discounted by inflation). Other
postretirement benefits, including severance benefits, are recognized as an
expense in the year in which they are paid. In some circumstances, however,
provisions have been made for these benefits.
K) INCOME TAX ("IT"), BUSINESS ASSETS TAX ("BAT"), EMPLOYEES' STATUTORY PROFIT
SHARING ("ESPS") AND DEFERRED INCOME TAXES (note 17)
The IT, BAT and ESPS on the income statement, include amounts incurred during
the period and the effects of deferred IT and ESPS. Consolidated deferred IT
represents the summarization of the effect determined in each subsidiary for
by the assets and liabilities method, by applying the enacted statutory income
tax rate to the total temporary differences resulting from comparing the book
and taxable values of assets and liabilities, considering when available, and
subject to a recoverability analysis, tax loss carryforwards as well as other
recoverable taxes and tax credits. The effect of deferred ESPS is recognized
for those temporary differences, which are of a non-recurring nature, arising
from the reconciliation of the net income of the period and the taxable income
of the period for ESPS. The effect of a change in the statutory tax rate is
recognized in the income statement for the period in which the change occurs
and is officially declared.
The cumulative initial effect, arising from the adoption of the asset and
liability method, was recognized on January 1, 2000 in stockholders' equity
under the caption "Cumulative initial deferred income tax effects".
Consolidated balances of assets and liabilities and their corresponding
taxable amounts substantially differ from those of the Parent Company. The
cumulative initial deferred income tax effects presented in the statement of
changes in stockholders equity correspond to the consolidated entity. The
difference between the Parent Company's accumulated initial deferred IT
effects and the consolidated equivalent effects is included under the caption
"Deficit in equity restatement".
L) MONETARY POSITION RESULT
The monetary position result, which represents the gain or loss from holding
monetary assets and liabilities in inflationary environments, is calculated by
applying the inflation rate of the country of each subsidiary to its net
monetary position (difference between monetary assets and liabilities).
M) DEFICIT IN EQUITY RESTATEMENT (note 14)
The deficit in equity restatement includes: (i) the accumulated effect from
holding non-monetary assets; (ii) the currency translation effects from
foreign subsidiaries' financial statements, net of exchange fluctuations
arising from foreign currency indebtedness directly related with the
acquisition of foreign subsidiaries and foreign currency related parties
balances that are of a long-term investment nature (see notes 2D and 14D); and
(iii) valuation and liquidation effects of certain derivative financial
instruments that qualify as hedge instruments, which are recorded temporarily
or permanently in stockholders' equity (see note 2N).
N) DERIVATIVE FINANCIAL INSTRUMENTS (notes 11 and 16)
In compliance with the controls and procedures established by the financial
risk managers, CEMEX uses derivative financial instruments, in order to reduce
risks associated with changes in interest rates and foreign exchange rates of
debt agreements, as a vehicle to reduce financing costs (see note 11) and as
an alternative source of financing (see note 16). The Company also uses
derivative financial instruments as hedges of: (i) forecasted transactions,
(ii) the net assets in foreign subsidiaries and (iii) the executive stock
option programs. These instruments have been negotiated with institutions with
significant financial capacity; therefore, the Company considers the risk of
non-compliance of the obligations agreed to by such counterparties to be
minimal. Some of these instruments have been designated as hedges of raw
materials costs as well as debt or equity instruments. In other cases,
although some derivatives complement the Company's financial strategy, such
derivatives have not been designated as hedge instruments because accounting
hedge requirements were not met.
F-10
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
Effective January 1, 2001, in accordance with Bulletin C-2, Financial
Instruments, the Company recognizes all derivative financial instruments as
assets or liabilities in the balance sheet at their estimated fair value and
recognizes the changes in such values in the income statement for the period
in which they occur.
The exceptions to the rule, as they refer to the Company are the following:
a) Beginning in 2002, changes in the estimated fair value of interest rate
swaps to exchange floating rate for fixed rate, designated as accounting
hedges of variations in interest rates of contracted debt, as well as
those instruments negotiated to hedge the interest rate at which certain
forecasted debt is expected to be contracted or renegotiated, are
recognized temporarily in stockholders' equity (see note 14G) and
reclassified to earnings, in the case of the forecasted debt, once the
related debt is recognized in the balance sheet and its related
financial expense is accrued. Until December 31, 2001, the effects of
similar derivative instruments were recognized in earnings based on cash
flows, as part of the interest expense of the related debt.
b) The changes in the estimated fair value of foreign currency forwards,
designated as hedges of the Company's net investments in foreign
subsidiaries, are recorded in stockholders' equity, as part of the
foreign currency translation result (see notes 2D and 14D). The
accumulated effect on stockholder's equity will be reversed through the
income statement upon disposition of the foreign investment.
c) The results derived from equity forward contracts on the Company's own
shares, as well as from other equity derivative instruments (such as the
appreciation warrants), are recognized in stockholders' equity upon
settlement. Beginning in 2001, changes in the estimated fair value of
those equity forward contracts that cover the executive stock option
programs are recorded through the income statement, as part of the costs
related to such programs. See notes 15 and 16.
For balance sheet presentation purposes, a portion of the assets or
liabilities resulting from the estimated fair value recognition of Cross
Currency Swaps ("CCS"), is reclassified as part of the carrying amount of the
underlying debt instruments, thereby reflecting the cash flows expected to be
received or paid upon liquidation of such instruments. CCS are negotiated to
change the profile of interest rate and currency of existing debt, required to
present the indebtedness as if it had been originally negotiated in the
exchanged interest rates and currencies. The non-reclassified portion,
resulting from the difference between the forward exchange rates and those in
effect as of the balance sheet date, is recognized as other assets or other
liabilities, both short and long term, depending on the maturity of the
contracts.
The periodic cash flows generated by interest rate swaps and CCS are
recognized as financial expense, and the effective interest rate of the
related debt is adjusted. For all other derivative instruments, cash flows are
recognized within the same item where the effects of the primary instrument
subject to the accounting or economic hedge relationship are classified. In
the case of derivatives not associated with an identified exposure, related
cash flows are recognized in earnings as part of the results from valuation
and liquidation of financial instruments. Premiums paid on derivative
instruments designated as hedges are deferred and amortized over the life of
the instrument or immediately upon settlement. In other cases, premiums are
recognized in earnings when paid or received.
The estimated fair value represents the amount at which a financial asset
could be bought or sold, or a financial liability could be extinguished,
between willing parties in an arm's length transaction. Occasionally, there is
a reference market that provides the estimated fair value; in the absence of a
market, such value is determined by the net present value of projected cash
flows or through mathematical valuation models. The estimated fair values of
derivative instruments, used for recognition and disclosure purposes in the
financial statements and their notes, are supported by the confirmations of
these values received from the financial counterparties.
O) REVENUE RECOGNITION
Revenue is recorded upon shipment of cement and ready-mix concrete to
customers and they assume the risk of loss. Income from activities other than
the Company's main line of business is recognized when the revenue has been
realized and there is no condition or uncertainty implying a reversal thereof.
F-11
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
P) CONTINGENCIES AND COMMITMENTS
Obligations or losses, related to contingencies, are recognized as liabilities
in the balance sheet when present obligations exist as a result of past
events, and it is probable that the effects will materialize and can be
reasonably quantified. Otherwise, a qualitative disclosure is included in the
notes to the financial statements. The effects of long-term commitments
established with third parties, such as supply contracts with suppliers or
clients, are recognized in the financial statements on the incurred or accrued
basis, depending on the substance of the agreements. Relevant commitments are
disclosed in the notes to the financial statements. The Company does not
recognize contingent revenues, income or assets.
Q) COMPREHENSIVE NET INCOME (LOSS) (note 14G)
The Company presents the comprehensive net income (loss) and its components as
a single item in the statement of changes in stockholders' equity.
Comprehensive net income (loss) represents the change in stockholders' equity
during a period for transactions and other events not representing
contributions, reductions or distributions of capital.
R) USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities at the
financial statements date, as well as the reported amounts of revenues and
expenses during the period. Actual results could differ from these estimates.
S) CONCENTRATION OF CREDIT RISK
The Company sells its products primarily to distributors in the construction
industry, with no specific geographic concentration within the countries in
which the Company operates. No single customer accounted for a significant
amount of the Company's sales in 2001, 2002 and 2003, and there were no
significant accounts receivable from a single customer for the same periods.
In addition, there is no significant concentration of a specific supplier
relating to the purchase of raw materials.
T) OTHER INCOME AND EXPENSE
Other income and expense, in the statements of income, consists primarily of
goodwill amortization, anti-dumping duties, results from the sales of fixed
assets, impairment charges of long-lived assets, results from the early
extinguishment of debt and, in 2001, the costs related to the restructuring of
the executive stock option programs (see note 15).
U) IMPAIRMENT OF LONG LIVED ASSETS (notes 9 and 10)
The Company periodically evaluates its machinery and equipment and the
balances of goodwill and other investments to establish if factors such as the
occurrence of significant adverse events, changes in the environment in which
the business operates and changes in expectations with respect to operating
results for each cash generating unit, business unit or affiliated entity,
indicate that the book value may not be recovered, in which case an impairment
loss is recorded in the income statement for the period when such
determination is made, resulting from the excess of carrying amount over the
net present value of estimated cash flows related to such assets.
V) ASSET RETIREMENT OBLIGATIONS (note 12)
Effective January 1, 2003, in accordance with new Bulletin C-9, Liabilities,
Accruals, Contingent Assets and Liabilities, and Commitments, the Company
recognizes unavoidable obligations, wheter legal or assumed, to restore the
site or the environment when assets are removed at the end of their useful
lives. These obligations represent the net present value of expected cash
flows to be incurred in the restoration process and are initially recognized
against the related assets' book value. The additional asset is depreciated to
operating results during its remaining useful life, while the increase of the
liability, by the passage of time, is charged to results of the period.
Adjustments to the obligation for changes in the estimated cash flows or the
estimated disbursement period, are made against fixed assets and depreciation
is modified prospectively.
F-12
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
As of the effective date, the Company had already created liabilities for the
known obligations. However, an analysis was performed with respect to each
subsidiary in order to identify additional possible existing obligations to
calculate them, if any, and to recognize appropriate liabilities in the
accounting record. Asset retirement obligations in the case of CEMEX, are
related primarily to the future costs of demolition, cleaning and
reforestation derived from commitments, both legal and assumed, that are
incurred at the end of an operation. Sites where raw materials are extracted,
maritime terminals and other production sites, must be left in certain
conditions. As of December 31, 2003, the identification phase was almost
completed and the valuation and registration process is expected to be
completed in the first half of 2004. For those obligations identified and
quantified, effective January 1, 2003, a remediation liability was recorded
for approximately Ps505.7, against fixed assets of Ps365.3, deferred IT assets
of Ps54.6 and an initial cumulative effect of Ps85.8. The initial cumulative
effect was recorded in stockholders' equity as an element of the comprehensive
net income. During 2003, the depreciation of the additional fixed assets and
the revaluation of liabilities from the passing of time generated an expense
in the results, net of deferred IT, of approximately Ps33.2.
W) EXECUTIVE STOCK OPTION PROGRAMS (note 15)
The Company recognizes the cost associated with executive stock options
programs by means of the intrinsic value method, for those programs in which,
as of the grant date, the exercise price at which the underlying shares will
be exercised is not known. This is because the exercise price is growing
(variable) over the life of the options. Through the intrinsic value method,
the changes in the appreciation of options represented by the difference
between the market price of the CPO and the exercise price of the option is
recognized as, cost in the Company's income statement, within the
comprehensive financing result. The Company does not recognize the cost for
those programs in which the exercise price is equal to the CPO price at the
grant date and such exercise price remains fixed for the life of the option.
3. CASH AND INVESTMENTS
Consolidated cash and investments as of December 31, 2002 and 2003 consists
of:
2002 2003
--------------- -------------
Cash and bank accounts.................................. Ps 1,944.7 1,663.3
Fixed-income securities................................. 2,196.3 1,287.1
Investments in marketable securities.................... 1.0 324.7
------------- ------------
Ps 4,142.0 3,275.1
------------- ------------
4. TRADE ACCOUNTS RECEIVABLE
The Company evaluates each of its customers' credit and risk profiles in order
to establish the required allowance for doubtful accounts. Trade accounts
receivable as of December 31, 2002 and 2003 include allowances for doubtful
accounts of Ps528.7 and Ps632.1, respectively.
The Company has established sales of trade accounts receivable programs with
financial institutions ("securitization programs"). These programs were
negotiated in Mexico during 2002, in the United States during 2001 and in
Spain in 2000. Through the securitization programs, the Company effectively
surrenders control, risks and the benefits associated to the accounts
receivable sold; therefore, the amount of receivables sold is recorded as a
sale of financial assets and the balances are removed from the balance sheet
at the moment of sale, except for the amounts that the counterparties have not
paid, which are reclassified to other accounts receivable (see note 5). The
balances of receivables sold pursuant the securitization programs as of
December 31, 2002 and 2003 were Ps5,575.2 (U.S.$496 million) and Ps6,124.9
(U.S.$544.9 million), respectively. The accounts receivable qualifying for
sale do not include amounts over certain days past due or concentrations over
certain limit to any one customer, according to the terms of the programs.
Expenses incurred under these programs, related to the discount granted to the
acquirers of the accounts receivable, are recognized in the income statements
and were approximately Ps91.8 (U.S. $8.2 million) in 2001, Ps119.9 (U.S.$10.7
million) in 2002 and Ps106.9 (U.S.$9.5 million) in 2003.
F-13
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
5. OTHER ACCOUNTS RECEIVABLE AND OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Other accounts receivable as of December 31, 2002 and 2003 consist of:
2002 2003
--------------- --------------
Non-trade receivables........................................................... Ps 1,240.1 1,589.4
Prepayments and receivables from valuation of derivative instruments (notes 11
and 16)....................................................................... 1,442.2 489.8
Interest and notes receivable................................................... 992.5 1,001.7
Advances for travel expenses and loans to employees............................. 418.8 306.9
Other refundable taxes.......................................................... 540.6 1,155.6
-------------- -------------
Ps 4,634.2 4,543.4
-------------- -------------
Non-trade receivables primarily consist of accounts receivable from the sale
of assets. Prepayments and valuation of derivative financial instruments at
December 31, 2002 included advanced payments toward the final price of forward
contracts for Ps1,093.0. The forward contracts were settled in October 2003
(see note 16A). Interest and notes receivable included Ps963.8 (U.S.$85.7
million) at December 31, 2002 and Ps962.8 (U.S.$85.7 million) at December 31,
2003, arising from securitization programs (see note 4). Other refundable
taxes included Ps302.6 at December 31, 2002 corresponding to a final
resolution related to a business assets tax lawsuit, the payment of which was
received in 2003 and Ps872.4 at December 31, 2003 for tax advances.
Other accounts payable and accrued expenses as of December 31, 2002 and 2003
consist of:
2002 2003
--------------- ---------------
Other accounts payable and accrued expenses..................................... Ps 3,294.4 2,492.5
Interest payable................................................................ 1,096.3 673.1
Tax payable..................................................................... 1,279.3 3,000.2
Dividends payable............................................................... 66.5 89.9
Provisions...................................................................... 2,617.2 2,951.3
Advances from customers......................................................... 778.3 861.4
Accounts payable from valuation of derivative instruments (notes 11 and 16)..... 4,086.6 1,306.2
-------------- -------------
Ps 13,218.6 11,374.6
-------------- -------------
Short-term provisions primarily consist of: (i) remunerations and other
personnel benefits accrued at the balance sheet date; (ii) accruals for
insurance payments and (iii) accruals related to the portion of legal
assessments to be settled in the short-term, such as the case of dumping fees
and environmental resolutions (see notes 21C and 21G). Commonly, these amounts
are revolving in nature and are to be settled and replaced by similar amounts
within the next 12 months.
6. INVENTORIES
Inventories as of December 31, 2002 and 2003 are summarized as follows:
2002 2003
--------------- --------------
Finished goods................................................................ Ps 1,604.3 1,381.7
Work-in-process............................................................... 1,721.4 1,808.7
Raw materials................................................................. 689.3 552.5
Supplies and spare parts...................................................... 3,480.9 2,384.8
Advances to suppliers......................................................... 377.7 240.1
Inventory in transit.......................................................... 231.9 315.3
-------------- -------------
Ps 8,105.5 6,683.1
-------------- -------------
F-14
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
7. OTHER CURRENT ASSETS
Other current assets as of December 31, 2002 and 2003 consist of:
2002 2003
-------------- --------------
Advanced payments............................................................. Ps 515.7 353.9
Non-cement related assets..................................................... 400.2 395.6
-------------- -------------
Ps 915.9 749.5
-------------- -------------
Non-cement related assets are stated at their estimated realizable value and
primarily consist of (i) non-cement related assets acquired in business
combinations, (ii) various assets held for sale received from customers as
payment of trade receivables, and (iii) real estate held for sale.
8. INVESTMENTS AND NONCURRENT RECEIVABLES
A) INVESTMENTS IN SUBSIDIARIES AND AFFILIATED COMPANIES
Investments in affiliated companies as of December 31, 2002 and 2003 are
summarized as follows:
2002 2003
--------------- ---------------
Book value at acquisition date................................................ Ps 3,595.5 3,905.5
Equity in income and other changes in stockholders' equity.................... 2,823.7 3,012.1
-------------- --------------
Ps 6,419.2 6,917.6
-------------- --------------
Investments held by subsidiaries in CEMEX shares, amounting to Ps7,201.3
(144,870,296 CPOs and 1,793,725 appreciation warrants) at December 2002 and
Ps9,238.1 (153,594,177 CPOs and 30,709,083 appreciation warrants) at December
2003, are offset against majority interest stockholders' equity in the
accompanying financial statements.
The Company's principal acquisitions and divestitures during 2002 and 2003 are
the following:
I. During 2003, for a combined price of approximately U.S.$99.7 million
(Ps1,120.6), CEMEX, Inc. acquired Mineral Resource Technologies, Inc.
("MRT"), and a cement plant and quarry with an annual production
capacity of 560 thousand tons located in Dixon, Illinois, United States.
The operating results of MRT and the Dixon plant are included in the
consolidated financial statements since the acquisition date. The
acquisition of MRT, a distributor of minerals used in manufacturing of
ready-mix concrete, occurred in August and that of the Dixon plant
occurred in September.
II. On July 30, 2002, through a public tender offer, a subsidiary of the
Company acquired 100% of the outstanding shares of Puerto Rican Cement
Company, Inc. ("PRCC"), a Puerto Rican cement producer, for
approximately U.S.$180.2 million (U.S.$35 dollars per share). As of
December 31, 2002, the consolidated financial statements include the
balance sheet of PRCC and the results of operations as of and for the
five-month period ended December 31, 2002.
III. On July 12, 2002, a subsidiary of CEMEX acquired 1,508,794 shares of
CEMEX Asia Holdings Ltd. ("CAH"). Of this total, 25,429 shares were
acquired for cash of approximately U.S.$2.3 million, while 1,483,365
shares were acquired through a forward exchange contract requiring
delivery of 28,195,213 CEMEX CPOs in four equal quarterly transactions
beginning in March 2003. In April 2003, CEMEX and its counterparties
modified the original settlement date regarding 1,398,602 CAH shares,
which will be acquired in four equal quarterly transactions beginning on
March 31, 2004. In 2003, through the original agreements, 84,763 CAH
shares were acquired in exchange for 1,683,822 CEMEX CPOs, with an
approximate value of U.S.$7.8 million (Ps87.7). For accounting purposes,
the 1,483,365 CAH shares are considered the Company's property and were
consolidated beginning on July 12, 2002, when the Company recognized an
account payable for U.S.$140 million, equivalent to the price of
28,195,213 CPOs on the date of the exchange agreements, which at the
closing of 2003, has decreased to approximately U.S.$132.0 million
(Ps1,483.7). The consolidation of the CAH shares was deemed appropriate
since a price to the physical exchange of shares was fixed, it is a firm
commitment and the CAH shareholders relinquished their risk of ownership
of the shares. Subject to the culmination of the exchange in 2004, the
Company's share in CAH increased from 77.4% to 92.3%.
CAH was created during 1999 by CEMEX and institutional investors in Asia
to jointly invest in the region. CAH is the holder of the 25.5% of the
common stock of PT Semen Gresik, Tbk. ("Gresik"), an Indonesian cement
company, as well as the operations of CEMEX in the Philippines and
Thailand.
F-15
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
IV. In July 2002, a Company subsidiary acquired the 30% remaining economic
interest of Solid from third parties for approximately U.S.$95 million.
Prior to this purchase, CEMEX already had a 70% economic interest in
Solid through CAH. As a result of this acquisition and the increase in
CAH's equity interest, the approximate indirect economic interest of
CEMEX in Solid increased from 54.2% to 94.6%.
V. During 2002, CEMEX, Inc. sold aggregate quarries and other equipment for
approximately U.S.$49 million. CEMEX, Inc. was formed in 2001, as a
result of the merger of Southdown, Inc., acquired in November 2000, for
approximately U.S.$2,628.3 million (Ps29,542.1) and CEMEX USA, Inc.
Certain condensed financial information of the companies acquired during 2002
and 2003, and that was consolidated in the Company's financial statements in
the year of acquisition is presented below:
2002 2003
----------------------------------- ------------------
PRCC Others Dixon and MRT
---------------- --------------- ------------------
Total assets............................................ Ps 4,179.4 239.1 1,225.2
Total liabilities....................................... 3,862.2 28.2 112.4
Stockholders' equity.................................... 317.2 210.9 1,112.8
---------------- --------------- ------------------
Sales................................................... Ps 708.5 2.4 186.0
Operating income (loss)................................. 27.8 (6.3) 11.5
Net income (loss)....................................... 27.7 (77.7) 11.4
---------------- --------------- ------------------
As of December 31, 2002 and 2003, the consolidated investments in affiliated
companies are as follows:
% Equity
Activity Country interest 2002 2003
---------- ----------- ----------- ----------- -----------
PT Semen Gresik, Tbk........................... Cement Indonesia 25.5 Ps 2,668.8 2,747.9
Control Administrativo Mexicano, S.A. de C.V... Cement Mexico 49.0 1,812.5 1,965.3
Trinidad Cement Limited........................ Cement Trinidad 20.0 340.2 321.0
Cementos Bio Bio, S.A.......................... Cement Chile 11.9 332.0 412.5
Cancem, S.A. de C.V............................ Cement Mexico 10.0 174.9 199.8
Lehigh White Cement Company.................... Cement U.S. 24.5 141.9 119.9
Societe des Ciments Antillais.................. Cement Antilles 26.1 119.9 160.8
Caribbean Cement Company Limited............... Cement Jamaica 5.0 78.3 102.6
Others......................................... - - - 750.7 887.8
----------- -----------
Ps 6,419.2 6,917.6
----------- -----------
During 2003, Gresik encountered problems created by the management of its
subsidiary PT Semen Padang ("Padang"), which obstructed the ownership rights
of Gresik, by not acknowledging Padang's new management team designated by
Gresik at May's 2003 stockholders' meeting, which assumed its duties in
September 2003 by court order, and by not providing financial information for
consolidation purposes. The consolidated financial statements of Gresik, at
December 31, 2002 included unaudited information of Padang. The external
auditors of Gresik, who were also auditors of Padang abstained from giving an
opinion since Padang represents around 16% of the combined net assets. In
December 2003, Gresik designated new auditors to review the 2002 consolidated
financial statements, a process estimated to be completed during the first
half of 2004. These problems persist and relate to the 1998 agreements between
the Indonesian government and CEMEX, which led CEMEX to invest in Indonesia,
and are the agreements through which the government would sell its majority
interest in Gresik and its subsidiaries to CEMEX. The sale has not yet
occurred primarily due to the opposition of Padang, who has the support of the
provincial administration of West Sumatra. Padang has argued that the sale by
the government of Padang to Gresik in 1995 is invalid because the necessary
approvals were not obtained. As a result of this, in December 2003, CEMEX
filed before the International Center for the Settlement of Investments
Disputes, a panel of the World Bank in Washington, D.C., a request for
arbitrage against the Indonesian Republic and its government.
The legal issues described above can take several years; in the meantime,
because the status of the investment is uncertain, the Company cannot
determine whether the investment in Gresik has become impaired. Based on the
information derived from the procedures described above, should the investment
become impaired, CEMEX will apply the rules indicated by the accounting
principles. As of December 31, 2003, CEMEX used the best information available
in order to valuate and update the investment in Gresik.
F-16
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
B) NONCURRENT ACCOUNTS RECEIVABLE
Consolidated amounts include assets for the valuation of derivative
instruments (see notes 11 and 16) of Ps802.5 in 2002 and Ps1,135.2 in 2003.
Furthermore, they include investments in private funds, recorded at fair value
for U.S.$8.6 million (Ps96.7) in 2002 and U.S.$16.1 million (Ps181.0) in 2003.
During 2003, approximately U.S.$7.3 million (Ps82.1) were contributed to these
funds.
During 2001, CEMEX sold for approximately U.S.$162.4 million, an investment
that was held in its long-term investments portfolio. The sale generated a
non-recurrent gain of approximately U.S.$131 million (Ps1,472.4) recognized in
2001 as part of the Comprehensive Financing Result. Of this gain,
approximately Ps877.4 corresponded to the reversal of unrealized valuation
gains previously recorded in stockholders equity.
9. PROPERTIES, MACHINERY AND EQUIPMENT
In December 2003, based on the periodic impairment analysis (see note 2U), a
loss of approximately Ps236.5 was recognized in earnings within other
expenses, related to the write-off of the book value of a group of assets in
Mexico. In 1999, as the assets were no longer in operation, they were adjusted
to their then estimated realizable value, and depreciation was suspended. The
approximate effect of having suspended the depreciation in 2001 and 2002 was
Ps42.2 and Ps40.8, respectively.
During 2003, an impairment loss of approximately Ps62.9 was recognized in
earnings within other expenses, arising from the book value's write-off of
cement terminals in the Asian region that are out of service.
10. INTANGIBLE ASSETS AND DEFERRED CHARGES
At December 31, 2002 and 2003, consolidated intangible assets of definite and
indefinite life as well as the deferred charges are summarized as follows:
2002 2003
--------------- --------------
Intangible of indefinite useful life:
Goodwill..................................................................... Ps 48,141.4 47,242.6
Accumulated amortization...................................................... (4,314.4) (5,050.9)
--------------- --------------
43,827.0 42,191.7
--------------- --------------
Intangible of definite useful life:
Cost of internally developed software......................................... 3,113.7 3,035.7
Additional minimum liability (note13)......................................... 662.9 1,108.2
Accumulated amortization...................................................... (891.7) (1,421.0)
--------------- --------------
2,884.9 2,722.9
--------------- --------------
Deferred Charges:
Prepaid pension costs (note 13)............................................... 426.4 387.8
Deferred financing costs...................................................... 1,148.9 583.3
Deferred income taxes (note 17B).............................................. 2,572.6 2,143.0
Others........................................................................ 4,728.0 3,235.5
Accumulated amortization ..................................................... (6,164.2) (4,906.3)
--------------- --------------
2,711.7 1,443.3
--------------- --------------
Ps 49,423.6 46,357.9
--------------- --------------
As a result of the periodic impairment evaluations (see note 2U), the Company
recognized in earnings within other expenses, impairment losses of goodwill
for approximately Ps102.9 in 2002 and Ps881.9 in 2003. Such losses consist of
those related to the Company's information technology business unit, which
were Ps102.9 in 2002 and Ps157.4 in 2003 and those related to the business
units in the Asian region in 2003 were Ps724.5.
The amortization expenses of intangible assets and deferred charges were
Ps2,816.1 in 2001, Ps2,787.1 in 2002 and Ps2,808.4 in 2003, of which, 75%, 65%
and 69% were recognized in other expenses, respectively. The difference in
each year was recognized within operating expenses.
F-17
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
11. SHORT-TERM AND LONG-TERM BANK LOANS AND NOTES PAYABLE
As of December 31, 2002 and 2003, short-term and long-term consolidated debt,
by type of financing and currency, as well as the interest rates, which
include the effects of the related derivative financial instruments, are
summarized as follows:
Weighted Relation Amount %
As of December 31, 2002 Original effective Carrying with subject to subject to
rate rate amount derivatives(1) derivatives derivatives
----------- ----------- ----------- ------------- ----------- -------------
Short-term bank loans
Lines of credit in Mexico...................... Variable 6.6% 3,407.7 IRS, CCS 3,407.7 100.0%
Lines of credit in foreign countries........... Variable 2.6% 1,550.6 - - -
----------- ----------- -------------
4,958.3 3,407.7 68.7%
Short-term notes payable
Mexican commercial paper programs.............. Variable 3.2% 1,938.2 CCS 1,657.3 85.5%
Foreign commercial paper programs.............. Variable 3.2% 1,495.5 - - -
Other notes payable............................ Variable 3.7% 126.3 - - -
----------- ----------- -------------
3,560.0 1,657.3 46.6%
-----------
8,518.3
Current maturities............................. 7,461.6
-----------
15,979.9
-----------
Long-term bank loans
Syndicated, 2003 to 2007....................... Variable 2.3% 10,173.5 - - -
Syndicated, 2003 to 2005....................... Fixed 4.1% 9,175.1 IRS 9,175.1 100.0%
Bank loans, 2003 to 2007....................... Variable 2.6% 8,749.7 - - -
Bank loans, 2003 to 2009....................... Fixed 6.5% 288.9 - - -
----------- ----------- -------------
9,175.1 32.3%
28,387.2
Long-term notes payable
Euro medium-term notes, 2003 to 2009........... Fixed 6.2% 8,326.3 CCS 4,966.2 59.6%
Medium-term notes, 2003 to 2009................ Variable 2.2% 8,203.8 CCS 6,961.6 84.9%
Medium-term notes, 2003 to 2008................ Fixed 4.0% 11,589.8 CCS 2,636.3 22.8%
Other notes, 2003 to 2006...................... Variable 2.5% 58.3 - - -
Other notes, 2003 to 2009...................... Fixed 4.2% 1,059.8 - - -
----------- ----------- -------------
14,564.1 49.8%
29,238.0
-----------
57,625.2
Current maturities............................. (7,461.6)
-----------
50,163.6
-----------
Debt by currency 2 Total debt Short-term Effective rate Long-term Effective rate
----------- ----------- ------------- ----------- -------------
Dollars...........................................45,465.5 7,277.5 3.1% 38,188.0 5.0%
Japanese yen......................................14,209.1 6,938.7 3.2% 7,270.4 2.5%
Euros..............................................3,293.6 655.8 3.7% 2,637.8 4.0%
Mexican pesos......................................2,403.0 745.8 8.8% 1,657.2 9.3%
Egyptian pounds.................................... 759.5 353.0 11.0% 406.5 11.0%
Other currencies................................... 12.8 9.1 8.7% 3.7 8.7%
----------- ----------- -----------
66,143.5 15,979.9 50,163.6
----------- ----------- -----------
1 IRS or Interest Rate Swaps are instruments used to exchange interest rates
(see note 11A). CCS or Cross Currency Swaps are instruments to exchange both
interest rates and currencies (see note 11B).
2 Includes the effects for currency exchanges related to the CCS.
F-18
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
Weighted Relation Amount %
As of December 31, 2003 Original effective Carrying with subject to subject to
rate rate amount derivatives(1) derivatives derivatives
----------- ----------- ----------- ------------- ----------- -------------
Short-term bank loans
Lines of credit in Mexico...................... Variable 2.1% 737.4 - - -
Lines of credit in foreign countries........... Variable 1.0% 1,742.0 - - -
----------- ----------- ------------
2,479.4 - -
Short-term notes payable
Mexican commercial paper program .............. Variable 6.3% 1,889.9 CCS 1,889.9 100.0%
Foreign commercial paper program............... Variable 2.6% 1,067.7 - - -
Other notes payable............................ Variable 7.4% 29.0 - - -
----------- ----------- ------------
2,986.6 1,889.9 63.3%
-----------
5,466.0
Current maturities............................. 9,471.8
-----------
14,937.8
-----------
Long-term bank loans
Syndicated loans, 2004 to 2007................. Variable 2.2% 11,854.4 CCS 1,278.5 10.8%
Syndicated loans, 2004 to 2006................. Fixed 7.4% 6,182.0 IRS 6,182.0 100.0%
Bank loans, 2004 to 2007....................... Variable 1.8% 7,362.5 - - -
Bank loans, 2004 to 2006....................... Fixed 7.4% 2,536.4 IRS 2,387.9 94.2%
----------- ----------- ------------
27,935.3 9,848.4 35.3%
Long-term notes payable
Euro medium-term notes, 2004 to 2009........... Fixed 8.0% 3,644.3 CCS 751.0 20.6%
Medium-term notes, 2004 to 2007................ Variable 3.0% 7,338.7 CCS 6,478.7 88.3%
Medium-term notes, 2004 to 2015................ Fixed 5.8% 18,482.7 CCS 5,862.1 31.7%
Other notes, 2004 to 2010...................... Variable 2.1% 2,639.5 - - -
Other notes, 2004 to 2009...................... Fixed 6.6% 425.3 IRS 422.1 99.3%
----------- ----------- ------------
32,530.5 13,513.9 41.5%
-----------
60,465.8
Current maturities............................. (9,471.8)
-----------
50,994.0
-----------
Effective
Debt by currency 2 Total debt Short-term Effective rate Long-term rate
----------- ----------- ---------------- ----------- ------------
Dollars...........................................44,817.2 4,977.2 4.4% 39,840.0 5.5%
Japanese yen.......................................9,011.6 4,518.0 0.6% 4,493.6 1.2%
Euros.............................................11,712.8 5,263.2 2.8% 6,449.6 3.4%
Mexican pesos...................................... 236.7 96.4 7.3% 140.3 7.3%
Egyptian pounds.................................... 108.0 72.3 11.3% 35.7 10.9%
Other currencies................................... 45.5 10.7 11.5% 34.8 12.6%
----------- ----------- -----------
65,931.8 14,937.8 50,994.0
----------- ----------- -----------
1 IRS or Interest Rate Swaps are instruments used to exchange interest rates
(see note 11A). CCS or Cross Currency Swaps are instruments to exchange both
interest rates and currencies (see note 11B).
2 Includes the effects for currency exchanges related to the CCS.
F-19
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
The most representative exchange rates with respect to the financial debt are
as follows:
2002 2003
----------------- ----------------
Mexican pesos per dollar.................................................. 10.38 11.24
Japanese yen per dollar................................................... 118.80 107.39
Euros per dollar.......................................................... 0.9519 0.7948
----------------- ----------------
The maturities of long-term debt as of December 31, 2003 are as follows:
2003
-----------------
2005............................................................................................ Ps 11,447.3
2006............................................................................................ 20,977.0
2007............................................................................................ 2,577.9
2008............................................................................................ 8,122.3
2009 and thereafter............................................................................. 7,869.5
-----------------
Ps 50,994.0
-----------------
In the consolidated balance sheet at December 31, 2002 and 2003, there were
short-term debt transactions amounting to U.S.$450 million (Ps5,058) and
U.S.$395 million (Ps4,439.8), that were classified as long-term debt due to
the Company's ability and intention to refinance such indebtedness with
available amounts from the committed long-term lines of credit.
At December 31, 2003, the Company and its subsidiaries have the following
lines of credit, both committed and subject to the banks' availability, at
annual interest rates ranging from 0.6% to 13.5%, depending on the negotiated
currency:
Line of credit Available
---------------- -----------------
European commercial paper (U.S.$600 million)............................... Ps 6,744.0 6,125.8
US commercial paper (U.S.$400 million)..................................... 4,496.0 3,315.8
Mexican commercial paper (Ps4,000 million)................................. 4,000.0 2,150.0
Other lines of credit in foreign subsidiaries.............................. 19,885.1 8,549.3
Other lines of credit from banks .......................................... 8,552.2 5,517.0
---------------- -----------------
Ps 43,677.3 25,657.9
---------------- -----------------
On October 15, 2003, a Dutch subsidiary, holding of CEMEX Spain, negotiated a
multi-currency credit facility for an equivalent at that date of U.S.$1,150
million. Funds were obtained as follows: Euro 256.4 million maturing in two
years and U.S.$550 million and yen 32,688 million maturing in three years.
Such amounts were used primarily to repay a revolving credit facility of
U.S.$400 million, and for the early redemption in 2003 of the preferred
stock's remaining balance of U.S.$650 million related to the purchase of
Southdown and which matured on various dates in 2004 (see note 14E).
In April 2002, the Company completed a tender offer for the early redemption
of U.S.$300 million of its 12.7% notes, due 2006, pursuant to which U.S.$208.4
million was redeemed. Expenses related to the offer and the premiums paid to
the holders of the notes as a result of the early redemption, which amounted
to approximately U.S.$54 million (Ps619.3) were recognized in earnings during
2002 within other expenses. As of December 31, 2002 and 2003, the outstanding
balance of these notes is U.S. $91.6 million (Ps1029.6).
As of December 31, 2002 and 2003, in order to: (i) hedge contractual cash
flows of certain financial debt with floating rates or exchange floating for
fixed interest rates of a portion of debt (see note 11A), and (ii) reduce the
financial cost of debt originally contracted in dollars or pesos (see note
11B), the Company has negotiated derivative financial instruments related to
short-term and long-term debt, which are described below:
F-20
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
A) Interest Rate Swaps Contracts
As of December 31, 2002 and 2003, the terms of the interest rate swaps ("IRS")
related to short-term and long-term financial debt is summarized as follows:
(U.S. dollars millions) Notional Debt Maturity CEMEX CEMEX Effective Estimated
Related debt amount currency date receives* pays rate fair value
- ----------------------------- -------------- ------------- ----------- ----------- ----------- ---------- ---------------
IRS in 2002
Short-term debt
Bank loans.................... U.S.$ 306 Dollar Jul 2007 LIBOR+60 5.5% 3.1% U.S.$ (24.4)
Long-term debt
Bank loans................... 300 Dollar Jul 2007 LIBOR 4.1% 5.3% (20.1)
Syndicated loans............. 500 Dollar Aug 2007 LIBOR 4.2% 5.5% (28.0)
-------------- --------------
800 (48.1)
-------------- --------------
U.S.$1,106 U.S.$ (72.5)
------------- ----------------
IRS in 2003
Long-term debt
Syndicated loans.............. U.S.$ 550 Dollar Mar 2008 LIBOR 6.5% 7.4% (70.3)
Bank loans.................... 250 Dollar Mar 2008 LIBOR 5.4% 7.3% (33.4)
------------- ----------------
800 (103.7)
Not assigned 1
Long term debt................ 1,050 Dollar Feb 2009 LIBOR 3.5% 2.3% (124.4)
-------------- ---------------
U.S.$1,850 U.S.$(228.1)
-------------- ---------------
* LIBOR ("L") represents the London Interbank Offering Rate, used in the market for debt denominated in U.S. dollars.
1 These instruments have optionality.
As of December 31, 2002 and 2003, the interest rate swaps presented above were
designated as accounting hedges of contractual cash flows (interest payments)
of the related floating rate debt. Therefore, changes in the estimated fair
value of these instruments were recognized in stockholders' equity (see note
2N), except for interest rate swaps for a notional amount of U.S.$1,050
million in 2003, which are part of the financial strategy of CEMEX, however,
do not meet the accounting hedge criteria, consequently, changes in the
estimated fair value were recognized in earnings within the comprehensive
financing result.
As of December 31, 2003, the notional amount of interest rate swaps increased
by U.S.$744 million as compared to 2002. This increase was primarily due to
interest rate swaps for a notional amount of U.S.$1,850 million, negotiated in
2003 upon the maturity or early settlement of interest rate options
("swaptions"), forward rate agreements ("FRAs") and floor and cap options.
This increase was partially offset by the settlement during the year of
interest rate swaps held at the close of 2002 for a notional amount of
U.S.$1,106 million. Such contracts were no longer useful since new contracts
were negotiated in 2003 and there were changes in the interest rates mix of
the financial debt portfolio resulting from new fixed rate borrowings and the
repayment of floating rate debt. As of December 31, 2003, of the approximate
loss in the estimated fair value of the interest rate swaps of U.S.$228.1
million (Ps2,563.8), losses of approximately U.S.$126 million (Ps1,416.2),
correspond to the estimated fair value of that swaptions, FRAs and the floor
and cap options had upon expiration or settlement. These losses were
recognized in earnings between origination and their termination. As of
December 31, 2002, changes in the estimated fair value resulted in losses of
approximately U.S.$72.5 million and were recognized in stockholders' equity.
During 2002 and 2003, due to changes in the interest rates mix of the
financial debt portfolio, interest rate swaps were settled in agreement with
the financial counterparties for notional amounts of U.S.$2,583 million and
U.S.$1,106 million, respectively. These settlements resulted in gains of
U.S.$14.2 million (Ps162.9) in 2002 and losses of U.S.$41.9 million (Ps471) in
2003, corresponding to the contracts estimated fair value on the settlement
date, which were recognized in earnings of each period.
F-21
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
As of December 31, 2002 and 2003, the description of other interest rate
derivatives, is as follows:
U.S. dollars millions 2002 2003
------------------------------- -------------------------------
Other interest rate derivatives Notional Estimated Notional Estimated
Amount fair value Amount fair value
------------- -------------- ------------- --------------
Interest rate options (swaptions)................... 1,000 (140.9) 200 (24.9)
Forward rate agreements (FRAs) ..................... 650 (61.2) - -
Other rates derivatives............................. 711 (96.5) - -
------------- ------------- ------------- ------------
2,361 (298.6) 200 (24.9)
------------- ------------- ------------- ------------
As of December 31, 2002 and 2003, there were call options to exchange floating
for fixed interest rates (swaptions). These options have maturities in October
2004 and grant the counterparties the option to elect, at maturity of the
options, to negotiate interest rate swaps and receive from CEMEX fixed rates
and pay variable rates for a five-year period. Alternatively, the
counterparties may elect to request net cash settlements. During 2003, through
the physical settlement of swaptions for a notional amount of U.S.$800
million, new interest rate swaps were negotiated. Furthermore, during 2003,
the Company sold and later settled options for a notional amount of U.S.$400
million, resulting in a net gain of approximately U.S.$1.1 million (Ps12.4).
In 2001, 2002 and 2003, for the sale of swaptions, CEMEX received premiums for
approximately U.S.$12.2 million (Ps139.9), U.S.$57.6 million (Ps660.6) and
U.S.$25.0 million (Ps281.0), respectively. Premiums received as well as
changes in the estimated fair value of the options, which represented losses
of approximately U.S.$30.1 million (Ps345.2) and U.S.$110.9 million
(Ps1,271.9) in 2001 and 2002, respectively, and gains of approximately
U.S.$1.6 million (Ps18.0) in 2003, were recognized in earnings of each period.
In addition, in 2001, 2002 and 2003, losses of approximately U.S.$3.4 million
(Ps39), U.S.$92.3 million (Ps1,058.6) and U.S.$23.9 million (Ps268.6),
respectively, were recognized in earnings as a result of the settlement or
termination of the swaption contracts.
As of December 31, 2002, the Company held forward rate agreements ("FRAs") for
a notional amount of U.S.$650 million, negotiated in 2001 to fix the interest
rate of future debt issuances, not negotiated due to market conditions. These
instruments were designated at the end of 2002 as accounting hedges of the
interest rates of debt issuances negotiated in 2003. These contracts expired
in 2003 and new interest rate swaps were negotiated. At maturity, an
approximate loss of U.S.$37.6 million (Ps422.6) was recognized in
stockholders' equity and is being amortized to the financial expenses as part
of the effective interest rate of the related debt. The changes in the
estimated fair value of these contracts represented losses of approximately
U.S.$27.5 million (Ps304.2) in 2001 and U.S.$33.7 million (Ps386.5) in 2002,
and were recognized in earnings, except for a loss of U.S.$42.4 million
(Ps476.6) in 2002, which was recognized in stockholders' equity, corresponding
to the change in valuation after these contracts were designated as accounting
hedges.
As of December 31, 2002, the Company held floor and cap options for a notional
amount of U.S.$711 million, with maturity in March 2008. These options were
settled in May 2003, through the negotiation of interest rate swaps. These
options were structured as part of an interest rate swap for the same notional
amount that was settled in 2002. The changes in the estimated fair value of
the floor and cap options until settlement, represented losses of
approximately U.S.$41.3 million (Ps456.8) in 2001, U.S.$55.2 million (Ps632.9)
in 2002 and U.S.$0.1 million (Ps1.5) in 2003. These losses were recognized in
earnings of each period.
B) Cross Currency Swap Contracts and Other Currency Instruments
As of December 31, 2002 and 2003, there were Cross Currency Swaps ("CCS"),
through which the Company exchanges the originally contracted interest rates
and currencies on notional amounts of related short-term and long-term debt.
During the life of the contracts, the cash flows related to the exchange of
interest rates under the CCS, match, in interest payment dates and conditions,
those of the underlying debt.
If there is no early settlement, at maturity of the contracts and the
underlying debt, the Company and the counterparty will exchange notional
amounts, so the Company will receive the cash flow in the currency of the
underlying debt necessary to cover its primary obligation, and will pay the
notional amount in the exchanged currency of the CCS. As a result, the
original financial risk profile related to interest rates and foreign exchange
variations of the underlying debt has been effectively exchanged.
F-22
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
As of December 31, 2002 and 2003, the terms of the CCS is summarized as
follows:
Currencies Interest Rates
-----------------------------------------------------
(Amounts in millions) Maturity Notional Original Amount in CEMEX CEMEX Effective Estimated
Related Debt date amount amount new currency receives* pays* rate fair value
- -------------------------- --------------- ------------- --------- ----------- ------------- --------- -------- ------------
CCS in 2002
Mexican peso to dollar
Short term notes........... Jan 03-Jun 03 U.S.$ 144.7 Ps1,500 U.S.$ 145 TIIE+5 bps L+29 bps 2.25% U.S.$ (9.6)
Dollar to Yen
Short term notes........... Jun 03-Jun 05 179.5 U.S.$180 Yen 20,459 L+183 bps 3.16% 3.16% 6.1
------------- ------------
324.2 (3.5)
Mexican peso to dollar
Medium term notes.......... Nov 04-Dec 08 230.3 Ps2,465 U.S.$230 TIIE+54 bps L+101 bps 2.86% 16.0
Mexican peso to dollar
Medium term notes.......... Apr 05-Apr 07 377.1 Ps4,225 U.S.$377 10.93% L+26 bps 1.34% 51.8
Mexican peso to Yen
Medium term notes.......... Jun 05-Jan 06 311.8 Ps3,058 Yen 27,308 11.76% 2.55% 3.78% 83.4
Dollar to Yen
Euro-medium term notes..... Jul 2003 500.0 U.S.$500 Yen 51,442 8.75% 3.14% 3.14% 93.7
------------- ------------
1,419.2 244.9
------------- ------------
U.S.$1,743.4 U.S.$241.4
------------- ------------
CCS in 2003
Mexican peso to dollar
Short term notes........... Jan 2004 U.S.$ 168.1 Ps 1,900 U.S.$ 168 N/A N/A 6.3% U.S.$ 0.8
------------- ------------
Mexican peso to dollar
Medium term notes.......... Nov 04-Dec 07 468.9 Ps6,104 U.S.$ 469 TIIE+62 bps L+121bps 2.7% 74.4
Mexican peso to dollar
Medium term notes.......... Apr 05-Apr 07 233.3 Ps3,369 U.S.$ 233 12.4% L+99 bps 1.9% 103.0
Mexican peso to dollar
Medium term notes Mar 06-Dec 08 377.8 Ps3,888 U.S.$ 378 8.6% 4.6% 3.8% 0.2
Mexican peso to dollar
Medium term notes.......... Oct 2007 79.9 Ps800 U.S.$ 80 Cetes+145 bps 4.3% 4.3% (8.9)
Dollar to Yen
Medium term notes.......... Jun 05-Jun 06 66.8 U.S.$ 67 Yen 1,904 L+27 bps 1.9% 9.3% 93.2
Mexican peso to Yen
Euro-medium term notes..... Jun 05-Jan 06 51.8 Ps1,574 Yen 6,008 8.8% 2.6% 1.3% (0.7)
------------- ------------
1,278.5 261.2
------------- ------------
U.S.$1,446.6 U.S.$262.0
------------- ------------
* LIBOR ("L") represents the London Interbank Offering Rate, used in the
market for debt denominated in U.S. dollars. TIIE represents the Interbank
Offering Rate in Mexico and CETES are public debt instruments issued by
the Mexican government. At December 31, 2003, the LIBOR rate was 1.12%,
the TIIE rate was 6.29% and the CETES yield was 6.04%.
F-23
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
The periodic cash flows underlying the CCS arising from the exchange of
interest rates are determined over the notional amounts in the exchanged
currency. The CCS have not been designated as accounting hedges; therefore,
changes in their estimated fair values are recognized through the income
statement. As mentioned in note 2N, a portion of the assets and liabilities
resulting from the estimated fair value recognition of the CCS have been
offset for presentation purposes, in order to reflect the cash flows that the
Company expects to receive or pay upon settlement of these financial
instruments. Through this presentation, the book value of the financial
indebtedness directly related to the CCS is presented as if it had been
effectively negotiated in the exchanged currencies instead of in the
originally negotiated currencies. Assuming an early liquidation of the CCS,
the related financial liabilities and their corresponding interest expense,
would be established in the rates and currencies originally contracted
beginning as of the settlement date.
As of December 31, 2002 and 2003, related to the estimated fair value of the
CCS, the Company recognized net assets of U.S.$241.4 million (Ps2,713.3) and
U.S.$262.0 million (Ps2,944.9), respectively. Of these amounts, U.S.$194.2
million (Ps2,182.8) in 2002 and U.S.$364.5 million (Ps4,097.0) in 2003 relates
to a prepayment made to yen and dollar denominated obligations under the CCS.
This is presented by decreasing the carrying amount of the related debt, while
a gain of U.S.$47.2 million (Ps530.5) in 2002 and a loss of U.S.$102.5 million
(Ps1,152.1) in 2003, represents the net assets and the net liabilities ,
respectively, arising from the CCS' estimated fair value without prepayment
effects.
In accordance with the presentation guidelines applied by the Company to the
assets or liabilities related to the CCS (see note 2N) of net liabilities and
net assets without prepayments in 2002 and 2003 described above, losses
directly related to variations in exchange rates between the origination of
the CCS and the balance sheet date of approximately U.S.$20.0 million
(Ps224.8) in 2002 and U.S.$171.9 million (Ps1,932.2) in 2003, are presented as
part of the related debt carrying amount. Likewise, gains of approximately
U.S.$25.9 million (Ps291.1) in 2002 and U.S.$12.2 million (Ps137.1) in 2003,
corresponding to the periodic cash flows exchange for interest rates, were
presented as an adjustment of the related financing interest payable. The
remaining net assets of U.S.$41.3 (Ps464.2) in 2002 and U.S.$57.2 million
(Ps642.9) in 2003, were presented in the consolidated balance sheet within
short-term and long-term other assets or other liabilities, as applicable.
For the years ended December 31, 2001, 2002 and 2003, the changes in the
estimated fair value of the CCS, excluding the effects of prepayments in 2002
and 2003, resulted in a gain of approximately U.S.$191.6 million (Ps2,119.1)
in 2001 and losses of approximately U.S.$192.2 million (Ps2,204.3) and
U.S.$149.7 million (Ps1,682.6) in 2002 and 2003, respectively. These results
were recognized in earnings of the respective period.
Additionally, as of December 31, 2002, the Company held other currency
instruments with a notional amount of U.S.$104.5 million, related to financial
debt expected to be negotiated in the near future. These contracts matured in
2003 and a loss of approximately U.S.$3.6 million (Ps40.5) was recognized in
earnings. In 2002, these contracts had an estimated fair value loss of
approximately U.S.$6.8 million (Ps78.0), which was recognized in the income
statement.
The estimated fair value of derivative instruments used for the exchange of
interest rates and/or currencies fluctuate over time and will be determined by
future interest rates and currency prices. These values should be viewed in
relation to the fair values of the underlying transactions and as part of the
overall Company's exposure to fluctuations in interest rates and foreign
exchange rates. The notional amounts of derivative instruments do not
necessarily represent amounts exchanged by the parties, and consequently,
there is no direct measure of the Company's exposure to the use of these
derivatives. The amounts exchanged in cash are determined based on the basis
of the notional amounts and other terms included in the derivative financial
instruments.
F-24
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
C) Guaranteed Debt
As of December 31, 2002 and 2003, CEMEX Mexico, S.A. de C.V. and Empresas
Tolteca de Mexico, S.A. de C.V. jointly, fully and unconditionally guarantee
indebtedness of the Company for an aggregate amount of U.S.$2,339 million
(Ps26,290.4) and U.S.$3,145 million (Ps35,349.8), respectively. The combined
summarized financial information of these guarantors as of December 31, 2001,
2002 and 2003 is as follows:
2002 2003
----------------- ------------------
Assets............................................... Ps 125,984.6 140,393.0
Liabilities.......................................... 60,082.5 64,503.2
Stockholders' equity................................. 65,902.1 75,889.8
----------------- ------------------
2001
-----------------
Net sales........................................... Ps 24,975.5 24,035.2 24,408.5
Operating income..................................... 1,786.2 3,762.6 2,778.2
Net income........................................... 11,444.1 479.7 6,035.9
----------------- ----------------- ------------------
Certain debt contracts guaranteed by the Company and/or some of its
subsidiaries contain restrictive covenants limiting sale of assets,
maintenance of controlling interest on certain subsidiaries, limiting liens
and requiring compliance with financial ratios. The Company obtains waivers
prior to the occurrence of events of default.
12. OTHER NON-CURRENT LIABILITIES
Other non-current liabilities as of December 31, 2002 and 2003 are summarized
as follows:
2002 2003
-------------- -------------
Accounts payable from valuation of derivative instruments (notes 11 and 16)....... Ps 3,608.9 4,919.0
Accruals for legal assessments and other responsibilities......................... 1,482.2 1,592.3
Asset retirement obligations and other environmental liabilities.................. 296.6 889.0
Other liabilities and deferred credits............................................ 1,093.5 1,303.1
-------------- -------------
Ps 6,481.2 8,703.4
-------------- -------------
Accounts payable from derivative financial instruments represent the
accumulated valuation losses resulting from the estimated fair value
recognition of these instruments (see notes 11 and 16). Accruals for legal
assessments and other responsibilities (see note 21), refer to the best
estimation of cash flows for with respect to legal claims where the Company is
determined to be responsible and which are expected to be settled in a period
greater than twelve months. During 2003, the balance of this caption increased
primarily as a result of the increase of Ps265.0 in the dumping duties
provision, partially offset by the decrease of Ps154.9 in the accruals for
responsibilities. Asset retirement obligations and other environmental
liabilities include the future estimated costs, mainly from the demolition,
cleaning and reforestation of production sites at the end of their operation
(see note 2V). The increase in this item is related to the quantification of
asset retirement obligations. The expected average period to settle these
obligations is greater than 15 years.
13. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
As of December 31, 2001, 2002 and 2003, the net periodic cost of pension plans
and other postretirement benefits (see note 2J), was Ps348.9, Ps228.1 and
Ps462.4, respectively, and is described as follows:
Pensions Other benefits*
------------------------------- --------------------------------
Components of net periodic cost: 2001 2002 2003 2001 2002 2003
------- ------- ------- -------- -------- --------
Service cost................................... Ps 344.3 274.7 287.5 14.8 28.5 31.3
Interest cost.................................. 281.2 269.2 284.8 38.5 43.2 45.4
Actuarial return on plan assets................ (383.3) (399.3) (335.0) (1.2) (0.7) (0.7)
Amortization of prior service cost, changes in
assumptions and experience adjustments.......... 53.3 47.6 131.2 1.3 13.7 15.1
Results from extinguishment of obligations..... - (47.3) 2.8 - (1.5) -
------- ------- ------- -------- -------- --------
Ps 295.5 144.9 371.3 53.4 83.2 91.1
------- ------- ------- -------- -------- --------
F-25
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
As of December 31, 2002 and 2003, the reconciliation of the actuarial value of
pension plans and other postretirement benefit obligations, as well as the
funded status (see note 2J), are presented as follows:
Pensions Other benefits*
----------------------- -----------------------
2002 2003 2002 2003
--------- --------- --------- ----------
Change in benefit obligation:
Projected benefit obligation ("PBO") at beginning of year........ Ps 5,041.3 5,680.8 726.1 902.2
Service cost..................................................... 274.7 287.5 28.5 31.3
Interest cost.................................................... 269.2 284.8 43.2 45.4
Actuarial result and amendments.................................. 138.0 659.5 78.4 (90.2)
Acquisitions..................................................... 388.5 - 50.7 -
Initial valuation of other postretirement benefits............... - - 11.9 27.7
Foreign exchange fluctuations and inflation adjustments.......... 52.5 (106.3) 17.1 (47.2)
Extinguishment of obligations.................................... (174.6) 1.9 (1.5) 2.2
Benefits paid.................................................... (308.8) (430.2) (52.2) (68.6)
--------- --------- --------- ----------
Projected benefit obligation ("PBO") at end of year.............. 5,680.8 6,378.0 902.2 802.8
--------- --------- --------- ----------
Change in plan assets:
Fair value of plan assets at beginning of year................... 5,253.8 5,045.5 17.6 17.8
Real return on plan assets....................................... (311.4) 812.9 0.8 2.1
Acquisitions..................................................... 323.5 - - -
Foreign exchange fluctuations and inflation adjustments.......... 75.6 (210.4) - (1.7)
Employer contributions........................................... 69.8 125.9 42.2 15.9
Extinguishment of obligations.................................... (196.3) - - -
Benefits paid from the funds..................................... (169.5) (265.3) (42.8) -
--------- --------- --------- ----------
Fair value of plan assets at end of year......................... 5,045.5 5,508.6 17.8 34.1
--------- --------- --------- ----------
Amounts recognized in the balance sheets consist of:
Funded status.................................................... 635.3 869.4 884.4 768.7
Prior service cost............................................... (714.9) (1,402.4) (149.8) (108.8)
Net actuarial results............................................ (1,632.4) (955.4) (111.9) (42.4)
--------- --------- --------- ----------
Accrued benefit liability (prepayment)......................... (1,712.0) (1,488.4) 622.7 617.5
Additional minimum liability................................... 659.5 1,100.6 3.4 7.6
--------- --------- --------- ----------
Net liability (prepayment) recognized ....................... Ps (1,052.5) (387.8) 626.1 625.1
--------- --------- --------- ----------
* The cost and the actuarial value of postretirement benefits, include the
cost and obligations of postretirement benefits other than pensions, such as
seniority premiums granted by law, as well as health care and life insurance
benefits that the Company grants to retirees.
For presentation purposes in the balance sheet as of December 31, 2002, the
net liability of Ps626.1 for other postretirement benefits (see above table),
is presented as offsetting the net prepayment for pensions of Ps1,052.5. This
resulted in a net final prepayment of Ps426.4, which is reported within other
deferred charges (see note 10). At December 31, 2003, the net liability for
other postretirement benefits and the net prepayment for pensions are not
offset in the balance sheet.
As of December 31, 2002 and 2003, the combined actual benefit obligation
("ABO") of pensions and other postretirement benefits, equivalent to the PBO
not considering salaries increases, amounted to Ps5,086.6 and Ps5,944.2,
respectively, of which the vested portion was Ps1,291.2 in 2002 and Ps2,008.9
in 2003.
An additional minimum liability (excess of the net actual liability over the
net projected liability) is recognized in those cases when the ABO less the
plan assets (net actual liability) is lower than the net projected liability.
At December 31, 2002 and 2003, a minimum liability and an intangible asset
were recognized for Ps662.9 and Ps1,108.2, respectively.
Prior service cost and actuarial results are amortized over the estimated
service life of the employees under plan benefits. At December 31, 2003,
average estimated service life for pension plans is 15 years and for other
postretirement benefits is 13 years.
F-26
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
As of December 31, 2002 and 2003, the consolidated assets of the pension plans
and other postretirement benefits are valued at their estimated fair value and
are integrated as follows:
2002 2003
---------------- -----------------
Fixed-income securities.................................................... Ps 2,585.6 2,472.0
Marketable securities...................................................... 1,965.3 2,383.3
Private funds and other investments........................................ 512.4 687.4
---------------- -----------------
Ps 5,063.3 5,542.7
---------------- -----------------
CEMEX applies real rates (nominal rates discounted for inflation) in the
actuarial assumptions used to determine postretirement benefit liabilities.
The most significant assumptions used in the determination of the net periodic
cost were:
2001 2002 2003
------------ ------------- -------------
Range of discount rates used to reflect the obligations' present value.. 3.5 % - 7.1% 3.0% - 7.0% 4.5% - 8.0%
Weighted average rate of return on plan assets.......................... 8% 7.8% 7.8%
------------ ------------- -------------
During 2003, the Company's units in Mexico implemented a voluntary early
retirement program, through which, the retirement age was decreased by five
years and all employees meeting the new requirements were given the option to
retire. This program ended in May 2003 and resulted in the early retirement of
230 employees and the increase of Ps568.9 in the projected benefit obligation
and the non-amortized prior service cost of pensions and other postretirement
benefits.
During 2002, the subsidiary of CEMEX in Spain, in agreement with its
employees, changed the structure of most of its defined benefit plans,
replacing them with defined contribution plans. In connection to this change,
the subsidiary contributed on behalf of its employees covered by the new
plans, assets for an amount equivalent to the obligation value as of the date
of the exchange. These assets were already restricted within the previous
plans. At December 31, 2002, the effects of writing off the PBO and the
non-amortized items, net of the assets contributed, are displayed on the
tables relating to the net periodic cost and the reconciliation of the
actuarial value of pensions and other postretirement benefits.
14. STOCKHOLDERS' EQUITY
A) COMMON STOCK
The Company's common stock as of December 31, 2002 and 2003 is as follows:
2002 2003
--------------------------------- ---------------------------------
Series A (1) Series B (2) Series A (1) Series B (2)
-------------- -------------- -------------- --------------
Subscribed and paid shares......................... 3,331,300,154 1,665,650,077 3,547,614,432 1,773,807,216
Treasury shares (3)................................ 166,400,476 83,200,238 287,097,712 143,548,856
Unissued shares authorized for Stock Option Plans.. 116,526,096 58,263,048 113,114,106 56,557,053
-------------- -------------- -------------- --------------
3,614,226,726 1,807,113,363 3,947,826,250 1,973,913,125
-------------- -------------- -------------- --------------
(1) Series "A" or Mexican shares must represent at least 64% of capital
stock.
(2) Series "B" or free subscription shares must represent at most
36% of capital stock.
(3) In 2003, includes the shares issued by the stockholders' meeting of April
24, 2003 that were not subscribed, and in 2002, includes the shares
acquired under the share repurchase program and those shares authorized by
the stockholders' meeting of April 25, 2002 that were not subscribed.
Of the total number of shares, 3,267,000,000 in 2002 and 2003 correspond to
the fixed portion, and 2,154,340,089 in 2002 and 2,654,739,375 in 2003
correspond to the variable portion.
On April 25, 2002, the annual stockholders' meeting approved: (i) a reserve
for share repurchases of up to Ps5,000.0 (nominal amount), under which, at
December 31, 2002, shares equivalent to 7,609,200 CPOs were repurchased,
representing a reduction in the repurchase reserve of Ps400.2; (ii) an
increase in the variable common stock through the capitalization of retained
earnings of up to Ps3,213.1 (nominal amount), issuing shares as a stock
dividend, equivalent to up to 140,000,000 CPOs, at a subscription price of
Ps46.336 (nominal amount) per CPO, or instead, stockholders could have chosen
to receive Ps2.00 (nominal amount) in cash for each CPO. As a result, shares
equivalent to 64,408,962 CPOs were subscribed and paid, representing an
increase in common stock of Ps2.3 and in additional paid-in capital of
Ps3,201.5. An approximate cash payment through December 31 2002 was made for
Ps256.9; and (iii) the cancellation of 169,206,112 Series "A" shares and
84,603,056 Series "B" shares that were held in the Company's treasury.
F-27
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
On April 24, 2003, the annual stockholders' meeting approved: (i) a reserve
for share repurchases of up to Ps6,000.0 (nominal amount); (ii) an increase in
the variable common stock through the capitalization of retained earnings of
up to Ps3,664.4 (nominal amount), issuing up to 750,000,000 shares as a stock
dividend, equivalent to up to 250,000,000 CPOs, at a subscription price of
Ps36.449 (nominal) per CPO or, instead, stockholders could have chosen to
receive Ps2.20 (nominal amount) in cash for each CPO. As a result, shares
equivalent to 98,841,944 CPOs were subscribed and paid, representing an
increase in common stock of Ps3.40 and in additional paid-in capital of
Ps3,696.6, assuming a theoretical value of Ps0.0333 per CPO, while an
approximate cash payment through December 31, 2003 was made for Ps66.8; and
(iii) the cancellation of the shares held in the Company's treasury.
B) RETAINED EARNINGS
Retained earnings as of December 31, 2003, include Ps82,240.2 of earnings
generated by subsidiaries and affiliated companies that are not available to
be paid as dividends by CEMEX until these entities distribute such amounts to
CEMEX. Additionally, retained earnings include a share repurchase reserve in
the amount of Ps6,585.0. Net income for the year is subject to a 5% allocation
toward a legal reserve until such reserve equals one fifth of the common
stock. As of December 31, 2003, the legal reserve amounted to Ps1,370.6.
Earnings distributed as dividends, in excess of tax earnings, will be subject
to a tax payment at a 33% rate, consequently, only 67% of retained earnings
may be distributed to the shareholders.
C) EFFECTS OF INFLATION
The effects of inflation on majority interest stockholders' equity as of
December 31, 2003 are as follows:
Historical Inflation
cost adjustment Total
-------------- ---------------- ---------------
Common stock............................................... Ps 59.1 3,436.1 3,495.2
Additional paid-in capital................................. 21,003.8 15,215.5 36,219.3
Deficit in equity restatement.............................. - (69,125.6) (69,125.6)
Cumulative initial deferred income tax effects............. (4,697.9) (1,044.0) (5,741.9)
Retained earnings.......................................... 51,773.3 46,384.5 98,157.8
Net income................................................. Ps 6,596.4 471.0 7,067.4
------------- --------------- --------------
D) FOREIGN CURRENCY TRANSLATION
The foreign currency translation results recorded in stockholders' equity are
summarized as follows:
Years ended December 31, 2001 2002 2003
-------------- ---------------- ---------------
Foreign currency translation adjustment...................... Ps (2,694.3) 7,038.4 5,169.2
Foreign exchange gain (loss) (1) ............................ 830.1 (2,847.0) (1,564.2)
-------------- ---------------- ---------------
Ps (1,864.2) 4,191.4 3,605.0
-------------- ---------------- ---------------
(1) Foreign exchange results from the financing corresponding to the acquisitions of foreign subsidiaries.
The foreign currency translation adjustment includes foreign exchange results
of financing related to acquisitions of foreign subsidiaries made by the
Company's subsidiary in Spain of Ps(49.5) in 2001, Ps167.3 in 2002 and Ps59.4
in 2003.
E) PREFERRED STOCK
In October 2003, CEMEX repurchased the remaining balance of preferred stock of
U.S.$650 million (Ps7,306.0), which was to mature in February and August 2004.
The preferred stock was issued in November 2000 by a Dutch subsidiary for
U.S.$1,500 million with an original maturity in May 2002 and was related to
the financing of CEMEX Inc.'s (formerly Southdown, Inc.) acquisition. During
2001 and 2002, CEMEX repurchased preferred stock for U.S.$600 million and
U.S.$250 million, respectively, and in 2002 the maturity of the remaining
balance was extended, with U.S.$195 million due in February 2004 and U.S.$455
million due in August 2004. The preferred stock was mandatorily redeemable
upon maturity and granted its holders 10% of the subsidiary's voting rights,
and the right to receive a guaranteed variable preferred dividend, and the
option, in certain circumstances, to subscribe for additional preferred stock
or common shares for up to 51% of the subsidiary's voting rights. Until its
liquidation, this transaction was included as minority interest. Preferred
dividends declared for approximately U.S.$76 million (Ps860.2) in 2001,
U.S.$23.2 million (Ps259.7) in 2002 and U.S.$12.5 million (Ps144.6) in 2003,
were recognized as minority interest in the consolidated income statements.
F-28
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
A subsidiary of CEMEX in Spain issued, during 1998, capital securities for
U.S.$250 million with an annual dividend rate of 9.66%. In April 2002, through
a tender offer, U.S.$184 million of capital securities were redeemed. The
amount paid to the holders in excess of the nominal amount of the capital
securities pursuant the early redemption of approximately U.S.$20 million
(Ps224.8) was recorded against stockholders' equity. The balance outstanding
as of December 31, 2002 and 2003 was U.S.$66 million (Ps741.8) in both years.
The Company has an option to repurchase the remaining securities in November
2004 or on any subsequent dividend payment date. Additionally, the holders
have the right to sell them to the Company in May 2005. This transaction is
recorded as minority interest. Preferred dividends declared on the capital
securities during 2001, 2002 and 2003 of approximately U.S.$24.2 million
(Ps271.4), U.S.$11.9 million (Ps132.6) and U.S.$6.4 million (Ps73.4),
respectively, were recognized as minority interest in the consolidated income
statements.
F) OTHER EQUITY TRANSACTIONS
Through an announcement dated on November 17, 2003, the Company launched a
public offer to purchase up to 90,018,042 appreciation warrants ("warrants")
traded on the Mexican Stock Exchange ("MSE"), including those warrants
represented by American Depository Warrants ("ADWs"), each ADW representing
five warrants, traded on the New York Stock Exchange ("NYSE"), which represent
approximately 86.73% of the total outstanding warrants and include the
approximately 34.9 million warrants owned by or controlled by CEMEX and its
subsidiaries. The Company issued two additional announcements on December 11
and 23, which established specific procedures with respect to such offer. The
offer expires on January 26, 2004, unless the Company extends the period. The
holders of warrants and ADWs wishing to participate in the offer must specify
the price at which they would tender their warrants or ADWs, within the range
of established prices from 5.10 pesos per warrant (equivalent to 25.50 pesos
per ADW) to 8.10 pesos per warrant (equivalent to 40.50 pesos per ADW).
At the end of the offer period, the single price at which CEMEX will purchase
the warrants and ADWs is to be determined, depending on the prices at which
warrants and ADWs are tendered, which will be ordered starting from the lowest
price per warrant offered until a single purchase price is reached that would
enable CEMEX to purchase 90,018,042 warrants, or such lesser number of
warrants as are validly tendered in the offer. If more than 90,018,042
warrants are validly tendered in the offer, CEMEX will acquire the warrants
and ADWs a "pro rata" basis, in most cases. Assuming that the total number of
warrants subject to the offer was repurchased, the remaining 13,772,903
warrants will remain outstanding and will mature in December 2004.
The warrants and ADWs subject to the offer were originally issued in December
1999 by means of a public offer on the MSE and the NYSE, in which 105 million
warrants and ADWs with December 2002 maturity were sold. In December 2001, in
a simultaneous and voluntary public purchase and sale offer for the warrants
and exchange offer for the ADWs, outstanding as of the offer date, under a one
for one exchange ratio, 103,790,945 new warrants and ADWs with maturity in
December 2004 were issued. The warrants and ADWs that were not exchanged in
2001 expired in December 2002. The warrants permit the holders to benefit from
future increases in the CEMEX CPO's market price above the strike price, which
at December 31, 2003 was approximately U.S.$5.45 per CPO (U.S.$27.23 per ADS).
The benefit, should any exist, will be paid in CPOs. Until September 2003, the
CPOs and ADSs required to cover future exercises of the new warrants, as well
as the old warrants, were held in equity forward contracts with financial
institutions. These forward contracts were settled in October 2003 as a result
of a simultaneous secondary equity offering on the MSE and the NYSE, made by
the Company and the banks holding the shares (see note 16A).
In addition, in December 2003, through the payment of U.S.$75.9 million
(Ps853.1), CEMEX executed the option that it retained and repurchased the
assets related to a financial transaction through which, in December 1995, the
Company transferred financial assets to a trust, while simultaneously,
investors contributed U.S.$123.5 million in exchange for notes representing a
beneficial interest in the trust. During the life of the transaction and until
maturity in 2007, periodic repurchases of the financial assets underlying in
the trust were stipulated. Therefore, as of December 31, 2002, the outstanding
balance of this transaction was approximately U.S.$90.6 million (Ps1,038.9).
Moreover, during the life of the transaction, the Company maintained an option
to reacquire the related financial assets at different dates. The cost of
retaining this option was recognized in earnings as part of the financial
expense for approximately U.S.$13.8 million (Ps152.6) in 2001, U.S.$13.2
million (Ps151.2) in 2002 and U.S.$14.5 million (Ps163.0) in 2003. Until its
settlement in December 2003, this transaction was included as part of the
minority interest in stockholders' equity.
F-29
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
G) COMPREHENSIVE NET INCOME (LOSS)
The main items included in the comprehensive net income (loss) items for the
years ended December 31, 2001, 2002 and 2003, are as follows:
2001 2002 2003
-------------- ------------- -------------
Majority interest net income....................................... Ps 13,026.6 5,966.9 7,067.4
Deficit in equity restatement:
Effects from holding non-monetary assets.......................... (2,445.9) (10,431.8) (3,432.9)
Foreign currency translation adjustment........................... (2,694.3) 7,038.4 5,169.2
Capitalized foreign exchange result (note 14D) ................... 830.1 (2,847.0) (1,564.2)
Additional minimum liability...................................... 230.3 - -
Valuation of investments available for sale (note 8B)............. (877.4) - -
Hedge derivative instruments (notes 11 and 16).................... - (2,398.7) 458.7
Deferred income tax of the year charged directly to stockholders'
equity (note 17)................................................ 26.2 858.9 (215.3)
Equity instruments' early redemption results...................... - (229.4) (653.4)
Cumulative initial effects of asset retirement obligations........ - - (85.8)
Inflation effect on equity 1...................................... 318.5 225.3 -
-------------- ------------- -------------
Total comprehensive income (loss) items......................... (4,612.5) (7,784.3) (323.7)
-------------- ------------- -------------
Majority comprehensive net income (loss)........................ 8,414.1 (1,817.4) 6,743.7
Minority interest............................................... 1,695.7 425.1 341.8
-------------- ------------- -------------
Consolidated comprehensive net income (loss).................... Ps 10,109.8 (1,392.3) 7,085.5
-------------- ------------- -------------
1 Relates to the adjustment resulting from the use of the weighted average
inflation index for the restatement of stockholders' equity and the use of
the index of inflation in Mexico to restate common stock and additional
paid-in capital (see note 2B).
15. EXECUTIVE STOCK OPTION PROGRAMS
The information relating to stock option programs, presented in terms of
equivalent CPOs and considering the effect of the options exchange program
described below, are summarized as follows:
Fixed program Special program Variable Voluntary
Options (A) (B) program (C) Programs (D)
---------------- ---------------- ---------------- ----------------
As of December 31, 2001.................... 8,695,396 - 88,937,805 20,215,960
Changes in 2002:
Granted.................................... - 4,963,775 16,949,800 2,120,395
Exercised.................................. (2,119,871) - (7,294,781) (6,287,050)
---------------- ---------------- ---------------- ----------------
As of December 31, 2002................... 6,575,525 4,963,775 98,592,824 16,049,305
Changes in 2003:
Granted.................................... - 2,682,985 22,346,738 38,583,989
Cancelled.................................. (533,608) - (22,799) (9,700,280)
Exercised.................................. (1,352,582) (17,500) - (38,884,926)
---------------- ---------------- ---------------- ----------------
As of December 31, 2003.................... 4,689,335 7,629,260 120,916,763 6,048,088
---------------- ---------------- ---------------- ----------------
Exercise Prices:
Options exercised during the year*......... Ps25.43 U.S.$4.52 - U.S.$3.45
Options outstanding at year-end*........... Ps29.33 U.S.$4.62 U.S.$5.02 U.S.$4.14
Remaining average life..................... 3.7 years 8.5 years 9.1 years 1.8 years
Options completed vested................... 92.8% 23.8% 73.6% 100.0%
---------------- ---------------- ---------------- ----------------
* Weighted average exercise price per CPO.
F-30
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
A) Fixed Program
Through October 31, 2001, CEMEX granted stock options annually to its
executives for the acquisition of CPOs under a stock option program ("fixed
program"), which was replaced through a voluntary exchange program (see
"variable program" below). The outstanding options correspond to the
executives that did not participate in the exchange program. Under the fixed
program, which was initiated in 1995, eligible executives received stock
option rights with fixed exercise prices denominated in pesos, equivalent to
the market price of the CPO at the grant date and life of 10 years. Exercise
prices reflect technical antidilution adjustments for stock dividends. The
executives' option rights vest up to 25% annually during the first four years
after having been granted. As of December 31, 2002 and 2003, the new CPOs
generated an additional-paid in capital of Ps75.7 and Ps42.9, respectively,
and increased the number of outstanding shares.
B) Special program
As a result of the acquisition of CEMEX, Inc. (formerly Southdown), a stock
option program to purchase CEMEX ADSs ("special program") was established for
CEMEX, Inc.'s executives. The options granted have a fixed exercise price in
dollars, equivalent to the market price of the ADS as of the grant date, and
have a 10-year tenure. The executives' option rights vest up to 25% annually
during the first four years after having been granted. The options exercises
are hedged using shares currently owned by subsidiaries, potentially
increasing stockholders' equity and the number of shares outstanding. The
amounts of this ADS' programs are presented in terms of equivalent CPOs.
C) Variable program
In November 2001, through a voluntary option exchange program, CEMEX invited
executives to exchange their existing options under the fixed program for new
options issued under a new annual stock option program with exercise prices
denominated in U.S. dollars increasing annually during the option's life
("variable program"), reflecting the funding cost in the market and with a 10
year tenure. The participating executives which exchanged 57,448,219 options,
resigned their rights to subscribe CPOs, in exchange for cash equivalent to
the intrinsic value for each executive at the exchange date and the issuance
of new options, equivalent in number to the time value of their redeemed
options, as determined by the appropriate valuation model, which resulted in
the issuance in 2001 of 88,937,805 options under the variable program. Except
for the options issued through the exchange, where 50% of the option's
exercise rights were vested immediately, with an additional 25% annual vesting
over the next two anniversaries, for subsequent option grants, executives'
option rights may be exercised up to 25% annually during the first four years
after having been granted. During 2001, by means of the exchange program, a
compensatory cost of approximately Ps729.1 was recognized in other expenses,
net.
D) Voluntary programs
As of December 31, 2003, there were 3,927,693 options with an approximate
exercise price of U.S.$3.31 per CPO, out of 36,468,375 options with a 5
year-tenure, sold to executives during 1998 and 1999. The exercise price is
denominated in dollars and increases annually to reflect the funding cost in
the market. In 2003, 300,937 options were exercised, while 9,700,280 options
expired and were canceled.
As of December 31, 2003, there are 2,120,395 options with an approximate
exercise price of U.S.$5.68 per CPO, which were sold to executives in April
and May 2002. As of December 31, 2003, no exercises had occurred. From the
sale of the options, a premium of approximately U.S.$1.5 million (Ps16.9) was
received. The exercise price of the options is denominated in dollars and
increases annually to reflect the funding cost in the market.
In September 2003 were exercised 38,583,989 options, sold to executives in
January 2003 in exchange for an approximate premium of U.S.$9.7 million
(Ps101.5). The options, which had an increasing U.S. dollar exercise price of
approximately U.S.$3.58 per CPO, equal to the CPO market price at the date of
sale, and a five-year term, contained a mandatory exercise condition in case
the market CPO price reached certain level, situation occurred in 2003.
According to agreed conditions, the executives' gain was paid in form of CPOs,
which have a sale restriction for two years after exercise.
E) Options hedging activities
The potential exercise of options under the variable and voluntary programs
require the Company to have availability of the CPOs or ADSs underlying in the
options; therefore, the Company has negotiated equity forward contracts in its
own stock (see note 16A), in order to guarantee that shares would be available
at prices equivalent to those established in the options, without the
necessity of issuing new CPOs into the market; therefore, these programs do
not increase the number of shares outstanding and consequently do not result
in dilution of the basic earnings per share.
F-31
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
Beginning in 2001, CEMEX recognizes the appreciation of the options under the
variable and voluntary programs, resulting from the difference between the
CPO's market price and the exercise prices established in the options, as an
expense in the income statement, which for the years ended December 31, 2001,
2002 and 2003 was U.S.$14.7 million (Ps163.2), U.S.$5.0 million (Ps57.3) and
U.S.$45.3 million (Ps509.2), respectively. Likewise, CEMEX recognizes through
earnings the changes in the estimated fair value of equity forward contracts
designated as hedges of these plans (see note 16A), which resulted in a gain
of approximately U.S.$28.7 million (Ps317.4), a loss of approximately
U.S.$47.1 million (Ps540.2) and a gain of approximately U.S.$28 million
(Ps314.7) as of December 31, 2001, 2002 and 2003, respectively.
16. DERIVATIVE FINANCIAL INSTRUMENTS
As of December 31, 2002 and 2003, the Company's derivative financial
instruments, other than those related to financial debt (see note 11), are
summarized as follows:
2002 2003
---------------------------------- ----------------------------------
U.S. dollars millions Notional Estimated fair Notional Estimated fair
amount value amount value
------------- ---------------- -------------- ----------------
A) Equity forward contracts................. 1,445.1 (90.6) 1,085.0 16.4
B) Foreign exchange instruments ............ 1,325.7 (201.4) 1,445.9 (191.6)
C) Derivatives related to energy projects... 177.0 (0.5) 174.5 (7.4)
------------- ---------------- -------------- ----------------
Upon liquidation and at CEMEX's option, the equity forward contracts allow for
physical or net cash settlement of the estimated fair value. The effects at
settlement are recognized in the income statement or as part of stockholders'
equity, according to their characteristics and use. At maturity, if these
forward contracts are not settled or replaced, or if the Company defaults on
the agreements established with the financial counterparties, such
counterparties may sell the shares underlying the contracts. If any such sale
were to occur, it may have an adverse effect on CEMEX and/or its subsidiaries'
stock market price, may reduce the amount of dividends and other distributions
that the Company receive from its subsidiaries, and/or may create minority
interest affecting the ability to operate the Company.
A) On October 26, 2003, through a secondary equity offering agreed to by the
Company, launched simultaneously on the MSE and the NYSE, financial
institutions offered 29.325 million ADSs (25.5 million ADSs in the offer
plus an optional amount of 3,825 million ADSs in case of over allotments)
held through forward contracts. The acquirerors purchased all ADSs
including the optional amount, resulting in the sale of 23.325 million
ADSs (116.6 million CPOs) and 30 million CPOs (6 million ADSs), at a price
of U.S.$23.15 per ADSs and Ps52.07 per CPO, respectively. Of the total
sale proceeds of approximately U.S.$660 million (Ps7,418.4), net of the
offering expenses, the financial institutions kept approximately U.S.$538
million (Ps6,047.1) as payment for the liquidation of the related forward
contracts, while approximately U.S.$122 million (Ps1,371.3) was reimbursed
to CEMEX. This transaction did not increase the number of shares
outstanding.
As of December 31, 2002, CEMEX held forward contracts for a notional
amount of U.S.$461.1 million. The maturity of these contracts was extended
until December 2003 and covered 24,008,392 ADSs (120,041,960 CPOs) and
33.8 million shares of the Company's subsidiary in Spain. In October 2003,
these forwards were settled through a secondary equity offering (see
preceding paragraph) that resulted in the write-off of accrued prepayments
toward the forwards final price of U.S.$101.7 million (Ps1,143.5),
recognized as part of other accounts receivable and a net gain in
stockholders' equity of approximately U.S.$19.5 million (Ps219.2). These
contracts were negotiated in 1999 to hedge future exercises under the 105
million warrants program, which CEMEX is currently seeking to acquire
through a tender offer (see note 14F). The shares underlying these
forwards contracts were sold by CEMEX during 1999 for approximately
U.S.$905.7 million, and the Company simultaneously prepaid approximately
U.S.$439.9 million toward the forwards' final price. In December 2002, as
a result of the forwards' net cash settlement that was required in order
to renegotiate and extend their maturity until December 2003, a loss of
approximately U.S.$98.3 million (Ps1,104.9) was recognized. The loss arose
from changes in the underlying shares market value. The prepayments made
toward the forwards final price of approximately U.S.$193.6 million,
recognized as short-term accounts receivable as of December 31, 2002 (see
note 5), decreased to approximately U.S.$95.3 million (Ps1,071.2). From
execution of the contracts until their settlement, due to the prepayment
made in 1999 and the withholding of the economic and voting rights on the
Spanish subsidiary's shares underlying the contracts, such shares were
considered property of CEMEX. As of December 31, 2002, the estimated fair
value of the contracts presented a gain of approximately U.S.$69.1
million.
F-32
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
As of December 31, 2002 and 2003, there are forward contracts with
different maturities until October 2006, for notional amounts of
U.S.$436.1 million and U.S.$789.3 million, respectively, covering
16,005,620 ADSs in 2002 and 29,314,561 ADSs in 2003, that are designated
to hedge the future exercise of the options granted under the executive
programs (see note 15). Starting in 2001, changes in the estimated fair
value of these contracts have been recognized in the balance sheet against
the income statement, as a complement of the costs generated by the option
programs. As of December 31, 2002 and 2003, the estimated fair value of
these contracts was a loss of approximately U.S.$47.0 million (Ps539) and
a gain of approximately U.S.$28.0 million (Ps314.7), respectively.
As of December 31, 2002 and 2003, there are forward contracts for notional
amounts of U.S.$95.5 million and U.S.$122.9 million, respectively, that
were to mature in August and September 2003, whose maturity was extended
until August and September 2004. These contracts covering 21,510,500 CPOs
in 2002 and 23,622,500 CPOs in 2003, were negotiated to hedge the purchase
of CAH shares through the exchange for CEMEX CPOs. They were originally
scheduled to be liquidated during 2003 but were extended to 2004 (see note
8A). The effects to be generated upon settlement of the forward contracts
will be recognized as an adjustment to stockholders' equity. The estimated
fair value is not periodically recorded. As of December 31, 2002 and 2003,
the estimated fair value of these contracts was a loss of approximately
U.S.$2.1 million (Ps23.6) and a gain of approximately U.S.$1.8 million
(Ps20.2), respectively.
Additionally, as of December 31, 2002 and 2003, there are forward
contracts for notional amounts of U.S.$452.4 million and U.S.$172.8
million, respectively, with different maturities until February 2006,
covering a total of 15,316,818 ADSs in 2002 and 5,268,939 ADSs in 2003.
These contracts are considered as equity instruments; therefore, changes
in the estimated fair value is not periodically recognized. All effects
resulting from these contracts will be recognized at maturity as an
adjustment to stockholders' equity. As of December 31, 2002 and 2003, the
estimated fair value of these contracts reflected losses of approximately
U.S.$110.6 million and U.S.$27.1 million, respectively. In addition, as of
December 31, 2002, the Company had a third party equity forward contract
for a notional amount of U.S.$7.1 million and an estimated fair value loss
of approximately U.S.$0.1 million (Ps1.1). This contract was settled in
cash during 2003 without any material effect.
As mentioned in note 14F, the Company has the intention to repurchase
86.73% of its appreciation warrants. Depending on the results of the
offer, expiring on January 26, 2004, at least approximately 13.8 million
warrants with maturity in December 2004 would remain outstanding. The
forwards on the Company's own shares not assigned at the end of 2003 will
be used to cover the potential exercises of warrants until expiration.
They will also be used for new stock option grants to executives.
B) In order to hedge financial risks associated with variations in foreign
exchange rates, CEMEX has negotiated foreign exchange forward contracts
for notional amounts of U.S.$1,266.0 million and U.S.$559.3 million, at
December 31, 2002 and 2003, respectively, with different maturities until
March 2005. These contracts have been designated as hedges of the
Company's net investment in foreign subsidiaries. The estimated fair value
of these instruments is recorded in stockholders' equity as part of the
foreign currency translation effect (see note 14D). In addition, as of
December 2002 and 2003, there are foreign exchange options for notional
amounts of U.S.$59.7 million and U.S.$886.6 million, respectively, with
different maturities until June 2005. For the sale of the options, CEMEX
received premiums of approximately U.S.$4.0 million in 2002 and U.S.$62.8
in 2003. The estimated fair value losses of U.S.$44.4 million (Ps509.2) in
2002 and U.S.$57.2 million (Ps642.9) in 2003 were recognized in earnings.
C) As of December 31, 2002 and 2003, CEMEX had an interest rate swap maturing
in May 2017, for notional amounts of U.S.$177 million and U.S.$162.1
million, respectively. The swap was negotiated to exchange floating for
fixed interest rates in connection with agreements entered into by the
Company for the acquisition of electric energy for a 20-year period (see
note 21F). During the life of the swap and based on its notional amount,
CEMEX will pay LIBOR rate and will receive a 7.53% fixed rate until May
2017. In addition, during 2001, the Company sold a floor option for
notional amounts of U.S.$177 million in 2002 and U.S.$174.5 million in
2003, related to the interest rate swap contract. Pursuant to this
contract, until 2017, CEMEX will pay the difference between the 7.53%
fixed rate and the LIBOR rate. For the sale of this option the Company
received a premium of approximately U.S.$22 million (Ps247.3). As of
December 31, 2002 and 2003, the combined fair value of the swap and the
floor option, recognized in earnings represented losses of approximately
U.S.$0.5 million and U.S.$7.4 million, respectively. The notional amount
of both contracts is not aggregated, considering that there is only one
notional amount with exposure to changes in interest rates and the effects
of one instrument, are proportionally inverse to the changes in the other
one.
F-33
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
The estimated fair values of derivative financial instruments fluctuate over
time and are based on estimated settlement costs or quoted market prices.
These values should be viewed in relation to the fair values of the underlying
instruments or transactions and as part of the Company's overall exposure to
fluctuations in foreign exchange rates, interest rates and prices of shares.
The notional amounts of derivative instruments do not necessarily represent
amounts exchanged by the parties and, therefore, are not a direct measure of
the Company's exposure through its use of derivatives. The amounts exchanged
are determined on the basis of the notional amounts and other terms included
in the derivative instruments.
17. INCOME TAX (IT), BUSINESS ASSETS TAX (BAT), EMPLOYEES' STATUTORY PROFIT
SHARING (ESPS) AND DEFERRED INCOME TAXES
The income tax law in Mexico provides that companies must pay either IT or BAT
depending on which amount is greater with respect to their Mexican operations.
Both taxes recognize the effects of inflation, though in a manner different
from Mexican GAAP. ESPS is calculated on similar basis as IT without
recognizing the effects of inflation.
A) IT, BAT AND ESPS
The Company and its Mexican subsidiaries generate IT or BAT on a consolidated
basis; therefore, the amounts of these items included in the accompanying
financial statements, with respect to the Mexican subsidiaries, represent the
consolidated result of these taxes. For ESPS purposes, the amount presented is
the sum of the individual results of each company. Beginning in 1999, the
determination of the consolidated IT for the Mexican companies, considers a
maximum of 60% of the taxable income or loss of each of the subsidiaries. In
addition, commencing in 1999, the taxable income of those subsidiaries that
have tax loss carryforwards generated before 1999 will be considered by the
holding according to equity ownership. Beginning in 2002, in the determination
of consolidated IT, 60% of the taxable result of the controlling entity should
be considered, unless such entity obtains taxable income, in which case 100%
should be considered, until the restated balance of the individual tax loss
carryforwards before 2001 are amortized. Beginning in 2002, a new IT law
became effective in Mexico, establishing that the IT rate will be decreased by
1% each year, beginning in 2003 until it reaches 32% in 2005.
The IT expense presented in the income statements is summarized as follows:
2001 2002 2003
------------- ------------- ------------
Current income tax................................................ Ps (1,476.7) (1,000.0) (1,515.4)
Deferred IT....................................................... (221.1) 434.8 508.2
Effects of inflation (note 2B).................................... (147.2) (63.7) -
------------- ------------- ------------
Ps (1,845.0) (628.9) (1,007.2)
------------- ------------- ------------
As of December 2001, 2002 and 2003, the total consolidated IT includes
expenses of Ps1,525.3, Ps860.4 and Ps1,396.8, respectively, from foreign
subsidiaries, and expense of Ps319.7 in 2001 and revenues of (Ps231.5) in 2002
and (Ps389.6) in 2003 from Mexican subsidiaries.
For its operations in Mexico, CEMEX has accumulated IT loss carryforwards
which, restated for inflation, can be amortized against taxable income in the
succeeding ten years according to Income Tax Law. The Company and its
subsidiaries in Mexico must generate taxable income to preserve the benefit of
the tax loss carryforwards generated beginning in 1999.
The tax loss carryforwards at December 31, 2003 are as follows:
Year in which tax loss occurred Amount of Year of
carryforwards expiration
---------------- -----------------
1995....................................................................... Ps 1,776.6 2005
2000....................................................................... 420.7 2010
2001....................................................................... 3,265.7 2011
2002....................................................................... 3,752.4 2012
2003....................................................................... 872.2 2013
----------------
Ps 10,087.6
----------------
F-34
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
The BAT Law establishes a 1.8% tax levy on assets, restated for inflation in
the case of inventory and fixed assets, and deducting certain liabilities. BAT
levied in excess of IT for the period may be recovered, restated for
inflation, in any of the succeeding ten years, provided that the IT incurred
exceeds BAT in such period.
The recoverable BAT as of December 31, 2003 is as follows:
Year in which BAT exceeded IT Amount of Year of
carryforwards expiration
---------------- ----------------
1997....................................................................... Ps 162.4 2007
----------------
B) DEFERRED IT AND ESPS (see note 2K)
The deferred IT result in the income statement, represents the difference, in
nominal pesos, between the beginning of year balance and the year-end balance
of the deferred tax assets or liabilities. The tax effects of the main
temporary differences that generate the consolidated deferred tax assets and
liabilities are presented below:
2002 2003
----------------- ----------------
Deferred tax assets:
Tax loss carryforwards and other tax credits................................. Ps 4,807.2 6,167.1
Accounts payable and accrued expenses........................................ 268.6 111.7
Trade accounts receivable.................................................... 26.5 8.5
Properties, plant and equipment.............................................. (42.3) (3,107.6)
Others....................................................................... 77.2 22.1
--------------------------------------
Total deferred tax assets.................................................. 5,137.2 3,201.8
Less - Valuation allowance................................................. (2,564.6) (1,058.8)
--------------------------------------
Net deferred tax assets.................................................. 2,572.6 2,143.0
--------------------------------------
Deferred tax liabilities:
Tax loss carryforwards and other tax credits................................. 6,796.5 6,906.3
Accounts payable and accrued expenses........................................ 4,706.4 1,924.7
Trade accounts receivable.................................................... 94.9 85.3
Properties, plant and equipment.............................................. (19,237.1) (16,815.6)
Inventories.................................................................. (1,355.9) (892.6)
Others....................................................................... (1,012.5) (433.6)
--------------------------------------
Total deferred tax liabilities............................................. (10,007.7) (9,225.5)
Less - Valuation allowance................................................. (2,496.9) (2,616.1)
--------------------------------------
Net deferred tax liabilities............................................. (12,504.6) (11,841.6)
--------------------------------------
Net deferred tax position (liability)........................................ (9,932.0) (9,698.6)
Less - Deferred IT of acquired subsidiaries at the acquisition date........ (4,468.5) (4,528.0)
--------------------------------------
Total effect of deferred IT in stockholders' equity at end of year........... (5,463.5) (5,170.6)
Total effect of deferred IT in stockholders' equity at beginning of year .... (6,757.2) (5,463.5)
--------------------------------------
Change deferred IT for the period....................................... Ps 1,293.7 292.9
--------------------------------------
The breakdown of the change in consolidated deferred income tax for the period
is as follows:
2001 2002 2003
-------------- ------------- -------------
Deferred income tax charged (credited) to the income statement.... Ps (221.1) 434.8 508.2
Deferred income tax applied directly to stockholders' equity...... 26.2 858.9 (215.3)
-------------- ------------- -------------
Deferred IT income (expense) for the period.................. Ps (194.9) 1,293.7 292.9
-------------- ------------- -------------
Bulletin D-4 states that all items whose effects are recorded directly in
stockholders' equity should be recognized net of their deferred income tax
effects. Bulletin D-4 does not allow the offsetting of deferred tax assets and
liabilities relating to different tax jurisdictions.
F-35
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
The Company's management considers that sufficient taxable income will be
generated as to realize the tax benefits associated with the deferred income
tax assets, and the tax loss carryforwards, prior to their expiration. In the
event that present conditions change, and it is determined that future
operations would not generate enough taxable income, or that tax strategies
are no longer viable, the valuation allowance would be increased against the
income statement.
Temporary differences between the net income of the period and taxable income
for ESPS, generated an expense of Ps14.6 in 2001, an income of Ps20.4 in 2002
and an expense of Ps69.9 in 2003, reflected in the income statement.
C) EFFECTIVE TAX RATE
The effects of inflation are recognized differently for income tax and for
accounting purposes. These situation, as well as other differences between the
book and the income tax basis, arising from the several income tax rates and
laws in each of the countries in which CEMEX operates, give rise to permanent
differences between the approximate statutory tax rate and the effective tax
rate presented in the consolidated income statement, as follows:
For the years ended December 31, 2001 2002 2003
---------- ---------- ---------
% % %
Approximated consolidated statutory tax rate.............................. 35.0 35.0 34.0
Additional deductions and other deductible items...................... (1.8) (6.6) (15.8)
Expenses and other non-deductible items............................... 0.8 1.0 1.2
Non-taxable sale of marketable securities and fixed assets............ - (10.2) -
Difference between book and tax inflation............................. (15.8) (5.6) (0.3)
Minimum taxes......................................................... 0.2 - -
Depreciation.......................................................... (0.6) - -
Others (1)............................................................ (6.7) (4.3) (6.8)
---------- ---------- --------
Effective consolidated tax rate .......................................... 11.1 9.3 12.3
---------- ---------- --------
(1) Includes the effects of the different IT rates in the countries where
CEMEX operates, and the difference between the 2003 rate in Mexico of 34%
and those in effect in 2004 of 33% and in 2005 and thereafter of 32%.
18. FOREIGN CURRENCY POSITION
The peso to dollar exchange rate as of December 31, 2001, 2002 and 2003 was
Ps9.17, Ps10.38 and Ps11.24 pesos per dollar, respectively. As of January 15,
2004, the exchange rate was Ps10.85 pesos per dollar.
As of December 31, 2003, the principal balances denominated in foreign
currencies, as well as non-monetary assets in Mexico of foreign origin, are
presented as follows:
U.S. dollars millions Mexico Foreign Total
---------------- ----------------- ----------------
Current assets......................................... 16.7 1,899.1 1,915.8
Noncurrent assets...................................... 917.1 (1) 10,182.1 11,099.2
---------------- ----------------- ----------------
Total assets......................................... 933.8 12,081.2 13,015.0
---------------- ----------------- ----------------
Current liabilities.................................... 736.4 1,795.7 2,532.1
Long-term liabilities.................................. 1,834.4 4,057.4 5,891.8
---------------- ----------------- ----------------
Total liabilities.................................... 2,570.8 5,853.1 8,423.9
---------------- ----------------- ----------------
(1) Non-monetary assets in Mexico of foreign origin.
Additionally, transactions of the Company's Mexican operations denominated in
foreign currencies during 2001, 2002 and 2003, are summarized as follows:
U.S. dollars millions 2001 2002 2003
---------------- ----------------- ----------------
Export sales........................................... 83.2 72.1 57.1
Import purchases....................................... 41.8 92.5 90.5
Financial income....................................... 105.1 11.1 7.5
Financial expense...................................... 302.1 275.6 389.0
---------------- ----------------- ----------------
F-36
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
19. GEOGRAPHIC SEGMENT DATA
The Company operates principally in the construction industry segment through
the production and marketing of cement and ready-mix concrete. The following
tables present, in accordance with the information analyzed for
decision-making by management, selected condensed financial information of the
Company's main business units for the years ended December 31, 2001, 2002 and
2003:
Net Sales Operating Income
----------- -- ------------ -- ------------ ------------ -- ------------ -- -------------
2001 2002 2003 2001 2002 2003
----------- ------------ ------------ ------------ ------------ -------------
Mexico................ Ps 29,659.5 28,477.9 29,544.9 11,854.1 10,875.3 11,378.5
Spain................. 8,724.4 11,283.0 13,653.1 2,124.8 2,631.5 2,981.0
United States......... 22,233.5 20,073.4 19,469.1 3,539.2 3,093.7 2,300.4
Venezuela............. 5,139.1 3,482.0 3,584.4 1,713.0 1,127.2 1,195.3
Colombia.............. 2,391.1 2,224.2 2,483.0 1,014.2 927.7 1,032.2
Caribbean and Central
America............... 4,899.9 5,748.5 6,668.0 742.3 1,081.5 1,179.6
Philippines........... 1,494.5 1,496.3 1,507.4 142.8 (72.4) (142.0)
Egypt................. 1,547.0 1,718.7 1,513.8 381.4 221.8 334.5
Others................ 9,241.3 8,688.0 9,424.9 (3,225.7) (4,857.4) (3,902.9)
----------- ------------ ------------ ------------ ------------ -------------
85,330.3 83,192.0 87,848.6 18,286.1 15,028.9 16,356.6
Eliminations.......... (8,758.2) (8,150.0) (7,320.9) - - -
----------- ------------ ------------ ------------ ------------ -------------
Consolidated.......... Ps 76,572.1 75,042.0 80,527.7 18,286.1 15,028.9 16,356.6
----------- ------------ ------------ ------------ ------------ -------------
In order to present integrally the operations of each geographic area, net
sales between geographic areas are presented under the caption "eliminations".
Depreciation and Amortization
-------------------------------------------
2001 2002 2003
----------- ------------ ------------
Mexico................ Ps 1,889.8 1,779.7 1,645.0
Spain................. 873.3 1,125.1 1,368.8
United States......... 2,437.0 1,932.2 2,013.4
Venezuela............. 725.1 580.6 635.2
Colombia.............. 557.5 531.5 830.1
Caribbean and Central
America............... 414.7 443.4 602.3
Philippines........... 394.6 465.6 444.3
Egypt................. 524.9 486.5 354.4
Others................ 950.9 1,431.8 1,377.6
----------- ------------ ------------
Consolidated.......... Ps 8,767.8 8,776.4 9,271.1
----------- ------------ ------------
For purposes of the table above, goodwill amortization reported by holding
companies has been allocated to the business geographic segment that
originated such goodwill amounts. Therefore, this information is not directly
comparable with the information of the individual entities, which are
comprised in each segment. Additionally, in the Company's consolidated income
statement, goodwill amortization is recognized as part of other expenses, net.
F-37
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Total assets and investment in fixed assets by geographic segment are
summarized as follows:
Total Assets Investment in Fixed Assets (2)
------------------------------------- ----------------------------------
2002 2003 2002 2003
---------------- ---------------- -------------- ---------------
Mexico....................................Ps 62,996.2 55,814.0 1,074.5 1,254.9
Spain..................................... 24,071.6 35,185.8 691.2 664.8
United Status............................. 49,405.6 46,776.2 1,130.1 1,107.8
Venezuela................................. 8,681.8 8,687.8 152.7 123.4
Colombia.................................. 6,651.7 7,554.5 58.3 68.3
Caribbean and Central America............. 11,785.4 12,155.4 323.0 683.4
Philippines............................... 9,356.0 7,869.5 136.5 19.1
Other Asian............................... 4,040.0 4,289.0 119.4 20.0
Egypt..................................... 6,313.8 4,149.9 305.1 161.6
Others (1)................................ 79,186.2 73,960.1 683.5 397.0
---------------- ---------------- -------------- ---------------
262,488.3 256,442.2 4,674.3 4,500.3
Eliminations.............................. (79,738.0) (76,424.8) - -
---------------- ---------------- -------------- ---------------
Consolidated..............................Ps 182,750.3 180,017.4 4,674.3 4,500.3
---------------- ---------------- -------------- ---------------
(1) Includes, in addition to trade maritime operating assets and other assets, related party balances of the Parent
Company of Ps37,466.3 and Ps35,331.8 in 2002 and 2003, respectively, which are eliminated in consolidation.
(2) Corresponds to fixed assets investments not considering the effects of inflation. As a result, this balance differs
from the amount presented as investing activities in the Statement of Changes in the Financial Position in
"Properties, machinery and equipment, net", which considers the inflation effects in accordance with Bulletin B-10.
As of December 31, 2002 and 2003, of the consolidated financial debt amounting
to Ps66,143.5 and Ps65,931.8, respectively, approximately 57% in 2002 and 35%
in 2003 is in the Parent Company, 24% and 14% in United States, 12% and 16% in
Spain and 7% and 35% in other countries, respectively. Of the 35% of other
countries in 2003, 57% is in a Dutch subsidiary, and is guaranteed by the
Mexican operations and the Parent. The other 31% is in financial companies in
the United States, and is guaranteed by the Spanish operations.
20. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing majority interest net
income for the year by the weighted average number of common shares
outstanding during the year. Diluted earnings per share reflects on the
weighted average number of common shares outstanding, the effects of any
transaction carried out by the Company which have a potentially dilutive
effect on such number of shares.
The weighted-average number of shares utilized in the earnings per share
("EPS") calculation is as follows:
Majority
Basic number of Diluted number of interest net Basic Diluted
shares shares income EPS EPS
---------------- ----------------- ------------- -------- --------
December 31, 2001..................... 4,264,724,371 4,299,689,171 Ps 13,026.6 Ps 3.05 Ps 3.03
December 31, 2002..................... 4,487,527,392 4,496,213,613 5,966.9 1.33 1.33
December 31, 2003........................ 4,728,201,229 4,837,194,188 7,067.4 1.49 1.46
---------------- ----------------- ------------- -------- --------
The difference between the basic and diluted average number of shares in 2001,
2002 and 2003 is attributable to the additional shares to be issued under the
Company's fixed executive stock option program (see note 15). In addition,
beginning in 2003, the Company includes the dilutive effect on the basic
number of shares resulting from the equity forward contracts in the Company's
own stock, determined under the inverse treasury method.
F-38
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
21. CONTINGENCIES AND COMMITMENTS
A) GUARANTEES
As of December 31, 2002 and 2003, CEMEX, S.A. de C.V. has signed as guarantor
of loans made to certain subsidiaries for approximately U.S.$55.2 million and
U.S.$1,322 million, respectively. As of the same dates, the Company and
certain subsidiaries have guaranteed the risks associated with certain
financial transactions, assuming contingent obligations under standby letters
of credit, issued by financial institutions for a total of U.S.$175.0 million
and U.S.$55 million, respectively.
B) TAX ASSESSMENTS
As of December 31, 2003, the Company and some of its subsidiaries in Mexico
have been notified of several tax assessments determined by the Mexican tax
authorities, related to different tax periods. These tax assessments are for
an amount of approximately Ps4,884.9. The tax assessments result primarily
from: (i) Recalculation of the inflationary tax deduction, since the tax
authorities claim that "Advance Payments to Suppliers" and "Guaranty Deposits"
are not by their nature credits; (ii) disallowed restatement of tax loss
carryforwards in the same period in which they occurred; (iii) disallowed
determination of tax loss carryforwards and; (iv) disallowed reduction of BAT
by the controlling entity on the grounds that the creditable amount should be
in proportion to the equity interest it has over the controlled entities. The
companies involved are using available defense actions granted by law in order
to cancel the tax claims.
As of December 31, 2003, the Philippine Bureau of Internal Revenue ("BIR")
assessed APO Cement Corp. ("APO") for deficiency in the payment of income tax.
The assessment covers the taxable years of 1998 through 2001 with deficiency
tax amounting to Philippine Pesos 741.1 million (approximately U.S.$13.3
million). The assessment disallows APO's income tax holiday related income.
APO contested BIR's findings with the Court of Tax Appeal ("CTA"). In a
separate case, the BIR finalized its determinations with respect to fiscal
year 1999 of Solid and APO. Both companies will continue to submit relevant
evidence to the BIR to contest these assessments. APO intends to contest these
assessments with the CTA in case the BIR issues a final collection letter.
Additionally, Solid's 1998 tax year and APO's 1997 and 1998 tax years are
under preliminary review for deficiency in the payment of taxes. Finalization
of the assessment was held in abeyance by the BIR as APO and Solid continue to
present evidence to dispute their findings. The Company intends to contest any
and all assessments if they arise.
C) ANTI-DUMPING DUTIES
In 1990, the United States Department of Commerce ("DOC") imposed an
anti-dumping duty order on imports of gray Portland cement and clinker from
Mexico. As a result, certain subsidiaries of the Company, as importers of
record, have been subject to payment of anti-dumping duty deposits, estimated
on imports of gray Portland cement and clinker from Mexico since April 1990.
The order is likely to continue for an indefinite period, until the United
States of America ("United States") government determines, taking into
consideration the World Trade Organization new rules, that conditions for
imposing the order no longer exist; the cancellation or suspension of the
order would follow. In the last quarter of 2000, the United States government
continued the order, a resolution that will prevail until it makes a new
review. During December 2001, the United States government through the
International Trade Commission denied the Company's request to initiate a new
review.
As of December 31, 2003, the Company has accrued a liability of U.S.$132.9
million, including accrued interest, for the difference between the amount of
anti-dumping duties paid on imports and the latest findings by the DOC in its
administrative reviews for all periods under review.
As of December 31, 2003, the Company is in the thirteenth administrative
review period by the DOC and expects a preliminary resolution in the second
half of 2004. The DOC published, during September 2003, the final resolution
with respect to the twelfth administrative review period. With respect to the
first five review periods, the DOC has issued a final resolution of the
anti-dumping duties. Referring to the remaining review periods, the final
resolutions are suspended until all the procedures before the North America
Free Trade Agreement Panel are concluded. As a result, the final amounts may
be different from those liabilities recorded in the accompanying consolidated
financial statements. The Company and its subsidiaries have defended their
position in this matter and will continue to do so through available means in
order to determine the actual dumping margins within each period of the
administration reviews carried out by the DOC.
F-39
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
During 2001, the Ministry of Finance ("MOF") of Taiwan by the claim of five
Taiwanese cement producers, initiated a formal antidumping investigation
involving imported gray Portland cement and clinker from the Philippines and
South Korea. APO, Rizal and Solid are among the cement producers under
investigation and have received their anti-dumping questionnaires from the
International Trade Commission under the Ministry of Economic Affairs
("ITC-MOEA") Rizal and Solid replied to the ITC-MOEA by confirming that they
have not been exporting cement or clinker during the review period.
Furthermore, APO contested the allegation of "injury" in the anti-dumping
proceedings before the ITC-MOEA. At the end of the same year ITC-MOEA informed
the petitioners and the respondent producers about the results of the
preliminary investigation and determined that there are reasonable indicators
that the Taiwanese industry has incurred material damage due to imports of
cement and clinker from South Korea and the Philippines that allegedly is sold
in Taiwan at a price below market price. In order to comply with regulations
of anti-dumping duties in Taiwan, the ITC-MOEA transferred this investigation
to the MOF. In November 2001, APO received supplemental questionnaires by the
MOF. The answer to these questionnaires was presented by APO during November
and December 2001.
In January 2002, the MOF notified the petitioners and respondent producers, on
a preliminary resolution, of findings that there might be dumping and that the
investigation would continue, without imposing any anti-dumping duty. In June
2002, the ITC-MOEA informed the petitioners and repondent producers of its
resolution that the imports from South Korea and the Philippines had caused
material damage to the Taiwanese industry. In July 2002, the MOF gave notice
of a cement and clinker import duty, from imports of South Korea and the
Philippines, beginning on July 19, 2002. The imposed tariff was 42% on imports
from APO, Rizal and Solid (Rizal and Solid merged in December 2002). In
September 2002, those entities appealed the anti-dumping duty before the
Taipei High Administrative Council. At December 31, 2003, the appeal remains
pending.
D) LEASES
CEMEX has entered into various non-cancelable operating leases, primarily for
operating facilities, cement storage and distribution facilities and certain
transportation and other equipment, under which annual rental payments are
required plus the payment of certain operating expenses. Future minimum rental
payments due under such leases are as follows:
Year ending December 31, U.S. dollars millions
- -------------------------------------------------------------------------------------------------- --------------------
2004............................................................................................... 65.3
2005............................................................................................... 62.3
2006............................................................................................... 47.3
2007............................................................................................... 41.0
2008............................................................................................... 40.8
2009 and thereafter................................................................................ 86.1
--------------------
342.8
--------------------
Rental expense for the years ended December 31, 2001, 2002, and 2003 was
approximately U.S.$67 million, U.S.$57 million and U.S.$56 million,
respectively.
E) PLEDGE ASSETS
As of December 31, 2002 and 2003 there are liabilities amounting to U.S.$80.8
million and U.S.$27.1 million, respectively, secured by properties, machinery
and equipment.
F) COMMITMENTS
As of December 31, 2002 and 2003, the Company has future commitments for the
purchase of raw materials for an approximate amount of U.S.$86.4 million and
U.S.$113.0 million, respectively.
During 1999, CEMEX entered into agreements with an international partnership
which will build and operate an electrical energy generating plant. The
agreements establish that when the plant begins operations, CEMEX will
purchase, starting in 2003, all the energy generated by the plant for a term
of no less than 20 years. As part of the agreements, CEMEX has committed to
supply the electrical energy plant with all fuel necessary for its operations,
a commitment that has been hedged through a 20-year agreement entered into by
the Company with Petroleos Mexicanos. By means of this transaction, CEMEX
expects to have significant decreases in its electrical energy costs, and the
supply is expected to be sufficient to cover approximately 80% of the
electrical energy needs of CEMEX in Mexico. CEMEX is not required to make any
capital investment in the project. At December 31, 2003, the plant is in the
proofing stage and has not sold any output to CEMEX. Electricity purchases are
expected to begin in the first quarter of 2004.
F-40
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
In March 2002, the distribution contract in Taiwan that CEMEX had with
Universe Company since March 31, 2000, was terminated. As a result, for the
year ended December 31, 2002, CEMEX recognized an approximate loss of
U.S.$17.3 million (Ps198.4) within other expenses, net.
G) OTHER CONTINGENCIES
At December 31 2003, CEMEX, Inc., has accrued liabilities specifically
relating to environmental matters in the aggregate amount of U.S.$32.4
million. The environmental matters relate to: a) in the past, in accordance
with industry practice, disposing of various materials, which might be
categorized as hazardous substances or wastes, and b) the cleanup of sites
used or operated by the Company, including discontinued operations, in regard
to the disposal of hazardous substances or wastes, either individually or
jointly with other parties. Most of the proceedings are in the preliminary
stage, and a final resolution might take several years. For purposes of
recording the provision, the subsidiary considers that it is probable that a
liability has been incurred and the amount of the liability is reasonably
estimable, whether or not claims have been asserted, and without giving effect
to any possible future recoveries. Based on information developed to date, the
subsidiary does not believe it will be required to spend significant sums on
these matters in excess of the amounts previously recorded. Until all
environmental studies, investigations, remediation work, and negotiations with
or litigation against potential sources of recovery have been completed,
however, the ultimate cost that might be incurred to resolve these
environmental issues cannot be assured.
In December 2002, an ex-maritime broker for Puerto Rican Cement Company, Inc.
("PRCC"), the main subsidiary of CEMEX in Puerto Rico, filed a lawsuit in
Puerto Rico against CEMEX, PRCC and other individuals not affiliated with
CEMEX, including Puerto Rican authorities. The plaintiff contends that the
defendants conspired to break antitrust laws so that one of the defendants,
who is not a CEMEX related party, could have control of the maritime broker
market in Port of Ponce, Puerto Rico. The plaintiff has asked for relief in
the amount of approximately U.S.$18 million. In October 2003, the legal
authorities in Puerto Rico ruled against the plaintiff.
In May 2001, a subsidiary of the Company in Colombia received a civil
liability suit from 42 transporters, alleging that this subsidiary is
responsible for alleged damages caused by the alleged breach of provision of
raw materials contracts. The plaintiffs have asked for relief in the amount of
U.S.$45.8 million. The Company filed a timely defense response. This
proceeding is in a preliminary stage. Typically, proceedings of this nature
take several years before a final resolution is reached.
In May 1999, several companies filed a lawsuit against two subsidiaries of the
Company based in Colombia, alleging that the Ibague plants were causing
capacity production damage to their lands due to the pollution they generate.
The plaintiffs demand a relief in the amount of U.S.$8.8 million. This
proceeding is in its final stage. As of December 31, 2003, the Company had not
been formally notified of any resolution.
22. NEW ACCOUNTING PRONOUNCEMENTS
In May 2003, the Mexican Institute of Public Accountants issued Bulletin C-12,
"Financial Instruments with Characteristics of Liabilities, Equity, or Both",
which is effective beginning January 1, 2004, however, earlier application is
permitted. Bulletin C-12 condenses the guidelines included in other bulletins
related to the issuance of complex financial instruments, and complements the
criteria to achieve a comprehensive resolution of general problems. As a
result, Bulletin C-12 defines the basic differences between liabilities and
equity; establishes rules for the initial classification and valuation of the
liability and equity components of combined financial instruments, and
establishes rules for disclosure of combined financial instruments. Under
Bulletin C-12, financial instruments should be classified as liabilities or
equity at the beginning of the year of adoption, without determining any
cumulative effect through earnings in the year of adoption. Prior years
comparative financial information should not be restated.
The Company estimates that the adoption of this Bulletin will have no
significant impact on its financial position or operating results, except for
the reclassification of preferred stock for U.S.$66 million (Ps741.8) (see
note 14E), which as of December 31, 2003 is recognized within minority
interest in stockholders' equity, and that according to the new Bulletin's
rules, should be considered as a liability.
F-41
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
23. DIFFERENCES BETWEEN MEXICAN AND UNITED STATES ACCOUNTING PRINCIPLES
The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Mexico (Mexican GAAP), which
differ in certain significant respects from those applicable in the United
States (U.S. GAAP).
The Mexican GAAP consolidated financial statements include the effects of
inflation as provided for under Bulletin B-10 and Bulletin B-15, whereas
financial statements prepared under U.S. GAAP are presented on a historical
cost basis. The reconciliation to U.S. GAAP includes (i) a reconciling item
for the reversal of the effect of applying Bulletin B-15 for the restatement
to constant pesos for the years ended December 31, 2001 and 2002, and (ii) a
reconciling item to reflect the difference in the carrying value of machinery
and equipment of foreign origin and related depreciation between the
methodology set forth by Bulletin B-10 (integrated document) and the amounts
that would be determined by using the historical cost/constant currency
method. As described below, these provisions of inflation accounting under
Mexican GAAP do not meet the requirements of Rule 3-20 of Regulation S-X of
the Securities and Exchange Commission. The reconciliation does not include
the reversal of other Mexican GAAP inflation accounting adjustments as these
adjustments represent a comprehensive measure of the effects of price level
changes in the inflationary Mexican economy and, as such, is considered a more
meaningful presentation than historical cost-based financial reporting for
both Mexican and U.S. accounting purposes. The other principal differences
between Mexican GAAP and U.S. GAAP for the years ended December 31, 2001, 2002
and 2003, and their effect on consolidated net income and earnings per share,
are presented below:
Years ended December 31,
-----------------------------------------
2001 2002 2003
--------------------------- -------------
Net income reported under Mexican GAAP...................................... Ps 13,026.6 5,966.9 7,067.4
Inflation adjustment (*).................................................... (1,181.2) (357.5) -
--------------------------- -------------
Net income reported under Mexican GAAP after inflation adjustment........... 11,845.4 5,609.4 7,067.4
Approximate additional U.S. GAAP adjustments:
1. Amortization of goodwill (see 23(a))........................................ (549.4) 1,729.4 1,946.4
2. Deferred income taxes (see 23(b))........................................... (285.9) 2,316.8 (61.8)
3. Deferred employees' statutory profit sharing (see 23(b)).................... (190.8) (194.4) 89.3
4. Other employee benefits (see 23(c))......................................... (9.7) (31.8) 86.4
5. Capitalized interest (see 23(d))............................................ 15.1 (40.0) (45.7)
6. Minority interest (see 23(e)):
a) Financing transactions................................................... 303.6 (167.0) (175.0)
b) Effect of U.S. GAAP adjustments.......................................... 135.3 33.6 (24.4)
7. Hedge accounting (see 23(l))................................................ 633.3 (2,555.3) (826.7)
8. Depreciation (see 23(f)).................................................... (18.1) 13.1 48.8
9. Accruals for contingencies (see 23(g))...................................... (9.6) 7.6 (108.9)
10. Equity in net income of affiliated companies (see 23(h)).................... 0.6 11.9 (9.7)
11. Inflation adjustment of fixed assets (see 23(i))............................ (481.3) (377.2) (262.0)
12. Temporary equity from forward contracts (see 23(j))......................... (461.6) (538.0) 740.5
13. Derivative instruments and equity forward contracts in CEMEX's stock (see
23(l) and 23(m))......................................................... 32.3 - 415.0
14. Other U.S. GAAP adjustments (see 23(k))..................................... (410.6) (494.3) (257.1)
15. Monetary effect of U.S. GAAP adjustments.................................... 495.0 542.4 291.9
--------------------------- -------------
Approximate U.S. GAAP adjustments before cumulative effect of accounting (801.8) 256.8 1,847.0
change...................................................................
--------------------------- -------------
Approximate net income under U.S. GAAP before cumulative effect of 11,043.6 5,866.2 8,914.4
accounting change........................................................
Cumulative effect of accounting change (see 23(k) and 23(m))................ - - (640.7)
--------------------------- -------------
Approximate net income under U.S. GAAP after cumulative effect of Ps 11,043.6 5,866.2 8,273.7
accounting change........................................................
--------------------------- -------------
Basic EPS under U.S. GAAP before cumulative effect of accounting change......... Ps 2.60 1.31 1.89
Diluted EPS under U.S. GAAP before cumulative effect of accounting change....... 2.53 1.31 1.84
--------------------------- -------------
Basic EPS under U.S. GAAP after cumulative effect of accounting change.......... Ps 2.60 1.31 1.75
Diluted EPS under U.S. GAAP after cumulative effect of accounting change........ 2.53 1.31 1.71
--------------------------- -------------
F-42
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
At December 31, 2002 and 2003, the other principal differences between Mexican GAAP and U.S. GAAP, and their effect on
consolidated stockholders' equity, with an explanation of the adjustments, are presented below:
At December 31,
-------------------------
2002 2003
----------- -------------
Total stockholders' equity reported under Mexican GAAP....................................... Ps 79,721.3 76,051.5
Inflation adjustment (*)..................................................................... (4,776.6) -
----------- -------------
Total stockholders' equity reported under Mexican GAAP after inflation adjustment............ 74,944.7 76,051.5
Approximate additional U.S. GAAP adjustments:
1. Goodwill, net (see 23(a)).................................................................... (1,938.1) 1,261.8
2. Deferred income taxes (see 23(b))............................................................ (888.6) 768.2
3. Deferred employees' statutory profit sharing (see 23(b))..................................... (3,314.2) (3,008.1)
4. Other employee benefits (see 23(c)).......................................................... (328.3) (175.8)
5. Capitalized interest (see 23(d))............................................................. (480.5) (523.5)
6. Minority interest--effect of financing transactions (see 23(e))............................... (976.7) (741.8)
7. Minority interest--U.S. GAAP presentation (see 23(e))......................................... (13,115.5) (5,419.1)
8. Depreciation (see 23(f))..................................................................... (208.1) (55.1)
9. Accruals for contingencies (see 23(g))....................................................... 120.9 31.4
10. Investment in net assets of affiliated companies (see 23(h))................................. (218.2) (249.9)
11. Inflation adjustment for machinery and equipment (see 23(i))................................. 6,354.9 3,770.6
12. Temporary equity from forward contracts (see 23(j)).......................................... (5,878.5) -
13. Derivative instruments and equity forward contracts in CEMEX's stock (see 23(l) and 23(m))... - 397.0
14. Other U.S. GAAP adjustments (see 23(k))...................................................... (377.4) (458.5)
----------- -------------
Approximate U.S. GAAP adjustments before cumulative effect of accounting change.............. (21,248.3) (4,402.8)
----------- -------------
Approximate stockholders' equity under U.S. GAAP before cumulative effect of accounting 53,696.4 71,648.7
change.....................................................................................
Cumulative effect of accounting change (see 23 k and m) - (527.5)
----------- -------------
Approximate stockholders' equity under U.S. GAAP after cumulative effect of accounting change Ps 53,696.4 71,121.2
----------- -------------
(*) Adjustment that reverses the restatement of prior periods into constant pesos as of December 31, 2003, using the
CEMEX weighted average inflation factor (see note 2B), and restates such prior periods into constant pesos as of
December 31, 2003 using the Mexican-only inflation factor, in order to comply with current requirements of
Regulation S-X. The Mexican and U.S. GAAP prior periods amounts included throughout note 23, were restated using
the Mexican inflation index, with the exception of those amounts of prior periods that are also disclosed in notes
1 to 22, which were not restated in note 23 using the Mexican inflation in order to have more straightforward
cross-references between note 23 and the Mexican GAAP notes.
Net income and stockholders' equity reconciliations to U.S. GAAP for the year
ended December 31, 2003 have been prepared on a basis that is substantially
consistent with the accounting principles applied in our Annual Report on Form
20-F for the year ended December 31, 2002, except for the adoption of SFAS 143
Accounting for Asset Retirement Obligations ("SFAS 143") and SFAS 150
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity ("SFAS 150"), as of and for the year ended December 31,
2003 (see notes 23(k) and 23(m)). The term "SFAS" as used herein refers to
Statements of Financial Accounting Standards.
(a) Goodwill
Goodwill represents the difference between the purchase price and the
estimated fair value of the acquired entity at the acquisition date. CEMEX's
goodwill recognized under Mexican GAAP has been adjusted for U.S. GAAP
purposes for (i) the effect on goodwill for the U.S. GAAP adjustments as of
the dates the subsidiaries were acquired; (ii) until December 31, 2001, for
the difference between amortization of goodwill as determined under sinking
fund method over 20 to 40 years for Mexican GAAP purposes (see note 2(I)) and
the straight-line method over 40 years for U.S. GAAP purposes. Beginning
January 1, 2002, SFAS 142, Goodwill and Other Intangible Assets, eliminates
the amortization of goodwill under U.S. GAAP (see note 23(s)) and (iii) the
difference between goodwill amounts carried in the reporting unit's functional
currency, restated by the inflation factor of the reporting unit's country and
then translated into Mexican pesos at the exchange rates prevailing at the
reporting date, under U.S. GAAP, against goodwill amounts carried in the
currencies of the reporting units' holding companies, translated into pesos
and then restated using the Mexican inflation index under Mexican GAAP.
In the condensed income statement under U.S. GAAP for the year ended December
31, 2001 presented in note 23(o), amortization of goodwill is reflected as an
operating expense versus other expense under Mexican GAAP.
F-43
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
For purposes of reconciliation to U.S. GAAP, CEMEX adopted in 2002, SFAS 142
and SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(see note 23(s)). As a result of this adoption, effective January 1, 2002,
amortization ceased for goodwill under U.S. GAAP; therefore, beginning in
2002, goodwill amortization recorded under Mexican GAAP is adjusted for
purposes of the reconciliation of net income and stockholders' equity to U.S.
GAAP.
CEMEX assesses goodwill for impairment annually unless events occur that
require more frequent reviews. Discounted cash flow analyses are used to
assess goodwill impairment (see note 23(s)). If an assessment indicates
impairment, the impaired asset is written down to its fair market value based
on the best information available. Estimated fair market value is generally
measured using estimated discounted future cash flows. Considerable management
judgment is necessary to estimate discounted future cash flows. Assumptions
used for these cash flows are consistent with internal forecasts.
(b) Deferred Income Taxes ("IT") and Employees' Statutory Profit Sharing
("ESPS")
For U.S. GAAP purposes, CEMEX accounts for income taxes utilizing SFAS 109,
Accounting for Income Taxes ("SFAS 109"), which requires the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred tax assets and liabilities are recognized for the future tax
consequences of "temporary differences", which result from applying the
enacted statutory tax rates applicable in future years to differences between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities and operating loss carryforwards. The deferred income tax
charged or credited to operations is determined by the difference between the
beginning and the year-end balance of the deferred tax assets or liabilities,
and is recognized in nominal pesos. The effect on deferred taxes of a change
in tax rates is recognized in income in the period that includes the enactment
date.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred
tax liabilities under U.S. GAAP at December 31, 2002 and 2003 are presented below:
2002 2003
------------ -----------
Deferred tax assets:
Net operating loss and assets tax carryforwards........................................ Ps 7,222.1 13,073.4
Trade accounts receivable.............................................................. 114.2 93.8
Investment in affiliated companies..................................................... 303.0 -
Accounts payable and accrued expenses.................................................. 4,467.2 1,705.8
Other.................................................................................. 626.4 22.1
------------ -----------
Total gross deferred tax assets........................................................ 12,732.9 14,895.1
Less valuation allowance............................................................... 1,071.8 3,674.9
------------ -----------
Total deferred tax assets under U.S. GAAP............................................ 11,661.1 11,220.2
------------ -----------
Deferred tax liabilities:
Property, plant and equipment.......................................................... 21,853.6 21,303.7
Inventories............................................................................ 1,273.6 892.6
Other.................................................................................. 903.9 (19.2)
------------ -----------
Total deferred tax liability under U.S. GAAP......................................... 24,031.1 22,177.1
------------ -----------
Net deferred tax liability under U.S. GAAP............................................. 12,370.0 10,956.9
Deferred tax recognized under Mexican GAAP (see note 17B).............................. 5,463.5 5,170.6
------------ -----------
Excess of liability under U.S. GAAP over that recognized under Mexican GAAP............ 6,906.5 5,786.3
Less--U.S. GAAP deferred income taxes of acquired subsidiaries at date of acquisition... 6,345.2 6,554.5
Inflation adjustment (note 2B)......................................................... 327.3 -
------------ -----------
Net adjustment to stockholders' equity under U.S. GAAP................................. Ps 888.6 768.2
------------ -----------
Management considers that there is existing evidence that, in the future, the
Company will generate sufficient taxable income to realize the tax benefits
associated with the deferred tax assets, and the tax loss carryforwards, prior
to their expiration. In the event that present conditions change, and it is
determined that future operations would not generate enough taxable income, or
that tax strategies are no longer viable, the deferred tax assets' valuation
allowance would be increased by a charge to income.
F-44
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
CEMEX records a valuation allowance for the estimated amount of the
recoverable tax on assets which may not be realized due to the expiration of
tax loss carryforwards. Through its continual evaluation of the effects of tax
strategies, among other economic factors, during 2002 and 2003 CEMEX increased
the valuation allowance by approximately Ps483.6 and Ps2,603.1, respectively.
Under Mexican GAAP, CEMEX determines deferred income tax through the asset and
liability method (see notes 2K and 17B), in a manner similar to U.S. GAAP.
Nonetheless, there are specific differences as compared to the calculation
under SFAS 109, resulting in adjustments in the reconciliation to U.S. GAAP.
These differences arise from: (i) the recognition of the accumulated initial
effect of the asset and liability method as of January 1, 2000, which was
recorded directly to stockholders' equity and therefore, does not consider the
provisions of APB Opinion 16 for the deferred tax consequences in business
combinations made before January 1, 2000; (ii) the effects of deferred tax on
the reconciling items between Mexican and U.S. GAAP, and (iii) for the year
ended December 31, 2001, some inflationary adjustments to Mexican GAAP
recorded in the foreign subsidiaries for consolidation purposes which were
treated as permanent differences. For Mexican GAAP presentation purposes,
deferred tax assets and liabilities are long-term items.
CEMEX has recorded a deferred tax liability for U.S. GAAP purposes, related to
ESPS in Mexico, under the asset and liability method at the statutory rate of
10%. The principal effects of temporary differences that give rise to
significant portions of the deferred ESPS liabilities at December 31, 2002 and
2003 are presented below:
At December 31,
-----------------------------
2002 2003
------------- -------------
Deferred assets:
Employee benefits............................................................... Ps 49.4 25.9
Trade accounts receivable....................................................... 15.0 22.3
Other........................................................................... 55.6 104.7
------------- -------------
Gross deferred assets under U.S. GAAP.............................................. 120.0 152.9
------------- -------------
Deferred liabilities:
Property, plant and equipment................................................... 3,008.8 2,920.3
Inventories..................................................................... 148.2 111.5
Other........................................................................... 277.2 129.2
------------- -------------
Gross deferred liabilities under U.S. GAAP......................................... 3,434.2 3,161.0
------------- -------------
Net deferred liabilities under U.S. GAAP........................................... Ps 3,314.2 3,008.1
------------- -------------
In the condensed financial information presented under U.S. GAAP in note
23(o), ESPS expense, both current and deferred, is included in the
determination of operating income. For Mexican GAAP presentation, ESPS
expense, both current and deferred, is considered as a separate line item
equivalent to income tax.
Under Mexican GAAP, CEMEX recognizes deferred ESPS for those temporary
differences arising from the reconciliation of net income of the period and
the taxable income for ESPS. In the reconciliation of net income to U.S. GAAP,
deferred ESPS expense of Ps14.6 in 2001, income of Ps20.4 in 2002 and expense
of Ps69.9 in 2003, determined under Mexican GAAP, were reversed.
(c) Other Employee Benefits
Vacations
Beginning in 2003, CEMEX recognizes vacation expense under Mexican GAAP during
the period the employees earn it, consistently with SFAS 43, Accounting for
Compensated Absences. For the years ended December 31, 2001 and 2002, in some
business units of CEMEX, vacation expense was recorded for purposes of Mexican
GAAP when taken rather than during the period the employees earn it;
therefore, a reconciling item was determined for U.S. GAAP purposes
representing expense of approximately Ps1.8 in 2001, expense of Ps5.7 in 2002
and expense of Ps1.2 in 2003. The amount of expense recognized during 2003
under U.S. GAAP represents the difference between the estimated accrual made
under U.S. GAAP through December 31, 2002 and the accumulated initial effect
from the accounting change under Mexican GAAP, which was recognized as of
January 1, 2003 directly to stockholders' equity for Mexican GAAP purposes.
F-45
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Severance
Under Mexican GAAP, severance payments, which are not part of a business
restructuring nor a substitution for pension benefits, are recognized in
earnings in the period in which they are paid. Under U.S. GAAP,
post-employment benefits for former or inactive employees, excluding
retirement benefits, are accounted for under the provisions of SFAS 112,
Employers' Accounting for Postemployment Benefits, which requires an entity to
accrue the cost of certain benefits, including severance payments, over an
employee's service life. For the years ended December 31, 2001, 2002 and 2003,
severance provisions recorded for U.S. GAAP purposes resulted in expenses of
Ps7.9, Ps26.1 and income of Ps87.6, respectively, with an accrual of Ps269.6
and Ps175.8 at December 31, 2002 and 2003, respectively. The decrease in the
accrual for severance payments during 2003 results from the voluntary early
retirement program described in note 13. Severance payments relating to any
specific event or restructuring are excluded from the SFAS 112 calculation.
Pension and other benefits
CEMEX accounts for employee pension benefits based on the net present value of
the obligations determined by independent actuaries (see notes 2J and 13), in
a manner similar to SFAS 87, Employers' Accounting for Pensions, under U.S.
GAAP and, therefore, no reconciling item is necessary.
In addition, as a result of the acquisition of CEMEX, Inc. (formerly Southdown
(see note 8A)) in 2000 and Puerto Rican Cement Company, Inc. ("PRCC") in 2002,
CEMEX assumed a package of employee benefits, which include pension,
retirement savings plan, supplemental executive retirement plan and health and
life insurance benefits. The benefit obligation and the net pension cost
arising from CEMEX, Inc.'s and PRCC's employee benefit plans, have been
recorded under Mexican GAAP and are included in the consolidated information
with respect to CEMEX's pension plans, seniority premium and other
postretirement benefits (see note 13).
Most of CEMEX's health care benefits are self-insured and administered on cost
plus fee arrangements with major insurance companies or provided through
health maintenance organizations. CEMEX also provides life insurance benefits
to its active and retired employees. Generally, life insurance benefits for
retired employees are reduced over a number of years from the date of
retirement to a minimum level.
(d) Capitalized Interest
Under Mexican GAAP, CEMEX capitalizes interest on property, machinery and
equipment under construction, which is comprehensively measured in order to
include the following effects from the debt incurred to finance the
construction project: (i) the interest cost, plus (ii) any foreign currency
fluctuations, and less (iii) the related monetary position result. Under U.S.
GAAP, only interest is considered an additional cost of constructed assets to
be capitalized and depreciated over the lives of the related assets. The U.S.
GAAP reconciliation removes the foreign currency gain or loss and the monetary
position result capitalized for Mexican GAAP derived from borrowings
denominated in foreign currency.
(e) Minority Interest
Financing Transactions
For U.S. GAAP presentation purposes (see note 23(o)), the preferred stock
described in note 14E for a notional amount of U.S.$650 million at December
31, 2002, which was repurchased during 2003, is presented as a separate
component of mezzanine items, which are those included between the liabilities
and the equity items on the balance sheet. Under Mexican GAAP, this
transaction was presented as part of the minority interest within
stockholders' equity. Preferred dividends paid in 2001 and 2002 were
recognized as part of the minority interest in the consolidated income
statements under both Mexican and U.S. GAAP, while the preferred dividends
paid in 2003 were classified as interest expense under U.S. GAAP as a result
of the adoption of SFAS 150, see note 23(m).
For U.S. GAAP presentation purposes (see note 23(o)), capital securities
described in note 14E for a notional amount of U.S.$66 million (Ps741.8) at
December 31, 2002 and 2003, are presented as a separate component of mezzanine
items at December 31, 2002 and, as a result of the adoption of SFAS 150, as a
separate component within liabilities at December 31, 2003 (see note 23(m)).
Under Mexican GAAP this transaction was presented as part of the minority
interest within stockholders' equity at both December 31, 2002 and 2003.
Capital securities dividends paid in 2001 and 2002 were recorded as part of
the minority interest in the consolidated income statements under both Mexican
and U.S. GAAP, while the capital securities dividends paid in 2003 were
classified as interest expense under U.S. GAAP as a result of the adoption of
SFAS 150 (see note 23(m)).
F-46
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
As described in note 14F, during 2003, CEMEX settled a financing transaction
entered into in 1995, under which, at December 31, 2002, CEMEX had an
outstanding obligation of U.S.$90.6 million (Ps1,038.9). For U.S. GAAP
purposes the amount outstanding under this arrangement was treated as debt.
Under Mexican GAAP, until its liquidation, this transaction was treated as
minority interest. CEMEX's cost of retaining its option to reacquire the
contributed assets during the years ended December 31, 2001, 2002 and 2003 was
recorded as interest expense in the consolidated income statements under both
Mexican and U.S. GAAP.
U.S. GAAP adjustments on minority interest
Under Mexican GAAP, the minority interest in consolidated subsidiaries is
presented as a separate component within stockholders' equity. Under U.S.
GAAP, minority interest is classified as a separate component between total
liabilities and stockholders' equity (see note 23(o)). At December 31, 2002
and 2003, the amount presented in the reconciliation of stockholders' equity
to U.S. GAAP includes the reclassification previously mentioned, as well as
the share on minority interest of the adjustments to U.S. GAAP determined in
the consolidated subsidiaries.
(f) Depreciation
A subsidiary of CEMEX in Colombia records depreciation expense utilizing the
sinking fund method. This methodology for depreciation was in place before
CEMEX acquired the subsidiary in 1997. For Mexican GAAP purposes, CEMEX has
maintained this accounting practice due to tax consequences in Colombia
arising from a change in methodology and the immateriality of the effects in
CEMEX's consolidated results. For U.S. GAAP purposes, depreciation is
calculated on a straight-line basis over the estimated useful lives of the
assets. As a result, for the years ended December 31, 2001, 2002 and 2003,
expense of Ps44.5 and income of Ps13.1 and Ps48.8, respectively, have been
reflected in the reconciliation of net income to U.S. GAAP.
Additionally, as a result of the application of APB 16 in the acquisition of
Solid (formerly Rizal), one of CEMEX's subsidiaries in the Philippines, for
U.S. GAAP purposes, CEMEX reduced the value of its fixed assets by Ps215.7 in
2001, net of depreciation, corresponding to the portion of the appraisal
value, determined at the acquisition date, related to the minority owners. The
change in the appraised fixed assets amount resulted in a decrease in
depreciation expense under U.S. GAAP of Ps26.4 for the year ended December 31,
2001. As mentioned in note 8A, during July 2002, CEMEX acquired the remaining
30% economic interest in Solid from the minority shareholders. As a result, in
2002, the adjustment made to the appraised fixed assets amount was reversed
against minority interest, given that the reversed amount is part of the
proportional net assets' fair value assigned to the 30% economic interest
acquired. There is no further effect on earnings under U.S. GAAP.
(g) Accruals for Contingencies
For Mexican GAAP purposes, CEMEX has recorded accruals for contingent items
related primarily to guarantees given and other responsibilities that do not
meet the accrual criteria of SFAS 5, Accounting for Contingencies, under U.S.
GAAP, since the likelihood of a loss occurring is considered to be possible
but not probable. Accordingly, the accruals under Mexican GAAP were reversed
for U.S. GAAP purposes.
With respect to the contingencies described in note 21, for which an accrual
has not been provided under Mexican GAAP at December 31, 2002 and 2003, CEMEX
considers that such contingencies do not meet the accrual criteria for both,
Mexican GAAP and U.S. GAAP.
(h) Affiliated Companies
CEMEX has adjusted its investment and equity method in affiliated companies
(see note 8A), for CEMEX's share of the approximate U.S. GAAP adjustments
applicable to these affiliates.
(i) Inflation Adjustment of Machinery and Equipment
For purposes of the reconciliation to U.S. GAAP, fixed assets of foreign
origin are restated by applying the inflation rate of the country that holds
the assets, regardless of the assets' origin countries, instead of using the
Mexican GAAP methodology, under which fixed assets of foreign origin are
restated by applying a factor that considers the inflation of the asset's
origin country, not the inflation of the country that holds the asset, and the
fluctuation of the functional currency (currency of the country that holds the
asset) against the currency of the asset's origin country. Depreciation
expense is based upon the revised amounts.
F-47
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
(j) Temporary Equity from Forward Contracts
As mentioned in notes 14F and 16A, during 1999, CEMEX entered into equity
forward contracts with respect to its ADSs with an original maturity in
December 2002, in connection with its appreciation warrants. In December 2002,
prior to their expiration, CEMEX renegotiated the extension of the forward
contracts until December 2003 and recognized a loss of approximately U.S$98.3
million (Ps1,104.8), which was charged to stockholders' equity under Mexican
GAAP, representing the difference between the cash redemption amount of the
forward contracts and the market value of the underlying shares at the date of
the agreements. Such loss was deducted by the counterparties from the
prepayments made by CEMEX toward the forward contracts' final price. These
contracts were settled during October 2003 in connection with a secondary
equity offering (see note 16A), resulting in a gain of approximately U.S.$19.5
million (Ps219.2), which was recognized in stockholders' equity under Mexican
GAAP. According to EITF 00-19, Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock, forward
contracts involving a company's own stock that will be physically settled by
delivering cash should be initially measured at fair value and recorded in
permanent equity, and an amount equivalent to the cash redemption at the date
of reporting, should be reclassified to temporary equity, which is to be
considered as a mezzanine item for balance sheet presentation under U.S. GAAP.
As a result, for purposes of reconciliation to U.S. GAAP, CEMEX presents a
reduction to its stockholders' equity under Mexican GAAP of approximately
Ps5,878.5 (U.S.$523.0) at December 31, 2002, which represents the cash
obligation plus the advanced payments made by CEMEX under the forward
contracts at the reporting date and is presented as a mezzanine item
(temporary equity) for purposes of the condensed balance sheets under U.S.
GAAP in note 23(o). Under Mexican GAAP, until their settlement, the shares
underlying the contracts were treated as permanent equity.
For Mexican GAAP purposes, since origination, these forward contracts had been
treated as equity transactions and, therefore, gains or losses were recognized
upon settlement or extension as an adjustment to stockholders' equity. During
the life of the contracts, the difference between the original proceeds of the
CPOs sale and the forward price that was periodically paid to the
counterparties was treated as a prepayment toward the forward contracts' final
price and presented as accounts receivable. Such amounts prepaid and
considered as accounts receivable were also treated as preferred dividends in
the net income reconciliation to U.S. GAAP, in a manner similar to a
mandatorily redeemable preferred stock, representing an expense of
approximately Ps461.6 in 2001, expense of Ps538.0 in 2002 and income of
Ps740.5 in 2003. The amount of income in 2003 includes a net gain of U.S.$19.5
million from the secondary equity offering, income of U.S.$101.7 million from
the reversal of prepayments accrued until settlement that were recognized as
preferred dividends during the life of the contracts and that were not
realized as a result of the offering and settlement; and an expense of
U.S.$6.4 million of prepayments made in 2003 treated as preferred dividends.
The loss of US$98.3 million and the gain of U.S.$19.5 million recognized in
stockholders' equity under Mexican GAAP in 2002 and 2003, respectively, were
not reclassified through net income in the reconciliation to U.S. GAAP, since
such amounts were periodically charged to earnings under U.S. GAAP as part of
the preferred dividends.
(k) Other U.S. GAAP Adjustments
Capitalization of costs of computer software development under U.S.
GAAP--Statement of Position 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use, requires that certain direct
costs related to the development or purchase of internal-use software be
capitalized and amortized over the estimated useful life of the software and
that costs related to the preliminary project stage and the
post-implementation/operations stage (as defined in SOP 98-1) in an
internal-use computer software development project be expensed as incurred.
The estimated average useful lives period to amortize these capitalized costs
is between 3 and 5 years.
For the years ended December 31, 2001, 2002 and 2003, the effect of
capitalizing these costs in the reconciliation of net income to U.S. GAAP, net
of amortization, led to expenses of Ps228.6, Ps203.6 and Ps347.5,
respectively, with a net effect of income in the stockholders' equity
reconciliation to U.S. GAAP at December 31, 2002 and 2003 of Ps272.6 and
Ps25.4, respectively. Beginning in 2001, in connection with CEMEX's decision
to significantly enhance and/or replace, on a worldwide basis, all of its
critical software systems under an effort denominated "CEMEX Way", for
accounting purposes under Mexican GAAP, CEMEX implemented the policy of
capitalizing the costs associated with developing and implementing
internal-use software (see note 10) resulting in a capitalization under
Mexican GAAP for the years ended December 31, 2001, 2002 and 2003 of
Ps1,462.2, Ps1,737.6 and Ps1,410.4, net of amortization. As a result, in the
reconciliation of net income to U.S. GAAP for the years ended December 31,
2001, 2002 and 2003, the reconciling item refers exclusively to the
amortization of the capitalized amount under U.S. GAAP until December 2000.
F-48
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Deferred charges--Capitalized costs, net of accumulated amortization, that did
not qualify for deferral under U.S. GAAP were reversed through earnings under
U.S. GAAP in the period incurred, resulting in expense of Ps182.0 in 2001,
expense of Ps290.7 in 2002 and income of Ps90.4 in 2003. During 2003, all
amounts capitalized under Mexican GAAP also met the requirements for
capitalization under U.S. GAAP. Accordingly, the reconciliation of net income
to U.S. GAAP for the year ended December 31, 2003 only includes amounts
amortized in Mexican GAAP during the year and which were expensed in prior
years under U.S. GAAP. The net effect in the reconciliation of stockholders'
equity to U.S. GAAP was a decrease of Ps650.0 and Ps484.0 at December 31, 2002
and 2003, respectively. Mexican GAAP allowed the deferral of these items.
Asset Retirement Obligations and Other Environmental Costs--Effective January
1, 2003, SFAS 143, Accounting for Asset Retirement Obligations ("SFAS 143"),
requires entities to record the fair value of an asset retirement obligation
as a liability in the period in which incur a legal obligation associated with
the retirement of tangible long-lived assets that result from the acquisition,
construction, development, and/or normal use of the assets. Such liability
would be recorded against an asset that is depreciated over the life of the
long-lived asset. Subsequent to the initial measurement, the obligation will
be adjusted at the end of each period to reflect the passage of time and
changes in the estimated future cash flows underlying the obligation. Also
effective January 1, 2003, Mexican GAAP's Bulletin C-9 established basically
the same requirement as SFAS 143. The difference between Mexican GAAP and U.S.
GAAP on this item relates to the recognition of the cumulative initial effect
from adoption, which under SFAS 143 was recognized in earnings after net
income, while under Mexican GAAP it was recognized in stockholders' equity.
Accordingly, the reconciling item presented in the reconciliation of net
income to U.S. GAAP includes the reclassification of the cumulative effect
from adoption from stockholders' equity under Mexican GAAP to net income under
U.S. GAAP (see notes 2V and 12).
As mentioned in note 2V, during 2003, a remediation liability was recorded in
the amount of approximately Ps505.7, against fixed assets of Ps365.3, deferred
IT assets of Ps54.6 and an initial cumulative effect of Ps85.8, recorded in
stockholders' equity under Mexican GAAP and in earnings under U.S. GAAP.
In addition, environmental expenditures related to current operations are
expensed or capitalized, as appropriate. Other than those contingencies
disclosed in note 21G, CEMEX is not currently facing other material
contingencies, which might result in the recognition of an environmental
remediation liability.
Monetary position result--Monetary position result of the U.S. GAAP
adjustments is determined by (i) applying the annual inflation factor to the
net monetary position of the U.S. GAAP adjustments at the beginning of the
period, plus (ii) the monetary position effect of the adjustments during the
period, determined in accordance with the weighted average inflation factor
for the period.
Reclassifications--Non-cement related assets under Mexican GAAP (see note 7)
of Ps400.2 and Ps395.6, as of December 31, 2002 and 2003, respectively, were
reclassified to long-term assets for purposes of the condensed financial
information under U.S. GAAP in note 23(o). These assets are stated at their
estimated fair value. Estimated costs to sell these assets are not
significant.
(l) Financial Instruments
Derivative Financial Instruments (see notes 2N, 11 and 16)
Under U.S. GAAP, all derivative instruments (including derivative instruments
embedded in other contracts) should be recognized in the balance sheet as
assets or liabilities at their fair values and changes in fair value are
recognized immediately in earnings, unless the derivatives qualify as hedges
of future cash flows, in which case the effective portion of such changes in
fair value is recorded temporarily in equity, and then recognized in earnings
along with the related effects of the hedged items. Any ineffective portion of
a hedge is reported in earnings as it occurs. Mexican GAAP, through Bulletin
C-2 (see note 2N), establishes a methodology similar to that of U.S. GAAP
(SFAS 133). The differences between SFAS 133 and Bulletin C-2 relate to the
rules for hedge accounting. SFAS 133 provides specific rules for hedge
accounting, while under Bulletin C-2, hedge accounting is based solely on
CEMEX's intention and designation, providing that the underlying hedged asset
or liability is already recognized in the balance sheet. Bulletin C-2 does not
provide guidance for hedging forecasted transactions, for cash flow hedges,
for derivative instruments by an entity in its own equity and, for hedges of
an entity's net investment in its foreign subsidiaries. Accordingly, such
instruments have been accounted for by CEMEX in accordance with SFAS 133 or
with other U.S. GAAP accounting pronouncements, as appropriate. Fair value
hedges, as defined by SFAS 133, are precluded by Mexican GAAP since it is not
permitted to record primary hedged instruments at fair value.
F-49
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
At December 31, 2002 and 2003, the differences in derivative instruments'
hedge accounting between Mexican and U.S. GAAP, as they relate to CEMEX, led
to certain adjustments in the reconciliations of stockholders' equity and net
income to U.S. GAAP, as well as reclassifications in the condensed financial
information under U.S. GAAP in note 23(o), which are explained as follows:
o During 2001, the estimated fair value of those interest rate swaps
designated as hedges of underlying debt transactions under Mexican GAAP was
not recognized in the balance sheet pursuant to the hedge designation (see
note 2N). Beginning in 2002, CEMEX applied under Mexican GAAP the accounting
provisions of cash flow hedges, in a manner equivalent to the rules set
forth in SFAS 133. As a result, after fulfilling the hedging documentation
requirements and effectiveness tests, beginning as of the designation date,
the estimated fair value of the hedging instruments and changes therein have
been recognized in the balance sheet against the deficit in equity
restatement within stockholders' equity, which is equivalent in Mexico to
other comprehensive income, as defined under U.S. GAAP (see note 14G). For
the years ended December 31, 2002 and 2003, changes in the estimated fair
value of interest rate derivatives, other than those designated as cash flow
hedges, were recorded through earnings under Mexican GAAP (see note 11),
consistently with U.S. GAAP. For the year ended December 31, 2001, changes
in fair value of interest rate swaps, not designated as accounting hedges
under SFAS 133, resulted in income of approximately Ps32.3 (U.S.$3.2
million) in the reconciliation of net income to U.S. GAAP.
o As discussed in note 11B, as of December 31, 2002 and 2003, related to the
estimated fair value of Cross Currency Swaps ("CCS"), CEMEX recognized net
assets of U.S.$241.4 million (Ps2,713.3) and U.S.$262.0 million (Ps2,944.9),
respectively. Under U.S. GAAP, these amounts do not qualify for net
presentation and thus have been presented as gross amounts for purposes of
the condensed financial information under U.S. GAAP presented in note 23(o).
As a result, under U.S. GAAP at December 31, 2002, in respect to the portion
of the estimated fair value attributable to changes in the exchange rates,
short-term and long-term debt increased U.S.$174.2 million (Ps1,997.8),
including prepayments, against current and non-current assets; while in
respect of the portion of the estimated fair value attributable to accrued
interest, current liabilities increased U.S.$25.9 million (Ps297.0) against
current assets. At December 31, 2003, in respect to the portion of the
estimated fair value attributable to changes in the exchange rates,
short-term and long-term debt increased U.S.$192.6 million (Ps2,164.8),
including prepayments, against current and non-current assets; while in
respect of the portion of the estimated fair value attributable to accrued
interest, current liabilities increased U.S.$12.2 million (Ps137.1) against
current assets.
See note 23(m) for changes in accounting principles regarding CEMEX's equity
forward contracts in its own shares resulting from the adoption of SFAS 150.
All other derivative instruments, with the exception of those described above
and the equity forwards described in notes 23(j) and 23(m), entered into by
CEMEX and disclosed in notes 11 and 16, were accounted under Mexican GAAP
consistently with the provisions of U.S. GAAP.
For all hedging relationships for accounting purposes, CEMEX formally
documents the hedging relationship and its risk-management objective and
strategy for undertaking the hedge, the hedging instrument, the item, the
nature of the risk being hedged, how the hedging instrument's effectiveness in
offsetting the hedged risk will be assessed, and a description of the method
of measuring ineffectiveness. This process includes linking all derivatives
that are designated as cash-flow or foreign-currency hedges to specific assets
and liabilities on the balance sheet or to specific firm commitments or
forecasted transactions. As of December 31, 2002 and 2003, CEMEX has not
designated any derivative instrument as a fair value hedge for accounting
purposes under both Mexican GAAP and U.S. GAAP. CEMEX also formally assesses,
both at the hedge's origination and on an ongoing basis, whether the
derivatives that are used in hedging transactions are highly effective in
offsetting changes in cash flows of hedged items. When it is determined that a
derivative is not highly effective as a hedge or that it has ceased to be a
highly effective hedge, CEMEX discontinues hedge accounting prospectively.
Fair Value of Financial Instruments
The carrying amount of cash, trade accounts receivable, other accounts
receivable, trade accounts payable, other accounts payable and accrued
expenses and short-term debt, approximates fair value because of the
short-term maturity of these financial assets and liabilities.
Marketable securities and long-term investments are accounted for at fair
value, which is based on quoted market prices for these or similar
instruments.
F-50
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
The carrying value of CEMEX's long-term debt and the related fair value based
on quoted market prices for the same or similar instruments or on current
rates offered to CEMEX for debt of the same remaining maturities (or
determined by discounting future cash flows using borrowing rates currently
available to CEMEX) at December 31, 2003 is summarized as follows:
At December 31, 2003 Carrying amount Estimated fair
value
------------------ -----------------
Bank loans...................................................................Ps 27,935.3 30,295.5
Notes payable................................................................ 32,530.5 34,075.6
------------------ -----------------
As discussed in notes 2D and 14D, CEMEX has designated certain debt as hedges
of its investment in foreign subsidiaries and, for Mexican GAAP purposes,
records foreign exchange fluctuations on such debt in stockholders' equity.
For purposes of the U.S. GAAP net income reconciliation, income of Ps633.3 in
2001, expense of Ps2,555.3 in 2002 and expense of Ps826.7 in 2003, were
recognized as foreign exchange results since the related debt did not meet the
conditions of SFAS 52 for hedge accounting purposes, given that the currencies
involved do not move in tandem.
(m) Financial Instruments with Characteristics of both Liabilities and Equity
In May 2003, the FASB issued SFAS 150, which requires an issuer to classify
financial instruments as liabilities (or assets under certain circumstances)
when they meet the following criteria: (i) a financial instrument issued in
the form of shares that is mandatorily redeemable, through the unconditional
obligation of transferring its assets at a specified or determinable date (or
dates) or upon an event that is certain to occur; (ii) a financial instrument,
other than an outstanding share, that, at origination, embodies an obligation
to repurchase the issuer's equity shares, or is indexed to such an obligation,
and that requires or may require the issuer to settle the obligation by
transferring assets (for example, a forward purchase contract or written put
option on the issuer's equity shares that is to be physically settled or net
cash settled); and (iii) a financial instrument that embodies an unconditional
obligation, which the issuer must or may settle by issuing a variable number
of its equity shares if, at origination, the monetary value of the obligation
is based solely or predominantly in a fixed monetary amount known at
origination, if variations are based on something other than the fair value of
the issuer's equity shares, or if variations are inversely related to changes
in the fair value of the issuer's equity shares. SFAS 150 is effective for all
transactions entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June
15, 2003.
Under SFAS 150, mandatorily redeemable instruments must be classified as a
liability and initially measured at fair value against equity. Equity forward
contracts that require physical settlement by repurchase of a fixed number of
the issuer's equity shares in exchange for cash are measured initially at the
fair value of the shares at origination, adjusted for any consideration or
unstated rights or privileges, against equity. Subsequently, those instruments
should be measured at the net present value of the amount to be paid at
settlement, accruing interest cost using the rate implicit at origination.
Other instruments within the scope of SFAS 150 shall be initially measured at
fair value with subsequent changes in fair value recognized in earnings as
interest expense. SFAS 150 has been required to be implemented by reporting
the cumulative effect of a change in an accounting principle for financial
instruments created before the issuance date of the Statement. Restatement is
not permitted.
Mandatorily Redeemable Instruments
As described in note 14E and 23(e), CEMEX held capital securities for the
outstanding amount of U.S.$66 million (Ps741.8) at both December 31, 2002 and
2003. The capital securities are a mandatorily redeemable financial
instrument. As of December 31, 2002, before SFAS 150 was implemented, for
purposes of the reconciliation of stockholders' equity to U.S. GAAP and the
condensed financial information under U.S. GAAP in note 23(o), the outstanding
amount was removed from minority interest under Mexican GAAP and presented as
a separate component of mezzanine items. For the years ended December 31, 2001
and 2002, capital securities dividends were recognized in the income statement
within minority interest for both Mexican GAAP and U.S. GAAP. As a result of
the adoption of SFAS 150, for purposes of the reconciliation of stockholders'
equity to U.S. GAAP as of December 31, 2003, capital securities were
recognized at their outstanding amount (equivalent to fair value) as a
separate component within liabilities, see note 23(o), for approximately
Ps741.8 (U.S.$66 million) against minority interest, which is considered a
component of consolidated stockholders' equity under Mexican GAAP. In the
condensed financial information under U.S. GAAP in note 23(o) for the year
ended December 31, 2003, capital securities dividends in the income statement
were reclassified from minority interest under Mexican GAAP to a separate item
of interest expense under U.S. GAAP (see note 14E).
F-51
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Equity Forward Contracts in CEMEX's own Shares
As described in notes 15 and 16A, as of December 31, 2002 and 2003, CEMEX held
equity forward contracts negotiated to hedge future exercises under its stock
option programs, for notional amounts of U.S.$436.1 million and U.S.$789.3
million, respectively. Since January 1, 2001, under Mexican GAAP, these
forward contracts, which can be physically or net cash settled at CEMEX's
option, have been recognized at their fair market value as assets or
liabilities in the balance sheet and changes in fair value have been recorded
in earnings for the years ended December 31, 2001, 2002 and 2003. The
accounting treatment given to these contracts since 2001 is consistent with
SFAS 150 and, therefore, with respect to these forwards, no reconciling
adjustments are required pursuant to the implementation of the Statement.
In addition, CEMEX held other equity forward contracts (see note 16A), which
can be physically or net cash settled at CEMEX's option and which are
considered as equity transactions for both Mexican GAAP and U.S. GAAP.
Accordingly, until December 31, 2002, the effects of these contracts were
recognized upon settlement as an adjustment to stockholders' equity and no
periodic recognition was made. As of December 31, 2002 and 2003, the notional
amounts of these forward contracts were U.S.$547.9 million and U.S.$295.7
million, respectively. Under SFAS 150, these instruments should be initially
recognized at their fair market value as assets or liabilities in the balance
sheet and subsequent changes in fair value recorded in earnings, with the
cumulative effect of adoption recognized as an adjustment to net income. CEMEX
adopted SFAS 150 as of June 30, 2003 and, as a result, for purposes of the
reconciliations of stockholders' equity and net income to U.S. GAAP as of and
for the year ended December 31, 2003, a net liability of approximately
U.S.$11.6 million (Ps130.4) was recognized against the cumulative effect from
the change in accounting principle, which represented an expense of
approximately U.S.$49.1 million (Ps551.3) and, a gain related to changes in
fair value for the period from June 30, 2003 to December 31, 2003 amounting to
approximately U.S.$36.9 million (Ps415.0).
There are no other instruments subject to SFAS 150 other than those previously
described.
(n) Supplemental Debt Information
At December 31, 2002 and 2003, due to CEMEX's ability and its intention to
refinance short-term debt with the available amounts of the committed
long-term lines of credit, U.S.$450 million (Ps5,058) and U.S.$395 million
(Ps4,439.8), respectively, were reclassified from short-term debt to long-term
debt under Mexican GAAP (see note 11). For purposes of the condensed balance
sheets under U.S. GAAP in note 23(o), this reclassification was reversed given
that under U.S. GAAP, the reclassification is precluded when the long-term
agreements contain "Material Adverse Events" clauses, which in the case of
CEMEX are customary covenants.
(o) Condensed Financial Information under U.S. GAAP
The following table presents consolidated condensed income statements for the
years ended December 31, 2001, 2002 and 2003, prepared under U.S. GAAP, and
includes all differences described in this note as well as certain other
reclassifications required for purposes of U.S. GAAP:
Years ended December 31,
------------------------------------------
Statements of income 2001 2002 2003
------------- ------------- --------------
Net sales..................................................................Ps 69,031.4 69,882.0 79,748.5
Gross profit............................................................... 29,135.4 30,180.1 33,265.2
Operating income........................................................... 11,034.4 11,295.0 13,606.5
Comprehensive financial result............................................. 3,409.3 (6,131.4) (2,835.8)
Other expenses, net........................................................ (648.8) (996.1) (1,122.7)
Income tax (including deferred)............................................ (1,935.2) 1,641.0 (1,111.4)
Equity in income of affiliates............................................. 334.4 472.1 535.7
------------- ------------- --------------
Consolidated net income.................................................... 12,194.1 6,280.6 9,072.3
Minority interest net income............................................... 1,150.5 414.4 157.9
------------- ------------- --------------
Majority interest net income before cumulative effect of accounting change. 11,043.6 5,866.2 8,914.4
Cumulative effect of accounting change..................................... - - (640.7)
------------- ------------- --------------
Majority interest net income...............................................Ps 11,043.6 5,866.2 8,273.7
------------- ------------- --------------
The following table presents consolidated condensed balance sheets at December
31, 2002 and 2003, prepared under U.S. GAAP, including all differences and
reclassifications as compared to Mexican GAAP described in this note 23:
F-52
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
At December 31,
----------------------------------
Balance sheets 2002 2003
----------------------------------
Current assets.................................................................Ps 20,703.7 14,329.3
Investments and non-current assets............................................. 7,849.4 9,501.4
Property, machinery and equipment.............................................. 101,918.4 106,907.9
Deferred charges............................................................... 45,646.2 53,732.4
----------------------------------
Total assets............................................................... 176,117.7 184,471.0
----------------------------------
Current liabilities............................................................ 37,548.0 33,052.6
Long-term debt................................................................. 42,817.6 44,789.8
Shares subject to mandatory redemption:
Putable capital securities (see note 14E).................................. - 741.8
Other non-current liabilities.................................................. 23,061.7 29,346.5
----------------------------------
Total liabilities.......................................................... 103,427.3 107,930.7
----------------------------------
Mezzanine items:
Putable capital securities (see note 14E).................................. 711.6 -
Temporary equity........................................................... 5,878.5 -
Preferred equity (see note 14E)............................................ 7,008.1 -
Minority interest.......................................................... 5,395.8 5,419.1
----------------------------------
Total mezzanine items.................................................. 18,994.0 5,419.1
----------------------------------
Stockholders' equity including cumulative effect of accounting change...... 53,696.4 71,121.2
----------------------------------
Total liabilities and stockholders' equity.................................Ps 176,117.7 184,471.0
----------------------------------
The prior period amounts presented in the tables above were restated to
constant pesos as of December 31, 2003 using the Mexican inflation rate in
order to comply with current requirements of Regulation S-X, instead of the
weighted average inflation factor used by CEMEX under Mexican GAAP (see note
2B).
(p) Supplemental Cash Flow Information Under U.S. GAAP
Under Mexican GAAP, statements of changes in financial position identify the
sources and uses of resources based on the differences between beginning and
ending financial statements in constant pesos. Monetary position results and
unrealized foreign exchange results are treated as cash items in the
determination of resources provided by operations. Under U.S. GAAP (SFAS 95),
statements of cash flows present only cash items and exclude non-cash items.
SFAS 95 does not provide any guidance with respect to inflation-adjusted
financial statements. The differences between Mexican GAAP and U.S. GAAP in
the amounts reported is primarily due to (i) the elimination of inflationary
effects of monetary assets and liabilities from financing and investing
activities against the corresponding monetary position result in operating
activities, (ii) the elimination of foreign exchange results from financing
and investing activities against the corresponding unrealized foreign exchange
result included in operating activities and (iii) the recognition in
operating, financing and investing activities of the U.S. GAAP adjustments.
The following table summarizes the cash flow items as required under SFAS 95
provided by (used in) operating, financing and investing activities for the
years ended December 31, 2001, 2002 and 2003, giving effect to the U.S. GAAP
adjustments, excluding the effects of inflation required by Bulletin B-10 and
Bulletin B-15. The following information is presented in millions of pesos on
a historical peso basis and is not presented in pesos of constant purchasing
power:
Years ended December 31,
----------------------------------------------
2001 2002 2003
--------------- -------------- ---------------
Net cash provided by operating activities........................... Ps 18,786.5 9,526.4 9,771.8
Net cash provided by (used in) financing activities................. (9,250.1) (1,323.7) (4,874.0)
Net cash used in investing activities............................... (8,433.3) (8,380.4) (5,419.4)
--------------- -------------- ---------------
F-53
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Net cash flow from operating activities reflects cash payments for interest
and income taxes as follows:
Years ended December 31,
----------------------------------------------
2001 2002 2003
--------------- -------------- ---------------
Interest paid....................................................... Ps 3,594.9 3,467.1 4,897.4
Income taxes paid................................................... 559.2 1,350.3 576.2
--------------- -------------- ---------------
Non-cash activities are comprised of the following:
1. Acquisition of fixed assets through capital leases amounting to Ps23.2 in 2001. CEMEX did not acquire assets
through capital leases during 2002 and 2003.
2. Liabilities assumed through the acquisition of businesses (see note 8A) were Ps275.6 in 2001, Ps1,873.7 in 2002 and
Ps137.8 in 2003.
(q) Restatement to Constant Pesos of Prior Years
The following table presents summarized financial information under Mexican
GAAP of the consolidated income statements for the years ended December 31,
2001 and 2002 and balance sheet information as of December 31, 2002, in
constant Mexican pesos as of December 31, 2003, using the Mexican inflation
index:
Years ended December 31,
------------------------------------------
2001 2002
-------------------- --------------------
Sales............................................................... Ps 69,630.1 70,545.9
Gross profit........................................................ 30,464.3 31,133.3
Operating income.................................................... 16,628.1 14,128.4
Majority interest net income........................................ 11,845.5 5,609.4
-------------------- --------------------
At December 31,
2002
--------------------
Current assets...................................................... Ps 21,053.2
Non-current assets.................................................. 150,747.7
Current liabilities................................................. 31,849.9
Non-current liabilities............................................. 65,006.3
Majority interest stockholders' equity.............................. 61,933.5
Minority interest stockholders' equity.............................. 13,011.2
--------------------
(r) Stock Option Programs
For financial reporting under Mexican GAAP, CEMEX accounts for its stock
option programs (see note 15) using a methodology that is consistent with the
rules set forth in APB Opinion No. 25, Accounting for Stock Issued to
Employees ("APB 25") under U.S GAAP. According to APB 25, compensation cost
should be determined under the intrinsic cost method, which represents the
difference between the strike price and the market price of the stock at the
reporting date, for all plans that do not meet the following characteristics:
(i) the exercise price established in the option is equal to the quoted market
price of the stock at the measurement date, (ii) the exercise price is fixed
for the option's life, and (iii) the option's exercise is hedged through the
issuance of new shares of common stock. After considering these
characteristics, no compensation cost is recognized for CEMEX's fixed program
(see note 15A), while compensation cost is periodically determined, beginning
in 2001, for CEMEX's variable program (see note 15C) and voluntary programs
(see note 15D) and beginning in 2002, for its special program (see note 15B).
Stock options activity during 2002 and 2003, the balance of options
outstanding at December 31, 2002 and 2003 and other general information
regarding CEMEX's stock option programs is presented in note 15. CEMEX hedges
the availability of CPOs for the potential future exercise of its programs
through equity forward contracts in CEMEX's own stock (see note 16A).
Under U.S. GAAP, SFAS 123, Accounting for Stock-Based Compensation, requires
compensation cost for stock option plans to be determined based on the
options' fair value at the grant date, using a qualified option-pricing model,
and recorded in results of operations during the options' vesting period,
after which no further recognition is required.
F-54
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Had compensation cost be determined under SFAS 123, based on the fair value of
stock options at the grant date using the Black-Scholes pricing model, CEMEX's
net income would have been reduced to the following pro forma amounts:
For the year ended December 31, 2001 Fixed program Variable Total
program
--------------- ------------- --------------
Net income, as reported (Mexican GAAP)..............................Ps 13,026.6
Cost of options granted according to SFAS 123.................... (300.0) (226.5) (526.5)
Result from voluntary exchange program, net (note 15) 1.......... 245.2 - 245.2
Reversal of cost recognized under APB 25......................... - 162.6 162.6
--------------- ------------- --------------
Approximate net income, pro forma................................... 12,907.9
--------------
Basic earnings per share, as reported...............................Ps 3.05
--------------
Basic earnings per share, pro forma.................................Ps 3.03
--------------
For the year ended December 31, 2002 Special Variable Voluntary Total
program program programs
------------- ------------ ------------ --------------
Net income, as reported (Mexican GAAP).....................Ps 5,966.9
Cost of options granted according to SFAS 123........... (10.3) (175.3) (19.8) (205.4)
Reversal of cost recognized under APB 25................ - - 57.3 57.3
------------- ------------ ------------ --------------
Approximate net income, pro forma.......................... 5,818.8
--------------
Basic earnings per share, as reported......................Ps 1.33
--------------
Basic earnings per share, pro forma........................Ps 1.29
--------------
For the year ended December 31, 2003 Special Variable Voluntary Total
program program programs
------------- ------------ ------------ --------------
Net income, as reported (Mexican GAAP).....................Ps 7,067.4
Cost of options granted according to SFAS 123 2......... (13.7) (173.4) - (187.1)
Reversal of cost recognized under APB 25................ 59.2 366.2 29.4 454.8
------------- ------------ ------------ --------------
Approximate net income, pro forma.......................... 7,335.1
--------------
Basic earnings per share, as reported......................Ps 1.49
--------------
Basic earnings per share, pro forma........................Ps 1.55
--------------
1 The amount of income presented in the pro forma calculations of Ps245.2 in 2001, represents the difference between
the intrinsic value at the exchange date paid to the executives for the repurchase of their options of
approximately Ps729.1, recorded as an expense under Mexican GAAP in 2001, and the expense determined under SFAS 123
of approximately Ps483.9, representing the options unvested fair value at the date of issuance, which was
accelerated as a result of the exchange program. The reason for the reversal in the pro forma calculations, of the
expense recognized under Mexican GAAP, is that such amount had been previously expensed in the pro forma
calculations as part of the cost under SFAS 123 in prior years and as part of the accelerated amortization of the
unrecognized cost discussed above.
2 The cost of the variable program granted in 2003 under the fair value approach (FAS 123) amounting to approximately
Ps214.0 million is not presented, since net income under Mexican GAAP includes the liquidation cost of
approximately Ps696.8 million related to such program, which was fully exercised during the year (see note 15 D).
The assumptions for the Black-Scholes model for the options granted during
each year were as follows:
2001 2002 2003
-------------- -------------- --------------
Expected dividend yield.................................................. 2% 2% 2%
Volatility............................................................... 25% 25% 25%
Range of risk free interest rates........................................ 4.9% - 9.8% 3.6% - 4.8% 3.7% - 4.5%
Weighted average tenure.................................................. 10 years 9.8 years 7 years
-------------- -------------- --------------
F-55
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
(s) Impairment of Long Lived Assets
As mentioned in note 23(a), effective January 1, 2002, CEMEX adopted SFAS 142,
which eliminates the amortization of goodwill and indefinite-lived intangible
assets, and addresses the amortization of intangible assets with finite lives
and impairment testing and recognition for goodwill and intangible assets, and
SFAS 144, which establishes a single model for the impairment of long-lived
assets and broadens the presentation of discontinued operations to include
disposal of an individual business.
As a result of such adoption under U.S. GAAP, CEMEX ceased the amortization of
the goodwill balances determined at December 31, 2001; however, such amounts
remain subject to impairment evaluations. During the first half of 2002, in
connection with SFAS 142's transitional goodwill impairment evaluation, which
required an assessment of whether there was an indication that goodwill was
impaired as of the date of adoption, CEMEX identified its reporting units and
determined the carrying value of each reporting unit as of January 1, 2002, by
assigning the assets and liabilities, including the existing goodwill and
intangible assets to those reporting units. CEMEX also determined the fair
value of each reporting unit and compared it to their related carrying amount.
Fair value of the reporting units exceeded in each case the corresponding
carrying amount and, therefore, no impairment charges resulted from the
transitional evaluation performed on the recorded goodwill as of January 1,
2002. For the years ended December 31, 2002 and 2003, goodwill under Mexican
GAAP continued to be an amortizable intangible asset. Based on the
similarities of the components of the operating segments (cement, ready-mix
concrete, aggregates and other construction materials), CEMEX's geographical
segments under SFAS 131 are also the reporting units under SFAS 142 for
purposes of assessing fair value in determining potential impairment at
transition and in future periods.
Under U.S. GAAP, CEMEX assesses goodwill and indefinite-lived intangibles for
impairment annually unless events occur that require more frequent reviews.
Long-lived assets, including amortizable intangibles, are tested for
impairment if impairment triggers occur. Discounted cash flow analyses are
used to assess the possible impairment of both amortizable and non-amortizable
intangible assets, while undiscounted cash flow analyses are used to assess
long-lived asset impairment. If an assessment indicates impairment, the
impaired asset is written down to its fair value based on the best information
available. The useful lives of amortizable intangibles are evaluated
periodically, and subsequent to impairment reviews, to determine whether
revision is warranted. If cash flows related to a non-amortizable intangible
are not expected to continue for the foreseeable future, a useful life is
assigned. Considerable management judgment is necessary to estimate
undiscounted and discounted future cash flows. Assumptions used for these cash
flows are consistent with internal forecasts and industry practices. For the
years ended December 31, 2002 and 2003, there were no impairment charges under
U.S. GAAP in addition to those described in notes 9 and 10, which were
recorded under Mexican GAAP, as CEMEX's policy for impairment is consistent
with U.S. GAAP.
As of December 31, 2002 and 2003, CEMEX's approximate goodwill by reporting
unit under U.S. GAAP, net of amortization accrued until December 31, 2001, is
summarized as follows:
Inflation and
currency
January 1, Goodwill Impairment fluctuation December 31,
2002 (1) acquired (2) charges (4) 2002
---------------- --------------- --------------- --------------- --------------
United States................ Ps 14,381.0 - - 1,035.8 15,416.8
Mexico....................... 6,282.4 - - - 6,282.4
Spain........................ 6,641.4 - - 2,106.2 8,747.6
Colombia..................... 3,472.3 - - (226.2) 3,246.1
The Philippines.............. 1,092.8 652.3 - 75.1 1,820.2
Dominican Republic........... 345.1 - - 56.1 401.2
Thailand..................... 377.5 - - 37.4 414.9
The Caribbean................ 360.3 - - 34.9 395.2
Venezuela.................... 297.1 - - (24.4) 272.7
Egypt........................ 266.2 - - 18.1 284.3
Costa Rica................... 273.4 - - 13.9 287.3
Other reporting units (5).... 339.6 385.7 (96.7) 99.7 728.3
Affiliates (see note 8A)..... 326.9 217.8 - 8.1 552.8
---------------- --------------- --------------- --------------- --------------
Ps 34,456.0 1,255.8 (96.7) 3,234.7 38,849.8
---------------- --------------- --------------- --------------- --------------
F-56
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
December 31, Goodwill Impairment Inflation and December 31,
currency
fluctuation
2002 acquired (3) charges (4) 2003
---------------- --------------- --------------- --------------- --------------
United States................ Ps 15,416.8 201.8 - 713.0 16,331.6
Mexico....................... 6,282.4 - - (298.2) 5,984.2
Spain........................ 8,747.6 - - 2,003.7 10,751.3
Colombia..................... 3,246.1 - - 457.1 3,703.2
The Philippines.............. 1,820.2 - (539.5) 63.2 1,343.9
Dominican Republic........... 401.2 - - (18.2) 383.0
Thailand..................... 414.9 - - (17.2) 397.7
The Caribbean................ 395.2 - - (56.1) 339.1
Venezuela.................... 272.7 - - (128.8) 143.9
Egypt........................ 284.3 - - (44.1) 240.2
Costa Rica................... 287.3 - - (0.1) 287.2
Other reporting units (5).... 728.3 - (342.4) 1,948.5 2,334.4
Affiliates (see note 8A)..... 552.8 - - (145.6) 407.2
---------------- --------------- --------------- --------------- --------------
Ps 38,849.8 201.8 (881.9) 4,477.2 42,646.9
---------------- --------------- --------------- --------------- --------------
1. This column presents goodwill by reporting unit; net of amortization accrued until December 31, 2001, presented in
constant pesos as of December 31, 2003, using the Mexican inflation rate.
2. For the acquisitions during 2002, no intangible assets were identified and determined other than goodwill. In 2002
(see note 8A), CEMEX acquired: (i) from the minority shareholders the remaining 30% economic interest in Solid for
approximately U.S.$95 million (Ps1,007.5); (ii) through a tender offer and a subsequent merger, a 100% equity
interest in Puerto Rican Cement Company for approximately U.S.$180.2 million (Ps1,911.0); and (iii) for cash and
pursuant to a forward purchase agreement, a 15.1% equity interest in CAH, for approximately U.S.$142.3 million. In
addition, during 2002, CEMEX also made other minor acquisitions for approximately U.S.$60 million.
3. During 2003 (see note 8A), CEMEX acquired a raw materials supplier and a cement plant and quarry in the United
States for a combined purchase price of approximately U.S.$99.7 million (Ps1,120.6).
4. The amounts presented in this column include: (i) the effects on goodwill from foreign exchange fluctuations during
the period between the reporting unit's currencies and the Mexican peso, and (ii) the effect of removing the
restatement into constant pesos as of December 31, 2003 using Mexican inflation, applied to the goodwill balances
at the beginning of the year.
5. Other reporting units are primarily integrated by CEMEX's cement operations in Puerto Rico and Panama, the
ready-mix concrete operations in France and Italy and the reporting unit engaged in software development projects.
The following table reflects the impact that SFAS 142 would have had on net
income and earnings per share under U.S. GAAP for the year ended December 31,
2001, as if adopted in that period:
Year ended December 31, 2001
---------------
Approximate net income under U.S. GAAP, as reported ............................................... Ps 11,043.9
Cease goodwill amortization..................................................................... 2,326.1
---------------
Adjusted net income under U.S. GAAP................................................................ Ps 13,370.0
---------------
Basic U.S. GAAP earnings per share................................................................. Ps 2.60
Cease goodwill amortization..................................................................... 0.54
---------------
Adjusted basic U.S. GAAP earnings per share........................................................ Ps 3.14
---------------
Diluted U.S. GAAP earnings per share............................................................... Ps 2.53
Cease goodwill amortization..................................................................... 0.53
---------------
Adjusted diluted U.S. GAAP earnings per share...................................................... Ps 3.06
---------------
F-57
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
(t) Sale of Accounts Receivable
CEMEX accounts for transfers of receivables under Mexican GAAP consistently
with the rules set forth by SFAS 140, Accounting for Transfers and Surveying
of Financial Assets and Extinguishments of Liabilities. Under SFAS 140,
transactions that meet the criteria for surrender of control are recorded as
sales of receivables and their amounts are removed from the consolidated
balance sheet at the time they are sold (see note 4).
(u) Other Disclosures Under U.S. GAAP
Accounting for Costs Associated with Exit or Disposal Activities
Effective January 1, 2003, CEMEX adopted SFAS 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS 146, which addresses
financial accounting and reporting for costs associated with exit or disposal
activities, basically requires, as a condition to accrue for the costs related
to an exit or disposal activity, including severance payments, that the entity
communicate the plan to all affected employees and that the plan be terminated
in the short-term, otherwise; associated costs should be expensed as incurred.
As of and for the year ended December 31, 2003, CEMEX did not recognize any
such costs related to exit or disposal activities.
Guarantor's Accounting and Disclosure Requirements for Guarantees
Effective January 1, 2003, CEMEX adopted Interpretation 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements 5,
57 and 107 and a rescission of FASB Interpretation 34, which elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees issued. The interpretation
also clarifies that a guarantor is required to recognize, at origination of a
guarantee, a liability for the fair value of the obligation undertaken. As of
December 31, 2003, CEMEX has not guaranteed any third parties' obligations;
however, with respect to the electricity supply long-term contract discussed
in note 21F, CEMEX may also be required to purchase the power plant upon the
occurrence of specified material defaults or events, such as failure to
purchase the energy and pay when due, bankruptcy or insolvency, and revocation
of permits necessary to operate the facility. Through December 31, 2003, for
accounting purposes under Mexican and U.S. GAAP, CEMEX has considered this
agreement as a long-term supply agreement and no liability has been created,
based on the contingent characteristics of CEMEX's obligation and given that,
absent a default under the agreement, CEMEX's obligations are limited to the
purchase of energy from, and the supply of fuel to, the plant.
Variable Interest Entities
Effective January 31, 2003, CEMEX adopted Interpretation 46, Consolidation of
Variable Interest Entities, an interpretation of ARB 51 ("FIN 46"). This
interpretation addresses the consolidation by business enterprises of variable
interest entities ("VIEs"), which defined in FIN 46 as those entities in which
the controlling entity or group cannot be identified and/or such entities lack
of sufficient own capital at risk to finance their operations without
requiring additional financing from other entity. Moreover, variable
interests, among other factors, may be represented by operating losses, debt,
contingent obligations or residual risks and may be assumed by means of loans,
guarantees, management contracts, leasing, put options, derivatives, etc. A
primary beneficiary is the entity that assumes the variable interests of a
VIE, or the majority of them in the case of partnerships, directly or jointly
with related parties, and is the entity that should consolidate the VIE. FIN
46 applies to variable interests in entities created or obtained after January
31, 2003. As discussed in the preceding paragraph, CEMEX has an electricity
supply long-term contract (see note 21F), under which, upon the occurrence of
specified material defaults or events, CEMEX may be required to purchase the
power plant. Under U.S. GAAP, after analysis of the provisions of the
agreements, CEMEX does not believe that based solely on the contingent
obligation, it would be considered to be the primary beneficiary of the
partnership's variable interests, and, therefore, as of and for the year ended
December 31, 2003, CEMEX has not consolidated any asset, liability or
operating result of such partnership.
F-58
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
(v) Newly Issued Accounting Pronouncements under U.S. GAAP
In December 2003, FASB issued SFAS 132 (revised), Employers' Disclosures about
Pensions and Other Postretirement Benefits--an amendment of FASB Statements
No. 87, 88, and 106. This Statement revises employers' disclosures about
pension plans and other postretirement benefit plans, retaining the
disclosures required by previous SFAS 132, but requiring entities to provide
additional disclosure describing the types of plan assets, investment
strategy, measurement date(s), plan obligations, cash flows, and components of
net periodic benefit cost recognized during interim periods. The required
information should be provided separately for pension plans and for other
postretirement benefit plans. This Statement does not change the measurement
or recognition methods. The new disclosure requirements are effective for
periods beginning after December 15, 2003.
(w) Recent Developments (unaudited)
During February 2004, eligible employees under the benefits of stock options
plans were invited to participate in a voluntary exchange offer for their
stock options under the variable program (see note 15C). By means of this
offer, participant employees would surrender their current options, granted
from November 2001 until February 2004, in exchange for new options, with a
initial strike price of U.S.$5.05 per CPO and a remaining life of 8.4 years
(weighted average of qualifying options programs) maintaining an increasing
strike price annually at a 7% rate. Any appreciation realized through the
exercise of new options, will be obligatorily invested in CEMEX CPOs that will
be restricted for sale, with monthly partial releases, for a period of five
years if the exercise occurs in 2004, four years in 2005, three years in 2006
and two years from 2007 until the maturity of the options. The new options
will be automatically exercised if at any time during their life, the CPO
price in the market reaches U.S.$7.50, in which case the intrinsic
appreciation between U.S.$7.50 and the option's strike price on that future
date, will be invested in restricted CPOs.
As compensation to the employees for requiring them to invest the appreciation
in CPOs, setting a restriction period for sale and limiting the potential
appreciation of the new options, employees participating in the exchange will
receive annually and until exercise or maturity of the options a payment of
U.S.$ 10 cents per any new option outstanding as of the payment date, growing
annually at a 10% rate, and upon exercise, a 20% discount to market in the
acquisition price of the CPOs. Employees can exchange 100% or elect to
participate with 70% or only 30% of their current options. Employees' current
options that are not exchanged will maintain their existing terms and
conditions. In terms of fair value at the exchange date, using the
Black-Scholes options pricing model, the current options' weighted average
fair value was approximately 15 percent higher than that of the new options.
The exchange period expired on February 13, 2004. As of March 31, 2004, as a
result of the voluntary exchange offer, approximately 122.5 million new
options were issued, while employees surrendered their rights over
approximately 113.9 million current options, which were forfeited. For
accounting purposes under Mexican and U.S. GAAP, CEMEX will account for the
new options under the intrinsic value method through earnings (see notes 2W
and 15), in the same manner the current plans are accounted for, including the
U.S.$ 10 cents per option payment that would be made to exployees. This
exchange is part of CEMEX's strategy, beginning in 2004, to compensate its
eligible employees with restricted stock instead of stock options.
On April 27, 2004, a subsidiary of CEMEX Colombia received notice as a
co-defendant, along with a government agency in charge of urban development in
Bogota, another supplier, and a ready-mix industry association, in an action
brought by a Colombian law firm on "public interest" grounds. The lawsuit
alleges that the use of a certain type of cement-based material in the
construction of roads for the "Transmilenio" public transport system and for
regular traffic resulted in defects that impede the proper functioning of the
"Transmilenio" system and hamper traffic flow. The lawsuit argues that CEMEX
Colombia's subsidiary, the other supplier, and the ready mix-industry
association promoted the use of the material, and seeks damages to pay for the
repair of the defects or, if repair is not possible, the rebuilding of the
defective road sections. The Company is currently evaluating the potential
impact of this matter on our Colombian operations. Because it is very early in
the process, CEMEX cannot estimate the financial implications of an adverse
resolution, but CEMEX believes that it is unlikely to have a material adverse
effect on our results of operations. CEMEX believes that this will be a
protracted matter that may result in additional lawsuits or actions. CEMEX
intends to defend its interests vigorously.
F-59
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
(x) Guaranteed debt
In June 2000, CEMEX concluded the issuance of U.S.$200 million aggregate
principal amount of 9.625% Exchange Notes due 2009 in a registered public
offering in the United States of America in exchange for U.S.$200 million
aggregate principal amount of its then outstanding 9.625% Notes due 2009. The
Exchange Notes are fully and unconditionally guaranteed, on a joint and
several basis, as to payment of principal and interest by two of CEMEX's
Mexican subsidiaries: CEMEX Mexico and ETM (see note 2C). These two companies,
together with their subsidiaries, account for substantially all of the
revenues and operating income of CEMEX's Mexican operations.
As mentioned in note 11C, as of December 31, 2002 and 2003, indebtedness of
CEMEX in an aggregate amount of U.S.$2,339 million (Ps26,290.4) and U.S.$3,145
million (Ps35,349.8), respectively, is fully and unconditionally guaranteed,
on a joint and several basis, by CEMEX Mexico and ETM.
As of December 31, 2002 and 2003, CEMEX owned a 100% equity interest in CEMEX
Mexico, including in 2002, an 0.6% equity interest held by a Mexican trust in
connection with an equity financing transaction due in 2007, which was
terminated during 2003 (see note 14F), and CEMEX Mexico owned a 100% equity
interest in ETM at the end of both years. During October and November 2001,
CEMEX Mexico and ETM carried out individually, a reverse stock split. Through
this operation, stockholders of CEMEX Mexico and ETM were entitled to receive
one new share for each 130 million old shares and one new share for each 20
million old shares, respectively. Pursuant to these transactions, the shares
of any shareholder not meeting the minimum number required for the reverse
stock split, were liquidated and converted into the right to receive a cash
liquidation. As a result, as of December 31, 2001, in the consolidated balance
sheet of CEMEX, an account payable of Ps427.8 million was created in favor of
the old shareholders against CEMEX Mexico and ETM stockholders' equity. During
2002, CEMEX Mexico and ETM paid no material amounts to the old shareholders.
On December 7, 2002, the period granted by Mexican law for the old
shareholders to claim their rights under the reverse stock split expired. As
prescribed by law, the unclaimed amount after the expiration date is
reimbursed to the entity's stockholders' equity and, as a result, the account
payable as of the expiration date was cancelled against stockholders' equity
as of December 31, 2002. In addition, resulting from the reverse stock split,
the equity interest of CEMEX in both subsidiaries increased to 100%.
For purposes of the accompanying condensed consolidated balance sheets, income
statements and statements of changes in financial position under Mexican GAAP,
the first column, "CEMEX," corresponds to the parent company issuer, which has
no material operations other than its investments in subsidiaries and
affiliated companies. The second column, "Combined guarantors", represents the
combined amounts of CEMEX Mexico and ETM on a Parent Company-only basis, after
adjustments and eliminations relating to their combination. The third column,
"Combined non-guarantors", represents the amounts of CEMEX's international
subsidiaries, CEMEX Mexico and ETM non-Guarantor subsidiaries, and other
immaterial Mexican non-guarantor subsidiaries of CEMEX. The fourth column,
"Adjustments and eliminations", includes all the amounts resulting from
consolidation of CEMEX, the Guarantors and the non-guarantor subsidiaries, as
well as the corresponding constant pesos adjustment as of December 31, 2003,
for the years ended December 31, 2001 and 2002 described below. The fifth
column, "CEMEX consolidated", represents CEMEX's consolidated amounts as
reported in the consolidated financial statements. The amounts presented under
the line item "investments in affiliates" for both the balance sheet and the
income statement are accounted for by the equity method.
As mentioned in note 2B, under Mexican GAAP, the financial statements of those
entities with foreign consolidated subsidiaries should be presented in
constant pesos as of the latest balance sheet presented, considering the
inflation of each country in which the entity operates, as well as the changes
in the exchange rate between the functional currency of each country vis-a-vis
the reporting currency (in this case, the Mexican peso). As a result of the
aforementioned, for comparability purposes the condensed financial information
of CEMEX, the "Combined Guarantors" and the "Combined non-guarantors" amounts
have been adjusted to reflect constant pesos as of December 31, 2003, using
the Mexican inflation index. Therefore, the corresponding inflation adjustment
derived from the application of the weighted average inflation factor in the
consolidated amounts is presented within the "Adjustments and eliminations"
column.
F-60
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
The condensed consolidated financial information is as follows:
Condensed consolidated balance sheets:
Adjustments
Combined Combined and CEMEX
As of December 31, 2002 CEMEX guarantors non-guarantors eliminations consolidated
- --------------------------------------------- --------------------------------------------------------------------------
Current assets.............................. Ps 21,654.1 10,498.1 59,753.6 (69,510.8) 22,395.0
Investment in affiliates.................... 83,290.4 79,263.6 8,481.9 (164,616.7) 6,419.2
Other non-current assets.................... 17,743.4 510.7 1,380.8 (17,919.3) 1,715.6
Property, machinery and equipment........... 1,754.7 28,603.4 66,129.9 6,308.9 102,796.9
Deferred charges............................ 6,245.1 6,260.9 83,375.3 (46,457.7) 49,423.6
------------- ------------- -------------- ------------- -------------
Total assets............................. 130,687.7 125,136.7 219,121.5 (292,195.6) 182,750.3
------------- ------------- -------------- ------------- -------------
Current liabilities......................... 24,836.1 9,070.4 23,314.8 (23,341.7 33,879.6
Long-term debt.............................. 38,521.8 6.5 15,673.8 (4,038.5) 50,163.6
Other non-current liabilities............... 1,449.0 51,456.2 17,880.7 (51,800.1) 18,985.8
------------- ------------- -------------- ------------- -------------
Total liabilities........................ 64,806.9 60,533.1 56,869.3 (79,180.3) 103,029.0
------------- ------------- -------------- ------------- -------------
Majority interest stockholders' equity...... 65,880.8 64,603.6 147,443.7 (212,047.3) 65,880.8
------------- ------------- -------------- ------------- -------------
Minority interest........................ - - 14,808.5 (968.0) 13,840.5
------------- ------------- -------------- ------------- -------------
Stockholders' equity under Mexican GAAP..... 65,880.8 64,603.6 162,252.2 (213,015.3) 79,721.3
------------- ------------- -------------- ------------- -------------
Total liabilities and stockholders' equity.. Ps 130,687.7 125,136.7 219,121.5 (292,195.6) 182,750.3
------------- ------------- -------------- ------------- -------------
Adjustments
Combined Combined and CEMEX
As of December 31, 2003 CEMEX guarantors non-guarantors eliminations consolidated
- --------------------------------------------- ---------------------------------------------------------------------------
Current assets.............................. Ps 1,716.1 6,106.7 74,175.1 (61,469.2) 20,528.7
Investment in affiliates.................... 84,843.5 92,701.7 64,166.4 (234,794.0) 6,917.6
Other non-current assets.................... 35,449.1 463.8 990.4 (34,833.4) 2,069.9
Property, machinery and equipment........... 1,738.5 29,817.8 72,629.0 (42.0) 104,143.3
Deferred charges............................ 5,300.2 5,664.8 89,598.0 (54,205.1) 46,357.9
------------- ------------- -------------- ------------- --------------
Total assets.............................. 129,047.4 134,754.8 301,558.9 (385,343.7) 180,017.4
------------- ------------- -------------- ------------- --------------
Current liabilities......................... 10,820.2 14,273.7 26,751.9 (20,044.0) 31,801.8
Long-term debt.............................. 46,346.2 8.4 33,636.4 (28,997.0) 50,994.0
Other non-current liabilities............... 1,808.8 47,798.1 14,036.1 (42,472.9) 21,170.1
------------- ------------- -------------- ------------- --------------
Total liabilities......................... 58,975.2 62,080.2 74,424.4 (91,513.9) 103,965.9
------------- ------------- -------------- ------------- --------------
Majority interest stockholders' equity...... 70,072.2 72,674.6 163,505.2 (236,179.8) 70,072.2
------------- ------------- -------------- ------------- --------------
Minority interest......................... - - 63,629.3 (57,650.0) 5,979.3
------------- ------------- -------------- ------------- --------------
Stockholders' equity under Mexican GAAP..... 70,072.2 72,674.6 227,134.5 (293,829.8) 76,051.5
------------- ------------- -------------- ------------- --------------
Total liabilities and stockholders' equity.. Ps 129,047.4 134,754.8 301,558.9 (385,343.7) 180,017.4
------------- ------------- -------------- ------------- --------------
F-61
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Condensed consolidated income statements:
Adjustments
Combined Combined and CEMEX
For the year ended December 31, 2001 CEMEX guarantors non-guarantors eliminations consolidated
- ----------------------------------------------- --------------------------------------------------------------------------
Sales........................................ Ps - 22,711.2 54,508.1 (647.2) 76,572.1
Operating income............................. (90.1) 1,624.3 6,109.2 10,642.7 18,286.1
Comprehensive financing result............... 33.9 1,457.8 2,658.6 (1,223.0) 2,927.3
Other income (expense), net.................. 109.5 2,084.2 3,381.9 (10,187.2) (4,611.6)
Income tax................................... 1,389.1 606.3 (1,727.9) (2,373.7) (2,106.2)
Equity in income of affiliates............... 11,584.2 2,719.4 370.2 (14,447.1) 226.7
------------- ------------- ------------ -------------- ------------
Consolidated net income...................... 13,026.6 8,492.0 10,792.0 (17,588.3) 14,722.3
------------- ------------- ------------ -------------- ------------
Minority interest......................... - - 1,188.6 507.1 1,695.7
------------- ------------- ------------ -------------- ------------
Majority net income.......................... Ps 13,026.6 8,492.0 9,603.4 (18,095.4) 13,026.6
------------- ------------- ------------ -------------- ------------
Adjustments
Combined Combined and CEMEX
For the year ended December 31, 2002 CEMEX guarantors non-guarantors eliminations consolidated
- ----------------------------------------------- --------------------------------------------------------------------------
Sales........................................ Ps - 22,595.2 50,717.2 1,729.6 75,042.0
Operating income............................. (110.4) 3,334.0 5,638.1 6,167.2 15,028.9
Comprehensive financing result............... (1,427.1) (6,630.0) (3,801.7) 8,081.4 (3,777.4)
Other income (expense), net.................. 129.5 (341.2) 6,326.6 (10,579.5) (4,464.6)
Income tax................................... 2,294.4 (1,297.5) (1,302.9) (441.0) (747.0)
Equity in income of affiliates............... 5,080.5 1,657.8 (2.4) (6,383.8) 352.1
------------- ------------- ------------ -------------- ------------
Consolidated net income...................... 5,966.9 (3,276.9) 6,857.7 (3,155.7) 6,392.0
------------- ------------- ------------ -------------- ------------
Minority interest.......................... - - 88.1 337.0 425.1
------------- ------------- ------------ -------------- ------------
Majority net income.......................... Ps 5,966.9 (3,276.9) 6,769.6 (3,492.7) 5,966.9
------------- ------------- ------------ -------------- ------------
Adjustments
Combined Combined and CEMEX
For the year ended December 31, 2003 CEMEX guarantors non-guarantors eliminations consolidated
- ----------------------------------------------- --------------------------------------------------------------------------
Sales........................................ Ps - 24,408.5 57,646.1 (1,526.9) 80,527.7
Operating income............................. (54.8) 3,383.9 349.3 12,678.2 16,356.6
Comprehensive financing result............... (1,769.1) (2,999.4) 1,001.6 760.7 (3,006.2)
Other income (expense), net.................. 5,160.2 (489.1) 3,270.5 (13,075.4) (5,133.8)
Income tax................................... 790.2 376.8 (1,173.6) (1,191.6) (1,198.2)
Equity in income of affiliates............... 2,940.9 3,393.0 193.0 (6,136.1) 390.8
------------- ------------- ------------ -------------- -------------
Consolidated net income...................... 7,067.4 3,665.2 3,640.8 (6,964.2) 7,409.2
------------- ------------- ------------ -------------- -------------
Minority interest......................... - - 20.6 321.2 341.8
------------- ------------- ------------ -------------- -------------
Majority net income.......................... Ps 7,067.4 3,665.2 3,620.2 (7,285.4) 7,067.4
------------- ------------- ------------ -------------- -------------
F-62
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Condensed consolidated statements of changes in financial position:
Adjustments
Combined Combined and CEMEX
For the year ended December 31, 2001 CEMEX guarantors non-guarantors eliminations consolidated
- ------------------------------------------------ --------------------------------------------------------------------------
Operating activities:
Majority net income........................... Ps 13,026.6 8,492.0 9,603.4 (18,095.4) 13,026.6
Non-cash items................................ (11,598.8) (1,804.5) 3,194.8 21,029.9 10,821.4
--------------------------------------------------------------------------
Resources provided by operations........... 1,427.8 6,687.5 12,798.2 2,934.5 23,848.0
Net change in working capital................. (7,894.8) 6,186.0 2,298.7 1,666.8 2,256.7
--------------------------------------------------------------------------
Resources provided by operations, net...... (6,467.0) 12,873.5 15,096.9 4,601.3 26,104.7
Financing activities:
Bank loans and notes payable, net............. 1,871.4 (58.1) (15,653.3) 8,606.0 (5,234.0)
Dividends paid................................ (3,369.1) - 9,080.3 (9,080.3) (3,369.1)
Issuance of common stock...................... 3,130.7 - - - 3,130.7
Issuance of preferred stock by subsidiaries... - - (7,038.1) (238.0) (7,276.1)
Others........................................ 382.5 49,084.2 (9,395.4) (42,961.5) (2,890.2)
--------------------------------------------------------------------------
Resources used in financing activities..... 2,015.5 49,026.1 (23,006.5) (43,673.8) (15,638.7)
Investing activities:
Property, machinery and equipment, net........ - (805.5) (4,331.4) 296.8 (4,840.1)
Acquisitions, net of cash acquired............ 42,638.3 (62,623.4) (22,801.0) 40,561.8 (2,224.3)
Dividends received............................ - - - - -
Minority interest............................. - - (102.6) (10.3) (112.9)
Deferred charges and others................... (38,079.8) 723.6 34,699.7 566.8 (2,089.7)
--------------------------------------------------------------------------
Resources used in investing activities..... 4,558.5 (62,705.3) 7,464.7 41,415.1 (9,267.0)
Change in cash and investments............. 107.0 (805.7) (444.9) 2,342.6 1,199.0
Cash and investments initial balance....... 62.8 1,899.1 2,814.6 (1,237.6) 3,538.9
-------------- ------------ -------------- -------------- -------------
Cash and investments ending balance........ Ps 169.8 1,093.4 2,369.7 1,105.0 4,737.9
-------------- ------------ -------------- -------------- -------------
F-63
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Adjustments
Combined Combined and CEMEX
For the year ended December 31, 2002 CEMEX guarantors non-guarantors eliminations consolidated
- ------------------------------------------------ --------------------------------------------------------------------------
Operating activities:
Majority net income........................... Ps 5,966.9 (3,276.9) 6,769.6 (3,492.7) 5,966.9
Non-cash items................................ (6,206.7) 1,422.9 20,479.4 (6,970.4) 8,725.2
--------------------------------------------------------------------------
Resources provided by operations........... (239.8) (1,854.0) 27,249.0 (10,463.1) 14,692.1
Net change in working capital................. 1,132.1 5,227.2 (28,178.2) 26,207.0 4,388.1
--------------------------------------------------------------------------
Resources provided by operations, net...... 892.3 3,373.2 (929.2) 15,743.9 19,080.2
Financing activities:
Bank loans and notes payable, net............. 7,582.0 66.3 (5,264.3) 151.8 2,535.8
Dividends paid................................ (3,750.1) (2,255.5) 2.5 2,253.0 (3,750.1)
Issuance of common stock...................... 3,279.6 - 15,063.3 (15,063.3) 3,279.6
Issuance of preferred stock by subsidiaries... - - (4,631.2) - (4,631.2)
Others........................................ 361.0 (178.4) 56,322.5 (53,527.2) 2,977.9
--------------------------------------------------------------------------
Resources used in financing activities..... 7,472.5 (2,367.6) 61,492.8 (66,185.7) 412.0
Investing activities:
Property, machinery and equipment, net........ - (1,104.8) (2,888.1) (254.5) (4,247.4)
Acquisitions, net of cash acquired............ (65,643.7) 11,990.0 584.2 50,047.2 (3,022.3)
Dividends received............................ 2,396.6 - - (2,396.6) -
Minority interest............................. - - (3,270.4) - (3,270.4)
Deferred charges and others................... 55,094.8 (11,076.0) (54,093.3) 526.5 (9,548.0)
--------------------------------------------------------------------------
Resources used in investing activities..... (8,152.3) (190.8) (59,667.6) 47,922.6 (20,088.1)
Change in cash and investments............. 212.5 814.8 896.0 (2,519.2) (595.9)
Cash and investments initial balance....... 169.8 1,093.4 2,369.7 1,105.0 4,737.9
-------------- ------------ -------------- -------------- -------------
Cash and investments ending balance........ Ps 382.3 1,908.2 3,265.7 (1,414.2) 4,142.0
-------------- ------------ -------------- -------------- -------------
F-64
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Adjustments
Combined Combined and CEMEX
For the year ended December 31, 2003 CEMEX guarantors non-guarantors eliminations consolidated
- ------------------------------------------------ --------------------------------------------------------------------------
Operating activities:
Majority net income........................... Ps 7,067.4 3,665.2 3,620.2 (7,285.4) 7,067.4
Non-cash items................................ (2,068.5) (1,291.9) 20,020.4 (6,232.5) 10,427.5
--------------------------------------------------------------------------
Resources provided by operations........... 4,998.9 2,373.3 23,640.6 (13,517.9) 17,494.9
Net change in working capital................. 18,112.7 13,871.6 (41,470.6) 9,595.0 108.7
--------------------------------------------------------------------------
Resources provided by operations, net...... 23,111.6 16,244.9 (17,830.0) (3,922.9) 17,603.6
Financing activities:
Bank loans and notes payable, net............. (11,601.9) (221.0) 9,979.2 (0.1) (1,843.8)
Dividends paid................................ (3,963.0) (5,641.0) 139.7 5,501.3 (3,963.0)
Issuance of common stock...................... 3,743.0 - - - 3,743.0
Issuance of preferred stock by subsidiaries... - - (7,343.3) - (7,343.3)
Others........................................ 746.8 (8,390.9) 2,719.5 8,812.4 3,887.8
--------------------------------------------------------------------------
Resources used in financing activities..... (11,075.1) (14,252.9) 5,495.1 14,313.6 (5,519.3)
Investing activities:
Property, machinery and equipment, net........ - (952.2) (3,317.5) - (4,269.7)
Acquisitions, net of cash acquired............ (7,007.2) (1,989.9) 12,786.5 (4,705.7) (916.3)
Dividends received............................ 5,501.3 - - (5,501.3) -
Minority interest............................. - - (859.7) - (859.7)
Deferred charges and others................... (10,804.3) 631.2 6,647.7 (3,380.1) (6,905.5)
--------------------------------------------------------------------------
Resources used in investing activities..... (12,310.2) (2,310.9) 15,257.0 (13,587.1) (12,951.2)
Change in cash and investments............. (273.7) (318.9) 2,922.1 (3,196.4) (866.9)
Cash and investments initial balance....... 382.3 1,908.2 3,265.7 (1,414.2) 4,142.0
-------------- ------------ -------------- -------------- -------------
Cash and investments ending balance........ Ps 108.6 1,589.3 6,187.8 (4,610.6) 3,275.1
-------------- ------------ -------------- -------------- -------------
F-65
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
The tables below present consolidated balance sheets as of December 31, 2002
and 2003, and income statements and statements of changes in financial
position for each of the three-year periods ended December 31, 2003 for the
Guarantors. Such information presents in separate columns each individual
Guarantor on a Parent Company-only basis, consolidation adjustments and
eliminations, and the combined Guarantors. All significant related parties
balances and transactions between the Guarantors have been eliminated in the
"Combined guarantors" column.
The amounts presented in the column "Combined guarantors" are readily
comparable with the information of the Guarantors included in the condensed
consolidated financial information. As previously described, amounts presented
under the line item "Investments in affiliates" for both the balance sheets
and income statements, include the net investment in affiliates accounted for
by the equity method. In addition, the Guarantors' reconciliation of net
income and stockholders' equity to U.S. GAAP are presented below:
Guarantors' Combined Balance Sheets:
December 31, 2002 Guarantors (Parent Company-only)
-----------------------------------------------------------------
Assets CEMEX Mexico ETM Adjustments Combined
and
eliminations guarantors
---------------- -------------- --------------- ---------------
Current Assets
Cash and investments................................. Ps 1,293.3 614.4 0.5 1,908.2
Trade accounts receivable, net....................... 342.0 - - 342.0
Other receivables and other current assets........... 878.4 919.0 (51.6) 1,745.8
Related parties receivables.......................... 3,030.9 4,762.5 (2,889.3) 4,904.1
Inventories.......................................... 1,598.0 - - 1,598.0
---------------- -------------- --------------- ---------------
Total current assets.............................. 7,142.6 6,295.9 (2,940.4) 10,498.1
---------------- -------------- --------------- ---------------
Other Investments
Investments in subsidiaries and affiliates........... 103,746.0 15,244.3 (39,726.7) 79,263.6
Long-term related parties receivables................ 301.1 14,088.4 (14,088.4) 301.1
Other investments.................................... 209.6 - - 209.6
---------------- -------------- --------------- ---------------
Total other investments........................... 104,256.7 29,332.7 (53,815.1) 79,774.3
---------------- -------------- --------------- ---------------
Property, plant and equipment........................ 28,603.4 - - 28,603.4
---------------- -------------- --------------- ---------------
Deferred Charges..................................... 2,118.7 4,230.2 (88.0) 6,260.9
---------------- -------------- --------------- ---------------
Total Assets...................................... Ps 142,121.4 39,858.8 (56,843.5) 125,136.7
---------------- -------------- --------------- ---------------
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long-term debt................. Ps 261.5 - - 261.5
Trade accounts payable............................... 406.8 - - 406.8
Other accounts payable and accrued expenses.......... 1,255.1 78.7 (51.2) 1,282.6
Related parties payables............................. 10,008.8 - (2,889.3) 7,119.5
---------------- -------------- --------------- ---------------
Total current liabilities......................... 11,932.2 78.7 (2,940.5) 9,070.4
---------------- -------------- --------------- ---------------
Total long-term debt................................. 6.5 - - 6.5
---------------- -------------- --------------- ---------------
Other Noncurrent Liabilities
Deferred income taxes................................ 7,782.6 - (88.1) 7,694.5
Others............................................... - 53.5 - 53.5
Long-term related parties payables................... 57,796.5 - (14,088.3) 43,708.2
---------------- -------------- --------------- ---------------
Total other noncurrent liabilities................ 65,579.1 53.5 (14,176.4) 51,456.2
---------------- -------------- --------------- ---------------
Total Liabilities................................. 77,517.8 132.2 (17,116.9) 60,533.1
---------------- -------------- --------------- ---------------
Stockholders' equity................................. 67,880.5 41,043.4 (41,043.4) 67,880.5
Net income........................................... (3,276.9) (1,316.8) 1,316.8 (3,276.9)
---------------- -------------- --------------- ---------------
Total stockholders' equity........................ 64,603.6 39,726.6 (39,726.6) 64,603.6
---------------- -------------- --------------- ---------------
Total Liabilities and Stockholders' Equity........ Ps 142,121.4 39,858.8 (56,843.5) 125,136.7
---------------- -------------- --------------- ---------------
F-66
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Guarantors' Combined Balance Sheets:
December 31, 2003 Guarantors (Parent Company-only)
Adjustments
---------------
and Combined
Assets CEMEX Mexico ETM eliminations guarantors
-------------- -------------- -------------- --------------
Current Assets
Cash and investments.............................. Ps 767.9 821.1 0.3 1,589.3
Trade accounts receivable, net.................... 264.1 - - 264.1
Other receivables and other current assets........ 841.8 101.6 (112.5) 830.9
Related parties receivables....................... 2,028.3 4,498.2 (4,363.8) 2,162.7
Inventories....................................... 1,259.7 - - 1,259.7
--------------------------------------------------------------
Total current assets.......................... 5,161.8 5,420.9 (4,476.0) 6,160.7
--------------------------------------------------------------
Other Investments
Investments in subsidiaries and affiliates........ 111,494.0 15,720.8 (34,513.1) 92,701.7
Long-term related parties receivables............. 241.6 9,331 (9,331.0) 241.6
Other investments................................. 222.2 - - 222.2
--------------------------------------------------------------
Total other investments....................... 111,957.8 25,051.8 (43,844.1) 93,165.5
--------------------------------------------------------------
Property, plant and equipment..................... 29,817.8 - - 29,817.8
--------------------------------------------------------------
Deferred Charges.................................. 1,550.3 4,130.8 (16.3) 5,664.8
--------------------------------------------------------------
Total Assets.................................. Ps 148,487.7 34,603.5 (48,336.4) 134,754.8
--------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long-term debt.............. 6.8 - - 6.8
Trade accounts payable............................ 607.6 - - 607.6
Other accounts payable and accrued expenses....... 1,252.1 5.2 (112.0) 1,145.3
Related parties payables.......................... 16,877.8 - (4,363.8) 12,514.0
--------------------------------------------------------------
Total current liabilities..................... 18,744.3 5.2 (4,475.8) 14,273.7
--------------------------------------------------------------
Total long-term debt.............................. 8.4 - - 8.4
--------------------------------------------------------------
Other Noncurrent Liabilities
Deferred income taxes............................. 7,901.3 - (16.5) 7,884.8
Others............................................ 96.9 85.2 - 182.1
Long-term related parties payables................ 49,062.2 - (9,331.0) 39,731.2
--------------------------------------------------------------
Total other noncurrent liabilities............ 57,060.4 85.2 (9,347.5) 47,798.1
--------------------------------------------------------------
Total Liabilities............................. 75,813.1 90.4 (13,823.3) 62,080.2
--------------------------------------------------------------
Stockholders' equity.............................. 69,009.4 33,575.0 (33,575.0) 69,009.4
Net income........................................ 3,665.2 938.1 (938.1) 3,665.2
--------------------------------------------------------------
Total stockholders' equity.................... 72,674.6 34,513.1 (34,513.1) 72,674.6
--------------------------------------------------------------
Total Liabilities and Stockholders' Equity.... Ps 148,487.7 34,603.5 (48,336.4) 134,754.8
--------------------------------------------------------------
F-67
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Guarantors' Combined Income Statements:
Guarantors (Parent Company-only)
----------------------------------------------------
Adjustments Combined
For the year ended December 31, 2001 CEMEX Mexico ETM and eliminations guarantors
------------ ------- ----------------- ----------
Net sales................................................ Ps 22,711.2 - - 22,711.2
Cost of sales............................................ (7,601.0) - - (7,601.0)
-------------------------------------------------------
Gross profit........................................ 15,110.2 - - 15,110.2
Total operating expenses............................ (13,483.7) (2.2) - (13,485.9)
-------------------------------------------------------
Operating income................................. 1,626.5 (2.2) - 1,624.3
-------------------------------------------------------
Net comprehensive financing result............... 752.8 705.0 - 1,457.8
-------------------------------------------------------
Other income (expense), net.............................. 2,145.0 (60.9) 0.1 2,084.2
-------------------------------------------------------
Income before IT, BAT, ESPS and equity in affiliates..... 4,524.3 641.9 0.1 5,166.3
-------------------------------------------------------
Total IT, BAT and ESPS.............................. 771.9 (165.6) - 606.3
-------------------------------------------------------
Income before equity in income of affiliates........ 5,296.2 476.3 0.1 5,772.6
Equity in income of affiliates................... 3,195.8 1,160.2 (1,636.6) 2,719.4
-------------------------------------------------------
Net income.......................................... Ps 8,492.0 1,636.5 (1,636.5) 8,492.0
-------------------------------------------------------
Guarantors (Parent Company-only)
----------------------------------------------------
Adjustments Combined
For the year ended December 31, 2002 CEMEX Mexico ETM and eliminations guarantors
------------ ------- ----------------- ----------
Net sales................................................ Ps 22,595.2 - - 22,595.2
Cost of sales............................................ (7,757.3) - - (7,757.3)
---------------------------------------------------------
Gross profit........................................ 14,837.9 - - 14,837.9
Total operating expenses............................ (11,503.7) (0.2) - (11,503.9)
---------------------------------------------------------
Operating income................................. 3,334.2 (0.2) - 3,334.0
---------------------------------------------------------
Net comprehensive financing result............... (6,094.2) (535.9) 0.1 (6,630.0)
---------------------------------------------------------
Other income (expense), net.............................. (334.2) (6.9) (0.1) (341.2)
---------------------------------------------------------
Income before IT, BAT, ESPS and equity in affiliates..... (3,094.2) (543.0) - (3,637.2)
---------------------------------------------------------
Total IT, BAT and ESPS.............................. (550.9) (746.6) - (1,297.5)
---------------------------------------------------------
Income before equity in income of affiliates........ (3,645.1) (1,289.6) - (4,934.7)
Equity in income of affiliates................... 368.2 (27.2) 1,316.8 1,657.8
---------------------------------------------------------
Net income.......................................... Ps (3,276.9) (1,316.8) 1,316.8 (3,276.9)
---------------------------------------------------------
Guarantors (Parent Company-only)
----------------------------------------------------
Adjustments Combined
For the year ended December 31, 2003 CEMEX Mexico ETM and eliminations guarantors
------------ ------- ----------------- ----------
Net sales................................................ Ps 24,408.5 - - 24,408.5
Cost of sales............................................ (8,768.2) - - (8,768.2)
-------------------------------------------------------
Gross profit........................................ 15,640.3 - - 15,640.3
Total operating expenses............................ (12,256.0) (0.4) - (12,256.4)
-------------------------------------------------------
Operating income................................. 3,384.3 (0.4) - 3,383.9
-------------------------------------------------------
Net comprehensive financing result............... (4,079.1) 1,079.7 - (2,999.4)
-------------------------------------------------------
Other income (expense), net.............................. (467.6) (21.5) - (489.1)
-------------------------------------------------------
Income before IT, BAT, ESPS and equity in affiliates..... (1,162.4) 1,057.8 - (104.6)
-------------------------------------------------------
Total IT, BAT and ESPS.............................. 448.5 (71.7) - 376.8
-------------------------------------------------------
Income before equity in income of affiliates........ (713.9) 986.1 - 272.2
Equity in income of affiliates................... 4,379.1 (48.0) (938.1) 3,393.0
-------------------------------------------------------
Net income.......................................... Ps 3,665.2 938.1 (938.1) 3,665.2
-------------------------------------------------------
F-68
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Guarantors' Combined Statements of Changes in Financial Position:
Guarantors (Parent Company-only)
----------------------------------------------------
Adjustments Combined
For the year ended December 31, 2001 CEMEX Mexico ETM and eliminations guarantors
------------ ------- ----------------- ----------
Operating activities
Net income Ps 8,492.0 1,636.5 (1,636.5) 8,492.0
Charges to operations which did not require resources..... (2,479.4) (975.7) 1,650.6 (1,804.5)
Resources provided by operating activities................ 6,012.6 660.8 14.1 6,687.5
Net change in working capital......................... 17,242.8 (11,098.4) 41.6 6,186.0
Net resources provided by operating activities........ 23,255.4 (10,437.6) 55.7 12,873.5
Financing activities
Bank loans and notes payable, net......................... (58.1) 41.5 (41.5) (58.1)
Long-term related parties receivables and payables, net... 40,847.7 8,384.8 - 49,232.5
Other noncurrent assets and liabilities, net.............. (148.3) (114.6) 114.6 (148.3)
Resources used in financing activities.................... 40,641.3 8,311.7 73.1 49,026.1
Investing activities
Property, plant and equipment, net........................ (805.5) - - (805.5)
Investments in subsidiaries and affiliates................ (62,583.3) 74.5 (114.6) (62,623.4)
Deferred charges.......................................... (451.5) 24.2 (13.9) (441.2)
Other investments......................................... (161.4) 1,326.2 - 1,164.8
Resources used in investing activities................ (64,001.7) 1,424.9 (128.5) (62,705.3)
Change in cash and investments........................ (105.0) (701.0) 0.3 (805.7)
Cash and investments initial balance.................. 522.3 1,376.6 0.2 1,899.1
Cash and investments ending balance................... Ps 417.3 675.6 0.5 1,093.4
- ----------------------------------------------------------------------------------------------------------------------------------
Guarantors (Parent Company-only)
----------------------------------------------------
Adjustments Combined
For the year ended December 31, 2002 CEMEX Mexico ETM and eliminations guarantors
------------ ------- ----------------- ----------
Operating activities
Net income................................................ Ps (3,276.9) (1,316.8) 1,316.8 (3,276.9)
Charges to operations which did not require resources..... 1,611.8 1,127.9 (1,316.8) 1,422.9
Resources provided by operating activities................ (1,665.1) (188.9) - (1,854.0)
Net change in working capital......................... 4,801.6 (26.2) 451.8 5,227.2
Net resources provided by operating activities........ 3,136.5 (215.1) 451.8 3,373.2
Financing activities
Bank loans and notes payable, net......................... 12.8 53.5 - 66.3
Dividends................................................. (2,255.5) - - (2,255.5)
Long-term related parties receivables and payables, net... (53,630.5) - - (53,630.5)
Other noncurrent assets and liabilities, net.............. 53,452.1 - - 53,452.1
Resources used in financing activities.................... (2,421.1) 53.5 - (2,367.6)
Investing activities
Property, plant and equipment, net........................ (1,104.8) - - (1,104.8)
Investments in subsidiaries and affiliates................ (10,774.3) (23.2) 64.6 (10,732.9)
Deferred charges.......................................... (220.7) (17.6) (104.8) (343.1)
Other investments......................................... 12,260.4 141.2 (411.6) 11,990.0
Resources used in investing activities................ 160.6 100.4 (451.8) (190.8)
Change in cash and investments........................ 876.0 (61.2) - 814.8
Cash and investments initial balance.................. 417.3 675.6 0.5 1,093.4
Cash and investments ending balance................... Ps 1,293.3 614.4 0.5 1,908.2
F-69
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Guarantors' Combined Statements of Changes in Financial Position:
- ----------------------------------------------------------------------------------------------------------------------------------
Guarantors (Parent Company-only)
----------------------------------------------------
Adjustments Combined
For the year ended December 31, 2003 CEMEX Mexico ETM and eliminations guarantors
------------ ------- ----------------- ----------
Operating activities
Net income................................................ Ps 3,665.2 938.1 (938.1) 3,665.2
Charges to operations which did not require resources..... (3,124.0) 894.0 938.1 (1,291.9)
Resources provided by operating activities................ 541.2 1,832.1 - 2,373.3
Net change in working capital......................... 38,376.8 1,055.8 (25,561.0) 13,871.6
Net resources provided by operating activities........ 38,918.0 2,887.9 (25,561.0) 16,244.9
Financing activities
Bank loans and notes payable, net......................... (252.8) 31.8 - (221.0)
Dividends................................................. (5,641.0) - - (5,641.0)
Long-term related parties receivables and payables, net... (38,743.3) - 30,317.0 (8,426.3)
Other noncurrent assets and liabilities, net.............. 35.4 (6,460.0) 6,460.0 35.4
Resources used in financing activities.................... (44,601.7) (6,428.2) 36,777.0 (14,252.9)
Investing activities
Property, plant and equipment, net........................ (952.2) - - (952.2)
Investments in subsidiaries and affiliates................ 5,479.3 (1,009.0) (6,460.2) (1,989.9)
Deferred charges.......................................... 602.2 - - 602.2
Other investments......................................... 29.0 4,756.0 (4,756.0) 29.0
Resources used in investing activities................ 5,158.3 3,747.0 (11,216.2) (2,310.9)
Change in cash and investments........................ (525.4) 206.7 (0.2) (318.9)
Cash and investments initial balance.................. 1,293.3 614.4 0.5 1,908.2
Cash and investments ending balance................... Ps 767.9 821.1 0.3 1,589.3
- ----------------------------------------------------------------------------------------------------------------------------------
Guarantors' Combined Statements of Changes in Financial Position:
Guarantors--Cash and investments
At December 31, 2002 and 2003, ETM's temporary investments are primarily
comprised of CEMEX CPOs. In June 2003, CEMEX issued 817,515 CPOs through
dividends to ETM amounting to Ps30.6.
Guarantors--Trade receivables
During December 2002, CEMEX Mexico and one of its subsidiaries established
sales of trade accounts receivables program ("securitization program"). With
this program, these companies effectively transferred control, risks and
benefits related to some of the trade accounts receivable balances. As of
December 31, 2002 and 2003, these balances amounted to Ps1,481.2 and Ps1,618.0
from CEMEX Mexico, respectively, and Ps754.9 and Ps862.9 from its subsidiary,
respectively.
Guarantors--Investment in affiliates
At December 31, 2002 and 2003, of the Guarantors' total investment in
affiliates, which are accounted for under the equity method, Ps79,058.3 and
Ps92,472.2, respectively, correspond to investments in non-guarantors, and
Ps205.3 in 2002 and Ps229.5 in 2003, are related to minority investments in
third parties.
At December 31, 2003, the main Guarantors' investments in non-guarantors are
in CEMEX Concretos, S.A. de C.V and CEMEX Internacional, S.A. de C.V., which
together integrate the ready-mix concrete operations and export trading
activities in Mexico; and CEDICE, which is the parent company of the
international operations of CEMEX.
The investment in affiliates includes an effect of Ps647.5 corresponding to
the cumulative effect of accounting change; see notes 23(k), with respect to
asset retirement obligations, and 23(m) with respect to equity forward
contracts.
F-70
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Guarantors--Indebtedness
At December 31, 2002 and 2003, the Guarantors had total indebtedness of
U.S.$24.9 million (Ps268.0) and U.S.$1.3 million (Ps15.2), respectively. At
December 31, 2003, the average interest rate of this indebtedness was
approximately 7.8%. Of the total indebtedness of the Guarantors at December
31, 2003, approximately U.S.$0.6 million (Ps6.8) matures in 2004 and U.S.$0.7
million (Ps8.4) matures in 2005 and thereafter.
Guarantors--Balances and transactions with related parties
Balances with related parties result primarily from (i) the sale and purchase
of cement and clinker to and from affiliates, (ii) the sale and/or acquisition
of subsidiaries' shares within the CEMEX group, (iii) the invoicing of
administrative and other services received or provided from and to affiliated
companies, and (iv) the transfer of funds between the Guarantors, their
respective parents and certain affiliates. The related parties balance detail
is as follows:
Guarantors Assets Liabilities
At December 31, 2002 Short-Term Long-Term Short-Term Long-Term
----------- ---------- ----------- -----------
CEMEX, S.A. de C.V........................................... Ps 1,873.0 - - 34,244.5
CEMEX Central, S.A. de C.V................................... 940.6 - - -
CEMEX Concretos, S.A. de C.V................................. 489.2 - - -
Impra Cafe, S.A. de C.V...................................... 389.3 - - -
Proveedora Mexicana de Materiales, S.A. de C.V............... 234.0 - - -
Servicio CEMEX Mexico, S.A. de C.V. ......................... 226.3 - - -
Poveedora de Fibras Textiles, S.A. de C.V.................... 183.6 - - -
Inversora en Cales, S.A. de C.V.............................. 178.0 - - -
Carbonifera San Patricio, S.A. de C.V........................ 82.5 - - -
Inmobiliaria Rio la Silla, S.A. de C.V....................... 72.1 301.1 - -
Aviacion Comercial de America, S.A. de C.V................... 35.8 - - -
Centro Distribuidor de Cemento, S.A. de C.V.................. - - - 6,607.3
CEMEX International Finance Company.......................... - - 4,843.0 -
Petrocemex, S.A. de C.V...................................... - - 708.4 2,856.4
CEMEX Internacional, S.A. de C.V............................. - - 608.0 -
Turismo CEMEX, S.A. de C.V................................... - - 265.3 -
Neoris de Mexico, S.A. de C.V................................ - - 223.5 -
Mexcement Holdings S.A. de C.V............................... - - 113.2 -
Others....................................................... 199.7 - 358.1 -
Ps 4,904.1 301.1 7,119.5 43,708.2
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantors Assets Liabilities
At December 31, 2003 Short-Term Long-Term Short-Term Long-Term
----------- ---------- ----------- -----------
CEMEX, S.A. de C.V........................................... Ps 134.1 - - 30,620.1
CEMEX Central, S.A. de C.V................................... 667.5 - - -
CEMEX Concretos, S.A. de C.V................................. 244.7 - - -
Impra Cafe, S.A. de C.V. .................................... 476.4 - - -
CEMEX Trademarks Worldwide................................... - - 4,860.3 -
Servicios CEMEX Mexico, S.A. de C.V. ........................ 258.8 - - -
Poveedora de Fibras Textiles, S.A. de C.V. .................. - - 58.0 -
Inmobiliaria Rio la Silla, S.A. de C.V....................... - 241.6 - -
Centro Distribuidor de Cemento, S.A. de C.V. ................ - - - 6,361.1
CEMEX International Finance Company.......................... - - 3,906.1 -
Petrocemex, S.A. de C.V...................................... - - 1,124.9 2,750.0
CEMEX Internacional, S.A. de C.V............................. - - 608.4 -
Turismo CEMEX, S.A. de C.V.. ................................ - - 255.2 -
Others....................................................... 381.2 - 1,701.1 -
Ps 2,162.7 241.6 12,514.0 39,731.2
- ------------------------------------------------------------------------------------------------------------------------------------
F-71
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
The principal transactions carried out with affiliated companies are as
follows:
Years ended December 31,
-------------------------------------------------
Guarantors 2001 2002 2003
-------------- ------------- -------------
Net sales......................................................... Ps 3,692.7 3,493.4 3,615.3
Purchases......................................................... (559.9) (1,024.0) (1,309.9)
Selling and administrative expenses .............................. (9,515.8) (7,475.7) (8,172.7)
Financial expense................................................. (6,188.3) (4,440.8) (4,709.3)
Financial income ................................................. 1,113.7 599.2 341.7
Other expense, net ............................................... Ps (72.6) (58.8) 280.2
-------------- ------------- -------------
Net sales--The Guarantors sell cement and clinker to affiliated companies in
arms-length transactions.
Purchases--The Guarantors purchase raw materials from affiliates in
arms-length transactions.
Selling and administrative expenses--CEMEX allocates part of its corporate
expense to the Guarantors, which also incur rental and trademark rights
expenses payable to CEMEX.
Financial income and expense is recorded on receivables from and payables to
affiliated companies as described above. Additionally, the Guarantors receive
financial income on their temporary investment position, invested in the
non-guarantor treasury company.
Guarantors--U.S. GAAP reconciliation of net income and stockholders' equity:
As discussed at the beginning of this note 23, the following reconciliation to
U.S. GAAP does not include the reversal of Mexican GAAP inflation accounting
adjustments, as these adjustments represent a comprehensive measure of the
effects of price level changes in the inflationary Mexican economy, which is
considered a more meaningful presentation than historical cost-based financial
reporting for both Mexican and U.S. accounting purposes. The other principal
differences between Mexican GAAP and U.S. GAAP and the effect on net income
and stockholders' equity are presented below, with an explanation of the
adjustments, as follows:
Years ended December 31,
2001 2002 2003
------ ------ ------
Net income reported under Mexican GAAP........................... Ps 8,492.0 (3,276.9) 3,665.2
Approximate U.S. GAAP adjustments:
1. Amortization of pushdown goodwill (see note A)................ (198.4) - -
2. Deferred income taxes and ESPS (see note B)................... (1,264.9) 2,008.8 (8.0)
3. Other employees' benefits (see note C)........................ (5.0) (14.0) 34.6
4. Inflation adjustment of machinery and equipment (see note D).. (249.4) (190.1) (116.8)
5. Other U.S. GAAP adjustments (see note E)...................... (1,287.5) 314.7 (167.1)
6. Monetary position result (see note F)......................... 231.5 513.4 112.3
Total approximate U.S. GAAP adjustments...................... (2,773.7) 2,632.8 (145.0)
Total approximate net income under U.S. GAAP................. Ps 5,718.3 (644.1) 3,520.2
At December 31,
-------------------------------------
2002 2003
---------------- ----------------
Total stockholders' equity under Mexican GAAP............................. Ps 64,603.6 72,674.6
Approximate U.S. GAAP adjustments:
1. Effect of pushdown of goodwill, net (see note A)...................... 2,018.3 2,029.8
2. Deferred income taxes and ESPS (see note B)........................... (2,281.3) (3,270.9)
3. Other employees' benefits (see note C)................................ (171.1) (100.1)
4. Inflation adjustment for machinery and equipment (see note D).......... 4,088.1 2,162.9
5. Other U.S. GAAP adjustments (see note E).............................. (6,398.8) 551.3
---------------- ----------------
Total approximate U.S. GAAP adjustments.............................. (2,744.8) 1,373.0
---------------- ----------------
Total approximate stockholders' equity under U.S. GAAP............... Ps 61,858.8 74,047.6
---------------- ----------------
F-72
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Guarantors--Notes to the U.S. GAAP reconciliation:
A. Business Combinations
In 1989 and 1990, through an exchange of its shares with CEMEX, CEMEX Mexico
acquired substantially all its Mexican subsidiaries from CEMEX. The original
excess of the purchase price paid by CEMEX over the fair value of the net
assets of these subsidiaries was Ps7,255.9, of which Ps3,753.1, were recorded
in ETM under Mexican GAAP at the time of the acquisition. The net adjustment
in the Guarantors stockholders' equity reconciliation to U.S. GAAP arising
from this pushed-down goodwill, after eliminating the amounts recorded under
Mexican GAAP, was Ps1,198.0 in 2002 and Ps1,209.6 in 2003.
In addition, during 1995, CEMEX acquired an additional 24.2% equity interest
in TOLMEX, S.A. de C.V. ("TOLMEX"), through a public exchange offer pursuant
to which CEMEX exchanged its own shares for TOLMEX's shares. TOLMEX merged
during 1999 with other Mexican subsidiaries creating CEMEX Mexico. The excess
of the purchase price paid by CEMEX over the fair value of the net assets of
TOLMEX was Ps922.9. The net adjustment in the Guarantors stockholders' equity
reconciliation to U.S. GAAP arising from this pushed-down goodwill was Ps820.3
in 2002 and Ps820.2 in 2003.
Amortization expense related to these pushed-down goodwill amounts was
recognized for purposes of the net income reconciliation to U.S. GAAP through
2001. As mentioned in note 23(a), for purposes of the reconciliation to U.S.
GAAP, CEMEX adopted SFAS 142 and SFAS 144 in 2002. As a result of this
adoption, effective January 1, 2002, amortization ceased for goodwill under
U.S. GAAP and, therefore, beginning in 2002, goodwill amortization recorded
under Mexican GAAP is adjusted for purposes of the reconciliation of net
income and stockholders' equity.
B. Deferred income taxes and Employees' Statutory Profit Sharing
Deferred income taxes adjustment in the stockholders' equity reconciliation to
U.S. GAAP, at December 31, 2002 and 2003, represented income of Ps514.7 and
expense of Ps680.7, respectively. In addition, deferred ESPS adjustment to
U.S. GAAP was an expense of Ps2,796.0 in 2002 and an expense of Ps2,590.2 in
2003.
C. Other employees' benefits
The Guarantors do not accrue for severance payments and until December 31,
2002, did not accrue for vacation expense. These items are recognized when
retirements occur or when vacation was taken. Beginning January 1, 2003, in
accordance with new Mexican GAAP pronouncements, the Guarantors began to
accrue for vacation expense on the basis of services rendered. As a result, at
December 31, 2002, for purposes of the U.S. GAAP reconciliation, a vacation
liability was determined in an amount of Ps30.6, which was cancelled at
December 31, 2003. In addition, the Guarantors recognized, for purposes of the
U.S. GAAP reconciliation, a liability for severance benefits for Ps140.5 in
2002 and Ps100.1 in 2003.
D. Inflation Adjustment of Machinery and Equipment
As previously mentioned in note 23(i), for purposes of the U.S. GAAP
reconciliation, fixed assets of foreign origin were restated using the
inflation factor arising from the Consumer Price Index ("CPI") of each
country, and depreciation is based upon the revised amounts.
E. Other U.S. GAAP adjustments
Deferred charges--For U.S. GAAP purposes, other deferred charges net of
accumulated amortization that did not qualify for deferral under U.S. GAAP
have been charged to expense, with a net effect in the net income
reconciliation to U.S. GAAP of expense of Ps27.3and of Ps279.3 for the years
ended December 31, 2001 and 2002, respectively. The net effect in the
stockholders' equity reconciliation to U.S. GAAP was expenses of Ps513.6 in
2002, from the partial reversal of the adjustment. Mexican GAAP allowed the
deferral of these expenses. This effect has been cancelled in
stockholders' equity because the intangible assets were sold to Cemex
Trademark Worldwide (CTW), an affiliated company, for a total amount of
Ps494.5 in February 2003.
F-73
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican pesos as of December 31, 2003)
Subsidiary companies--The Guarantors have adjusted their investment and their
equity in the earnings of subsidiary companies for the share of the
approximate U.S. GAAP adjustments applicable to these affiliates. The net
effect in the stockholders' equity reconciliation to U.S. GAAP at December 31,
2002 and 2003 was expense of Ps5,885.2 and income of Ps551.3, respectively.
The effect in the net income reconciliation to U.S. GAAP was expense of
Ps1,260.2, income of Ps594.0 and expense of Ps167.1 in 2001, 2002 and 2003,
respectively. From the U.S. GAAP adjustments to subsidiary companies in the
Guarantors' reconciliation of stockholders' equity, expense of Ps2,281.3 in
2002 and expense of Ps3,270.9 in 2003, are related to deferred IT and deferred
ESPS.
F. Monetary position result
Monetary position result of the U.S. GAAP adjustments is determined by (i)
applying the annual inflation factor to the net monetary position of the U.S.
GAAP adjustments at the beginning of the period, plus (ii) the monetary
position effect of the adjustments during the period, determined in accordance
with the CPI inflation factor for the period.
Supplemental Guarantors' Cash Flow Information under U.S. GAAP
The classifications of cash flows under Mexican GAAP and U.S. GAAP are
basically the same in respect of the transactions presented under each
caption. The nature of the differences between Mexican GAAP and U.S. GAAP in
the amounts reported is primarily due to (i) the elimination of inflationary
effects in the variations of monetary assets and liabilities arising from
financing and investing activities, against the corresponding monetary
position result in operating activities, (ii) the elimination of exchange rate
fluctuations resulting from financing and investing activities, against the
corresponding unrealized foreign exchange gain or loss included in operating
activities, and (iii) the recognition in operating, financing and investing
activities of the U.S. GAAP adjustments.
For the Guarantors, the following table summarizes the cash flow items as
required under SFAS 95 provided by (used in) operating, financing and
investing activities for the years ended December 31, 2001, 2002 and 2003,
giving effect to the U.S. GAAP adjustments, excluding the effects of inflation
required by Bulletin B-10 and Bulletin B-15. The following information is
presented, in millions of pesos, on a historical peso basis and it is not
presented in pesos of constant purchasing power:
Years ended December 31,
-------------------------------------------------
2001 2002 2003
-------------- ------------- --------------
Net cash provided by operating activities.......................... Ps (2,336.9) 2,001.4 6,969.9
Net cash provided by (used in) financing activities................ (25.4) 2,418.5 (5,886.0)
Net cash used in investing activities.............................. 2,287.0 (3,555.4) (1,561.2)
-------------- ------------- --------------
Net cash flow from operating activities reflects cash payments for interests
and income taxes as follows:
Years ended December 31,
-------------------------------------------------
2001 2002 2003
-------------- ------------- --------------
Interest paid...................................................... Ps 20.5 263.5 149.7
Income taxes paid.................................................. - - -
-------------- ------------- --------------
Guarantors' non-cash activities are comprised of the following:
During 2001, the Guarantors acquired, from CEMEX, an equity interest in CEDICE
for an amount of Ps37,466.4, which was credited against an account payable
owed by CEMEX to the Guarantors at the end of such year.
Dividends declared to CEMEX amounting to Ps2,171.5 in 2002 and Ps6,460.0 in
2003 were recognized by the Guarantors as accounts payable to CEMEX as of
December 31, 2002 and 2003, respectively.
Contingent liabilities of the Guarantors
As of December 31, 2002 and 2003, CEMEX Mexico and ETM guaranteed debt of
CEMEX in the amount of U.S.$2,339 million and U.S.$3,145 million (see note
11C).
F-74
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
The Board of Directors and Stockholders
CEMEX, S.A. de C.V.:
Under the date of January 15, 2004, we reported on the consolidated balance
sheets of CEMEX, S.A. de C.V. and subsidiaries as of December 31, 2002 and
2003, and the related consolidated statements of income, changes in
stockholders' equity and changes in financial position for each of the years
ended December 31, 2001, 2002 and 2003, which are included in this annual
report on Form 20-F. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related consolidated
financial statement schedules in the annual report. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG Cardenas Dosal, S.C.
/s/ Leandro Castillo Parada
Leandro Castillo Parada
Monterrey, N.L. Mexico
January 15, 2004
S-1
SCHEDULE I
CEMEX, S.A. DE C.V. (PARENT COMPANY ONLY)
Balance Sheets
(Millions of constant Mexican Pesos as of December 31, 2003)
December 31,
----------------- -- ---------------
Assets 2002 2003
----------------- ---------------
Current Assets
Cash and investments.................................................... Ps 382.3 108.6
Other receivables (note 3).............................................. 1,123.9 712.1
Related parties receivables (note 7).................................... 20,147.9 895.4
----------------- ---------------
Total current assets................................................ 21,654.1 1,716.1
----------------- ---------------
Investments and Noncurrent Receivables
Investments in subsidiaries and affiliated companies (note 4) .......... 83,290.4 84,843.5
Other investments....................................................... 84.7 71.7
Other noncurrent accounts receivable.................................... 511.7 940.9
Long-term related parties receivables (note 7).......................... 17,147.0 34,436.5
----------------- ---------------
Total investments and noncurrent receivables........................ 101,033.8 120,292.6
----------------- ---------------
----------------- ---------------
Land and Buildings......................................................... 1,754.7 1,738.5
----------------- ---------------
Deferred Charges (note 5).................................................. 6,245.1 5,300.2
----------------- ---------------
Total Assets........................................................ Ps 130,687.7 129,047.4
================= ===============
Liabilities and Stockholders' Equity
Current Liabilities
Bank loans (note 6).........................................................Ps 6,976.9 730.6
Notes payable (note 6)...................................................... 3,187.9 1,889.9
Current maturities of long-term debt (note 6)............................... 5,625.0 705.0
Other accounts payable and accrued expenses ................................ 2,963.3 2,816.8
Related parties payable (note 7)............................................ 6,083.0 4,677.9
----------------- ----------------
Total current liabilities............................................... 24,836.1 10,820.2
----------------- ----------------
Long-Term Debt (notes 6 and 7)
Long-Term Debt.............................................................. 21,337.9 22,200.1
Long-term related parties payables.......................................... 17,183.9 24,146.1
----------------- ----------------
Total long-term debt.................................................... 38,521.8 46,346.2
Other long-term liabilities............................................. 1,449.0 1,808.8
----------------- ----------------
Total Liabilities.............................................................. 64,806.9 58,975.2
----------------- ----------------
----------------- ----------------
Stockholders' Equity........................................................... 65,880.8 70,072.2
----------------- ----------------
Total Liabilities and Stockholders' Equity..............................Ps 130,687.7 129,047.4
================= ================
See accompanying notes to financial statements.
S-2
SCHEDULE I (continued)
CEMEX, S.A. DE C.V. (PARENT COMPANY ONLY)
Statements of Income
(Millions of constant Mexican Pesos as of December 31, 2003,
except for earnings per share)
Years ended December 31,
--------------- -- -------------- -- ---------------
2001 2002 2003
--------------- -------------- ---------------
Total revenues ..............................................Ps 13,828.0 5,560.4 3,733.4
Administrative expenses......................................... (90.1) (110.4) (54.8)
--------------- -------------- ---------------
Operating income............................................. 13,737.9 5,450.0 3,678.6
--------------- -------------- ---------------
Net comprehensive financing result....................... 33.9 (1,427.1) ( 1,769.1)
Other income (expense), net.................................... (2,134.3) ( 350.4) 4,367.7
--------------- -------------- ---------------
Income before income taxes................................... 11,637.5 3,672.5 6,277.2
Income tax benefit and business assets tax, net (note 8)........ 1,389.1 2,294.4 790.2
--------------- -------------- ---------------
Net income...................................................Ps 13,026.6 5,966.9 7,067.4
=============== ============== ===============
Basic earnings per share.....................................Ps 3.05 1.33 1.49
Diluted earnings per share...................................Ps 3.03 1.33 1.46
=============== ============== ===============
See accompanying notes to financial statements.
S-3
SCHEDULE I (continued)
CEMEX, S.A. DE C.V. (PARENT COMPANY ONLY)
Statements of Changes in Financial Position
(Millions of constant Mexican Pesos as of December 31, 2003)
Years ended December 31,
--------------- --------------- ---------------
2001 2002 2003
--------------- --------------- ---------------
Operating activities
Net income.......................................................... Ps 13,026.6 5,966.9 7,067.4
Charges to operations which did not require resources (note 9)...... (11,598.8) (6,206.7) (2,068.5)
--------------- --------------- ---------------
Resources (used in) provided by operating activities............ 1,427.8 (239.8) 4,998.9
Net change in working capital....................................... (7,894.8) 1,132.1 18,112.7
--------------- --------------- ---------------
Net resources provided by (used in) operating activities....... (6,467.0) 892.3 23,111.6
--------------- --------------- ---------------
Financing activities
Proceeds from bank loans (repayments), net......................... 7,070.0 3,343.2 (9,394.6)
Notes payable...................................................... (5,198.6) 4,238.8 (2,207.3)
Dividends paid..................................................... (3,369.1) (3,750.1) (3,963.0)
Issuance of common stock from reinvestment of dividends............ 3,015.3 3,203.8 3,700.0
Issuance of common stock under stock option plan................... 115.4 75.8 43.0
Acquisition of shares under repurchase program..................... (245.6) (400.6) 387.0
Other financing activities, net.................................... 628.1
761.6 359.8
--------------- --------------- ---------------
Resources provided by financing activities..................... 2,015.5 7,472.5 (11,075.1)
--------------- --------------- ---------------
Investing activities
Long-term related parties receivables, net......................... (38,601.4) 55,069.4 (10,327.3)
Net change in investment in subsidiaries........................... 42,638.3 (65,643.7) (7,007.2)
Dividends received................................................. - 2,396.6 5,501.3
Deferred charges................................................... 1,156.5 (97.8) (47.5)
Other noncurrent accounts receivable............................... (634.9) 123.2 (429.5)
--------------- --------------- ---------------
Resources (used in) provided by investing activities.......... 4,558.5 (8,152.3) (12,310.2)
--------------- --------------- ---------------
Increase (decrease) in cash and investments.................... 107.0 212.5 (273.7)
Cash and investments at beginning of year...................... 62.8 169.8 382.3
--------------- --------------- ---------------
Cash and investments at end of year............................ Ps 169.8 382.3 108.6
=============== =============== ===============
See accompanying notes to financial statements.
S-4
SCHEDULE I (continued)
CEMEX, S.A. DE C.V.
NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
1. DESCRIPTION OF BUSINESS
CEMEX, S.A. de C.V. (CEMEX or the Company) is a Mexican holding company (parent)
of entities whose main activities are oriented to the construction industry,
through the production and marketing of cement and ready-mix concrete.
2. SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION AND DISCLOSURE
These financial statements have been prepared in accordance with Generally
Accepted Accounting Principles in Mexico ("Mexican GAAP"), which include the
recognition of the effects of inflation on the financial information.
B) PRESENTATION OF COMPARATIVE FINANCIAL STATEMENTS
The restatement factors for the Parent Company's financial statements of prior
periods were calculated using Mexican inflation.
2001 to 2002 2002 to 2003
----------------- -----------------
Restatement factor using Mexican inflation............................. 1.0559 1.0387
----------------- -----------------
C) CASH AND INVESTMENTS
Investments include fixed-income securities with original maturities of three
months or less, as well as marketable securities easily convertible into cash.
Investments in fixed-income securities are recorded at cost plus accrued
interest. Investments in marketable securities are recorded at market value.
Results from changes in market values, accrued interest and the effects of
inflation are included in earnings as part of the Comprehensive Financing
Result.
D) INVESTMENTS IN SUBSIDIARIES AND AFFILIATED COMPANIES
Investments in common stock representing between 10% and 100% of the issuer's
common stock are accounted for by the equity method. Under the equity method,
after acquisition, the investments original cost are adjusted for the
proportional interest of the holding company in the affiliates equity and
earnings, considering the inflation effects.
E) LAND AND BUILDINGS
Land and buildings are presented at their restated values using the Mexican
inflation index. Depreciation of buildings is provided on the straight-line
method over the estimated useful lives of the assets. The useful lives of
administrative buildings are approximately 50 years.
F) INTANGIBLE ASSETS, DEFERRED CHARGES AND AMORTIZATION (note 5)
Effective January 1, 2003, intangible assets acquired as well as costs
incurred in the development stages of intangible assets are capitalized when
associated future benefits are identified and the control on such benefits is
demonstrated. Other expenditures are charged to earnings as incurred.
Intangible assets are presented at their restated value and are classified as
of definite life, which are amortized over the benefited periods, and as of
indefinite life, which are not amortized since it cannot be accurately
established the period in which the benefits associated with such intangibles
will terminate. Amortization of intangible assets, except for goodwill, is
calculated under the straight-line method.
Intangible assets acquired in a business combination are separately accounted
for at fair value at the acquisition date, unless such value cannot be
reasonably estimated, in which case, are included as part of goodwill, an
intangible asset of indefinite life, which is nevertheless amortized. The
Company amortizes goodwill under the present worth or sinking fund method,
which is intended to provide a better matching of goodwill amortization with
the revenues generated from the acquired companies. Goodwill generated before
1992 is amortized in a maximum of 40 years, while such generated from 1992 to
date, is amortized in a maximum period of 20 years. Deferred charges
previously recognized under former Bulletin C-8 will continue to be amortized
in their original period. Intangible assets are subject to periodic impairment
evaluations. The adoption of new Bulletin C-8 only implied grouping intangible
assets in the categories indicated above.
S-5
SCHEDULE I (continued)
CEMEX, S.A. DE C.V.
NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS--(Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
Direct costs incurred in debt issuances are capitalized and amortized as part
of the effective interest rate of each transaction over its maturity. These
costs include discounts on debt issuance, bank fees, fees paid to attorneys,
agents, printers and consultants.
G) MONETARY POSITION RESULT
The monetary position result, which represents the gain or loss from holding
monetary assets and liabilities in inflationary environments, is calculated by
applying the Mexican inflation rate on the Company's net monetary position.
H) DEFICIT IN EQUITY RESTATEMENT
The deficit in equity restatement includes the accumulated effect from holding
non-monetary assets as well as the foreign currency translation effects from
foreign subsidiaries' financial statements.
I) CONTINGENCIES AND COMMITMENTS
Obligations or material losses, related to contingencies and commitments, are
recognized when present obligations exist, as a result of past events, it is
probable that the effects will materialize and there are reasonable elements
for quantification. If there are no reasonable elements for quantification, a
qualitative disclosure is included in the notes to the financial statements.
The Company does not recognize contingent revenues, income or assets.
J) USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities at the
financial statements date and the reported amounts of revenues and expenses
during the reported periods. Actual results could differ from these estimates.
3. OTHER ACCOUNTS RECEIVABLE AND OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Other accounts receivable as of December 31, 2002 and 2003 consist of:
2002 2003
--------------- --------------
Non-trade receivables........................................................... Ps 163.4 282.9
Receivables from valuation of derivative instruments............................ - 110.0
Refundable income tax........................................................... 675.4 8.0
Other refundable taxes.......................................................... 285.1 311.2
--------------- --------------
Ps 1,123.9 712.1
--------------- --------------
Other accounts payable and accrued expenses as of December 31, 2002 and 2003
consist of:
2002 2003
--------------- ---------------
Other accounts payable and accrued expenses..................................... Ps 1,525.5 1,483.2
Interest payable................................................................ 606.1 319.6
Tax payable..................................................................... - 485.6
Dividends payable............................................................... 4.2 4.9
Provisions...................................................................... - 6.9
Accounts payable from valuation of derivative instruments....................... 827.5 516.6
----------- --- ----------- ---
Ps 2,963.3 2,816.8
----------- --- ----------- ---
S-6
SCHEDULE I (continued)
CEMEX, S.A. DE C.V.
NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS--(Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
Short-term provisions primarily consist of: (i) accruals for insurance
payments and (ii) accruals related to the portion of legal assessments to be
settled in short-term. Commonly, these amounts are revolving in nature and are
to be settled and replaced by similar amounts within the next 12 months.
4. INVESTMENTS IN SUBSIDIARIES AND AFFILIATED COMPANIES
As of December 31, 2002 and 2003, investments in subsidiaries and affiliated
companies accounted for by the equity method, are summarized as follows:
2002 2003
--------------- --------------
Book value at acquisition date................................................ Ps 66,259.1 64,076.5
Equity in income and other changes in stockholders' equity of subsidiaries and
affiliated companies....................................................... 17,031.3 20,767.0
--------------- --------------
Ps 83,290.4 84,843.5
--------------- --------------
5. INTANGIBLE ASSETS AND DEFERRED CHARGES
At December 31, 2002 and 2003, intangible assets of indefinite life and
deferred charges are summarized as follows:
2002 2003
--------------- --------------
Intangible of indefinite useful life:
Goodwill..................................................................... Ps 2,010.6 1,981.9
Accumulated amortization...................................................... (148.6) (149.8)
--------------- --------------
1,862.0 1,832.1
--------------- --------------
Deferred Charges:
Deferred financing costs...................................................... 761.8 384.7
Deferred income taxes (note 17B).............................................. 3,709.7 3,023.9
Others........................................................................ 1,501.5 415.6
Accumulated amortization ..................................................... (1,589.9) (356.1)
--------------- --------------
4,383.1 3,468.1
--------------- --------------
Ps 6,245.1 5,300.2
--------------- --------------
6. SHORT AND LONG-TERM BANK LOANS AND NOTES PAYABLE
A total of 95.6% and 69.9% of the Parent Company-only short-term debt is
denominated in dollars in 2002 and 2003, respectively.
Of the Parent Company-only long-term debt, approximately 77.0% and 89.0% is
denominated in dollars in 2002 and 2003, respectively; the remaining debt in
2002 is primarily denominated in Mexican pesos.
The maturities of long-term debt as of December 31, 2003 are as follows:
Parent
--------------------
2005...................................................................... 6,564.6
Ps
2006...................................................................... 5,364.0
2007...................................................................... 2,998.4
2008...................................................................... 3,473.3
2009 and thereafter....................................................... 3,799.8
--------------------
Ps 22,200.1
--------------------
In the Parent Company-only balance sheet at December 31, 2003, there were
short-term debt transactions amounting to U.S.$ 395 million ($4,439.8),
classified as long-term debt, due to the Company's ability and the intention
to refinance such indebtedness with the available amounts of the committed
long-term lines of credit.
S-7
SCHEDULE I (continued)
CEMEX, S.A. DE C.V.
NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS--(Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
7. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
The main balances receivable and payable with related parties as of December
31, 2002 and 2003 are:
Parent Company 2002
-------------------------------------------------------------------
Assets Liabilities
------------------------------ --------------------------------
Short-Term Long-Term Short-Term Long-Term
------------- ------------ -------------- -------------
CEMEX Mexico, S.A. de C.V...................... Ps 20,048.8 16,764.2 - -
CEMEX International Finance Co................. - - 271.9 11,192.6
CEMEX Trademarks Worldwide Ltd................. - - 156.0 5,991.3
Empresas Tolteca de Mexico, S.A. de C.V........ - - 4,439.3 -
CEMEX Central, S.A. de C.V. .......................... - - 722.3 -
Assiut Cement Company................................. - - 395.1 -
International Investors LLC........................... - 382.8 - -
CEMEX Asia PTE. Ltd................................... - - 73.9 -
Centro Distribuidor de Cemento, S.A. de C.V. ......... - - 16.2 -
Sunbelt Trading, S.A. de C.V. ........................ 45.6 - - -
CEMEX Concretos, S.A. de C.V. ........................ 24.0 - - -
PT CEMEX Indonesia................................... 14.2 - - -
Other................................................ 15.3 - 8.3 -
------------- ------------ -------------- -------------
Ps 20,147.9 17,147.0 6,083.0 17,183.9
------------- ------------ -------------- -------------
Parent Company 2003
-------------------------------------------------------------------
Assets Liabilities
------------------------------ --------------------------------
Short-Term Long-Term Short-Term Long-Term
------------- ------------ -------------- -------------
CEMEX Mexico, S.A. de C.V..........................Ps 745.5 34,236.9 - -
CEMEX International Finance Co........................ - - 39.6 20,119.2
Empresas Tolteca de Mexico, S.A. de C.V............... - - 4,496.4 -
CEMEX Irish Investment Company Limited................ - - 16.9 3,898.6
International Investors LLC........................... 9.7 199.6 - -
Centro Distribuidor de Cemento, S.A. de C.V........... 2.7 - - 128.3
CEMEX Asia PTE. Ltd................................... - - 118.6 -
CEMEX Manila Investments B. V......................... 55.6 - - -
Sunbelt Trading, S.A. ................................ 47.6 - - -
CEMEX Venezuela S.A. de C.V........................... 8.4 - - -
CEMEX Colombia S.A.................................... 6.7 - - -
Latin Asia Investments. Pte Ltd...................... 5.6 - - -
Other................................................ 13.6 - 6.4 -
------------- ------------ -------------- -------------
Ps 895.4 34,436.5 4,677.9 24,146.1
------------- ------------ -------------- -------------
The main transactions carried out during the last three years with related
parties are:
2001 2002 2003
--------------- -------------- ---------------
Rental income.............................................. 302.0 288.1 275.7
Ps
License fees............................................... 1,941.8 191.8 516.8
Financial expense.......................................... (642.4) (834.0) (792.8)
Financial income........................................... 4,958.5 3,232.7 3,067.8
Dividends received......................................... - 2,253.0 5,641.0
--------------- -------------- ---------------
S-8
SCHEDULE I (continued)
CEMEX, S.A. DE C.V.
NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS--(Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
8. INCOME TAX (IT), BUSINESS ASSETS TAX (BAT)
In accordance with the effective tax legislation in Mexico, corporations must
pay either income tax ("IT") or business assets tax ("BAT") depending on which
amount is greater for their operations in Mexico. Both taxes recognize the
effects of inflation, though in a manner different from Mexican GAAP.
The IT benefit, presented in the accompanying income statements, is summarized
as follows:
2001 2002 2003
--------------- ------------- -------------
Received from subsidiaries................................. Ps 703.9 967.8 1,337.7
Deferred IT................................................ 685.2 1,326.6 (547.5)
--------------- ------------- -------------
Ps 1,389.1 2,294.4 790.2
--------------- ------------- -------------
Arising from its Mexican subsidiaries, the Company has accumulated IT loss
carry forwards which, restated for inflation, can be amortized against taxable
income in the succeeding ten years according to Income Tax Law:
Year in which tax loss occurred Amount of Year of
carryforwards expiration
---------------- -----------------
1995.................................................................... Ps 1,776.6 2005
2000.................................................................... 420.7 2010
2001.................................................................... 3,265.7 2011
2002.................................................................... 3,752.4 2012
2003.................................................................... 872.2 2013
----------------
Ps 10,087.6
----------------
The Company and its subsidiaries in Mexico must generate taxable income to
preserve the benefit of the tax loss carryforwards generated beginning in
1999.
The BAT Law establishes a 1.8% tax levy on assets, restated for inflation in
the case of inventory and fixed assets, and deducting certain liabilities. BAT
levied in excess of IT for the period may be recovered, restated for
inflation, in any of the succeeding ten years, provided that the IT incurred
exceeds BAT in such period.
The recoverable BAT as of December 31, 2003 is as follows:
Year in which BAT exceeded IT Amount of Year of
carryforwards expiration
------------------- -----------------
1997................................................................... Ps 162.4 2007
9. ITEMS NOT AFFECTING CASH FLOWS
For the years ended December 31, 2001, 2002 and 2003, items charged or
credited to the results of operations, which did not generated the use of
resources, are summarized as follows:
2001 2002 2003
------------- ------------- -------------
Depreciation of properties..........................................Ps 5.2 5.2 5.2
Amortization of deferred charges and credits, net.................... 665.4 195.2 319.7
Deferred income tax credited to results.............................. (685.2) (1,326.6)
547.5
Equity in income of subsidiaries and affiliates...................... (11,584.2) (5,080.5) (2,940.9)
------------- ------------- -------------
Ps (11,598.8) (6,206.7) (2,068.5)
------------- ------------- -------------
S-9
SCHEDULE I (continued)
CEMEX, S.A. DE C.V.
NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS--(Continued)
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
10. CONTINGENCIES AND COMMITMENTS
As of December 31, 2002 and 2003, CEMEX has signed as guarantor of loans made
to certain subsidiaries for approximately U.S.$55.2 million and U.S. $ 1,322
million, respectively. As of the same date, the Company and certain
subsidiaries have guaranteed the risks associated with certain financial
transactions, assuming contingent obligations under standby letters of credit,
issued by financial institutions for a total of U.S. $175.0 million and U.S.
$55 million, respectively.
S-10
SCHEDULE II
CEMEX, S.A. DE C.V. AND SUBSIDIARIES
December 31, 2001, 2002 and 2003
(Millions of constant Mexican Pesos as of December 31, 2003)
Valuation and Qualifying Accounts as of December 31, 2001, 2002 and 2003, is a follows:
Description Balance at Charged to Balance at
beginning costs and end of
of period expenses Deductions Others (1) period
------------ ------------ ------------ --------------------------
Year ended December 31, 2001:
Allowance for doubtful accounts........... Ps 521.4 84.0 43.9 (5.7) 555.8
------------ ------------ ------------ ------------ -------------
Year ended December 31, 2002:
Allowance for doubtful accounts........... 555.8 267.4 314.9 20.4 528.7
------------ ------------ ------------ ------------ -------------
Year ended December 31, 2003:
Allowance for doubtful accounts........... 528.7 351.2 281.2 33.4 632.1
------------ ------------ ------------ ------------ -------------
(1) Amounts included in "Others" primarily result from the effects of foreign
currency translation and the inflation adjustment of the initial balance
in the restatement to constant pesos as of the end of the same period.
S-11
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
1.1 Amended and Restated By-laws of CEMEX, S.A. de C.V.(a)
2.1 Form of Trust Agreement between CEMEX, S.A. de C.V., as founder of
the trust, and Banco Nacional de Mexico, S.A. regarding the CPOs.
(b)
2.2 Amendment Agreement, dated as of November 21, 2002, amending the
Trust Agreement between CEMEX, S.A. de C.V., as founder of the
trust, and Banco Nacional de Mexico, S.A. regarding the CPOs. (b)
2.3 Form of CPO Certificate. (b)
2.4 Form of Second Amended and Restated Deposit Agreement (A and B
share CPOs), dated as of August 10, 1999, among CEMEX, S.A. de
C.V., Citibank, N.A. and holders and beneficial owners of American
Depositary Shares. (b)
2.5 Form of American Depositary Receipt (included in Exhibit 2.3)
evidencing American Depositary Shares. (b)
2.6 Form of Certificate for shares of Series A Common Stock of CEMEX,
S.A. de C.V. (b)
2.7 Form of Certificate for shares of Series B Common Stock of CEMEX,
S.A. de C.V. (b)
2.8 Form of appreciation warrant deed. (b)
2.9 Form of CPO Purchasing and Disbursing Agreement. (c)
2.10 Form of appreciation warrant certificate. (c)
2.11 Form of Warrant Deposit Agreement among CEMEX, S.A. de C.V.,
Depositary and holders and beneficial owners of American
Depositary Warrants. (c)
2.12 Form of American Depositary Warrant Receipt (included in Exhibit
2.10). (c)
4.1 Note and Guarantee Agreement dated as of March 15, 2001, by and
among CEMEX, Inc., as issuer, Valenciana, as parent guarantor and
Sandworth Plaza Holding B.V., Cemex Caracas Investments B.V.,
Cemex Caribe Investments B.V., Cemex Manila Investments B.V.,
Valcem International B.V., as subsidiary guarantors, and the
several purchasers named therein, in connection with the offering
and issuance by CEMEX, Inc. of U.S.$315,000,000 aggregate
principal amount of Series A Guaranteed Senior Notes due
2006,(euro)50,000,000 aggregate principal amount of Series B
Guaranteed Senior Notes due 2006 and U.S.$396,000,000 aggregate
principal amount of Series C Guaranteed Senior Notes due 2008. (d)
4.2 Credit facility dated as of October 29, 2001, by and among
Compania Valenciana de Cementos Portland, S.A., as borrower, Banco
Bilbao Vizcaya Argentaria, S.A., Salomon Brothers International
Limited, and Deutsche Bank AG as mandated lead arrangers and the
several banks and other financial institutions named therein, as
lenders, for an aggregate amount of(euro)800 million. (e)
4.3 Agreement and Plan of Merger, dated as of June 11, 2002, among
CEMEX, S.A. de C.V., Tricem Acquisition, Corp. and the Puerto
Rican Cement Company, Inc. (f)
4.4 ABN AMRO Special Corporate Services B.V. Forward Contract, dated
as of December 13, 2002. (g)
4.5 Citibank, N.A. Forward Contract, dated as of December 13, 2002.
(g)
4.6 Credit Suisse First Boston International Forward Contract, dated
as of December 13, 2002. (g)
4.7 Deutsche Bank AG, London Branch, Forward Contract, dated as of
December 13, 2002. (g)
4.8 ING Bank, N.V. Forward Contract, dated as of December 13, 2002.
(g)
4.9 JPMorgan Chase Bank Forward Contract, dated as of December 13,
2002. (g)
4.10 Societe Generale Forward Contract, dated as of December 13, 2002.
(g)
4.11 Note Purchase Agreement dated June 23, 2003, by and among CEMEX
Espana Finance, LLC, as issuer, CEMEX Espana, Sandworth Plaza
Holding B.V., Cemex Caracas Investments B.V., Cemex Caracas II
Investments B.V., Cemex Manila Investments B.V. and Cemex Egyptian
Investments B.V., as guarantors, and several institutional
purchasers named therein, in connection with the issuance by CEMEX
Espana Finance, LLC of U.S.$103 million aggregate principal amount
of Senior Notes due 2010, U.S.$96 million aggregate principal
amount of Senior Notes due 2013, U.S.$201 million aggregate
principal amount of Senior Notes due 2015. (h)
4.12 First Amended and Restated Reimbursement and Credit Agreement
dated as of August 8, 2003, by and among, CEMEX, S.A. de C.V., as
Issuer, CEMEX Mexico, S.A. de C.V. and Empresas Tolteca de Mexico,
S.A. de C.V., as Guarantors, Barclays Bank PLC, New York Branch,
as Issuing Bank, Documentation Agent and Administrative Agent, the
several lenders party thereto and Barclays Capital, The Investment
Banking Division of Barclays Bank PLC, as Joint Arranger and Banc
of America Securities LLC, as Joint Arranger and Syndication
Agent., for an aggregate principal amount of U.S.$400,000,000. (h)
4.13 $1,150,000,000 Term Loan Agreement, dated October 15, 2003, by and
among New Sunward Holding B.V. as borrower, CEMEX, S.A. de C.V.,
CEMEX Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de
C.V. as guarantors, and the several lenders named therein. (h)
4.14 Early Termination Amendment to ABN AMRO Special Corporate Services
B.V. Forward Contract, dated as of October 15, 2003. (h)
4.15 Early Termination Amendment to Citibank, N.A. Forward Contract,
dated as of October 15, 2003. (h)
4.16 Early Termination Amendment to Credit Suisse First Boston
International Forward Contract, dated as of October 15, 2003. (h)
4.17 Early Termination Amendment to Deutsche Bank AG, London Branch,
Forward Contract, dated as of October 15, 2003. (h)
4.18 Early Termination Amendment to ING Bank, N.V. Forward Contract,
dated as of October 15, 2003. (h)
4.19 Early Termination Amendment to JPMorgan Chase Bank Forward
Contract, dated as of October 15, 2003.(h)
4.20 Early Termination Amendment to Societe Generale Forward Contract,
dated as of October 15, 2003. (h)
4.21 Term and Revolving Facilities Agreement, dated as of March 30,
2004, by and among CEMEX Espana, as borrower, Sandworth Plaza
Holding B.V., Cemex Caracas Investments B.V., Cemex Caracas II
Investments B.V., Cemex Manila Investments B.V. and Cemex Egyptian
Investments, B.V., as guarantors, Banco Bilbao Vizcaya Argentaria,
S.A. and Societe Generale, as mandated lead arrangers, and the
several banks and other financial institutions named therein, as
lenders, for an aggregate amount of(euro)250,000,000
and(Y)19,308,000,000. (h)
8.1 List of subsidiaries of CEMEX, S.A. de C.V. (h)
12.1 Certification of the Principal Executive Officer of CEMEX, S.A. de
C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(h)
12.2 Certification of the Principal Financial Officer of CEMEX, S.A. de
C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(h)
12.3 Certification of the Principal Executive Officer of CEMEX Mexico,
S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. (h)
12.4 Certification of the Principal Financial Officer of CEMEX Mexico,
S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. (h)
12.5 Certification of the Principal Executive Officer of Empresas
Tolteca de Mexico, S.A. de C.V. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. (h)
12.6 Certification of the Principal Financial Officer of Empresas
Tolteca de Mexico, S.A. de C.V. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. (h)
13.1 Certification of the Principal Executive and Financial Officers of
CEMEX, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h)
13.2 Certification of Principal Executive and Financial Officers of
CEMEX Mexico, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(h)
13.3 Certification of Principal Executive and Financial Officers of
Empresas Tolteca de Mexico, S.A. de C.V. pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. (h)
14.1 Consent of KPMG Cardenas Dosal, S.C. to the incorporation by
reference into the effective registration statements of CEMEX,
S.A. de C.V. under the Securities Act of 1933 of their report with
respect to the consolidated financial statements of CEMEX, S.A. de
C.V., which appears in this Annual Report on Form 20-F. (h)
_______________
(a) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form F-3 of CEMEX, S.A. de C.V. (Registration
No. 333-11382), filed with the Securities and Exchange Commission on
August 27, 2003.
(b) Incorporated by reference to the Registration Statement on Form F-4 of
CEMEX, S.A. de C.V. (Registration No. 333-10682), filed with the
Securities and Exchange Commission on August 10, 1999.
(c) Incorporated by reference to Amendment No. 2 to the Registration
Statement on Form F-4 of CEMEX, S.A. de C.V. (Registration No.
333-13956), filed with the Securities and Exchange Commission on November
19, 2001.
(d) Incorporated by reference to Amendment No. 1 to the annual report on Form
20-F/A of CEMEX, S.A. de C.V. filed with the Securities and Exchange
Commission on November 19, 2001.
(e) Incorporated by reference to the annual report on Form 20-F of CEMEX,
S.A. de C.V. filed with the Securities and Exchange Commission on April
8, 2002.
(f) Incorporated by reference to the Tender Offer Statement on Schedule TO of
Tricem Acquisition, Corp. and CEMEX, S.A. de C.V. filed with the
Securities and Exchange Commission on July 1, 2002.
(g) Incorporated by reference to the annual report on Form 20-F of CEMEX,
S.A. de C.V. filed with the Securities and Exchange Commission on April
8, 2003.
(h) Filed herewith.
Exhibit 4.11
CONFORMED COPY
===============================================================================
CEMEX ESPANA FINANCE LLC
$103,000,000 4.77% Senior Notes, Series 2003, Tranche 1, due 2010
$96,000,000 5.36% Senior Notes, Series 2003, Tranche 2, due 2013
$201,000,000 5.51% Senior Notes, Series 2003, Tranche 3, due 2015
_______________
NOTE PURCHASE AGREEMENT
_______________
Dated as of June 23, 2003
===============================================================================
TABLE OF CONTENTS
Page
1. AUTHORIZATION OF NOTES..................................................................................1
2. SALE AND PURCHASE OF NOTES..............................................................................1
3. CLOSING.................................................................................................2
4. CONDITIONS TO CLOSING...................................................................................2
4.1 Representations and Warranties.................................................................2
4.2 Performance; No Default........................................................................2
4.3 Compliance Certificates........................................................................3
4.4 Opinions of Counsel............................................................................3
4.5 Purchase Permitted By Applicable Law, etc......................................................3
4.6 Related Transactions...........................................................................4
4.7 Payment of Special Counsel Fees................................................................4
4.8 Private Placement Number.......................................................................4
4.9 Changes in Corporate Structure.................................................................4
4.10 Proceedings and Documents......................................................................4
4.11 Note Guarantee.................................................................................4
4.12 Agent for Service of Process...................................................................4
5. REPRESENTATIONS AND WARRANTIES OF CEMEX ESPANA AND THE COMPANY..........................................5
5.1 Organization; Power and Authority..............................................................5
5.2 Authorization, etc.............................................................................5
5.3 Disclosure.....................................................................................5
5.4 Organization and Ownership of Shares of Subsidiaries...........................................6
5.5 Financial Statements...........................................................................6
5.6 Compliance with Laws, Other Instruments, etc...................................................6
5.7 Governmental Authorizations, etc...............................................................7
5.8 Litigation; Observance of Agreements, Statutes and Orders......................................7
5.9 Taxes..........................................................................................7
5.10 Title to Property; Leases......................................................................8
5.11 Licenses, Permits, etc.........................................................................8
5.12 ERISA; Foreign Pension Plans...................................................................8
5.13 Private Offering by the Company................................................................9
5.14 Use of Proceeds; Margin Regulations............................................................9
5.15 Existing Financial Indebtedness; Future Liens.................................................10
5.16 Foreign Assets Control Regulations, Foreign Corrupt Practices Act, etc........................10
5.17 Status under Certain Statutes.................................................................10
5.18 Environmental Matters.........................................................................11
5.19 Pari Passu Obligations........................................................................11
6. REPRESENTATIONS OF THE PURCHASERS......................................................................11
6.1 Purchase for Investment.......................................................................11
6.2 Source of Funds...............................................................................12
7. INFORMATION AS TO CEMEX ESPANA AND THE COMPANY.........................................................13
7.1 Financial and Business Information............................................................13
7.2 Officer's Certificate.........................................................................15
7.3 Inspection....................................................................................16
7.4 Maintenance of Books and Records..............................................................16
8. MATURITY; PREPAYMENT OF THE NOTES......................................................................16
8.1 Stated Maturity...............................................................................16
8.2 Optional Prepayments with Make-Whole Amount...................................................17
8.3 Optional Prepayment of Notes for Tax Reasons..................................................17
8.4 Prepayment Upon Substantial Asset Disposition.................................................19
8.5 Allocation of Partial Prepayments.............................................................19
8.6 Maturity; Surrender, etc......................................................................20
8.7 Purchase of Notes.............................................................................20
8.8 Make-Whole Amount for Notes...................................................................20
8.9 Change in Control, Offer to Prepay, etc.......................................................21
9. AFFIRMATIVE COVENANTS..................................................................................23
9.1 Compliance with Law...........................................................................23
9.2 Insurance.....................................................................................23
9.3 Maintenance of Properties.....................................................................23
9.4 Payment of Taxes and Claims...................................................................23
9.5 Corporate Existence, etc......................................................................24
9.6 Pari Passu Obligations........................................................................24
10. NEGATIVE COVENANTS.....................................................................................24
10.1 Transactions with Affiliates..................................................................24
10.2 Merger, Consolidation, etc....................................................................25
10.3 Liens.........................................................................................26
10.4 Sales of Assets...............................................................................28
10.5 Financial Covenants...........................................................................29
10.6 Limitation on Non-Guarantor Financial Indebtedness............................................29
10.7 Notarization..................................................................................31
11. EVENTS OF DEFAULT......................................................................................32
12. REMEDIES ON DEFAULT, ETC...............................................................................34
12.1 Acceleration..................................................................................34
12.2 Other Remedies................................................................................35
12.3 Rescission....................................................................................35
12.4 No Waivers or Election of Remedies, Expenses, etc.............................................35
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES..........................................................36
13.1 Registration of Notes.........................................................................36
13.2 Transfer and Exchange of Notes................................................................36
13.3 Replacement of Notes..........................................................................36
14. PAYMENTS ON NOTES......................................................................................37
14.1 Place of Payment..............................................................................37
14.2 Home Office Payment...........................................................................37
14.3 Tax Indemnification...........................................................................37
14.4 Currency of Payment...........................................................................40
15. EXPENSES, ETC..........................................................................................40
15.1 Transaction Expenses..........................................................................40
15.2 Survival......................................................................................41
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT...........................................41
17. AMENDMENT AND WAIVER...................................................................................41
17.1 Requirements..................................................................................41
17.2 Solicitation of Holders of Notes..............................................................42
17.3 Binding Effect, etc...........................................................................42
17.4 Notes held by Company, etc....................................................................42
18. NOTICES................................................................................................42
19. REPRODUCTION OF DOCUMENTS..............................................................................43
20. CONFIDENTIAL INFORMATION...............................................................................44
21. SUBSTITUTION OF PURCHASER..............................................................................45
22. MISCELLANEOUS..........................................................................................45
22.1 Successors and Assigns........................................................................45
22.2 Payments Due on Non-Business Days.............................................................45
22.3 Severability..................................................................................45
22.4 Construction..................................................................................46
22.5 Counterparts..................................................................................46
22.6 Governing Law.................................................................................46
22.7 Jurisdiction; Service of Process..............................................................46
22.8 Judgment Currency.............................................................................48
Schedules
- ---------
Schedule A Information Relating to Purchasers
Schedule B Defined Terms
Schedule 4.9 Changes in Corporate Structure
Schedule 5.3 Disclosure Exceptions
Schedule 5.4 Subsidiaries (including identification of Material
Subsidiaries)
Schedule 5.5 Financial Statements
Schedule 5.8 Litigation
Schedule 5.11 License, etc. Exceptions
Schedule 5.15 Financial Indebtedness
Schedule 10.3 Existing Liens
Schedule 10.7 Existing Notarizations
Exhibits
Exhibit 1 Forms of Notes
Exhibit 4.4(a) Form of Opinion of Counsel to Cemex Espana
Exhibit 4.4(b) Form of Opinion of Special New York Counsel to the Obligors
Exhibit 4.4(c) Form of Opinion of Special Netherlands Counsel to the Obligors
Exhibit 4.4(d) Form of Opinion of Special US Counsel to the Purchasers
Exhibit 4.4(e) Form of Opinion of Special Spanish Counsel to the Purchasers
CEMEX ESPANA FINANCE LLC
c/o Cemex Espana, S.A.
Caleruega 67- 5(0)
28033 Madrid, Spain
4.77% Senior Notes, Series 2003, Tranche 1, due June 15, 2010
5.36% Senior Notes, Series 2003, Tranche 2, due June 15, 2013
5.51% Senior Notes, Series 2003, Tranche 3, due June 15, 2015
as of June 23, 2003
TO EACH OF THE PURCHASERS LISTED ON
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
CEMEX ESPANA, S.A., a corporation organized under the laws of the
Kingdom of Spain ("Cemex Espana"), and its wholly owned Subsidiary CEMEX ESPANA
FINANCE LLC, a limited liability company organized under the laws of Delaware
(the "Company"), agree with the Purchasers listed on the attached Schedule A
(the "Purchasers") to this Note Purchase Agreement (as amended, modified or
supplemented, this "Agreement") as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of (i) $103,000,000
aggregate principal amount of its 4.77% Senior Notes, Series 2003, Tranche 1,
due June 15, 2010 (the "Tranche 1 Notes"), (ii) $96,000,000 aggregate principal
amount of its 5.36% Senior Notes, Series 2003, Tranche 2, due June 15, 2013
(the "Tranche 2 Notes") and (iii) $201,000,000 aggregate principal amount of
its 5.51% Senior Notes, Series 2003, Tranche 3, due June 15, 2015 (the "Tranche
3 Notes"; the Tranche 1 Notes, the Tranche 2 Notes and the Tranche 3 Notes are
collectively referred to herein as the "Notes", such term to include any such
notes issued in substitution therefor pursuant to Section 13 of this
Agreement). The Notes shall be substantially in the forms set out in Exhibit
1(a), Exhibit 1(b) and Exhibit 1(c), respectively, with such changes therefrom,
if any, as may be approved by the Purchasers and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to each Purchaser and each Purchaser will purchase from the
Company, at the Closing provided for in Section 3, Notes in the principal
amount and of the tranche(s) specified opposite such Purchaser's name on
Schedule A at the purchase price of 100% of the principal amount thereof. The
obligations of each Purchaser hereunder are several and not joint obligations
and no Purchaser shall have any liability to any other Person for the
performance or non-performance by any other Purchaser hereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by each Purchaser
shall occur at the offices of Mayer, Brown, Rowe & Maw, 1675 Broadway, New
York, New York 10019, at 10:00 a.m., New York time, at a closing (the
"Closing") on June 23, 2003 or on such other Business Day thereafter on or
prior to June 23, 2003 as may be agreed upon by the Company and the Purchasers.
At the Closing the Company will deliver to each Purchaser the Notes to be
purchased by such Purchaser in the form of a single Note (or such greater
number of Notes in denominations of at least $500,000 as such Purchaser may
request) dated the date of the Closing and registered in the name of such
Purchaser (or in the name of such Purchaser's nominee), against delivery by
such Purchaser to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to Citibank, N.A., New York,
ABA:021000089 for further transfer to the credit of Cemex Espana Finance, LLC,
account USD:0011022014 held at Citibank International, PLC, Madrid Branch,
Swift: CITIESMX. If at the Closing the Company shall fail to tender such Notes
to any Purchaser as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to any Purchaser's
reasonable satisfaction, such Purchaser shall, at such Purchaser's election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.
4. CONDITIONS TO CLOSING.
The obligation of each Purchaser to purchase and pay for the Notes to
be sold to it at the Closing is subject to the fulfillment to such Purchaser's
satisfaction, prior to or at the Closing, of the following conditions:
4.1 Representations and Warranties.
The representations and warranties of Cemex Espana and the Company in
this Agreement shall be correct when made and at the time of the Closing
(except for such representations and warranties made as of a specific earlier
date).
4.2 Performance; No Default.
Cemex Espana and the Company shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by them prior to or at the Closing, and after giving
effect to the issue and sale of the Notes (and the application of the proceeds
thereof as contemplated by Section 5.14) no Default or Event of Default shall
have occurred and be continuing. Neither Cemex Espana nor any Subsidiary shall
have entered into any transaction since the date of the Memorandum that would
have been prohibited by Section 10.1, 10.3 or 10.7 hereof had such Sections
applied since such date.
4.3 Compliance Certificates.
(a) Officer's Certificate. Each of Cemex Espana and the Company shall
have delivered to such Purchaser an Officer's Certificate, dated the date of
the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and
4.9 have been fulfilled.
(b) Secretary's Certificate. Each of the Company, Cemex Espana and
each other Guarantor shall have delivered to such Purchaser a certificate,
signed by the Secretary of the manager of the Company, the Secretary of Cemex
Espana and one or more Managing Directors of the other Guarantors,
respectively, certifying as to the resolutions attached thereto and other
corporate proceedings taken by it relating to the authorization, execution and
delivery of the Financing Documents to which it is a party.
4.4 Opinions of Counsel.
Such Purchaser shall have received opinions in form and substance
satisfactory to it, dated the date of the Closing (a) from Juan Pelegri y
Giron, counsel for Cemex Espana, covering the matters set forth in Exhibit
4.4(a) and covering such other matters incident to the transactions
contemplated hereby as such Purchaser or such Purchaser's counsel may
reasonably request (and Cemex Espana and the Company hereby instruct such
counsel to deliver such opinion to such Purchaser), (b) from Mayer, Brown, Rowe
& Maw, special New York counsel to the Obligors, covering the matters set forth
in Exhibit 4.4(b) and covering such other matters incident to the transactions
contemplated hereby as such Purchaser or such Purchaser's counsel may
reasonably request (and Cemex Espana and the Company hereby instruct such
special counsel to deliver such opinion to such Purchaser), (c) from Clifford
Chance Limited Liability Partnership, special Netherlands counsel for each
Obligor that is organized in The Netherlands, covering the matters set forth in
Exhibit 4.4(c) and covering such other matters as such Purchaser or such
Purchaser's counsel may reasonably request (and Cemex Espana and the Company
hereby instruct such counsel to deliver such opinion to such Purchaser), (d)
from Latham & Watkins, the Purchasers' US special counsel in connection with
such transactions, substantially in the form set forth in Exhibit 4.4(d) and
covering such other matters incident to such transactions as such Purchaser may
reasonably request and (e) from Uria & Menendez, the Purchasers' Spanish
special counsel in connection with such transactions, substantially in the form
set forth in Exhibit 4.4(e) and covering such other matters incident to such
transactions as such Purchaser may reasonably request.
4.5 Purchase Permitted By Applicable Law, etc.
On the date of the Closing each purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which each
Purchaser is subject, without recourse to provisions (such as Section
1405(a)(8) of the New York Insurance Law) permitting limited investments by
insurance companies without restriction as to the character of the particular
investment, (ii) not violate any applicable law or regulation (including,
without limitation, Regulation T, U or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject any Purchaser to any tax, penalty
or liability under or pursuant to any applicable law or regulation, which law
or regulation was not in effect on the date hereof. If requested by any
Purchaser, such Purchaser shall have received an Officer's Certificate
certifying as to such matters of fact as such Purchaser may reasonably specify
to enable such Purchaser to determine whether such purchase is so permitted.
4.6 Related Transactions.
The Company shall have consummated the sale of the entire principal
amount of the Notes scheduled to be sold on the date of Closing pursuant to
this Agreement.
4.7 Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall
have paid on or before the Closing the fees, charges and disbursements of the
Purchasers' special counsel referred to in Section 4.4 to the extent reflected
in a statement of such counsel rendered to the Company at least one Business
Day prior to the Closing.
4.8 Private Placement Number.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the SVO) shall have been obtained for each tranche
of the Notes.
4.9 Changes in Corporate Structure.
Except as specified on Schedule 4.9, neither the Company nor Cemex
Espana nor any other Guarantor shall have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not
have succeeded to all or any substantial part of the liabilities of any other
entity, at any time following the date of the most recent financial statements
referred to on Schedule 5.5.
4.10 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be reasonably satisfactory to such
Purchaser and the Purchasers' special counsel, and such Purchaser and the
Purchasers' special counsel shall have received all such counterpart originals
or certified or other copies of such documents as such Purchaser and the
Purchasers' special counsel may reasonably request.
4.11 Note Guarantee.
Cemex Espana and each other Guarantor shall have executed and
delivered to each Purchaser a counterpart of the Note Guarantee and the Note
Guarantee shall be in full force and effect.
4.12 Agent for Service of Process.
CT Corporation System shall have accepted its appointment by the
Company and each Guarantor as the agent for service of process for the Company
and each Guarantor in the City of New York, State of New York, from the date of
the Closing to and including June 30, 2016.
5. REPRESENTATIONS AND WARRANTIES OF CEMEX ESPANA AND THE COMPANY.
Cemex Espana and the Company represent and warrant to the Purchasers
that:
5.1 Organization; Power and Authority.
The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of Delaware. Cemex Espana is a
corporation duly organized, validly existing and in good standing under the
laws of the Kingdom of Spain. Each of Cemex Espana and the Company is
qualified to do business in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be
so qualified would not reasonably be expected to have a Material Adverse
Effect. Each of Cemex Espana and the Company has the corporate or other
organizational power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver the Financing Documents to
which it is a party and to perform the provisions thereof.
5.2 Authorization, etc.
Each Financing Document has been duly authorized by all necessary
corporate or other organizational action on the part of each Obligor party
thereto, and each Financing Document constitutes, or will constitute upon
execution and delivery thereof, a legal, valid and binding obligation of each
Obligor party thereto enforceable against such Obligor in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
5.3 Disclosure.
The Company, through its agent, RBS Securities Corporation, has
delivered to each Purchaser a copy of a Private Placement Memorandum, dated
April 30, 2003 (the "Memorandum"), relating to the transactions contemplated
hereby. The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of Cemex Espana and its
Subsidiaries. Except as disclosed on Schedule 5.3, this Agreement, the
Memorandum, the documents, certificates or other writings delivered to the
Purchasers by or on behalf of Cemex Espana or the Company in connection with
the transactions contemplated hereby and the financial statements listed on
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. Except as disclosed in the Memorandum or as expressly
described on Schedule 5.3, or in one of the documents, certificates or other
writings identified therein, or in the financial statements listed on Schedule
5.5, since December 31, 2002, there has been no change in the financial
condition, operations, business, properties or prospects of Cemex Espana or
any Subsidiary except changes that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect. There is no fact
known to the Company or Cemex Espana that would reasonably be expected to have
a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings
delivered to the Purchasers by or on behalf of the Company or Cemex Espana
specifically for use in connection with the transactions contemplated hereby.
5.4 Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists of (i) Cemex Espana's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization and
the percentage of shares of each class of its Capital Stock outstanding owned
by Cemex Espana and each other Subsidiary and (ii) the directors and senior
officers of each of Cemex Espana and the manager of the Company.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown on Schedule 5.4 as being owned by Cemex
Espana and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by Cemex Espana or another Subsidiary free and
clear of any Lien (except as otherwise disclosed on Schedule 5.4).
(c) Each Subsidiary identified on Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and, if applicable, in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and, if applicable, is
in good standing in each jurisdiction in which such qualification is required
by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements and
other restrictions listed on Schedule 5.4 and customary limitations imposed by
corporate law statutes) directly restricting the ability of such Subsidiary to
pay dividends out of profits or make any other similar distributions of profits
to Cemex Espana or any of its Subsidiaries that owns outstanding shares of
Capital Stock or similar equity interests of such Subsidiary.
5.5 Financial Statements.
Cemex Espana has delivered to each Purchaser copies of the financial
statements of Cemex Espana and its Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of Cemex Espana and its Subsidiaries as of the respective dates
specified in such schedule and the consolidated results of their operations for
the respective periods so specified and have been prepared in accordance with
Spanish GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Obligors of the
Financing Documents will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of Cemex Espana or any Subsidiary under, any indenture, mortgage,
deed of trust, loan purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which Cemex Espana or any
Subsidiary is bound or by which Cemex Espana or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree or ruling of any court, arbitrator or Governmental Authority applicable
to Cemex Espana or any Subsidiary or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to Cemex
Espana or any Subsidiary.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by any Obligor of any Financing Document to
which such Obligor is a party.
5.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed on Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of Cemex Espana, threatened against
or affecting Cemex Espana or any Subsidiary or any property of Cemex Espana or
any Subsidiary in any court or before any arbitrator of any kind or before or
by any Governmental Authority that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(b) Neither Cemex Espana nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
5.9 Taxes.
Cemex Espana and its Subsidiaries have filed all Material tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the
amount of which is not individually or in the aggregate Material or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which Cemex Espana or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with relevant national accounting standards and practices (in the case of Cemex
Espana, Spanish GAAP). Cemex Espana knows of no basis for any other tax or
assessment that would reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of Cemex Espana and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods
are adequate.
5.10 Title to Property; Leases.
Cemex Espana and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance
sheet referred to in Section 5.5 or purported to have been acquired by Cemex
Espana or any Subsidiary after said date (except as sold or otherwise disposed
of in the ordinary course of business), in each case free and clear of Liens
prohibited by this Agreement. All leases that individually or in the aggregate
are Material are valid and subsisting and are in full force and effect in all
material respects.
5.11 Licenses, Permits, etc.
Except as disclosed on Schedule 5.11,
(a) Cemex Espana and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others except
for those conflicts that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect;
(b) to the best knowledge of Cemex Espana, no product of Cemex Espana
infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and
(c) to the best knowledge of Cemex Espana, there is no Material
violation by any Person of any right of Cemex Espana or any of its Subsidiaries
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by Cemex Espana or any of its Subsidiaries.
5.12 ERISA; Foreign Pension Plans.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and would not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any Material liability pursuant to Title I or IV
of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such Material liability by the
Company or any ERISA Affiliate, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding in such Plan's most recent actuarial valuation report,
did not exceed the aggregate current value of the assets of such Plan allocable
to such benefit liabilities by an amount that would reasonably be expected to
have a Material Adverse Effect in the case of any single Plan or in the
aggregate for all Plans. The term "benefit liabilities" has the meaning
specified in section 4001 of ERISA and the terms "current value" and "present
value" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that are
individually or in the aggregate are Material.
(d) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax
would be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation in the first sentence of this Section 5.12(d) is made in
reliance upon and subject to (i) the accuracy of the representations of the
Purchasers in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes and (ii) the assumption, made solely for the
purpose of making such representation, that Department of Labor Interpretive
Bulletin 75-2 with respect to prohibited transactions remains valid in the
circumstances of the transactions contemplated herein.
(e) All Foreign Pension Plans have been established, operated,
administered and maintained in material compliance with all laws, regulations
and orders applicable thereto. Except where it would not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect,
all premiums, contributions and any other amounts required to be paid pursuant
to applicable Foreign Pension Plan documents or applicable laws have been paid
or accrued as required.
5.13 Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof
with, any Person other than the Purchasers and not more than 40 other
Institutional Investors (as defined in clause (c) of the definition of such
term), each of which has been offered the Notes at a private sale for
investment. Neither the Company nor anyone acting on its behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.
5.14 Use of Proceeds; Margin Regulations.
The Company, through its parent Cemex Netherlands B.V., will apply the
proceeds of the sale of the Notes for general corporate purposes (including the
repayment of Financial Indebtedness) of Cemex Espana and its Subsidiaries. No
part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for the purpose of buying or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board or to involve any broker or dealer in a violation of
Regulation T of said Board. Margin stock does not constitute more than 5% of
the value of the consolidated assets of Cemex Espana and its Subsidiaries and
Cemex Espana does not have any present intention that margin stock will
constitute more than 25% of the value of such assets. As used in this Section,
the terms "margin stock" and "purpose of buying or carrying" shall have the
meanings assigned to them in said Regulation U.
5.15 Existing Financial Indebtedness; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Financial Indebtedness of Cemex Espana and
its Subsidiaries as of May 31, 2003, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Financial Indebtedness of Cemex Espana or its
Subsidiaries. Neither Cemex Espana nor any Subsidiary is in default, and no
waiver of such a default is currently in effect, in the payment of any
principal or interest on any Financial Indebtedness of Cemex Espana or such
Subsidiary and no Material event or condition exists with respect to any
Financial Indebtedness of Cemex Espana or any Subsidiary that would permit (or
that with notice or other lapse of time, or both, would permit) one or more
Persons to cause such Financial Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.
(b) Except as disclosed on Schedule 5.15, neither Cemex Espana nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 10.3.
5.16 Foreign Assets Control Regulations, Foreign Corrupt Practices Act, etc.
Neither the sale of the Notes by the Company hereunder nor the use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto. Without limiting the
foregoing, neither Cemex Espana nor any Subsidiary (i) is or will become a
blocked person described in the Anti-Terrorism Order or the Department of the
Treasury Rule or (ii) knowingly engages or will engage in any dealings or
transactions with any such person.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will cause any Purchaser to be in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977 or other applicable
national or local law regulating the payments of bribes to government officials
or employees nor will the proceeds from the sale of the Notes be used by the
Company for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity, to make any direct or indirect unlawful
payment to any foreign or domestic government official or employee or make any
bribe or other unlawful payment.
5.17 Status under Certain Statutes.
Neither the Company nor any Guarantor is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the ICC Termination Act of 1995, as amended,
or the Federal Power Act, as amended.
5.18 Environmental Matters.
Neither Cemex Espana nor any Subsidiary has knowledge of any claim or
has received any notice of any claim, and, to Cemex Espana's knowledge, no
proceeding has been instituted raising any claim against Cemex Espana or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any
violation of Environmental Laws, except, in each case, such as would not
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to the Purchasers in writing,
(a) neither Cemex Espana nor any Subsidiary has knowledge of any facts
that would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties or other assets now or formerly owned,
leased or operated by any of them or their use, except, in each case, such as
would not reasonably be expected to result in a Material Adverse Effect;
(b) neither Cemex Espana nor any Subsidiary has stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by any
of them and has not disposed of any Hazardous Materials in a manner contrary to
any Environmental Laws, in each case in any manner that would reasonably be
expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated
by Cemex Espana or any Subsidiary are in compliance with applicable
Environmental Laws, except where failure to comply would not reasonably be
expected to result in a Material Adverse Effect.
5.19 Pari Passu Obligations.
The obligations of each Obligor under the Financing Documents rank at
least pari passu with the claims of all other unsecured and unsubordinated
creditors of such Obligor, except for obligations mandatorily preferred by law
applying to companies generally (including but not limited to under paragraph
1, 2 or 3 of Article 913 of the Spanish Commercial Code (Codigo de Comercio),
Article 914 of the Spanish Commercial Code (Codigo de Comercio), Article 32 of
the Spanish Workers' Statute (Estatuto de los Trabajadores), Article 71 of the
Spanish General Taxation Law (Ley General Tributaria) and Article 22 of the
Spanish General Law on Social Security (Ley General de la Seguridad Social) and
those whose claims that according to Spanish law rank in priority as a result
of having been raised to the status of a Spanish Public Document as a result of
Permitted Notarizations in accordance with Section 10.7.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1 Purchase for Investment.
Each Purchaser represents that it is purchasing the Notes for its own
account or for one or more separate accounts maintained by it or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof; provided that the disposition of such Purchaser's or such
pension or trust funds' property shall at all times be within such Purchaser's
or such pension or trust funds' control. Each Purchaser understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that
the Company is not required to register the Notes.
6.2 Source of Funds.
Each Purchaser represents that at least one of the following
statements is an accurate representation as to each source of funds (a
"Source") to be used by such Purchaser to pay the purchase price of the Notes
to be purchased by such Purchaser hereunder:
(a) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60
(issued July 12, 1995) and there is no employee benefit plan, treating as a
single plan, all plans maintained by the same employer or employee
organization, with respect to which the amount of the general account reserves
and liabilities for all contracts held by or on behalf of such plan, exceeds
10% of the total reserves and liabilities of such general account (exclusive of
separate account liabilities) plus surplus, as set forth in the NAIC Annual
Statement filed with such Purchaser's state of domicile; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990) or (ii) a
bank collective investment fund, within the meaning of PTE 91-38 (issued July
12, 1991) and, except as such Purchaser has disclosed to the Company in writing
pursuant to this clause (b) at least five Business Days prior to such
Purchaser's purchase of the Notes, no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns more
than 10% of all assets allocated to such pooled separate account or collective
investment fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified professional
asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established
or maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this clause (c) at least five Business Days prior to such
Purchaser's purchase of the Notes; or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this clause
(e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA. If Cemex Espana
notifies a proposed Purchaser prior to its purchase of the Notes that any plan
identified by Purchaser pursuant to clause (b) or (c) of this Section 6.2
would be prohibited by ERISA Section 406 from purchasing the Notes, the Source
shall not include assets of any such plan.
7. INFORMATION AS TO CEMEX ESPANA and THE COMPANY.
7.1 Financial and Business Information.
Cemex Espana shall deliver to each holder that is an Institutional
Investor:
(a) Semi-Annual Statements-- within 90 days after the end of the
first half of each fiscal year of Cemex Espana, duplicate copies of
(i) a consolidated balance sheet of Cemex Espana and its
Subsidiaries as at the end of such period, and
(ii) consolidated statements of income and changes in
shareholders' equity of Cemex Espana and its Subsidiaries, for
such period,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with Spanish GAAP applicable to
interim financial statements generally (for the avoidance of doubt,
until such time as Cemex Espana produces its interim financial
statements with notes, without notes attached thereto), and certified
by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on
and their results of operations, subject to changes resulting from
year-end adjustments;
(b) Annual Statements-- within 180 days after the end of each
fiscal year of Cemex Espana, duplicate copies of,
(i) a consolidated balance sheet of Cemex Espana and its
Subsidiaries as at the end of such year, and
(ii) consolidated statements of income, of changes in
shareholders' equity and of source and application of funds of
Cemex Espana and its Subsidiaries for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in
accordance with Spanish GAAP, and accompanied by an opinion thereon
of independent certified public accountants of recognized standing,
which opinion shall state that such financial statements present
fairly, in all material respects, the financial position of the
companies being reported upon and their results of operations and of
source and application of funds and have been prepared in conformity
with Spanish GAAP, and that the examination by such accountants in
connection with such financial statements has been made in accordance
with generally accepted auditing standards in Spain, and that such
audit provides a reasonable basis for such opinion in the
circumstances;
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by Cemex Espana or any Subsidiary to public
securities holders generally and (ii) each regular or periodic report,
each registration statement (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments
thereto filed by Cemex Espana or any Subsidiary with the Securities
and Exchange Commission or with any other Governmental Authority of
competent jurisdiction charged with the regulation of securities and
of all press releases and other statements made available generally by
Cemex Espana or any Subsidiary to the public concerning developments
that are Material;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Senior Financial Officer becomes
aware of the existence of any Default or Event of Default or that any
Person has given any notice or taken any action with respect to a
claimed default hereunder or that any Person has given any notice or
taken any action with respect to a claimed default of the type
referred to in Section 11(f), a written notice specifying the nature
and period of existence thereof and what action Cemex Espana is taking
or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with
respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on any
of the rights, properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, would
reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to Cemex
Espana or any Subsidiary from any Governmental Authority relating to
any order, ruling, statute or other law or regulation that would
reasonably be expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of Cemex Espana or
any of its Subsidiaries or relating to the ability of the Company or
any Guarantor to perform its obligations hereunder and under the other
Financing Documents as from time to time may be reasonably requested
by any such holder. In furtherance of the foregoing, if reasonably
requested by any holder, Cemex Espana shall provide information
regarding Cemex Espana's business and financial statements if such
information has been requested by the SVO in order to assign or
maintain a designation of the Notes.
7.2 Officer's Certificate.
Each set of financial statements delivered to a holder pursuant to
Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate
of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations, to the extent applicable) required in order to establish
whether Cemex Espana was in compliance with the requirements of
Sections 10.3 through 10.7 during the semi-annual or annual period
covered by the statements then being furnished (including with respect
to each such Section, where applicable, the calculations of the
maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Section, and the calculation of
the amount, ratio or percentage then in existence); and
(b) Event of Default-- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of Cemex Espana and its Subsidiaries from the beginning of
the semi-annual or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall
not have disclosed the existence during such period of any condition
or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of
Cemex Espana or any Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action
Cemex Espana shall have taken or proposes to take with respect
thereto.
7.3 Inspection.
Cemex Espana and the Company shall permit the representatives of each
holder that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to
Cemex Espana, to visit the principal executive offices of Cemex Espana
and the Company, to discuss the affairs, finances and accounts of
Cemex Espana and its Subsidiaries with the officers of Cemex Espana
and the manager of the Company, and (with the consent of Cemex Espana,
which consent will not be unreasonably withheld), and to visit the
other offices and properties of Cemex Espana and each Material
Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at
the expense of the Company, to visit and inspect any of the offices or
properties of Cemex Espana or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to
make copies and extracts therefrom and to discuss their respective
affairs, finances and accounts with the officers of Cemex Espana and
the manager of the Company and the independent public accountants of
Cemex Espana (and by this provision Cemex Espana authorizes said
accountants to discuss the affairs, finances and accounts of Cemex
Espana and its Subsidiaries), all at such times and as often as may be
reasonably requested; provided that at all such meetings with
independent public accountants, a representative of Cemex Espana is
entitled to, but need not, be in attendance.
7.4 Maintenance of Books and Records.
Cemex Espana will, and will cause each of its Subsidiaries to, keep
accurate records and books of account, in which complete entries will be made
in accordance with relevant national accounting standards and practices (in
the case of Cemex Espana, Spanish GAAP).
8. MATURITY; PREPAYMENT OF THE NOTES.
8.1 Stated Maturity.
(a) The entire principal amount of the Tranche 1 Notes shall become
due and payable on June 15, 2010.
(b) The entire principal amount of the Tranche 2 Notes shall become
due and payable on June 15, 2013.
(c) The entire principal amount of the Tranche 3 Notes shall become
due and payable on June 15, 2015.
8.2 Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than 5% of the aggregate principal amount of the Notes then outstanding in
the case of a partial prepayment, at 100% of the principal amount so prepaid,
together with interest accrued but unpaid thereon to the date of such
prepayment, plus the Make-Whole Amount determined for the prepayment date with
respect to such principal amount. The Company will give each holder of Notes
written notice of each optional prepayment under this Section 8.2 not less than
30 days and not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by
such holder to be prepaid (determined in accordance with Section 8.5) and the
interest to be paid on the prepayment date with respect to such principal
amount being repaid, and shall be accompanied by a certificate of a Senior
Financial Officer as to the estimated Make-Whole Amount due in connection with
such prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date. In the event the Company
shall incorrectly compute the Make-Whole Amount, if any, payable in connection
with any Note to be purchased pursuant to this Section 8.2, the holder of such
Note shall not be bound by such incorrect computation, but instead, shall be
entitled to receive an amount equal to the correct Make-Whole Amount, if any,
computed in compliance with the terms of this Agreement.
8.3 Optional Prepayment of Notes for Tax Reasons.
If the Company or Cemex Espana (assuming that Cemex Espana is required
to make a payment) shall deliver to each holder (each, an "Affected Holder") to
which an Additional Payment would be payable by the Company or Cemex Espana on
the occasion of the next payment by the Company or Cemex Espana in respect of
such Notes (in the case of Cemex Espana, in an amount greater than 10% of the
amount which Cemex Espana would have been obligated to pay exclusive of the
requirements of Section 14.3) (the date of such next payment in respect of
which such Additional Payment will be due is herein referred to as the
"Affected Payment Date") written notice of a Responsible Officer (with respect
to each incident in which a Related Tax is initially levied by a Taxing
Jurisdiction that would result in the payment of an Additional Payment, a "Tax
Prepayment Notice") setting forth in reasonable detail the nature of the
Related Tax in respect of such Additional Payment and confirming that
(a) such Related Tax is required, under the laws of such Taxing
Jurisdiction, to be withheld or deducted from the payment due to such
Affected Holders on such Affected Payment Date and that such payment
is the first payment in respect of which such particular Related Tax
must be withheld (it being understood that the payment immediately
following and reflecting a change in a pre-existing Related Tax shall
be deemed the first payment with respect to such Related Tax),
provided that if the enactment of the statute or regulation, the
amendment of an existing statute or regulation or the adoption or
amendment of a treaty giving rise to a Related Tax occurs less than
180 days prior to the due date of a payment in respect of the Notes
that is subject to such Related Tax, then, at the election of the
Company, the first payment in respect of the Notes, the due date of
which is more than 180 days after such enactment, shall be deemed to
be such first payment and
(b) as of the date of such opinion, such Related Tax would be
required to be withheld from similar future payments to such Affected
Holders,
then the Company may elect to prepay all (but not less than all) of the Notes
held by each such Affected Holder, provided that the Company may not elect to
so prepay if
(i) the Related Tax being levied is in respect of a payment
under the Notes having an Affected Payment Date that is more than 180
days after the delivery of the notice from a Responsible Officer
referred to above in respect of such Related Tax or
(ii) the Company (or, if applicable, Cemex Espana) shall have
failed to take such reasonable actions as are provided by law so as to
avoid the imposition of such Related Tax, or the Company (or, if
applicable, Cemex Espana) shall have taken any action the direct
result of which is the imposition of such Related Tax.
The Company shall deliver such Tax Prepayment Notice to each Affected Holder
not less than 30 nor more than 60 days prior to the prepayment date (in
respect of each Tax Prepayment Notice, a "Tax Prepayment Date"), which Tax
Prepayment Date shall be the Affected Payment Date related to such Additional
Payment, which Tax Prepayment Notice shall state the circumstances giving rise
to the Company's (or, if applicable, Cemex Espana's) obligation to make such
Additional Payment and shall set forth the Tax Prepayment Date. Such Tax
Prepayment Notice shall also state that each Note of each such Affected Holder
shall be prepaid on such Tax Prepayment Date at a price equal to 100% of the
principal amount of such Note, together with an amount equal to the Make-Whole
Amount, if any, as of the Tax Prepayment Date in respect of the principal
amount of the Notes being so prepaid and interest on such principal amount
then being prepaid accrued to the Tax Prepayment Date (as provided in the
definition of Reinvestment Yield, in determining the Make-Whole Amount with
respect to any prepayment under this Section 8.3, and only under this Section
8.3, the margin over the implied yield of U.S. Treasury Securities will be
0.85% rather than 0.50%). No Note of any Affected Holder shall be prepaid
pursuant to this Section 8.3 if such Affected Holder shall, not less than five
Business Days prior to the Tax Prepayment Date, deliver a written notice to
the Company (which notice shall be binding on any transferee of such Note),
stating that such Affected Holder unconditionally and irrevocably waives any
right to any Additional Payment under Section 14.3 in respect of the specific
event or condition (including with respect to the continuing or future effects
of such specific event or condition on subsequent payments) that shall have
given rise to the Company's prepayment right under this Section 8.3 (it being
agreed that no such waiver shall constitute a waiver of any other right to
receive Additional Payments in respect of any event or condition other than
the specific event or condition in respect of which such waiver shall be
given). Two Business Days prior to the Tax Prepayment Date, the Company will
deliver to each Affected Holder a certificate of a Responsible Officer
specifying the principal amount of the Notes of such Affected Holders
specified therein, together with the Make-Whole Amount, if any, as of the
specified Tax Prepayment Date with respect thereto, if any, and accrued
interest thereon shall become due and payable on the specified Tax Prepayment
Date. In the event the Company shall incorrectly compute the Make-Whole
Amount, if any, payable in connection with any Note to be purchased pursuant
to this Section 8.3, the holder of such Note shall not be bound by such
incorrect computation, but instead, shall be entitled to receive an amount
equal to the correct Make-Whole Amount, if any, computed in compliance with
the terms of this Agreement. The Company will, promptly after making such
prepayment, notify in writing all holders of Notes of the payment amount, and
the name of the holder, of each Note prepaid under this Section 8.3.
8.4 Prepayment Upon Substantial Asset Disposition.
In the event that Cemex Espana or any Subsidiary (i) effects any
sale, lease or other disposition of assets constituting a Substantial Asset
Disposition and (ii) elects to apply the Net Proceeds Amount resulting from
such Substantial Asset Disposition to the retirement of Senior Debt in
accordance with Section 10.4, the Company will offer to prepay, by written
notice to all holders as provided in the next sentence (a "Section 8.4
Notice"), a principal amount of each Note equal to the Pro Rata Amount of the
Net Proceeds Amount of such Substantial Asset Disposition, together with
accrued and unpaid interest due on each Note to the Disposition Prepayment
Date (defined below), without any Make-Whole Amount. Each Section 8.4 Notice
shall (i) describe the material facts of the related Substantial Asset
Disposition in reasonable detail, (ii) refer to this Section 8.4 and the
rights of each holder of the Notes to require that an amount equal to the Pro
Rata Amount of the Net Proceeds Amount from such Substantial Asset Disposition
be applied to the prepayment of such holder's Notes on the terms and
conditions provided herein, (iii) contain an offer by the Company to apply an
amount equal to the Pro Rata Amount of the Net Proceeds Amount to the
prepayment of the principal of the outstanding Notes held by such holder, with
accrued interest to the Disposition Prepayment Date, but not including any
Make-Whole Amount, and (iv) set forth the date, which shall be not less than
30 nor more than 60 days following the date of the Section 8.4 Notice and not
more than one year following the date of such Substantial Asset Disposition
(the "Disposition Prepayment Date"), on which the Company shall make such
prepayment. Each holder of the Notes shall have the right to accept such offer
of prepayment by written notice to the Company given not later than 20 days
following receipt of the Section 8.4 Notice. Holders that do not submit such a
written notice to the Company accepting such offer of prepayment within such
20-day period shall be deemed to have rejected such offer. The Company shall
on the relevant Disposition Prepayment Date prepay an amount equal to the Pro
Rata Amount of the Net Proceeds Amount, together with accrued and unpaid
interest to the Disposition Prepayment Date, without any Make-Whole Amount,
and shall apply such amounts to the Notes held by holders who have accepted
the Company's offer of prepayment.
8.5 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes pursuant to
Section 8.2, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.
8.6 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due
and payable on the date fixed for such prepayment, together with interest on
such principal amount accrued to such date and the applicable Make-Whole
Amount, if any. From and after such date, unless the Company shall fail to pay
such principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount
shall cease to accrue. Any Note paid or prepaid in full shall be surrendered
to the Company and cancelled and shall not be reissued, and no Note shall be
issued in lieu of any prepaid principal amount of any Note.
8.7 Purchase of Notes.
Cemex Espana and the Company will not, nor will Cemex Espana or the
Company permit any Affiliate (to the extent that the Company or Cemex Espana
controls such Affiliate), to purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Notes except (a) upon the
payment or prepayment of the Notes in accordance with the terms of this
Agreement and the Notes or (b) pursuant to an offer to purchase made by any
Obligor or an Affiliate pro rata to the holders of all Notes at the time
outstanding upon the same terms and conditions. Any such offer pursuant to the
preceding clause (b) shall provide each holder with sufficient information to
enable it to make an informed decision with respect to such offer, and shall
remain open for at least 30 Business Days. If the Required Holders accept such
offer, the Company shall promptly notify the remaining holders of such fact
and the expiration date for the acceptance by holders of Notes of such offer
shall be extended by the number of days necessary to give each such remaining
holder at least five Business Days from its receipt of such notice to accept
such offer. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to
any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.
8.8 Make-Whole Amount for Notes.
The term "Make-Whole Amount" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal; provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2
or 8.3 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable)
equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.50% (or 0.85% in the case of any prepayment
under Section 8.3) plus the yield to maturity implied by (i) the
yields reported, as of 10:00 a.m. (New York City time) on the second
Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page PX1" on the
Bloomberg Financial Markets Services Screen (or such other display as
may replace Page PX1 on the Bloomberg Financial Markets Services
Screen) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Life of such Called Principal as of
such Settlement Date, or (ii) if such yields are not reported as of
such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with respect to
such Called Principal, in Federal Reserve Statistical Release
H.15(519) (or any comparable successor publication) for actively
traded U.S. Treasury securities having a constant maturity equal to
the Remaining Life of such Called Principal as of such Settlement
Date. Such implied yield will be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating
linearly between (1) the actively traded U.S. Treasury security with
the duration closest to and greater than the Remaining Life and (2)
the actively traded U.S. Treasury security with the duration closest
to and less than the Remaining Life.
"Remaining Life" means, with respect to any Called Principal
of any Note, the number of years (calculated to the nearest
one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the maturity date of such Note.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called Principal
and interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date; provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount
of interest accrued to such Settlement Date and required to be paid
on such Settlement Date pursuant to Section 8.2, 8.3 or 12.1.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called Principal is to
be prepaid pursuant to Section 8.2 or 8.3 or has become or is
declared to be immediately due and payable pursuant to Section 12.1,
as the context requires.
8.9 Change in Control, Offer to Prepay, etc.
(a) Notice and Offer. If a Responsible Officer shall have knowledge of
Cemex having entered into a binding agreement that will give rise to a Change
in Control, such agreement shall have been publicly disclosed, and it is
reasonably practicable, to give notice of such agreement to the holders prior
to the expected effective date of such Change in Control (taking into account
any applicable confidentiality agreements and other business considerations
arising in connection with the negotiation of related transactions), Cemex
Espana shall cause the Company to give each holder of the Notes notice of such
agreement and such expected effective date no less than 10 Business Days prior
to such expected effective date. Within 30 days of the actual effective date
(if any) of such Change in Control, Cemex Espana will cause the Company to give
written notice of such Change in Control to each holder. Such written notice of
the actual effective date shall contain, and such written notice shall
constitute, an irrevocable offer by the Company to prepay all of the Notes held
by such holder (or, at the election of such holder, a portion of such Notes
designated by such holder) on a date specified in such notice (the "Control
Prepayment Date") that is not less than 30 days and not more than 60 days after
the date of such written notice. If the Control Prepayment Date shall not be
specified in such notice, the Control Prepayment Date shall be the 60th day
after the date of such written notice.
(b) Acceptance and Payment. To accept (in whole or in part) or reject
(in its entirety) such offered prepayment, a holder shall cause a notice of
such acceptance or rejection to be delivered to the Company not later than five
Business Days prior to the Control Prepayment Date. In such notice, such holder
shall, if such notice is an acceptance, designate the principal amount of Notes
that it has elected to have prepaid and, if such notice is a rejection, state
that such holder is rejecting in its entirety such offered prepayment. If so
accepted, such offered prepayment in respect of such principal amount of such
Notes shall be due and payable on the Control Prepayment Date. Such accepted
offered prepayment shall be made at 100% of the principal amount of such Notes
so elected to be prepaid, together with interest on such principal amount
accrued to the Control Prepayment Date, but not including any Make-Whole
Amount. If a holder shall not have responded to such offered prepayment on or
prior to five Business Days prior to the Control Prepayment Date, such holder
shall be deemed to have rejected, in its entirety, such offered prepayment.
(c) Officer's Certificate. Each offer to prepay the Notes pursuant to
this Section 8.9 will be accompanied by an Officer's Certificate dated the date
of such offer, specifying:
(i) the Control Prepayment Date;
(ii) the principal amount of each Note offered to be prepaid on
such Control Prepayment Date;
(iii) the interest to be paid on each such Note, accrued to the
Control Prepayment Date; and
(iv) in reasonable detail, the nature of the Change in Control.
(d) Notice Concerning Status of Holders of Notes. Promptly after each
Control Prepayment Date and the making of all prepayments contemplated on such
Control Prepayment Date under this Section 8.9 (and, in any event, within 30
days thereof) the Company shall deliver to each holder a certificate signed by
a Responsible Officer of the Company containing a list of the then current
holders of Notes and setting forth as to each such holder the outstanding
principal amount of Notes held by such holder at such time.
9. AFFIRMATIVE COVENANTS.
Cemex Espana and the Company covenant that so long as any of the Notes
are outstanding:
9.1 Compliance with Law.
Cemex Espana will and will cause each of its Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.2 Insurance.
Cemex Espana will and will cause each of its Subsidiaries to maintain
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated, except to the extent that the failure to maintain such
insurance would not have a Material Adverse Effect.
9.3 Maintenance of Properties.
Cemex Espana will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear),
so that the business carried on in connection therewith may be properly
conducted at all times; provided that this Section shall not prevent Cemex
Espana or any Subsidiary from discontinuing the operation and the maintenance
of any of its properties if such discontinuance is desirable in the conduct of
its business and Cemex Espana has concluded that such discontinuance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
9.4 Payment of Taxes and Claims.
Cemex Espana will and will cause each of its Subsidiaries to file all
Material tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges or levies imposed on them or any of
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of Cemex Espana or any Subsidiary;
provided that neither Cemex Espana nor any Subsidiary need pay any such tax or
assessment or claims if (i) the amount, applicability or validity thereof is
contested by Cemex Espana or such Subsidiary on a timely basis in good faith
and in appropriate proceedings, and Cemex Espana or a Subsidiary has
established adequate reserves therefor in accordance with relevant national
accounting standards and practices (in the case of Cemex Espana, Spanish GAAP)
on the books of Cemex Espana or such Subsidiary or (ii) the nonpayment of all
such taxes and assessments in the aggregate would not reasonably be expected to
have a Material Adverse Effect.
9.5 Corporate Existence, etc.
Cemex Espana will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.2 and 10.4, Cemex Espana
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries (unless merged into Cemex Espana or a
Subsidiary) and all rights and franchises of Cemex Espana and its Subsidiaries
unless, in the good faith exercise of the reasonable business judgment of Cemex
Espana, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise would not, individually or
in the aggregate, have a Material Adverse Effect.
9.6 Pari Passu Obligations.
Cemex Espana covenants that the obligations of each Obligor hereunder
and under the Financing Documents rank at least pari passu with the claims of
all other unsecured and unsubordinated creditors of such Obligor, except for
obligations mandatorily preferred by law applying to companies generally
(including but not limited to under paragraph 1, 2 or 3 of Article 913 of the
Spanish Commercial Code (Codigo de Comercio), Article 914 of the Spanish
Commercial Code (Codigo de Comercio), Article 32 of the Spanish Workers'
Statute (Estatuto de los Trabajadores), Article 71 of the Spanish General
Taxation Law (Ley General Tributaria) and Article 22 of the Spanish General Law
on Social Security (Ley General de la Seguridad Social) and those whose claims
that according to Spanish law rank in priority as a result of having been
raised to the status of a Spanish Public Document as a result of Permitted
Notarizations in accordance with Section 10.7.
10. NEGATIVE COVENANTS.
Cemex Espana and the Company covenant that so long as any of the Notes
are outstanding:
10.1 Transactions with Affiliates.
Cemex Espana will not and will not permit any Subsidiary to enter
into directly or indirectly any transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than Cemex Espana or another Subsidiary), except in the
ordinary course and pursuant to the reasonable requirements of Cemex Espana's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to Cemex Espana or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
10.2 Merger, Consolidation, etc.
(a) Merger, Consolidation, etc. of Guarantors.
Cemex Espana will not, and will not permit any other Guarantor to,
consolidate with or merge with any other corporation or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to any Person unless:
(i) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of such Guarantor as an
entirety, as the case may be, shall be a Guarantor or a solvent Person
organized and existing under the laws of the United States or any
State thereof (including the District of Columbia) or any country that
is a member of the EU on the date hereof (other than Greece) or any
political subdivision thereof and, if a Guarantor is not the surviving
Person, such Person (x) shall have executed and delivered to each
holder of any Notes its assumption of the due and punctual performance
and observance of such Guarantor's obligations under this Agreement
(if such Guarantor was obligated hereunder immediately prior to such
consolidation, merger, conveyance, transfer or lease) and the Note
Guarantee and (y) shall have caused to be delivered to each holder of
any Notes an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Required
Holders, to the effect that all agreements or instruments effecting
such assumption are enforceable in accordance with their terms and
comply with the terms hereof; and
(ii) at the time of and immediately after giving effect to such
transaction, no Default or Event of Default shall result from such
transaction.
Except as provided in the next sentence, no such conveyance, transfer
or lease of substantially all of the assets of a Guarantor shall have the
effect of releasing such Guarantor or any successor Person that shall
theretofore have become such in the manner prescribed in this Section 10.2(a)
from any liability under this Agreement or the Note Guarantee. The Company
shall have the right to cause any Guarantor to be released from liability
under the Note Guarantee if (a) such Guarantor has conveyed, transferred or
leased all or substantially all of its assets to another Person in accordance
with this Section 10.2(a) and such Guarantor becomes dormant or otherwise
stops conducting trading activity and (b) both immediately prior thereto and
after giving effect to such release, no Default or Event of Default exists.
Any such release shall be effective upon the Company providing notice thereof
to each holder, which notice shall state that the foregoing conditions have
been satisfied with respect to such release.
(b) Merger, Consolidation, etc. of the Company.
The Company shall not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person unless:
(i) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety,
as the case may be, shall be a solvent Person organized and existing
under the laws of the United States or any State thereof (including
the District of Columbia) or any political subdivision of any thereof
and, if the Company is not the surviving Person, such Person (x) shall
have executed and delivered to each holder of any Notes its assumption
of the due and punctual performance and observance of each covenant
and condition of this Agreement and the Notes and (y) shall have
caused to be delivered to each holder of any Notes an opinion of
nationally recognized independent counsel, or other independent
counsel reasonably satisfactory to the Required Holders, to the effect
that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms
hereof; and
(ii) at the time of and immediately after giving effect to such
transaction, no Default or Event of Default shall result from such
transaction.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or any
successor Person that shall theretofore have become such in the manner
prescribed in this Section 10.2(b) from its liability under this Agreement or
the Notes.
10.3 Liens.
(a) Cemex Espana shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any of its property or assets or those of
any Subsidiary, whether now owned or held or hereafter acquired, other than the
following Liens ("Permitted Liens"):
(i) Liens for taxes, assessments and other governmental charges
the payment of which is being contested in good faith by appropriate
proceedings promptly initiated and diligently conducted and for which
such reserves or other appropriate provision, if any, as shall be
required by relevant national accounting standards and practices (in
the case of Cemex Espana, Spanish GAAP) shall have been made;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary
course of business for sums not yet due or the payment of which is
being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and for which such reserves or
other appropriate provision, if any, as shall be required by GAAP
shall have been made;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security;
(iv) any judgment Lien, unless the judgment it secures shall
not, within 90 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been
discharged within 90 days after the expiration of any such stay;
(v) Liens existing on the date of this Agreement as described in
Schedule 10.3 (Existing Liens) and any Lien renewing or extending such
Lien, provided that the principal amount of Financial Indebtedness
secured by such Lien immediately prior thereto is not increased and
such Lien is not extended to other property;
(vi) any Lien on property acquired by Cemex Espana or any of its
Subsidiaries after the date of this Agreement that was existing on the
date of acquisition of such property, provided that such Lien was not
incurred in anticipation of such acquisition, and any Lien created to
secure all or any payment of the purchase price, or to secure
indebtedness incurred or assumed to pay all or any part of the
purchase price, of property acquired by Cemex Espana or any of its
Subsidiaries after the date of this Agreement; provided that (A) any
such Lien permitted pursuant to this clause (vi) shall be confined
solely to the item or items of property so acquired (including, in the
case of any acquisition of a corporation through the acquisition of
51% or more of the Voting Stock of such corporation, the stock and
assets of any acquired Subsidiary or acquiring Subsidiary by which the
acquired Subsidiary will be directly or indirectly controlled) and, if
required by the terms of the instrument originally creating such Lien,
other property which is an improvement to, or is acquired for specific
use with, such acquired property, (B) if applicable, any such Lien
shall be created within nine months after, in the case of property,
its acquisition, or, in the case of improvements, their completion and
(C) no such Lien shall be made in respect of any indebtedness in
relation to repayment of which recourse may be had to Cemex Espana or
any Subsidiary other than in relation to the item or items as referred
to in clause (vi)(A) above;
(vii) any Lien renewing, extending or refinancing the
indebtedness to which any Lien permitted by clause (vi) above relates;
provided that the principal amount of indebtedness secured by such
Lien immediately prior thereto is not increased and such Lien is not
extended to other property;
(viii) the transfer of shares or any other instrument of title
representing an equity participation in the Asia Fund into a trust,
provided it does not secure Financial Indebtedness;
(ix) any Lien created on shares representing no more than a
Stake in the Capital Stock of any of Cemex Espana's Subsidiaries
solely as a result of the deposit or transfer of such shares into a
trust or a special purpose corporation (including any entity with
legal personality) of which such shares constitute the sole assets
provided that the proceeds from the deposit or transfer of such shares
into such trust, corporation or entity and from any transfer of or
distributions in respect of Cemex Espana's or any Subsidiary's
interest in such trust, corporation or entity are applied as provided
under Section 10.4; provided that such Lien may not secure Financial
Indebtedness of Cemex Espana or any Subsidiary unless otherwise
permitted under this clause (ix) and that the economic and voting
rights in such Capital Stock is maintained by Cemex Espana in its
Subsidiaries;
(x) any Lien on any asset of a Special Purpose Vehicle in
connection with a Permitted Securitization; and
(xi) in addition to the Liens permitted by the foregoing clauses
(i) through (x), Liens securing obligations of Cemex Espana and its
Subsidiaries, provided that, after giving effect to the incurrence of
such Liens and the concurrent retirement of any Financial Indebtedness
and/or release of Liens, the outstanding principal amount of Priority
Indebtedness does not exceed 15% of the Consolidated Total Assets of
Cemex Espana and its Subsidiaries.
(b) This Section 10.3 shall not apply to any Lien if, the Obligors
have made or caused to be made effective provision whereby the Notes are
secured equally and ratably with, or prior to, the indebtedness secured by such
Lien (other than Permitted Liens) for so long as such indebtedness is so
secured.
10.4 Sales of Assets.
Cemex Espana will not, and will not permit any Subsidiary to, sell,
lease or otherwise dispose of any substantial part (as defined below) of the
assets of Cemex Espana and its Subsidiaries; provided, however, that Cemex
Espana or any Subsidiary may sell, lease or otherwise dispose of assets
constituting a substantial part of the assets of Cemex Espana and its
Subsidiaries (a "Substantial Asset Disposition") if such assets are sold for
at least Fair Market Value and, at such time and after giving effect thereto,
no Default or Event of Default shall have occurred and be continuing, and an
amount equal to the Net Proceeds Amount with respect to such Substantial Asset
Disposition (determined without subtracting therefrom clause (b)(v) of the
definition of "Net Proceeds Amount") shall be used within one year of such
disposition as follows:
(1) to prepay or retire Senior Debt of Cemex Espana or a
Subsidiary, provided that if any Senior Debt is prepaid pursuant to
the terms of this Section 10.4, the Company shall offer to prepay the
Notes in accordance with the terms of Section 8.4 of this Agreement;
or
(2) to the extent not used to prepay Senior Debt as set forth in
clause (1) above, to acquire assets used or useful in carrying on the
business of Cemex Espana and its Subsidiaries and having a Fair Market
Value at least equal to the acquisition price thereof.
For purposes of any determination pursuant to this Section 10.4, the
Company shall be given credit for all amounts applied in accordance with the
preceding clauses (1) and (2) during the applicable one-year period but shall
not be required to apply any amount in accordance with the preceding clauses
(1) and (2) unless the book value of the assets that have been sold or
otherwise disposed of during the applicable one-year period is in excess of
15% of Consolidated Total Assets of Cemex Espana and its Subsidiaries
(determined as set forth below).
If the Company makes an offer to prepay the Notes in accordance with
the terms of Section 8.4 of this Agreement with respect to any Net Proceeds
Amount, to the extent any holder rejects (or is deemed to have rejected) such
offer of prepayment, the Pro Rata Amount allocable to such holder may be
applied to general corporate purposes of Cemex Espana and its Subsidiaries
(including, without limitation, the repayment of Financial Indebtedness of
Cemex Espana and its Subsidiaries and for acquisitions).
As used in this Section 10.4, a sale, lease or other disposition of
assets shall be deemed to be a "substantial part" of the assets of Cemex
Espana and its Subsidiaries if the book value of such assets, when added to
the book value of all other assets sold, leased or otherwise disposed of by
Cemex Espana and its Subsidiaries during the period of 12 consecutive calendar
months immediately preceding such proposed disposition, exceeds 15% of
Consolidated Total Assets of Cemex Espana and its Subsidiaries (determined as
of the beginning of such twelve-month period, but giving effect to any
acquisition of any Subsidiary or all or substantially all the assets of any
Person during such period); provided that in no event will (a) any Excluded
Disposition constitute a sale of a "substantial part" of the assets of Cemex
Espana and its Subsidiaries or (b) the book value of the assets sold in any
Excluded Disposition be counted in determining whether such 15% limit has been
exceeded.
"Excluded Disposition" means any (i) transaction in the ordinary
course of business, (ii) transaction in which Cemex Espana or a Subsidiary is
the purchaser, (iii) transaction in which any assets acquired in an
acquisition of a Person or of a business are sold, transferred or otherwise
disposed of for not less than Fair Market Value to a Person that is not Cemex
Espana or a Subsidiary within one year of such acquisition, (iv) purchase by
Cemex Espana or its Subsidiary of any of its shares or any dividend or other
distribution made or paid by Cemex Espana or its Subsidiary to its
equityholders, (v) payment or transfer of cash, (vi) disposal of assets not
required for the efficient operation of the businesses of Cemex Espana and its
Subsidiaries for not less than Fair Market Value, (vii) disposal of
investments or financial assets on an arm's length basis for Fair Market
Value, (viii) application of the proceeds of any issuance of securities
(whether equity or debt) or other financial obligations for the purpose stated
in the offering memorandum or any other document related to such issuance or
(ix) disposal pursuant to any Permitted Securitization, sale-leaseback
transaction or other asset-backed financing.
10.5 Financial Covenants.
(a) Minimum Consolidated Net Worth. Cemex Espana will not permit
Consolidated Net Worth as of the last day of any Relevant Period to be less
than (euro)2,000,000,000.
(b) Maximum Leverage Ratio. Cemex Espana will not permit the ratio of
Net Borrowings to Adjusted EBITDA calculated on a Rolling Basis as of the last
day of any Relevant Period to exceed 3.5 to 1.0.
(c) Minimum Interest Coverage Ratio. Cemex Espana will not permit the
ratio of EBITDA to Finance Charges calculated on a Rolling Basis as of the last
day of any Relevant Period to be less than 2.5 to 1.0.
10.6 Limitation on Non-Guarantor Financial Indebtedness.
Cemex Espana will not, at any time, permit any Subsidiary (other than
the Company) to, directly or indirectly, create, incur, assume, guaranty, have
outstanding or otherwise become or remain directly or indirectly liable with
respect to, any Financial Indebtedness other than:
(a) Financial Indebtedness arising under the Note Guarantee;
(b) Financial Indebtedness of a Subsidiary that is an Excluded
Subsidiary Guarantor;
(c) Financial Indebtedness of a Subsidiary outstanding on the date
hereof and disclosed on Schedule 5.15 (Existing Financial Indebtedness), and
any Financial Indebtedness extending the maturity of, or refunding or
refinancing, the same, provided that (i) the principal amount of such Financial
Indebtedness shall not be increased above the principal amount thereof
outstanding immediately prior to such extension, refunding or refinancing and
(ii) the aggregate amount of all Financial Indebtedness that has been extended,
refunded or refinanced under this clause (c) shall not exceed $100,000,000 (or
the equivalent thereof if denominated in another currency) (for the avoidance
of doubt, it is understood that (x) if any such Financial Indebtedness is
successively extended, refinanced or refunded, only the Financial Indebtedness
outstanding after giving effect to all such successive extensions, refinancings
and refundings shall be counted against the foregoing amount and (y) any
Financial Indebtedness incurred in a currency other than Dollars pursuant to
this clause (c) shall continue to be permitted under this clause (c),
notwithstanding any fluctuation in currency values, as long as the outstanding
principal amount of such Financial Indebtedness (denominated in its original
currency) does not exceed the maximum amount of such Financial Indebtedness
(denominated in such currency) permitted to be outstanding on the date such
Financial Indebtedness was incurred);
(d) Financial Indebtedness of a Subsidiary owed to Cemex Espana, the
Company or another Subsidiary;
(e) Financial Indebtedness of a Subsidiary that is (i) outstanding at
the time such Subsidiary becomes a Subsidiary or (ii) contractually required to
be incurred by such Subsidiary at such time, provided that such Financial
Indebtedness shall not have been incurred in contemplation of such Subsidiary
becoming a Subsidiary;
(f) any Financial Indebtedness extending the maturity of the Financial
Indebtedness referred to in clause (e) above, or any refunding or refinancing
of the same, provided that the principal amount of such Financial Indebtedness
shall not be increased above the principal amount thereof outstanding
immediately prior to such extension, refunding or refinancing;
(g) Financial Indebtedness of a Subsidiary which (i) has been formed
for the purpose of, and whose primary activities are, the issuance or other
incurrence of debt obligations to Persons other than Affiliates of Cemex
Espana, and the lending or other advance of the net proceeds of such debt
obligations (whether directly or indirectly) to the Company or an Excluded
Subsidiary Guarantor, and (ii) has no significant assets other than promissory
notes and other contract rights in respect of funds advanced to the Company or
the Excluded Subsidiary Guarantors;
(h) Financial Indebtedness of a Subsidiary incurred pursuant to or in
connection with any pooling agreements in place within a bank or financial
institution, but only to the extent of offsetting credit balances of Cemex
Espana or its Subsidiaries pursuant to such pooling arrangement; and
(i) Financial Indebtedness of a Subsidiary in addition to that
otherwise permitted by the foregoing provisions of this Section 10.6, provided
that on the date the Subsidiary incurs or otherwise becomes liable with respect
to such Financial Indebtedness and immediately after giving effect thereto and
the concurrent retirement of any Financial Indebtedness and/or release of
Liens, the aggregate outstanding principal amount of all Priority Indebtedness
does not exceed 15% of Consolidated Total Assets of Cemex Espana and its
Subsidiaries.
10.7 Notarization
(a) Subject to clause (b) below, Cemex Espana will not (and will not
permit its Subsidiaries to) permit any unsecured Financial Indebtedness of
Cemex Espana or its Subsidiaries to be notarized as a Spanish Public Document
(any such notarization, a "Notarization"), other than the following permitted
Notarizations ("Permitted Notarizations"):
(i) any existing Notarization listed in Schedule 10.7 (Existing
Notarizations) and any amendments or modifications thereof, provided
that any such amendment or modification shall not increase the
principal amount of such Financial Indebtedness, extend the maturity
thereof or refinance such Financial Indebtedness;
(ii) Notarizations with the prior written consent of the
Required Holders;
(iii) any Notarization securing indebtedness, provided that
immediately after giving effect to such Notarization and the
concurrent retirement of any Financial Indebtedness and/or release of
Liens, the aggregate outstanding principal amount of all Priority
Indebtedness does not exceed 15% of Consolidated Total Assets of Cemex
Espana and its Subsidiaries; and
(iv) any Notarizations relating to indebtedness in respect of
any sale and purchase agreement customarily registered in a public
register in Spain and payment of which indebtedness is made within
seven days of the date of such agreement.
(b) This Section 10.7 shall not apply if Cemex Espana, concurrently
with any such Notarization (other than a Permitted Notarization) referred to in
clause (a) above and at its own cost and expense, causes this Agreement and the
Note Guarantee of Cemex Espana to be the subject of a Notarization. Cemex
Espana shall give each holder at least 30 days' written notice prior to the
Notarization of any Financial Indebtedness other than a Permitted Notarization.
Such notice shall instruct the holders as to the procedures to be followed in
order for this Agreement and the Note Guarantee of Cemex Espana of the Notes to
be notarized. Each holder shall, at the expense of Cemex Espana, take such
actions as may be reasonably requested by Cemex Espana and are necessary or
required in obtaining such Notarization. Cemex Espana shall have no obligation
to notarize Financial Indebtedness held by any Person (including a holder) if
such Person does not take such actions as may be reasonably requested by Cemex
Espana in order for Cemex Espana to satisfy its obligations under this Section
10.7(b). If requested in writing by the Required Holders, Cemex Espana shall,
prior to the time of any such Notarization, deliver to the holders an opinion
of nationally recognized Spanish counsel to the effect that, upon the
Notarization of this Agreement and Cemex Espana's Note Guarantee of the Notes
required to be Notarized, such Note Guarantee shall, in the event of a
bankruptcy of Cemex Espana, rank in right of payment equal and pro rata with or
senior to all other unsecured Financial Indebtedness of Cemex Espana Notarized
concurrently therewith, except for obligations mandatorily preferred by law
applying to companies generally (including but not limited to under paragraph
1, 2 or 3 of Article 913 of the Spanish Commercial Code (Codigo de Comercio),
Article 914 of the Spanish Commercial Code (Codigo de Comercio), Article 32 of
the Spanish Workers' Statute (Estatuto de los Trabajadores), Article 71 of the
Spanish General Taxation Law (Ley General Tributaria) and Article 22 of the
Spanish General Law on Social Security (Ley General de la Seguridad Social).
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) Cemex Espana or the Company defaults in the performance of
or compliance with any term contained in Section 7.1(d), 10.2, 10.4,
10.5, 10.6 or 10.7 and such default is not remedied within 10 Business
Days after the earlier of (i) a Senior Financial Officer obtaining
actual knowledge of such default and (ii) the Company receiving
written notice of such default from any holder of a Note (any such
written notice to be identified as a "notice of default" and to refer
specifically to this clause (c) of Section 11); or
(d) Cemex Espana or the Company defaults in the performance of
or compliance with any term contained herein (other than those
referred to in clauses (a), (b) and (c) of this Section 11) and such
default is not remedied within 30 days after the earlier of (i) a
Senior Financial Officer obtaining actual knowledge of such default
and (ii) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a
"notice of default" and to refer specifically to this clause (d) of
Section 11); or
(e) any representation or warranty made in writing by or on
behalf of Cemex Espana or the Company or by any officer of Cemex
Espana or the manager of the Company in this Agreement or in any
writing furnished in connection with the transactions contemplated
hereby proves to have been false or incorrect in any material respect
on the date as of which made; or
(f) (i) Cemex Espana or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal or premium or make-whole amount or interest on any Financial
Indebtedness in an aggregate principal amount of at
least(euro)27,500,000 (or the equivalent thereof, as of any date of
determination, in any other currency) other than Financial
Indebtedness outstanding under this Agreement, the Notes or the Note
Guarantee, when the same becomes due and payable (whether by way of
scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the relevant agreement or instrument
relating to such Financial Indebtedness or (ii) any other event shall
occur or condition shall exist under any agreement or instrument
relating to any such Financial Indebtedness beyond any period of grace
provided with respect thereto, if the effect of such event or
condition is to accelerate the maturity of such Financial Indebtedness
or (iii) any such Financial Indebtedness shall be declared to be due
and payable, or required to be prepaid or redeemed (other than by a
regularly scheduled required payment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such
Financial Indebtedness shall be required to be made, in each case
prior to the stated maturity thereof; or
(g) the Company, Cemex Espana or any of its Material
Subsidiaries (i) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar
law of any jurisdiction, (iii) makes an assignment for the benefit of
its creditors, (iv) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to
it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated or (vi) takes corporate
action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company, Cemex
Espana or any of its Material Subsidiaries, a custodian, receiver,
trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation
or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Company, Cemex Espana or any of its Material Subsidiaries, or
any such petition shall be filed against the Company, Cemex Espana or
any of its Material Subsidiaries and such petition shall not be
dismissed within 90 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of(euro)27,500,000 (or the equivalent thereof if
denominated in a currency other than euro) (excluding in the
calculation of such(euro)27,500,000 any final judgment to the extent,
but only to the extent, such judgment will be covered by payments from
insurance maintained by Cemex Espana or any Subsidiary (x) in respect
of which insurance the issuer thereof has agreed, in writing, to make
such payments in respect of such judgment and (y) the issuer of which
insurance is an independent commercial insurer that, in the good faith
opinion of the Board of Directors of Cemex Espana, is capable of
discharging its payment obligations in connection with such insurance)
are rendered against one or more of Cemex Espana and the Subsidiaries
and which judgments are not, within 90 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged
within 90 days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified Cemex Espana or
any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) Cemex Espana or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (iv) Cemex Espana or any
ERISA Affiliate withdraws from any Multiemployer Plan or (v) Cemex
Espana or any Subsidiary establishes or amends any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides
post-employment welfare benefits in a manner that would increase the
liability of Cemex Espana or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (v) above, either
individually or together with any other such event or events, would
reasonably be expected to have a Material Adverse Effect; or
(k) the Note Guarantee shall cease to be in full force and
effect with respect to Cemex Espana or any other Guarantor; or Cemex
Espana or any other Guarantor (or any Person by, through or on behalf
of Cemex Espana or such other Guarantor) shall contest in any manner
the validity, binding nature or enforceability of the Note Guarantee.
12. REMEDIES ON DEFAULT, ETC.
12.1 Acceleration.
(a) If an Event of Default with respect to the Company described in
clause (g) or (h) of Section 11 (other than an Event of Default described in
clause (g)(i) or described in clause (g)(vi) by virtue of the fact that such
clause encompasses clause (g)(i)) has occurred, all the Notes then outstanding
shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders of the Notes at the time outstanding may at any time at its or
their option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.
(c) If any Event of Default described in clause (a) or (b) of Section
11 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it
or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the
Company (except as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Company, in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such
circumstances.
12.2 Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for
an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or by law or
otherwise.
12.3 Rescission.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the Required Holders by written
notice to the Company may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17 and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred by this Agreement or by any Note upon any holder
thereof shall be exclusive of any other right, power or remedy referred to
herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount
as shall be sufficient to cover all costs and expenses of such holder incurred
in any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1 Registration of Notes.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered
in such register. Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and treated
as the owner and holder thereof for all purposes hereof, and the Company shall
not be affected by any notice or knowledge to the contrary. The Company shall
give to any holder of a Note that is an Institutional Investor promptly upon
request therefor a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company
shall execute and deliver, at the Company's expense (except as provided
below), one or more new Notes (as requested by the holder thereof) of the same
tranche in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially
in the form of the Note of such tranche originally issued hereunder. Each such
new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $1,000,000, provided that if
necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $1,000,000.
Any transferee, by its acceptance of a Note registered in its name (or the
name of its nominee), shall be deemed to have made the representations set
forth in Sections 6.1 and 6.2.
13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such
Note is, or is a nominee for, an original Purchaser or another holder
of a Note with a minimum net worth of at least $50,000,000, such
Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a
new Note of the same tranche, dated and bearing interest from the date to
which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1 Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York at Citibank, N.A, 111 Wall Street, 14th Floor, New York, New
York 10043, Corporate Agency and Trust Department. The Company may at any
time, by notice to each holder of a Note, change the place of payment of the
Notes so long as such place of payment shall be either the principal office of
the Company in such jurisdiction or the principal office of a bank or trust
company in the United States.
14.2 Home Office Payment.
So long as any Purchaser or a nominee of such Purchaser shall be the
holder of any Note, and notwithstanding anything contained in Section 14.1 or
in such Note to the contrary, the Company will pay all sums becoming due on
such Note for principal, Make-Whole Amount, if any, and interest by the method
and at the address specified for such purpose below such Purchaser's name on
Schedule A, or by such other method or at such other address as such Purchaser
shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of
any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full
of any Note, such Purchaser shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its principal
executive office or at the place of payment most recently designated by the
Company pursuant to Section 14.1. Prior to any sale or other disposition of
any Note held by any Purchaser or its nominee, such Purchaser will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to
the Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by
any Purchaser under this Agreement and that has made the same agreement
relating to such Note as such Purchaser has made in this Section 14.2.
14.3 Tax Indemnification.
(a) Payments Free and Clear. All payments to be made by the Company
under this Agreement and the Notes will be made free and clear of, and without
withholding or deduction for or on account of, any present or future taxes,
levies, imposts, duties, charges, assessments or fees of whatever nature, but
excluding franchise taxes and taxes imposed on or measured by any holder's net
income or receipts (such non-excluded items, "Related Taxes") imposed or levied
by or on behalf of The Netherlands, the United States or any jurisdiction from
or through which any amount is paid by the Company pursuant to the terms of
this Agreement or the Notes (or any political subdivision or taxing authority
of or in any such jurisdiction) (a "Taxing Jurisdiction"), unless the
withholding or deduction of any such Related Tax is required by law.
(b) Gross-Up, etc. If any deduction or withholding for any present or
future Related Tax of a Taxing Jurisdiction shall at any time be required in
respect of any amount to be paid by the Company under this Agreement or the
Notes, the Company will promptly (i) pay over to the government or taxing
authority of the Taxing Jurisdiction imposing such Related Tax the full amount
required to be deducted or withheld by the Company (including the full amount
required to be deducted or withheld from or otherwise paid by the Company in
respect of any Additional Payment required to be made pursuant to clause (ii)
of this Section 14.3(b)) and (ii) except as expressly provided below, pay to
each holder entitled under this Agreement to receive the payment from which the
amount referred to in the foregoing clause (i) has been so deducted or withheld
such additional amount as is necessary in order that the amount received by
such holder after any required deduction or withholding of Related Tax
(including, without limitation, any required deduction, withholding or other
payment of Related Tax on or with respect to such additional amount) shall
equal the amount such holder would have received had no such deduction,
withholding or other payment of Related Tax been paid (the "Additional
Payment"), and if any holder pays any amount in respect of any Related Tax on
any payment due from the Company hereunder or under the Notes, or penalties or
interest thereon, then the Company shall reimburse such holder for that payment
upon demand, provided that no payment of any Additional Payment, or of any such
reimbursement in respect of any such payment made by any such holder, shall be
required to be made for or on account of:
(A) any Related Tax that would not have been imposed but for the
existence of any present or former connection between such holder and
the Taxing Jurisdiction or any territory or possession or area subject
to the jurisdiction of the Taxing Jurisdiction, other than the mere
holding of the relevant Note, including, without limitation, such
holder's being or having been a citizen or resident thereof, or being
or having been present or engaged in a trade or business therein or
having an establishment therein;
(B) any such holder that is not a resident of the United States
of America or, with respect to any payment hereunder or under the
Notes owing to such holder, all or any part of which represents income
that is not subject to United States tax as income of a resident of
the United States of America to the extent that, had such holder been
a resident of the United States of America or had the payment been so
subject to United States tax, or had the payment been made to a
location within the United States of America, the provisions of a
statute, treaty or regulation of the Taxing Jurisdiction would have
enabled an exemption to be claimed from the Related Tax in respect of
which an Additional Payment would otherwise have been payable; or
(C) any combination of the items or conditions described in
clause (A) or clause (B) of this Section 14.3(b); and
provided further that the Company shall not be obliged to pay any Additional
Payment to any holder of a Note in respect of Related Taxes to the extent such
Related Taxes exceed the Related Taxes that would have been payable but for
the delay or failure by such holder (after receiving a written request from
Cemex Espana or the Company to make such filing and including copies (together
with instructions in English) of forms, certificates, documents, applications
or other reasonably required evidence (collectively, "Forms") to be filed) in
the filing with an appropriate Governmental Authority or otherwise of Forms
required to be filed by such holder to avoid or reduce such Related Taxes and
that in the case of any of the foregoing would not result in any confidential
income tax return information being revealed, either directly or indirectly,
to any Person and such delay or failure could have been lawfully avoided by
such holder, provided that such holder shall be deemed to have satisfied the
requirements of this proviso upon the good faith completion and submission of
such Forms as may be specified in a written request of the Company no later
than 45 days after receipt by such holder of such written request.
(c) Official Receipt. If the Company shall make any such Additional
Payment, it will promptly furnish each holder receiving such Additional Payment
under this Section 14.3 an official receipt issued by the relevant taxation or
other authorities involved for all amounts deducted or withheld as aforesaid.
(d) Other. Each holder agrees to use its best efforts to comply (after
a reasonable period to respond) with a written request of the Company delivered
to such holder to provide information (other than any confidential or
proprietary information) concerning the nationality, residence or identity of
such holder, and to make such declaration or other similar claim or reporting
requirement regarding such information (copies of the forms of which
declaration, claim or reporting requirement shall have been provided to such
holder by the Company), that is required by a statute, treaty or regulation of
the Taxing Jurisdiction as a precondition to exemption from all or part of any
Related Tax. The Company agrees to reimburse each holder for such holder's
reasonable out-of-pocket expenses, if any, incurred in complying with any such
request of such Person.
(e) Tax Refund. If the Company makes an Additional Payment under this
Section 14.3 for the account of any Person and such Person is entitled to a
refund of any portion of the tax (a "Tax Refund"), to which such payment is
attributable, and such Tax Refund may be obtained by filing one or more Forms,
then such Person shall after receiving a written request therefore from the
Company (which request shall specify in reasonable detail the Forms to be
filed), file such Forms. If such Person subsequently receives such a Tax
Refund, and such Person is readily able to identify the Tax Refund as being
attributable to the tax with respect to which an Additional Payment was made,
then such Person shall reimburse the Company such amount as such Person shall
determine acting in good faith to be the proportion of the Tax Refund, together
with any interest received thereon, attributable to such Additional Payment as
will leave such Person after the reimbursement (including such interest) in no
better or worse position than it would have been if the Additional Payment had
not been required. Nothing in this clause (e) shall obligate any holder to
disclose any information regarding its tax affairs or computations to the
Company.
(f) Survival. The obligations of the Company and the holders under
this Section 14.3 shall survive the payment in full of the Notes and the
termination of this Agreement.
14.4 Currency of Payment.
(a) Payment in Dollars. All payments under the Notes shall be made in
Dollars.
(b) Certain Expenses. If any expense required to be reimbursed
pursuant to this Agreement or the Notes is originally incurred in a currency
other than Dollars, the Company shall nonetheless make reimbursement of that
expense in Dollars, in an amount equal to the amount in Dollars that would have
been required for the Person that incurred such expense to have purchased, in
accordance with normal banking procedures, the sum paid in such other currency
(after any premium and costs of exchange) on the day that expense was
originally incurred.
(c) Payments Not in Dollars. To the fullest extent permitted by
applicable law, the obligations of the Company in respect of any amount due
under or in respect of this Agreement and the Notes shall (notwithstanding any
payment in any other currency, whether as a result of any judgment or order or
the enforcement thereof, the realization of any security, the liquidation of
any Obligor, any voluntary payment by any Obligor or otherwise) be discharged
only to the extent of the amount in Dollars that each holder entitled to
receive such payment may, in accordance with normal banking procedures,
purchase with the sum paid in such other currency (after any premium and costs
of exchange) on the Business Day immediately following the day on which such
holder receives such payment. If the amount in Dollars that may be so purchased
for any reason falls short of the amount originally due, the Company shall
indemnify and save harmless such holder from and against all loss or damage
arising out of or as a result of such deficiency. This indemnity shall
constitute an obligation separate and independent from the other obligations
contained in this Agreement and the Notes, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by such holder from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due under this Agreement or the Notes or under any judgment or order.
15. EXPENSES, ETC.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all reasonable costs and expenses (including reasonable
attorneys' fees of one special U.S. counsel and one special Spanish counsel for
the Purchasers, provided that, as to the costs and expenses of Spanish counsel,
Cemex Espana and the holders shall have agreed upon the scope of work to be
done by such Spanish counsel prior to its engagement) incurred by the
Purchasers in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note; (b) the
costs and expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Notes; and (c) the fees and costs incurred in connection with
the initial filing of this Agreement and all related documents and financial
information, and all subsequent annual and interim filings of documents and
financial information related to this Agreement (provided the Company shall not
be required to pay more than $2,500 per year in respect of subsequent annual
and interim filings), with the SVO. The Company will pay, and will save each
Purchaser and each other holder of a Note harmless from, all claims in respect
of the fees, costs or expenses, if any, of brokers and finders (other than
those retained by any Purchaser).
15.2 Survival.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this
Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the related Notes, the purchase or
transfer by any Purchaser of any such Note or portion thereof or interest
therein and may be relied upon by any subsequent holder of any such Note,
regardless of any investigation made at any time by or on behalf of any
Purchaser or any other holder of any such Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company or
Cemex Espana pursuant to this Agreement shall be deemed representations and
warranties of the Company and Cemex Espana under this Agreement. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement
and understanding between the Purchasers and the Company and Cemex Espana and
supersede all prior agreements and understandings relating to the subject
matter hereof.
17. AMENDMENT AND WAIVER.
17.1 Requirements. This Agreement, the Note Guarantee and the Notes
may be amended, and the observance of any term hereof or of the Notes may be
waived (either retroactively or prospectively), with (and only with) the
written consent of Cemex Espana, the Company and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4,
5, 6 or 21 hereof, or any defined term (as it is used in any such Section),
will be effective as to any holder unless consented to by such holder in
writing and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the
principal amount of the Notes the holders of which are required to consent to
any such amendment or waiver or (iii) amend Section 8, 11(a), 11(b), 12, 17 or
20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder as
consideration for or as an inducement to the entering into by any holder of any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder then outstanding even if such holder did not
consent to such waiver or amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon Cemex Espana and the Company without regard
to whether such Note has been marked to indicate such amendment or waiver. No
such amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or
impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.
17.4 Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), (b) by registered or certified mail with return receipt
requested (postage prepaid) or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to any Purchaser or its nominee, to such Purchaser or
nominee at the address specified for such communications on Schedule
A, or at such other address as such Purchaser or nominee shall have
specified to the Company and Cemex Espana in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing or
(iii) if to the Company or Cemex Espana, to the Company or Cemex
Espana at Caleruega 67- 5, 28033 Madrid, Spain, Facsimile number:+
3491 3535065/66, Phone number: + 3491 3535055, to the attention of
Santiago Puelles/Francisco Lopez, with a copy to Cemex Espana at Ave.
Ricardo Margain Zozaya, n(0) 325, Col. Valle del Campestre, Garza
Garcia NL, 66220 Mexico, Facsimile number: +52 81 8888 4428, to the
attention of Francisco Contreras, or at such other address as the
Company or Cemex Espana shall have specified to the holder of each
Note in writing.
Notices under this Section 18 will be deemed given only when actually
received.
Each document, instrument, financial statement, report, notice, Form
or other communication delivered in connection with this Agreement shall be in
English or accompanied by an English translation thereof, which translation
shall be certified by a Responsible Officer.
The Financing Documents have been prepared and signed in English and
the parties hereto agree that the English versions of this Agreement and the
other Financing Documents shall be the only versions valid for the purpose of
the interpretation and construction hereof and thereof notwithstanding the
preparation of any translation into another language of any Financing Document,
whether official or otherwise or whether prepared in relation to any
proceedings with may be brought in the Kingdom of Spain or The Netherlands in
respect of any Financing Document.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves) and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. Each of Cemex Espana and the
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
This Section 19 shall not prohibit Cemex Espana, the Company or any other
holder from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the
inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to any Purchaser by or on behalf of Cemex Espana or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of Cemex Espana or any Subsidiary;
provided that such term does not include information that (a) was publicly
known or otherwise known to such Purchaser prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by such Purchaser or any Person acting on the behalf of such Purchaser, (c)
otherwise becomes known to such Purchaser other than through disclosure by
Cemex Espana or any Subsidiary or (d) constitutes financial statements
delivered to such Purchaser under Section 7.1 that are otherwise publicly
available. Each Purchaser will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties
delivered to such Purchaser; provided that such Purchaser may deliver or
disclose Confidential Information to (i) such Purchaser's directors, trustees,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by such Purchaser's Notes), (ii) such Purchaser's financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor
to which such Purchaser sells or offers to sell such Note or any part thereof
or any participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 20), (v) any Person from which such Purchaser offers to purchase any
security of the Company (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 20), (vi) any federal or state regulatory authority having jurisdiction
over such Purchaser, (vii) the National Association of Insurance Commissioners
or any similar organization, or any nationally recognized rating agency that
requires access to information about such Purchaser's investment portfolio or
(viii) any other Person to which such delivery or disclosure may be necessary
or appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Purchaser is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such Purchaser may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Purchaser's Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by Cemex Espana in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with Cemex Espana embodying the provisions
of this Section 20. Notwithstanding anything to the contrary set forth herein
or in any other written or oral understanding or agreement to which the parties
hereto are parties or by which they are bound, the parties to this Agreement
acknowledge and agree that (i) any obligations of confidentiality contained
herein and therein do not apply and have not applied from the commencement of
discussions between the parties to the tax treatment and tax structure of the
Notes (and any related transactions or arrangements) and (ii) each Purchaser
(and each of its employees, representatives or other agents) may disclose to
any and all persons, without limitation of any kind, the tax treatment and tax
structure of the Notes and all materials of any kind (including opinions or
other tax analyses) that are provided to such Purchaser relating to such tax
treatment and tax structure, all within the meaning of the U.S. Department of
the Treasury Regulations Section 1.6011-4.
21. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, wherever
the word "Purchaser" is used in this Agreement (other than in this Section 21),
such words shall be deemed to refer to such Affiliate in lieu of such
Purchaser. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to such Purchaser all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of
such transfer, wherever the word "Purchaser" is used in this Agreement (other
than in this Section 21), such words shall no longer be deemed to refer to such
Affiliate, but shall refer to such Purchaser, and such Purchaser shall have all
the rights of an original holder of the Notes under this Agreement.
22. MISCELLANEOUS.
22.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
22.2 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest
on any Note that is due on a date other than a Business Day shall be made on
the next succeeding Business Day without including the additional days elapsed
in the computation of the interest payable on such next succeeding Business
Day.
22.3 Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by any
Person, or that such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6 Governing Law.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New
York excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
22.7 Jurisdiction; Service of Process.
EACH OF CEMEX ESPANA AND THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND/OR ANY OTHER FINANCING DOCUMENT, OR ANY ACTION
OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY
BREACH HEREUNDER OR UNDER ANY OTHER FINANCING DOCUMENT, BROUGHT BY ANY HOLDER
OF A NOTE AGAINST CEMEX ESPANA OR THE COMPANY OR ANY OF THEIR RESPECTIVE
PROPERTIES, MAY BE BROUGHT BY SUCH HOLDER OF A NOTE IN THE COURTS OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY NEW YORK
STATE COURT SITTING IN NEW YORK CITY, AS SUCH HOLDER OF A NOTE MAY IN ITS SOLE
DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT EACH OF
CEMEX ESPANA AND THE COMPANY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF EACH SUCH COURT AND AGREES THAT PROCESS SERVED
EITHER PERSONALLY OR BY REGISTERED MAIL ON CEMEX ESPANA, THE COMPANY OR A
DESIGNATED AGENT SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE
SERVICE OF PROCESS IN ANY SUCH SUIT, AND EACH OF CEMEX ESPANA AND THE COMPANY
IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS EVIDENCED
BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES POSTAL SERVICE OR ANY
COMMERCIAL DELIVERY SERVICE. WITHOUT LIMITING THE FOREGOING, EACH OF CEMEX
ESPANA AND THE COMPANY HEREBY APPOINTS, IN THE CASE OF ANY SUCH ACTION OR
PROCEEDING BROUGHT IN THE COURTS OF OR IN THE STATE OF NEW YORK, CT CORPORATION
SYSTEM, 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, TO RECEIVE, FOR IT AND ON
ITS BEHALF, SERVICE OF PROCESS IN THE STATE OF NEW YORK WITH RESPECT THERETO AT
ANY AND ALL TIMES. EACH OF CEMEX ESPANA AND THE COMPANY WILL TAKE ANY AND ALL
ACTION, INCLUDING THE EXECUTION AND FILING OF ALL SUCH DOCUMENTS AND
INSTRUMENTS AND TIMELY PAYMENTS OF FEES AND EXPENSES, AS MAY BE NECESSARY TO
EFFECT AND CONTINUE THE APPOINTMENT OF SUCH AGENT IN FULL FORCE AND EFFECT, OR
IF NECESSARY BY REASON OF ANY FACT OR CONDITION RELATING TO SUCH AGENT, TO
REPLACE SUCH AGENT (BUT ONLY AFTER HAVING GIVEN NOTICE THEREOF TO EACH HOLDER
OF NOTES AND ANY SUCCESSOR AGENT IS REASONABLY ACCEPTABLE TO REQUIRED HOLDERS).
EACH OF CEMEX ESPANA AND THE COMPANY AGREES THAT SERVICE OF PROCESS UPON SUCH
AGENT SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON EACH
OF CEMEX ESPANA AND THE COMPANY IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
SUCH COURT. EACH OF CEMEX ESPANA AND THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL CLAIM OR ERROR BY REASON OF ANY SUCH
SERVICE IN SUCH MANNER AND AGREES THAT SUCH SERVICE SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON EACH OF CEMEX ESPANA AND THE COMPANY
IN ANY SUCH SUIT, ACTION OR PROCEEDING AND SHALL, TO THE FULLEST EXTENT
PERMITTED BY LAW, BE TAKEN AND HELD TO BE VALID AND PERSONAL SERVICE UPON AND
PERSONAL DELIVERY TO EACH OF CEMEX ESPANA AND THE COMPANY. IN ADDITION, EACH OF
CEMEX ESPANA AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND/OR ANY OTHER FINANCING DOCUMENT BROUGHT IN SUCH COURTS, AND
HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY HOLDER OF A NOTE
TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY
APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER CEMEX ESPANA OR THE COMPANY IN
SUCH OTHER JURISDICTION, AND IN SUCH MANNER, AS MAY BE PERMITTED BY APPLICABLE
LAW. NOTHING IN THIS SECTION 22.7 SHALL BE DEEMED TO LIMIT ANY OTHER SUBMISSION
TO JURISDICTION, WAIVER OR OTHER AGREEMENT BY CEMEX ESPANA OR THE COMPANY
CONTAINED IN ANY OTHER FINANCING DOCUMENT. TO THE EXTENT THAT CEMEX ESPANA OR
THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, EACH OF CEMEX ESPANA AND THE COMPANY HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE
OTHER FINANCING DOCUMENTS.
22.8 Judgment Currency.
Each of Cemex Espana and the Company agrees that if, for the purposes
of obtaining judgment in any court, it is necessary to convert a sum due
hereunder or under the Notes in any currency into another currency, to the
fullest extent permitted by law, the rate of exchange used shall be that at
which in accordance with normal banking procedures a holder could purchase such
first currency with such other currency on the Business Day preceding that on
which final judgment is given.
* * * * *
The execution hereof by the Purchasers shall constitute a contract
among Cemex Espana, the Company and the Purchasers for the uses and purposes
hereinabove set forth.
Very truly yours,
CEMEX ESPANA, S.A.
By /s/ Hector Campa Martinez
---------------------------
Hector Campa Martinez
Financing Director Spain
CEMEX ESPANA FINANCE LLC
By /s/ Juan M Portal
---------------------------
Juan M. Portal
Treasurer and Assistant
Secretary
The foregoing is hereby agreed
to as of the date thereof.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
AIG ANNUITY INSURANCE COMPANY
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY
OF NEW YORK
AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY
MERIT LIFE INSURANCE CO.
By: AIG Global Investment Corp.,
Investment Adviser
By: /s/Lorri J. White
--------------------------------------
Vice President
THE TRAVELERS INSURANCE COMPANY
By: /s/John A. Wills
--------------------------------------
Assistant Investment Officer
THE TRAVELERS LIFE AND ANNUITY COMPANY
By: /s/John A. Wills
--------------------------------------
Assistant Investment Officer
NATIONAL BENEFIT LIFE INSURANCE COMPANY
By: /s/John A. Wills
--------------------------------------
Assistant Investment Officer
PRIMERICA LIFE INSURANCE COMPANY
By: /s/John A. Wills
--------------------------------------
Assistant Investment Officer
AMERICAN MAYFLOWER LIFE INSURANCE COMPANY
By: GE Asset Management Incorporated,
Its Investment Advisor
By: /s/Jon M. Lucia
--------------------------------------
Senior Vice President - Fixed Income Private Placement
EMPLOYERS REINSURANCE CORPORATION
By: GE Asset Management Incorporated,
Its Investment Advisor
By: /s/Jon M. Lucia
--------------------------------------
Senior Vice President - Fixed Income Private Placement
FIRST COLONY LIFE INSURANCE COMPANY
By: GE Asset Management Incorporated,
Its Investment Advisor
By: /s/Jon M. Lucia
--------------------------------------
Senior Vice President - Fixed Income Private Placement
GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY
By: GE Asset Management Incorporated,
Its Investment Advisor
By: /s/Jon M. Lucia
--------------------------------------
Senior Vice President - Fixed Income Private Placement
MEDICAL PROTECTIVE COMPANY
By: GE Asset Management Incorporated,
Its Investment Advisor
By: /s/Jon M. Lucia
--------------------------------------
Senior Vice President - Fixed Income Private Placement
JOHN HANCOCK LIFE INSURANCE COMPANY
By: /s/David E. Johnson
--------------------------------------
Managing Director
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By: /s/David E. Johnson
--------------------------------------
Authorized Signatory
AMCO INSURANCE COMPANY
By: /s/Joseph P. Young
--------------------------------------
Associate Vice President
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By: /s/Joseph P. Young
--------------------------------------
Associate Vice President
NATIONWIDE LIFE INSURANCE COMPANY
By: /s/Joseph P. Young
--------------------------------------
Associate Vice President
NATIONWIDE MULTIPLE MATURITY SEPARATE ACCOUNT
By: /s/Joseph P. Young
--------------------------------------
Associate Vice President
NATIONWIDE MUTUAL INSURANCE COMPANY
By: /s/Joseph P. Young
--------------------------------------
Associate Vice President
CALHOUN & CO., AS NOMINEE FOR COMERICA
BANK & TRUST, NATIONAL ASSOCIATION, TRUSTEE
TO THE TRUST CREATED BY TRUST AGREEMENT
DATED OCTOBER 1, 2002
By: /s/Lori Perrault
--------------------------------------
Assistant Vice President
(Scottish - Lincoln Account)
CALHOUN & CO., AS NOMINEE FOR COMERICA
BANK & TRUST, NATIONAL ASSOCIATION, TRUSTEE
TO THE TRUST CREATED BY TRUST AGREEMENT
DATED OCTOBER 1, 2002
By: /s/Lori Perrault
--------------------------------------
Assistant Vice President
(Scottish -1YR Trust Account)
CALHOUN & CO., AS NOMINEE FOR COMERICA
BANK & TRUST, NATIONAL ASSOCIATION, TRUSTEE
TO THE TRUST CREATED BY TRUST AGREEMENT
DATED OCTOBER 1, 2002
By: /s/Lori Perrault
--------------------------------------
Assistant Vice President
(Scottish -5YR Trust Account)
BERKSHIRE LIFE INSURANCE COMPANY OF AMERICA
By: /s/Thomas M. Donahue
--------------------------------------
Managing Director
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
By: /s/Thomas M. Donahue
--------------------------------------
Managing Director
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY
SENTINEL INSURANCE COMPANY
By Hartford Investment Services, Inc.
By: /s/Ronald S. Mendel
--------------------------------------
Ronald A. Mendel
Senior Vice President
RELIASTAR LIFE INSURANCE COMPANY
USG ANNUITY & LIFE COMPANY
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
By: ING Investment Management LLC, as Agent
By: /s/Kurt Opperman
--------------------------------------
Vice President
THE OHIO NATIONAL LIFE INSURANCE COMPANY
By: /s/Michael A. Boedeker
--------------------------------------
Senior Vice President, Investments
THRIVENT FINANCIAL FOR LUTHERANS
By: /s/Mark O. Swenson
--------------------------------------
Vice President
NEW YORK LIFE INSURANCE COMPANY
By: /s/Lisa A. Scuderi
--------------------------------------
Investment Vice President
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By: New York Life Investment Management LLC,
Its Investment Manager
By: /s/Lisa A. Scuderi
--------------------------------------
Director
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT
By New York Life Investment Management LLC,
Its Investment Manager
By: /s/Lisa A. Scuderi
--------------------------------------
Director
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By: /s/Timothy S. Collins
--------------------------------------
Authorized Representative
BENEFICIAL LIFE INSURANCE COMPANY
By: /s/Robert R. Dalley
--------------------------------------
Senior Vice President and CFO
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By: /s/Jon C. Heiny
--------------------------------------
Counsel
By: /s/James C. Fifield
--------------------------------------
Counsel
PHOENIX LIFE INSURANCE COMPANY
By: /s/Christopher M. Wilkos
--------------------------------------
Senior Vice President
Corporate Portfolio Management
PHL VARIABLE INSURANCE COMPANY
By: /s/Christopher M. Wilkos
--------------------------------------
Senior Vice President
Corporate Portfolio Management
SCHEDULE A
TRANCHE 1
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
THE TRAVELERS INSURANCE COMPANY Series 2003
Tranche 1
$18,900,000
(R-T1-1)
$4,400,000
(R-T1-2)
1) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
The Travelers Insurance Company -
Consolidated Private Placement
Account No. 910-2-587434
JPMorgan Chase Bank
One Chase Manhattan Plaza
New York, New York 10081
ABA No. 021000021
In case of all notices with respect to payments:
The Travelers Insurance Company
242 Trumbull Street, P.O. Box 150449
Hartford, Connecticut 06115-0449
Attention: Cashier, 5th Floor
Facsimile: 860-308-8556
Delivery of Notes after Closing:
Daniel B. Kenney, Esq.
Citigroup Investments Inc.
242 Trumbull Street
Hartford, Connecticut 06115-0449
Notices and Communications:
The Travelers Insurance Company
242 Trumbull Street, P.O. Box 150449
Hartford, Connecticut 06115-0449
Attention: Private Placements, 7th Floor
Facsimile: 860-308-8547
Tax Identification No.: 06-0566090
Signature Block Format:
THE TRAVELERS INSURANCE COMPANY
By: _____________________________
Name: ____________________________
Title: ___________________________
Nominee: TRAL & CO
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
THE TRAVELERS LIFE AND ANNUITY COMPANY Series 2003
Tranche 1
$2,000,000
(R-T1-3)
(2) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
The Travelers Insurance Company -
Consolidated Private Placement
Account No. 910-2-587434
JPMorgan Chase Bank.
One Chase Manhattan Plaza
New York, New York
In case of all notices with respect to payments:
The Travelers Insurance Company
242 Trumbull Street, P.O. Box 150449
Hartford, Connecticut 06115-0449
Attention: Cashier, 5th Floor
Facsimile: 860-308-8556
Delivery of Notes after Closing:
Daniel B. Kenney, Esq.
Citigroup Investments Inc.
242 Trumbull Street
Hartford, Connecticut 06115-0449
Notices and Communications:
The Travelers Insurance Company
242 Trumbull Street, P.O. Box 150449
Hartford, Connecticut 06115-0449
Attention: Private Placements, 7th Floor
Facsimile: 860-308-8547
Tax Identification No.: 06-0904249
Signature Block Format:
THE TRAVELERS LIFE AND ANNUITY COMPANY
By: ____________________________________
Name: ___________________________________
Title: __________________________________
Nominee: TRAL & CO
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
NATIONAL BENEFIT LIFE INSURANCE COMPANY Series 2003
Tranche 1
$1,100,000
(R-T1-4)
(3) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
National Benefit Life Insurance Company
Account No. 910-2-790384
JPMorgan Chase Bank
One Chase Manhattan Plaza
New York, New York 10081
ABA No. 021000021
In case of all notices with respect to payments:
National Benefit Life Insurance Company
242 Trumbull Street, P.O. Box 150449
Hartford, Connecticut 06115-0449
Attention: Cashier, 5th Floor
Facsimile: 860-308-8556
Delivery of Notes after Closing:
Daniel B. Kenney, Esq.
Citigroup Investments Inc.
242 Trumbull Street
Hartford, Connecticut 06115-0449
Notices and Communications:
National Benefit Life Insurance Company
242 Trumbull Street, P.O. Box 150449
Attention: Private Placements, 7th Floor
Facsimile: 860-308-8547
Tax Identification No.: 23-1618791
Signature Block Format:
NATIONAL BENEFIT LIFE INSURANCE COMPANY
By: ____________________________________
Name: ___________________________________
Title: __________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
PRIMERICA LIFE INSURANCE COMPANY Series 2003
Tranche 1
$3,600,000
(R-T1-5)
(4) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Primerica Life Insurance Company
Account No. 910-2-790079
JPMorgan Chase Bank
One Chase Manhattan Plaza
New York, New York 10081
ABA No. 021000021
In case of all notices with respect to payments:
Primerica Life Insurance Company
242 Trumbull Street, P.O. Box 150449
Hartford, Connecticut 06115-0449
Attention: Cashier, 5th Floor
Facsimile: 860-308-8556
Delivery of Notes after Closing:
Daniel B. Kenney, Esq.
Citigroup Investments Inc.
242 Trumbull Street
Hartford, Connecticut 06115-0449
Notices and Communications:
Primerica Life Insurance Company
242 Trumbull Street, P.O. Box 150449
Attention: Private Placements, 7th Floor
Facsimile: 860-308-8547
Tax Identification No.: 04-1590590
Signature Block Format:
PRIMERICA LIFE INSURANCE COMPANY
By: ______________________________
Name: _____________________________
Title: ____________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
AMERICAN MAYFLOWER LIFE INSURANCE COMPANY OF NEW YORK Series 2003
Tranche 1
$2,000,000
(R-T1-6)
(5) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Deutsche Bank
14 Wall Street
New York, NY 10005
SWIFT Code: BKTR US 33
ABA #021001033
Account Number 99-911-145
FCC: #098067
In case of all notices with respect to payments:
GE Asset Management
Account: American Mayflower Life Insurance Company
of New York
3003 Summer Street
Stamford, CT 06904
Attn: Investment Accounting (Private Placement Event)
Telephone No.: (203) 356-2734
Fax No.: (203) 356-3023
Jennifer.Ficko@corporate.ge.com (preferred method)
with a copy to:
GE Asset Management
Account: American Mayflower Life Insurance Company
of New York
3003 Summer Street
Stamford, CT 06904
Attn: Trade Operations-Data Integrity
Telephone No.: (203) 921-2126
Fax No.: (203) 326-4288
allison.lima@corporate.ge.com
and with a copy to:
GE Asset Management
Account: American Mayflower Life Insurance Company
of New York
601 Union Street, Suite 2200
Seattle, WA 98101
Attn: Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Delivery of Notes after Closing:
Deutsche Bank
14 Wall Street, 4th Floor
Mail Stop 4042, Window 61
New York, NY 10005
Acct #098067
Attn: Lorraine Squires (212)618-2200
Notices and Communications:
GE Asset Management
Account: American Mayflower Life Insurance Company
of New York
601 Union Street, Suite 2200
Seattle, WA 98101
Attn: Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Tax Identification No.: 13-5660550
Signature Block Format:
AMERICAN MAYFLOWER LIFE INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: SALKELD & CO
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
EMPLOYERS REINSURANCE CORPORATION Series 2003
Tranche 1
$10,000,000
(R-T1-7)
(6) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Deutsche Bank Trust Company
16 Wall Street
New York, NY 10005
SWIFT Code: BKTR US 33
ABA #021-001-033
Account Number 99-911-196
FCC: ERC Total Return (TR) #098481
In case of all notices with respect to payments:
GE Asset Management
Account: ERC Total Return (TR)
3003 Summer Street
Stamford, CT 06904
Attn: Investment Accounting (Private Placement Event)
Telephone No.: (203) 356-2734
Fax No.: (203) 356-3023
Jennifer.Ficko@corporate.ge.com (preferred method)
with a copy to:
GE Asset Management
Account: ERC Total Return (TR)
3003 Summer Street
Stamford, CT 06904
Attn: Trade Operations-Data Integrity
Telephone No.: (203) 921-2126
Fax No.: (203) 326-4288
allison.lima@corporate.ge.com
and with a copy to:
GE Asset Management
Account: ERC Total Return (TR)
601 Union Street, Suite 2200
Seattle, WA 98101
Attn: Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Delivery of Notes after Closing:
Deutsche Bank Trust Company
16 Wall Street
4th Floor, Window 61
New York, NY 10005
Ref: ERC Total Return (TR) #098481
Attn: Lorraine Squires
Notices and Communications:
GE Asset Management Incorporated
Account: ERC Total Return (TR)
Two Union Square, 601 Union Street
Seattle, WA 98101
Attn: Investment Dept., Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Tax Identification No.: 48-0921045
Signature Block Format:
EMPLOYERS REINSURANCE CORPORATION
By:________________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: SALKELD & CO.
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
FIRST COLONY LIFE INSURANCE COMPANY Series 2003
Tranche 1
$9,000,000
(R-T1-8)
(7) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Deutsche Bank
14 Wall Street
New York, NY 10005
SWIFT Code: BKTR US 33
ABA #021001033
Account Number 99-911-145
FCC: #098069
In case of all notices with respect to payments:
GE Asset Management
Account: First Colony Life Insurance Company
3003 Summer Street
Stamford, CT 06904
Attn: Investment Accounting (Private Placement Event)
Telephone No.: (203) 356-2734
Fax No.: (203) 356-3023
Jennifer.Ficko@corporate.ge.com (preferred method)
with a copy to:
GE Asset Management
Account: First Colony Life Insurance Company
3003 Summer Street
Stamford, CT 06904
Attn: Trade Operations-Data Integrity
Telephone No.: (203) 921-2126
Fax No.: (203) 326-4288
allison.lima@corporate.ge.com
and with a copy to:
GE Asset Management
Account: First Colony Life Insurance Company
601 Union Street, Suite 2200
Seattle, WA 98101
Attn: Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Delivery of Notes after Closing:
Deutsche Bank
14 Wall Street, 4th Floor
Mail Stop 4042, Window 61
New York, NY 10005
Acct #098069
Attn: Lorraine Squires (212)618-2200
Notices and Communications:
GE Asset Management
Account: First Colony Life Insurance Company
601 Union Street, Suite 2200
Seattle, WA 98101
Attn: Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Tax Identification No.: 54-0596414
Signature Block Format:
FIRST COLONY LIFE INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: SALKELD & CO.
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY Series 2003
Tranche 1
$6,000,000
(R-T1-9)
(8) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Deutsche Bank
14 Wall Street
New York, NY 10005
SWIFT Code: BKTR US 33
ABA #021001033
Account Number 99-911-145
FCC: #097833
In case of all notices with respect to payments:
GE Asset Management
Account: General Electric Capital Assurance Company
3003 Summer Street
Stamford, CT 06904
Attn: Investment Accounting (Private Placement Event)
Telephone No.: (203) 356-2734
Fax No.: (203) 356-3023
Jennifer.Ficko@corporate.ge.com (preferred method)
with a copy to:
GE Asset Management
Account: General Electric Capital Assurance Company
3003 Summer Street
Stamford, CT 06904
Attn: Trade Operations-Data Integrity
Telephone No.: (203) 921-2126
Fax No.: (203) 326-4288
allison.lima@corporate.ge.com
and with a copy to:
GE Asset Management
Account: General Electric Capital Assurance Company
601 Union Street, Suite 2200
Seattle, WA 98101
Attn: Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Delivery of Notes after Closing:
Deutsche Bank
14 Wall Street, 4th Floor
Mail Stop 4042, Window 61
New York, NY 10005
Acct #097833
Attn: Lorraine Squires (212)618-2200
Notices and Communications:
GE Asset Management
Account: General Electric Capital Assurance Company
601 Union Street, Suite 2200
Seattle, WA 98101
Attn: Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Tax Identification No.: 91-6027719
Signature Block Format:
GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY
By:________________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: SALKELD & CO.
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
MEDICAL PROTECTIVE COMPANY Series 2003
Tranche 1
$3,000,000
(R-T1-10)
(9) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Deutsche Bank Trust Company
16 Wall Street
New York, NY 10005
SWIFT Code: BKTR US 33
ABA #021-001-033
Account Number 99-911-196
FCC: Med Pro General Fund (MPG) #094773
In case of all notices with respect to payments:
GE Asset Management
Account: Medical Protective Company
3003 Summer Street
Stamford, CT 06904
Attn: Investment Accounting (Private Placement Event)
Telephone No.: (203) 356-2734
Fax No.: (203) 356-3023
Jennifer.Ficko@corporate.ge.com (preferred method)
with a copy to:
GE Asset Management
Account: Medical Protective Company
3003 Summer Street
Stamford, CT 06904
Attn: Trade Operations-Data Integrity
Telephone No.: (203) 921-2126
Fax No.: (203) 326-4288
allison.lima@corporate.ge.com
and with a copy to:
GE Asset Management
Account: Medical Protective Company
601 Union Street, Suite 2200
Seattle, WA 98101
Attn: Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Delivery of Notes after Closing:
Deutsche Bank Trust Company
16 Wall Street
4th Floor, Window 61
New York, NY 10005
Ref: Med Pro General Fund (MPG) Account # 094773
Attn: Lorraine Squires
Notices and Communications:
GE Asset Management Incorporated
Account: Medical Protective General Fund (MPG)
Two Union Square, 601 Union Street
Seattle, WA 98101
Attn: Investment Dept., Private Placements
Telephone No: (206) 516-4515
Fax No: (206) 516-4578
Tax Identification No.: 35-0506406
Signature Block Format:
MEDICAL PROTECTIVE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: SALKELD & CO.
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
John Hancock Life Insurance Company Series 2003
Tranche 1
$13,750,000
(R-T1-11)
(10) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Bank One, N.A.
ABA No. 071000013
Account of: John Hancock Champaign Service Center -
Mortgage/Bond
Account Number: 617423603
In case of all notices with respect to payments:
John Hancock Life Insurance Company
201 Knollwood Drive, Suite A
Champaign, IL 61820-7594
Attn: Accounting
Fax: (217) 356-1031
with a copy to:
John Hancock Life Insurance Company
200 Clarendon St.
Boston, MA 02117
Attn: Bond & Corp. Finance Group, T-57
Fax: (617) 572-1165
Delivery of Notes after Closing:
John Hancock Life Insurance Company
200 Clarendon Street, T-30
Boston, MA 02117
Attn: Malcolm Pittman
Notices and Communications:
John Hancock Life Insurance Company
200 Clarendon St.
Boston, MA 02117
Attn: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1605
Tax Identification No.: 04-1414660
Signature Block Format:
JOHN HANCOCK LIFE INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY Series 2003
Tranche 1
$6,250,000
(R-T1-12)
(11) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Bank One, N.A.
ABA No. 071000013
Account of: John Hancock Champaign Service Center -
Mortgage/Bond
Account Number: 617423603
In case of all notices with respect to payments:
John Hancock Life Insurance Company
201 Knollwood Drive, Suite A
Champaign, IL 61820-7594
Attn: Accounting
Fax: (217) 356-1031
with a copy to:
John Hancock Life Insurance Company
200 Clarendon St.
Boston, MA 02117
Attn: Bond & Corp. Finance Group, T-57
Fax: (617) 572-1165
Delivery of Notes after Closing:
John Hancock Life Insurance Company
200 Clarendon Street, T-30
Boston, MA 02117
Attn: Malcolm Pittman
Notices and Communications:
John Hancock Life Insurance Company
200 Clarendon St.
Boston, MA 02117
Attn: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1605
Tax Identification No.: 04-2664016
Signature Block Format:
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
AMCO INSURANCE COMPANY Series 2003
Tranche 1
$1,000,000
(R-T1-13)
(12) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O AMCO Insurance Company
Attn: P & I Department
In case of all notices with respect to payments:
AMCO Insurance Company
c/o The Bank of New York
P O Box 19266
Attn: P & I Department
Newark, NJ 07195
With a copy to:
AMCO Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Delivery of Notes after Closing:
The Bank of New York
One Wall Street
3rd Floor - Window A
New York, NY 10286
F/A/O AMCO Insurance Co. Acct #000611
Notices and Communications:
AMCO Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Tax Identification No.: 42-6054959
Signature Block Format:
AMCO INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY Series 2003
Tranche 1
$1,000,000
(R-T1-14)
(13) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Life and Annuity Insurance Company
Attn: P & I Department
In case of all notices with respect to payments:
Nationwide Life and Annuity Insurance Company
c/o The Bank of New York
P O Box 19266
Attn: P & I Department
Newark, NJ 07195
With a copy to:
Nationwide Life and Annuity Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Delivery of Notes after Closing:
The Bank of New York
One Wall Street
3rd Floor - Window A
New York, NY 10286
F/A/O Nationwide Life and Annuity Insurance Co. Acct #267961
Notices and Communications:
Nationwide Life and Annuity Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Tax Identification No.: 31-1000740
Signature Block Format:
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
NATIONWIDE LIFE INSURANCE COMPANY Series 2003
Tranche 1
$10,000,000
(R-T1-15)
(14) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Life Insurance Company
Attn: P & I Department
In case of all notices with respect to payments:
Nationwide Life Insurance Company
c/o The Bank of New York
P O Box 19266
Attn: P & I Department
Newark, NJ 07195
With a copy to:
Nationwide Life Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Delivery of Notes after Closing:
The Bank of New York
One Wall Street
3rd Floor - Window A
New York, NY 10286
F/A/O Nationwide Life Insurance Co. Acct #267829
Notices and Communications:
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Tax Identification No.: 31-4156830
Signature Block Format:
NATIONWIDE LIFE INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
NATIONWIDE MULTIPLE MATURITY SEPARATE ACCOUNT Series 2003
Tranche 1
$1,000,000
(R-T1-16)
(15) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Multiple Maturity Separate Account
Attn: P & I Department
In case of all notices with respect to payments:
Nationwide Multiple Maturity Separate Account
c/o The Bank of New York
P O Box 19266
Attn: P & I Department
Newark, NJ 07195
With a copy to:
Nationwide Multiple Maturity Separate Account
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Delivery of Notes after Closing:
The Bank of New York
One Wall Street
3rd Floor - Window A
New York, NY 10286
F/A/O Nationwide Multiple Maturity Separate Account -
Account #267919
Notices and Communications:
Nationwide Multiple Maturity Separate Account
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Investments
Tax Identification No.: 31-4156830
Signature Block Format:
NATIONWIDE MULTIPLE MATURITY SEPARATE ACCOUNT
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
NATIONWIDE MUTUAL INSURANCE COMPANY Series 2003
Tranche 1
$2,000,000
(R-T1-17)
(16) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Mutual Insurance Company
Attn: P & I Department
In case of all notices with respect to payments:
Nationwide Mutual Insurance Company
c/o The Bank of New York
P O Box 19266
Attn: P & I Department
Newark, NJ 07195
With a copy to:
Nationwide Mutual Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Delivery of Notes after Closing:
The Bank of New York
One Wall Street
3rd Floor - Window A
New York, NY 10286
F/A/O Nationwide Mutual Insurance Co. Acct #264232
Notices and Communications:
Nationwide Mutual Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Investments
Tax Identification No.: 31-4177100
Signature Block Format:
NATIONWIDE MUTUAL INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
SCOTTISH ANNUITY & LIFE HOLDINGS LINCOLN, LTD Series 2003
Tranche 1
$1,000,000
(R-T1-18)
(17) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Comerica Bank / Trust Operations
AC: 2158598532
BNF: Scottish Annuity & Life Holdings, Ltd.
AC: 011000734950
BBI: Trade Settlement (313) 222-3111
Bank Routing Number: 072000096
OBI PFGSE (S) B0066174( )
In case of all notices with respect to payments:
Scottish Annuity & Life - Lincoln
c/o Principal Global Investors, LLC
801 Grand Avenue
Des Moines, Iowa 50392-0960
Attn: Investment Accounting - Securities
Fax (515) 248-2643
Confirmation (515) 248-2766
Delivery of Notes after Closing:
Comerica Bank
Attn: Dan Molnar
Mail Code 3462
411 West Lafayette
Detroit, MI 48226
Notices and Communications:
Scottish Annuity & Life - Lincoln
c/o Principal Global Investors, LLC
801 Grand Avenue
Des Moines, Iowa 50392-0800
Attn: Fixed Income - Securities
Fax (515) 248-2490
Confirmation (515) 248-3495
Tax Identification No.: 23-2038295
Signature Block Format:
CALHOUN & CO., AS NOMINEE FOR COMERICA BANK &
TRUST, NATIONAL ASSOCIATION, TRUSTEE TO THE
TRUST CREATED BY TRUST AGREEMENT DATED
OCTOBER 1, 2002
By: _______________________________________
Name: ______________________________________
Title: _____________________________________
Nominee: CALHOUN & CO.
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
SCOTTISH RE (US)/ NATIONWIDE LIFE INSURANCE Series 2003
CO. 1 YR TRUST Tranche 1
$1,000,000
(R-T1-19)
(18) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Comerica Bank / Trust Operations
AC: 2158598532
BNF: Scottish Annuity & Life Holdings, Ltd.
AC: 011000735079
BBI: Trade Settlement (313) 222-3111
Bank Routing Number: 072000096
OBI PFGSE (S) B0066174( )
In case of all notices with respect to payments:
Scottish Annuity & Life - 1 YR
c/o Principal Global Investors, LLC
801 Grand Avenue
Des Moines, Iowa 50392-0960
Attn: Investment Accounting - Securities
Fax (515) 248-2643
Confirmation (515) 248-2766
Delivery of Notes after Closing:
Comerica Bank
Attn: Dan Molnar
Mail Code 3462
411 West Lafayette
Detroit, MI 48226
Notices and Communications:
Scottish Annuity & Life - 1 YR
c/o Principal Global Investors, LLC
801 Grand Avenue
Des Moines, Iowa 50392-0800
Attn: Fixed Income - Securities
Fax (515) 248-2490
Confirmation (515) 248-3495
Tax Identification No.: 23-2038295
Signature Block Format:
CALHOUN & CO., AS NOMINEE FOR COMERICA
BANK & TRUST, NATIONAL ASSOCIATION, TRUSTEE
TO THE TRUST CREATED BY TRUST AGREEMENT
DATED OCTOBER 1, 2002
By: _______________________________________
Name: ______________________________________
Title: _____________________________________
Nominee: CALHOUN & CO.
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
SCOTTISH RE (US)/ NATIONWIDE LIFE & ANNUITY Series 2003
INSURANCE CO. 5 YR TRUST Tranche 1
$1,000,000
(R-T1-20)
(19) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
Comerica Bank / Trust Operations
AC: 2158598532
BNF: Scottish Annuity & Life Holdings, Ltd.
AC: 011000782327
BBI: Trade Settlement (313) 222-3111
Bank Routing Number: 072000096
OBI PFGSE (S) B0066174( )
In case of all notices with respect to payments:
Scottish Annuity & Life - 5 YR
c/o Principal Global Investors, LLC
801 Grand Avenue
Des Moines, Iowa 50392-0960
Attn: Investment Accounting - Securities
Fax (515) 248-2643
Confirmation (515) 248-2766
Delivery of Notes after Closing:
Comerica Bank
Attn: Dan Molnar
Mail Code 3462
411 West Lafayette
Detroit, MI 48226
Notices and Communications:
Scottish Annuity & Life - 5 YR
c/o Principal Global Investors, LLC
801 Grand Avenue
Des Moines, Iowa 50392-0800
Attn: Fixed Income - Securities
Fax (515) 248-2490
Confirmation (515) 248-3495
Tax Identification No.: 23-2038295
Signature Block Format:
CALHOUN & CO., AS NOMINEE FOR COMERICA BANK
& TRUST, NATIONAL ASSOCIATION, TRUSTEE TO
THE TRUST CREATED BY TRUST AGREEMENT DATED
OCTOBER 1, 2002
By: ______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: CALHOUN & CO.
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
PHL VARIABLE INSURANCE COMPANY Series 2003
Tranche 1
$2,500,000
(R-T1-21)
(20) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
New York, New York
ABA# 021 000 021
Acct. No. 900 9000 200
Acct. Name: Income Processing
Reference: G 09390, Phoenix Life
PHLVIC Annuity
In case of all notices with respect to payments:
Phoenix Investment Partners
Private Placement Group
56 Prospect Street
Hartford, CT 06115
Fax number: (860) 403-7248
Delivery of Notes after Closing:
Phoenix Life Insurance Company
Attn: John Mulrain
One American Row
Hartford, CT 06115
Notices and Communications:
Phoenix Investment Partners
Private Placement Group
56 Prospect Street
Hartford, CT 06115
Fax number: (860) 403-7248
with a copy to:
PHL Variable Insurance Company
One American Row
Hartford, CT 06115
Tax Identification No.: 06-1045829
Signature Block Format:
PHL VARIABLE INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
PHL VARIABLE INSURANCE COMPANY Series 2003
Tranche 1
$2,500,000
(R-T1-22)
(21) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 4.77% Senior Notes
due June 2010, PPN 15128@AA 1, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
New York, New York
ABA# 021 000 021
Acct. No. 900 9000 200
Acct. Name: Income Processing
Reference: G 09163, Phoenix Life
PHLVIC Separate Account MVA
In case of all notices with respect to payments:
Phoenix Investment Partners
Private Placement Group
56 Prospect Street
Hartford, CT 06115
Fax number: (860) 403-7248
Delivery of Notes after Closing:
Phoenix Life Insurance Company
Attn: John Mulrain
One American Row
Hartford, CT 06115
Notices and Communications:
Phoenix Investment Partners
Private Placement Group
56 Prospect Street
Hartford, CT 06115
Fax number: (860) 403-7248
with a copy to:
PHL Variable Insurance Company
One American Row
Hartford, CT 06115
Tax Identification No.: 06-1045829
Signature Block Format:
PHL VARIABLE INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: None
TRANCHE 2
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
BERKSHIRE LIFE INSURANCE COMPANY OF AMERICA Series 2003
Tranche 2
$2,000,000
(R-T2-1)
(22) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
FED ABA#021000021
Chase/NYC/CTR/BNF
A/C 900-9-000200
Ref. A/C # G07064 Berkshire Life Insurance and
[insert Cusip No.]
In case of all notices with respect to payments:
Berkshire Life Insurance Company of America
c/o The Guardian Life Insurance Company of America
7, Hanover Square
New York,
NY 10004-2616
Fax +1 212 919 2906
Attn. Investment Accounting Department 17-B
Delivery of Notes after Closing:
JP Morgan Chase
4 New York Plaza
Ground Floor Receive Window New York 10004
Ref. A/C # G07064 Berkshire Life Insurance
Notices and Communications:
Berkshire Life Insurance Company of America
c/o The Guardian Life Insurance Company of America
7, Hanover Square
New York,
NY 10004-2616
Fax +1 212 919 2656/2658
Attn. Thomas M. Donohue
Investment Department 20-D
Tax Identification No.: 75-1277524
Signature Block Format:
BERKSHIRE LIFE INSURANCE COMPANY OF AMERICA
By: ______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA Series 2003
Tranche 2
$5,000,000 (R-T2-2)
$4,000,000 (R-T2-3)
(23) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
FED ABA#021000021
Chase/NYC/CTR/BNF
A/C 900-9-000200
Ref. A/C # G05978 Guardian Life
The Guardian Life Insurance Company of America and
[insert Cusip No.]
In case of all notices with respect to payments:
The Guardian Life Insurance Company of America
Attn.: Investment Accounting Dept. 17-B
7, Hanover Square
New York,
NY 10004-2616
Fax +1 212 919 2906
Delivery of Notes after Closing:
JP Morgan Chase
4 New York Plaza
Ground Floor Receive Window
New York 10004
Ref. A/C # G05978 Guardian Life
Notices and Communications:
The Guardian Life Insurance Company of America
7, Hanover Square
New York,
NY 10004-2616
Fax +1 212 919 2656/2658
Attn. Thomas M. Donohue
Investment Department 20-D
Tax Identification No.: 13-5123390
Signature Block Format:
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
By: __________________________________________
Name: _________________________________________
Title: ________________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY Series 2003
Tranche 2
$10,000,000
(R-T2-4)
(24) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
4 New York Plaza
New York New York 10004
Bank ABA No. 021000021
Chase NYC/Cust
A/C # 900-9-000200 for F/C/T G06956-EBD
Attn: Bond Interest/Principal - Cemex Espana
Finance LLC Senior Notes Ser 2003 Tranche 2
In case of all notices with respect to payments:
Hartford Investment Management Company
c/o Portfolio Support
P.O. Box 1744 Hartford, Connecticut 06144-1744
Fax 860-297-8875/8876
Delivery of Notes after Closing:
JP Morgan Chase
North America Insurance
3 Chase MetroTech Center - 5th Floor South
Brooklyn, New York 11245
Attn: Bettye Carrera
Custody Account Number: G06956-EBD must appear
on outside of envelope
Notices and Communications:
Hartford Investment Management Company
c/o Investment Department - Private Placements
P.O. Box 1744 Hartford, Connecticut 06144-1744
Fax 860-297-8884
Tax Identification No.: 06-0838648
Signature Block Format:
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY
SENTINEL INSURANCE COMPANY
BY HARTFORD INVESTMENT SERVICES, INC.
By: _______________________________________
Name: Ronald A. Mendel
Title: Senior Vice President
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
HARTFORD LIFE INSURANCE COMPANY Series 2003
Tranche 2
$10,000,000
(R-T2-5)
(25) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
4 New York Plaza
New York New York 10004
Bank ABA No. 021000021
Chase NYC/Cust
A/C # 900-9-000200 for F/C/T G06641-CRC
Attn: Bond Interest/Principal - Cemex Espana
Finance LLC Senior Notes Ser 2003 Tranche 2
In case of all notices with respect to payments:
Hartford Investment Management Company
c/o Portfolio Support
P.O. Box 1744 Hartford, Connecticut 06144-1744
Fax 860-297-8875/8876
Delivery of Notes after Closing:
JP Morgan Chase
North America Insurance
3 Chase MetroTech Center - 5th Floor South
Brooklyn, New York 11245
Attn: Bettye Carrera
Custody Account Number: G06641-CRC must appear
on outside of envelope
Notices and Communications:
Hartford Investment Management Company
c/o Investment Department - Private Placements
P.O. Box 1744 Hartford, Connecticut 06144-1744
Fax 860-297-8884
Tax Identification No.: 06-0974148
Signature Block Format:
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY
SENTINEL INSURANCE COMPANY
BY HARTFORD INVESTMENT SERVICES, INC.
By: _______________________________________
Name: Ronald A. Mendel
Title: Senior Vice President
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
SENTINEL INSURANCE COMPANY, LTD Series 2003
Tranche 2
$10,000,000
(R-T2-6)
(26) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
4 New York Plaza
New York New York 10004
Bank ABA No. 021000021
Chase NYC/Cust
A/C # 900-9-000200 for F/C/T G06249-SEN
Attn: Bond Interest/Principal - Cemex Espana
Finance LLC Senior Notes Ser 2003 Tranche 2
In case of all notices with respect to payments:
Hartford Investment Management Company
c/o Portfolio Support
P.O. Box 1744 Hartford, Connecticut 06144-1744
Fax 860-297-8875/8876
Delivery of Notes after Closing:
JP Morgan Chase
North America Insurance
3 Chase MetroTech Center - 5th Floor South
Brooklyn, New York 11245
Attn: Bettye Carrera
Custody Account Number: G06249-SEN must appear on
outside of envelope
Notices and Communications:
Hartford Investment Management Company
c/o Investment Department - Private Placements
P.O. Box 1744
Hartford, Connecticut 06144-1744
Fax 860-297-8884
Tax Identification No.: 06-1552103
Signature Block Format:
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY
SENTINEL INSURANCE COMPANY
BY HARTFORD INVESTMENT SERVICES, INC.
By: _______________________________________
Name: Ronald A. Mendel
Title: Senior Vice President
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
RELIASTAR LIFE INSURANCE COMPANY Series 2003
Tranche 2
$2,000,000
(R-T2-7)
(27) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
BK OF NYC
IOC 566-INST'L CUSTODY
ABA #021000018
Ref.: ReliaStar Life Insurance Company,
Acct. No. 187035 and [insert Cusip No.]
In case of all notices with respect to payments:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Securities Accounting
Fax: (770) 690-4886
Delivery of Notes after Closing:
The Bank of New York
One Wall Street
Window A - 3rd Floor
New York, NY 10286
Ref. RLI - Acct. No. 187035
with copy to:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Private Placements
Fax: (770) 690-5057
Notices and Communications:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Private Placements
Fax: (770) 690-5057
Tax Identification No.: 41-0451140
Signature Block Format:
RELIASTAR LIFE INSURANCE COMPANY
USG ANNUITY & LIFE COMPANY
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
By: ING Investment Management LLC, as Agent
By: _______________________________________
Name: ______________________________________
Title: _____________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK Series 2003
Tranche 2
$8,000,000
(R-T2-8)
(28) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
BK OF NYC
IOC 566-INST'L CUSTODY
ABA #021000018
Ref.: ReliaStar Life Insurance Company of New York,
Acct. No. 187038 and [insert Cusip No.]
In case of all notices with respect to payments:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Securities Accounting
Fax: (770) 690-4886
Delivery of Notes after Closing:
The Bank of New York
One Wall Street
Window A - 3rd Floor
New York, NY 10286
Ref. RNY - Acct. No. 187038
with copy to:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Private Placements
Fax: (770) 690-5057
Notices and Communications:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Private Placements
Fax: (770) 690-5057
Tax Identification No.: 53-0242530
Signature Block Format:
RELIASTAR LIFE INSURANCE COMPANY
USG ANNUITY & LIFE COMPANY
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
By: ING Investment Management LLC, as Agent
By: ________________________________________
Name: _______________________________________
Title: ______________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
USG ANNUITY & LIFE COMPANY Series 2003
Tranche 2
$ 15,000,000
(R-T2-9)
(29) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
The Bank of New York
ABA #021000018
BNF #IOC566 - Income Collections
Attn: William Cashman
Ref.: USG Annuity & Life Company,
Acct. No. 368520 and [insert Cusip No.]
In case of all notices with respect to payments:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Securities Accounting
Fax: (770) 690-4886
Delivery of Notes after Closing:
The Bank of New York
One Wall Street
Window A - 3rd Floor
New York, NY 10286
Ref. USG - Acct. No. 368520
with copy to:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Private Placements
Fax: (770) 690-5057
Notices and Communications:
ING Investment Management LLC
5780 Powers Ferry Road, NW, Suite 300
Atlanta, GA 30327-4349
Attn.: Private Placements
Fax: (770) 690-5057
Tax Identification No.: 73-0663836
Signature Block Format:
RELIASTAR LIFE INSURANCE COMPANY
USG ANNUITY & LIFE COMPANY
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
By: ING Investment Management LLC, as Agent
By: ________________________________________
Name: _______________________________________
Title: AUTHORISED SIGNATORY
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY Series 2003
Tranche 2
$10,000,000
(R-T2-10)
(30) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
U.S. Bank N.A. (ABA #042-000013)
5th & Walnut Streets
Cincinnati, OH 45202
For credit to The Ohio National Life Insurance Company's
Account No. 910-275-7
In case of all notices with respect to payments:
The Ohio National Life Insurance Company
One Financial Way
Cincinnati, OH 45242
Attention: Investment Department
Fax number: 513-794-4506
Delivery of Notes after Closing:
Jed R. Martin
Investment Vice President, Private Placements
The Ohio National Life Insurance Company
One Financial Way
Cincinnati, OH 45242
telephone number: 513-794-6381
fax number: 513-794-4506
e-mail: jed_martin@ohionational.com
Notices and Communications:
The Ohio National Life Insurance Company
One Financial Way
Cincinnati, OH 45242
Attention: Investment Department
Fax number: 513-794-4506
Tax Identification No.: 31-0397080
Signature Block Format:
THE OHIO NATIONAL LIFE INSURANCE COMPANY
By: ____________________________________
Name: ___________________________________
Title: __________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
THRIVENT FINANCIAL FOR LUTHERANS Series 2003
Tranche 2
$20,000,000
(R-T2-11)
(31) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.36% Senior Notes
due June 2013, PPN 15128@AB 9, principal,
interest and/or Make Whole Amount") to:
ABA # 011000028
State Street Bank & Trust Co.
DDA # A/C - 6813-049-1
Fund Number: NCE1
Fund Name: Thrivent Financial for Lutherans
In case of all notices with respect to payments:
Investment Division
Thrivent Financial for Lutherans
625 Fourth Avenue North
Minneapolis MN 55415
Fax: 612-340-5776
With a copy to:
Thrivent Accounts
State Street Kansas City
801 Pennsylvania
Kansas City, MO 64105
Attention: Bart Woodson
Fax: 816-691-3610
Delivery of Notes after Closing:
DTC/New York Window
55 Water Street
Plaza Level - 3rd Floor
New York, NY 10041
Account: State Street
Fund Name: Thrivent Financial for Lutherans
Fund Number: NCE1
Nominee Name: Swanbird & Co.
Nominee Tax ID Number: 04-3475606
With a copy to the Thrivent Financial in-house attorney
Notices and Communications:
Thrivent Financial for Lutherans
Attn: Investment Division
625 Fourth Avenue South
Minneapolis, MN 55415
Fax: (612) 340-5776
Tax Identification No.: 39-0123480
Signature Block Format:
THRIVENT FINANCIAL FOR LUTHERANS
By: __________________________________
Name: _________________________________
Title: ________________________________
Nominee: SWANBIRD & CO.
TRANCHE 3
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
AIG ANNUITY INSURANCE COMPANY Series 2003
Tranche 3
$15,000,000
(R-T3-1)
(32) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
ABA # 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: AIG Annuity Insurance Company
A/C: 7215-132-7
OBI = PPN # and description of payment
Fund Number WE1B
In case of all notices with respect to payments:
AIG Annuity Insurance Company and WE1B
c/o State Street Bank Corporation
Insurance Services
801 Pennsylvania
Kansas City, MO 64105
Fax: (816) 691-3619
Duplicate payment notices to:
AIG Annuity Insurance Company and WE1B
c/o AIG Global Investment Corporation
Attn: Private Placements Department, A36-04
P.O. Box 3247 Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, Texas 77019-2155
Fax: (713) 831-1072
with copy to:
AIG Global Investment Corporation
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax: (713) 831-2328
Delivery of Notes after Closing:
DTC / New York Window,
55 Water Street
New York, N.Y. 10041
Attention: Robert Mendez
Account: State Street
Fund Name: AIG ANNUITY INSURANCE COMPANY
Fund Number: WE 1B
Depository Trust Company (DTC) Instructions:
DTC Participant # 0997
Agent Bank ID # 20997
Institution ID # 39456
Fund Name: AIG ANNUITY INSURANCE COMPANY
Fund Number: WE 1B
Notices and Communications:
AIG Annuity Insurance Company and WE1B
c/o AIG Global Investment Corporation
Attn: Private Placements Department, A36-04
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, Texas 77019-2155
Fax: (713) 831-1072
with copy to:
AIG Global Investment Corporation
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax: (713) 831-2328
Tax Identification No.: 75-0770838
Signature Block Format:
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
AIG ANNUITY INSURANCE COMPANY
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY
OF NEW YORK
AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE
COMPANY
MERIT LIFE INSURANCE CO.
BY: AIG GLOBAL INVESTMENT CORP.,
INVESTMENT ADVISER
By: ______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY Series 2003
Tranche 3
$10,000,000
(R-T3-2)
(33) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
ABA#0110000280
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Life and Accident
Insurance Company
AC-0125-934-0
OBI=PPN # and description of payment
Fund Number PA 10
In case of all notices with respect to payments:
American General Life and Accident Insurance Company
and PA 10
c/o State Street Bank Corporation
Insurance Services
801 Pennsylvania
Kansas City, MO 64105
Fax: (816) 691-3619
Duplicate payment notices to:
American General Life and Accident Insurance
Company and PA 10
c/o AIG Global Investment Corporation
Attn: Private Placement Department, A36-04
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, TX 77019-2155
Fax: (713) 831-1072
with copy to:
AIG Global Investment Corporation
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax: (713) 831-2328
Delivery of Notes after Closing:
DTC / New York Window,
55 Water Street
New York, N.Y. 10041
Attention: Robert Mendez
Account: State Street
Fund Name: AGLA
Fund Number: PA 10
Depository Trust Company (DTC) Instructions:
DTC Participant # 0997
Agent Bank ID # 20997
Institution ID # 39456
Fund Name: AGLA
Fund Number: PA 10
Notices and Communications:
American General Life and Accident Insurance
Company and PA 10
c/o AIG Global Investment Corporation
Attn: Private Placement Department, A36-04
P.O. Box 3247 Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, TX 77019-2155
Fax: (713) 831-1072
with copy to:
AIG Global Investment Corporation
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax: (713) 831-2328
Tax Identification No.: 62-0306330
Signature Block Format:
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
AIG ANNUITY INSURANCE COMPANY
AMERICAN INTERNATIONAL LIFE ASSURANCE
COMPANY OF NEW YORK
AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE
COMPANY
MERIT LIFE INSURANCE CO.
BY: AIG GLOBAL INVESTMENT CORP.,
INVESTMENT ADVISER
By: _______________________________________
Name: ______________________________________
Title: _____________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY Series 2003
OF NEW YORK Tranche 3
$12,000,000
(R-T3-3)
(34) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
ABA#011001234 / BOS SAFE DEP
Federal Reserve Bank of Boston
Boston, MA
DDA # 169064
Cost Center 1178
Ref A/C: AGIFLNY0012 - AILIFE
OBI=PPN # and description of payment
P $ ______________ I $_________________
In case of all notices with respect to payments:
AIG Global Investment Group
ATTN: Jennifer Lee / Kathleen Cosgrove
160 Water Street, 15th Floor
New York, NY 10038
Tel: 212-820-4899 / 4913
Fax: 212-820-4925
Duplicate payment notices to:
American International Life Assurance Company
of New York
c/o AIG Global Investment Corporation
Attn: Private Placement Department, A36-04
P.O. Box 3247 Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, Texas 77019-2155
Fax: (713) 831-1072
with copy to:
AIG Global Investment Corporation
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax (713) 831-2328
Delivery of Notes after Closing:
Mellon Bank
Attn: Mr. Michael Visone
Mellon Bank Securities Trust
120 Broadway - 13th Floor
New York, NY 10271
Ref A/C: AGIFLNY0012 - AI LIFE
DTC Participation # 0954
Agent Bank ID # 26017
Institution ID # 30012
Ref: AI Life
Account # AGIFLNY0012
Notices and Communications:
American International Life Assurance Company
of New York
c/o AIG Global Investment Corporation
Attn: Private Placement Department, A36-04
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, Texas 77019-2155
Fax: (713) 831-1072
with copy to:
AIG Global Investment Corporation
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax (713) 831-2328
Tax Identification No.: 13-6101875
Signature Block Format:
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
AIG ANNUITY INSURANCE COMPANY
AMERICAN INTERNATIONAL LIFE ASSURANCE
COMPANY OF NEW YORK
AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE
COMPANY
MERIT LIFE INSURANCE CO.
BY: AIG GLOBAL INVESTMENT CORP.,
INVESTMENT ADVISER
By: ______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
MERIT LIFE INSURANCE CO. Series 2003
Tranche 3
$3,000,000
(R-T3-4)
(35) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: Merit Life Insurance Co.
AC-4653-082-0
OBI=PPN # and description of payment
Fund Number PA 20
In case of all notices with respect to payments:
Merit Life Insurance Co. and PA 20
c/o State Street Bank Corporation
Insurance Services
801 Pennsylvania
Kansas City, MO 64105
Fax: (816) 691-3619
Duplicate payment notices to:
Merit Life Insurance Co. and PA 20
Attn: Private Placement Department, A36-04
c/o AIG Global Investment Corporation
P.O. Box 3247 Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, TX 77019-2155
Fax: (713) 831-1072
with copy to:
American General Enterprise Services, Inc.
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax: (713) 831-2328
Delivery of Notes after Closing:
DTC / New York Window,
55 Water Street
New York, N.Y. 10041
Attention: Robert Mendez
Account: State Street
Fund Name: MERIT LIFE INSURANCE CO.
Fund Number: PA 20
Depository Trust Company (DTC) Instructions:
DTC Participant # 0997
Agent Bank ID # 20997
Institution ID # 39456
Fund Name: MERIT LIFE INSURANCE CO.
Fund Number: PA 20
Notices and Communications:
Merit Life Insurance Co. and PA 20
Attn: Private Placement Department, A36-04
c/o AIG Global Investment Corporation
P.O. Box 3247 Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, TX 77019-2155
Fax: (713) 831-1072
with copy to:
American General Enterprise Services, Inc.
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax: (713) 831-2328
Tax Identification No.: 35-1005090
Signature Block Format:
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
AIG ANNUITY INSURANCE COMPANY
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY
OF NEW YORK
AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE
COMPANY
MERIT LIFE INSURANCE CO.
BY: AIG GLOBAL INVESTMENT CORP.,
INVESTMENT ADVISER
By: _______________________________________
Name: ______________________________________
Title: _____________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY Series 2003
Tranche 3
$35,000,000
(R-T3-5)
(36) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
ABA # 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Variable Annuity Life Insurance Company
A/C: 0125-821-9
OBI = PPN # and description of payment
Fund Number PA 54
In case of all notices with respect to payments:
The Variable Annuity Life Insurance Company and PA 54
c/o State Street Bank Corporation
Insurance Services
801 Pennsylvania
Kansas City, MO 64105
Fax: (816) 691-3619
Duplicate payment notices to:
The Variable Annuity Life Insurance Company and PA 54
c/o AIG Global Investment Corporation
Attn: Private Placement Department, A36-04
P.O. Box 3247 Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, Texas 77019-2155
Fax: (713) 831-1072
with copy to:
AIG Global Investments Corporation
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax: (713) 831-2328
Delivery of Notes after Closing:
DTC / New York Window,
55 Water Street
New York, N.Y. 10041
Attention: Robert Mendez
Account: State Street
Fund Name: The Variable Annuity Life Insurance Company
Fund Number: PA 54
Depository Trust Company (DTC) Instructions:
DTC Participant # 0997
Agent Bank ID # 20997
Institution ID # 39456
Fund Name: The Variable Annuity Life Insurance Company
Fund Number: PA 54
Notices and Communications:
The Variable Annuity Life Insurance Company and PA 54
c/o AIG Global Investment Corporation
Attn: Private Placement Department, A36-04
P.O. Box 3247 Houston, Texas 77253-3247
Overnight Mail Address:
2929 Allen Parkway, A36-04
Houston, Texas 77019-2155
Fax: (713) 831-1072
with copy to:
AIG Global Investments Corporation
Legal Department - Investment Management
2929 Allen Parkway, Suite A36-01
Houston, TX 77019-2155
Fax: (713) 831-2328
Tax Identification No.: 74-1625348
Signature Block Format:
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
AIG ANNUITY INSURANCE COMPANY
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY
OF NEW YORK
AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE
COMPANY
MERIT LIFE INSURANCE CO.
BY: AIG GLOBAL INVESTMENT CORP.,
INVESTMENT ADVISER
By: _______________________________________
Name: ______________________________________
Title: _____________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
JOHN HANCOCK LIFE INSURANCE COMPANY Series 2003
Tranche 3
$17,500,000
(R-T3-6)
(37) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
Bank One, N.A.
ABA No. 071000013
Account of: John Hancock Champaign Service Center -
Mortgage/Bond
Account Number: 617423603
In case of all notices with respect to payments:
John Hancock Life Insurance Company
201 Knollwood Drive, Suite A
Champaign, IL 61820-7594
Attn: Accounting
Fax: (217) 356-1031
with a copy to:
John Hancock Life Insurance Company
200 Clarendon St.
Boston, MA 02117
Attn: Bond & Corp. Finance Group, T-57
Fax: (617) 572-1165
Delivery of Notes after Closing:
John Hancock Life Insurance Company
200 Clarendon Street, T-30
Boston, MA 02117
Attn: Malcolm Pittman
Notices and Communications:
John Hancock Life Insurance Company
200 Clarendon St.
Boston, MA 02117
Attn: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1605
Tax Identification No.: 04-1414660
Signature Block Format:
JOHN HANCOCK LIFE INSURANCE COMPANY
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY Series 2003
Tranche 3
$2,500,000
(R-T3-7)
(38) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
Bank One, N.A.
ABA No. 071000013
Account of: John Hancock Champaign Service Center -
Mortgage/Bond
Account Number: 617423603
In case of all notices with respect to payments:
John Hancock Life Insurance Company
201 Knollwood Drive, Suite A
Champaign, IL 61820-7594
Attn: Accounting
Fax: (217) 356-1031
with a copy to:
John Hancock Life Insurance Company
200 Clarendon St.
Boston, MA 02117
Attn: Bond & Corp. Finance Group, T-57
Fax: (617) 572-1165
Delivery of Notes after Closing:
John Hancock Life Insurance Company
200 Clarendon Street, T-30
Boston, MA 02117
Attn: Malcolm Pittman
Notices and Communications:
John Hancock Life Insurance Company
200 Clarendon St.
Boston, MA 02117
Attn: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1605
Tax Identification No.: 04-2664016
Signature Block Format:
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
NEW YORK LIFE INSURANCE COMPANY Series 2003
Tranche 3
$16,000,000
(R-T3-8)
(39) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
Chase Manhattan Bank
New York, New York 10019
ABA No. 021-000-021
Credit: New York Life Insurance Company
General Account No. 008-9-00687
In case of all notices with respect to payments:
New York Life Insurance Company
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010-1603
Attention: Financial Management and Operations Group
Securities Operations
2nd Floor
Fax #: (212) 447-4160
Delivery of Notes after Closing:
New York Life Insurance Company
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010-1603
Attention Parkin Lee - Deputy General Counsel
Fax #: (212) 447-4160
Notices and Communications:
New York Life Insurance Company
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010
Attention: Securities Investment Group
Private Finance
2nd Floor
Fax #: (212) 447-4122
with a copy of any notices regarding defaults or
Events of Default under the operative documents to:
Attention: Office of General Counsel
Investment Section, Room 1104
Fax #: (212) 576-8340
Tax Identification No.: 13-5582869
Signature Block Format:
NEW YORK LIFE INSURANCE COMPANY
By: ______________________________________
Name: _____________________________________
Title: ____________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION Series 2003
Tranche 3
$8,500,000
(R-T3-9)
(40) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
Chase Manhattan Bank
New York, New York 10019
ABA No. 021-000-021
Credit: New York Life Insurance and Annuity Corporation
General Account No. 323-8-47382
In case of all notices with respect to payments:
New York Life Insurance and Annuity Corporation
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010-1603
Attention: Financial Management and Operations Group
Securities Operations
2nd Floor
Fax #: (212) 447-4160
Delivery of Notes after Closing:
New York Life Insurance Company
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010-1603
Attention Parkin Lee - Deputy General Counsel
Fax #: (212) 447-4160
Notices and Communications:
New York Life Insurance and Annuity Corporation
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010
Attention: Securities Investment Group
Private Finance
2nd Floor
Fax #: (212) 447-4122
with a copy of any notices regarding defaults or
Events of Default under the operative documents to:
Attention: Office of General Counsel
Investment Section, Room 1104
Fax #: (212) 576-8340
Tax Identification No.: 13-3044743
Signature Block Format:
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By: New York Life Investment Management LLC,
Its Investment Manager
Name: _______________________________________
Title: ______________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
NEW YORK LIFE INSURANCE AND ANNUITY Series 2003
CORPORATION INSTITUTIONALLY OWNED LIFE Tranche 3
INSURANCE SEPARATE ACCOUNT $500,000
(R-T3-10)
(41) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
Chase Manhattan Bank
New York, New York 10019
ABA No. 021-000-021
Credit: NYLIAC SEPARATE BOLI 3 BROAD FIXED
General Account No. 323-8-39002
In case of all notices with respect to payments:
New York Life Insurance and Annuity Corporation
Institutionally Owned Life Insurance Separate Account
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010-1603
Attention: Financial Management and Operations Group
Securities Operations
2nd Floor
Fax #: (212) 447-4160
Delivery of Notes after Closing:
New York Life Insurance Company
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010-1603
Attention Parkin Lee - Deputy General Counsel
Fax #: (212) 447-4160
Notices and Communications:
New York Life Insurance and Annuity Corporation
Institutionally Owned Life Insurance Separate Account
c/o New York Life Investment Management LLC
51 Madison Avenue
New York, New York 10010
Attention: Securities Investment Group
Private Finance
2nd Floor
Fax #: (212) 447-4122
with a copy of any notices regarding defaults or
Events of Default under the operative documents to:
Attention: Office of General Counsel
Investment Section, Room 1104
Fax #: (212) 576-8340
Tax Identification No.: 13-3044743
Signature Block Format:
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE
ACCOUNT
By New York Life Investment Management LLC,
Its Investment Manager
Name: _______________________________________
Title: ______________________________________
Nominee: None
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY Series 2003
Tranche 3
$38,000,000
(R-T3-11)
(42) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
State Street Corporation
14 Wall Street, 4th Floor
New York, NY 10005
ABA # 021001033
Account Name: The Northwestern Mutual Life Insurance
Company
Account #: 00-000-027
In case of all notices with respect to payments:
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Treasury & Investment Operations Department
Facsimile: (414) 625-6998
Delivery of Notes after Closing:
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: David Silber
Notices and Communications:
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Securities Department
Facsimile: (414) 665-7124
Tax Identification No.: 39-0509570
Signature Block Format:
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By: __________________________________________
Name: _________________________________________
Title: ________________________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
BENEFICIAL LIFE INSURANCE COMPANY Series 2003
Tranche 3
$3,000,000
(R-T3-12)
(43) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
ABA # 021000021
A/C # 544755102
FFC: Zions First National Bank G70990
In case of all notices with respect to payments:
Beneficial Life Insurance Co.
36 South State, 25th floor
Salt Lake City, UT 84136
Attn: Sterling Russell
Fax: (801)531-3339
Delivery of Notes after Closing:
Annette Rohovit
Deseret Trust Co.
10 East South Temple
Salt Lake City, UT 84133
Phone: 801-363-2991, x3016
Notices and Communications:
Sterling Russell
Beneficial Life Insurance Company
36 South State Street, Salt Lake City, Utah 84136
Phone (801-933-1239)
Facsimile (801-531-3339)
Sterling.Russell@benlife.com
Tax Identification No.: 87-0115120
Signature Block Format:
BENEFICIAL LIFE INSURANCE COMPANY
By: ___________________________________
Name: __________________________________
Title: _________________________________
Nominee: TFINN
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
PRINCIPAL LIFE INSURANCE COMPANY Series 2003
Tranche 3
$27,500,000
(R-T3-13)
$5,000,000
(R-T3-14)
$2,500,000
(R-T3-15)
(44) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
ABA No.: 073000228
Wells Fargo Bank Iowa, N.A.
7th and Walnut Streets
Des Moines, Iowa 50309
For credit to Principal Life Insurance Company
Account No.: 0000014752
OBI PFGSE (S) B0066175( )
In case of all notices with respect to payments:
Principal Global Investors, LLC
801 Grand Ave
Des Moines, IA 50392-0960
ATTN: Investment Accounting - Securities
Fax: (515) 248-2643
Confirmation: (515) 248-2766
Delivery of Notes after Closing:
Principal Global Investors, LLC
801 Grand Avenue
Des Moines, Iowa 50392-0301
Attn.: Jon C. Heiny, Esq.
Notices and Communications:
Principal Global Investors, LLC
801 Grand Ave
Des Moines, IA 50392-0800
ATTN.: Fixed Income - Securities
Fax: (515) 248-2490
Confirmation: (515) 248-3495
Tax Identification No.: 42-0127290
Signature Block Format:
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By: ___________________________
Its: ___________________________
By: ___________________________
Its: ___________________________
Nominee: NONE
PRINCIPAL AMOUNT
AND SERIES OF NOTES
NAME OF PURCHASER TO BE PURCHASED
- ----------------- -------------------
PHOENIX LIFE INSURANCE COMPANY Series 2003
Tranche 3
$5,000,000
(R-T3-16)
(45) All payments on account of the Notes shall be
made by crediting in the form of bank wire
transfer of Federal or other immediately
available funds (identifying each payment as
"Cemex Espana Finance LLC, 5.51% Senior Notes
due June 2015, PPN 15128@AC 7, principal,
interest and/or Make Whole Amount") to:
JP Morgan Chase
New York, New York
ABA# 021 000 021
Acct. No. 900 9000 200
Acct. Name: Income Processing
Reference: G05123, Phoenix Life
PHL Closed Block
In case of all notices with respect to payments:
Phoenix Investment Partners
Private Placement Group
56 Prospect Street
Hartford, CT 06115
Fax number: (860) 403-7248
Delivery of Notes after Closing:
Phoenix Life Insurance Company
Attn: John Mulrain
One American Row
Hartford, CT 06115
Notices and Communications:
Phoenix Investment Partners
Private Placement Group
56 Prospect Street
Hartford, CT 06115
Fax number: (860) 403-7248
with a copy to:
Phoenix Life Insurance Company
One American Row
Hartford, CT 06115
Tax Identification No.: 06-0493340
Signature Block Format:
PHOENIX LIFE INSURANCE COMPANY
By: ______________________________
Name: ____________________________
Title: ___________________________
Nominee: None
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Additional Payment" is defined in Section 14.3(b); when used herein
with respect to any Guarantor, such term shall have the meaning assigned
thereto in the Note Guarantee.
"Adjusted EBITDA" means, for any Relevant Period, the sum of (a)
EBITDA and (b) with respect to any business acquired during such period, the
sum of (i) the operating income and (ii) depreciation and amortization expense
for such business for such period, as determined in accordance with Spanish
GAAP for such Relevant Period less (c) with respect to any business disposed of
during such period, the sum of (i) the operating income and (ii) depreciation
and amortization expense for such business for such period, as determined in
accordance with Spanish GAAP for such Relevant Period; provided that Cemex
Espana need only make the adjustments contemplated by clause (b) and/or (c)
above if the Adjusted EBITDA that would result therefrom would exceed EBITDA by
(euro)10,000,000 or more.
"Affiliate" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of Cemex
Espana or any Subsidiary or any corporation of which Cemex Espana and its
Subsidiaries beneficially own or hold, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity interests. As used in
this definition, "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an
"Affiliate" is a reference to an Affiliate of Cemex Espana.
"Agreement" is defined in the introduction hereto.
"Anti-Terrorism Order" means Executive Order 13,224 of September 23,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49,079 (2001), as
amended).
"Asia Fund" means Cemex Asia Holdings Ltd. or any other vehicles used
by Cemex Espana or any Subsidiary to invest, or finance investments already
made, in companies involved in or assets dedicated to the cement, concrete or
aggregates business in Asia in both cases, such company or vehicle, as
applicable, with committed third parties with minority interests other than
Cemex Espana and its Subsidiaries or Cemex and its Subsidiaries and with Cemex
Espana maintaining control of its management.
"Business Day" means (a) for the purposes of Section 8.8 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Madrid, Spain or New York City are required or
authorized to be closed.
"Capital Lease" means any lease that is capitalized on a balance sheet
prepared in accordance with Spanish GAAP.
"Capital Stock" means, with respect to any Person, capital stock or
share capital or other ownership interests in such Person substantially similar
to capital stock or share capital, whether or not called "capital stock" or
"share capital" under the laws of (or in business terminology commonly used in)
the jurisdiction where such Person is organized or conducts its primary
business.
"Cemex" means Cemex S.A. de C.V., a stock corporation organized under
the laws of the United Mexican States.
"Cemex Espana" means (a) Cemex Espana, S.A., a corporation organized
under the laws of the Kingdom of Spain, and (b) any Person that, as a result of
a combination, merger or asset transfer permitted by Section 10.2, assumes the
obligations of Cemex Espana under the Note Guarantee and this Agreement.
"Change in Control" means that Cemex ceases to (a) be entitled to
(whether by way of ownership of shares, proxy, contract, agency or otherwise)
(i) cast, or control the casting of, at least 51% of the maximum number of
votes that might be cast at a general meeting of Cemex Espana, (ii) appoint or
remove all, or the majority, of the directors or other equivalent officers of
Cemex Espana or (iii) give directions with respect to the operating and
financial policies of Cemex Espana which the directors or other equivalent
officers of Cemex Espana are obliged to comply with or (b) hold at least 51% of
the common shares in Cemex Espana.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to
time.
"Company" means Cemex Espana Finance LLC, a limited liability company
organized under the laws of Delaware.
"Confidential Information" is defined in Section 20.
"Consolidated Net Worth" means, at any date, the sum of the
consolidated shareholders' equity plus minority interests of Cemex Espana and
its Subsidiaries in accordance with Spanish GAAP.
"Consolidated Total Assets" means, at any time, the total assets of
Cemex Espana and its Subsidiaries, as determined in accordance with Spanish
GAAP by reference to the most recent financial statements supplied by Cemex
Espana pursuant to Section 7.1(a) or 7.1(b), provided that such financial
statements shall be adjusted to reflect the acquisition of any Subsidiary.
"Control Prepayment Date" is defined in Section 8.9(a).
"Default" means an event or condition the occurrence or existence of
which if it continues uncured would, with the lapse of time or the giving of
notice or both, become an Event of Default.
"Default Rate" means, with respect to any Note, that rate of interest
that is the greater of (i) 2% per annum above the rate of interest stated in
clause (a) of the first paragraph of such Note or (ii) 2% over the rate of
interest publicly announced by Citibank, N.A. in New York, New York as its
"base" or "prime" rate.
"Department of the Treasury Rule" means Blocked Persons, Specially
Designated Nationals, Specifically Designated Terrorists, Foreign Terrorist
Organizations, and Specially Designated Narcotics Traffickers: Additional
Designations of Terrorism-Related Blocked Persons, 66 Fed. Reg. 54,404 (2001).
"Disposition Prepayment Date" is defined in Section 8.4.
"Dollar" and the sign "$" mean lawful currency of the United States of
America.
"EBITDA" means, for the Relevant Period immediately preceding the date
on which it is to be calculated, operating profit plus annual depreciation for
fixed assets plus annual amortization of intangible assets plus annual
amortization of start-up costs of Cemex Espana and its Subsidiaries plus
dividends received from non-consolidated companies, plus an amount equal to the
amount of Cemex Capital Contributions made during such period immediately
preceding the date on which it is to be calculated (up to an amount equal to
the amount of Royalty Expenses made in such period). Such calculation shall be
made in accordance with Spanish GAAP, where:
"Cemex Capital Contributions" means contributions in cash to the
capital of Cemex Espana by Cemex or by any of its Subsidiaries not
being a Subsidiary of Cemex Espana made after January 1, 2002.
"Intellectual Property Rights" means all copyrights (including
rights in computer software), trade marks, service marks, business
names, patents, rights in inventions, registered designs, design
rights, database rights and similar rights, rights in trade secrets or
other confidential information and any other intellectual property
rights and any interests (including by way of license) in any of the
foregoing (in each case whether registered or not and including all
applications for the same) which may subsist in any given
jurisdiction.
"Royalty Expenses" means expenses incurred by Cemex Espana or
any of its Subsidiaries to Cemex or any of its Subsidiaries not being
a Subsidiary of Cemex Espana as (a) consideration for the granting to
Cemex Espana or any Subsidiary of a license to use, exploit and enjoy
Intellectual Property Rights and any other intangible assets such as,
but not limited to, know-how, formulae, process technology and other
forms of intellectual and industrial property, whether or not
registered, held by Cemex or any of its Subsidiaries not being a
Subsidiary of Cemex Espana; or (b) fees, commissions or other amounts
accrued in respect of any management contract, services contract,
overhead expenses allocation arrangement or any other similar
transaction; provided that in clauses (a) and (b) such amounts shall
have been taken into consideration in the calculation of operating
profit under Spanish GAAP.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with Cemex Espana
under section 414 of the Code.
"EU" means the European Union.
"euro" or "(euro)" means the single currency of participating member
states of the EU.
"Event of Default" is defined in Section 11.
"Excess Asset Disposition" is defined in Section 10.4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Disposition" is defined in Section 10.4.
"Excluded Subsidiary Guarantor" means any of the Subsidiaries that are
Guarantors when the Note Guarantee is initially delivered; provided that any
other Subsidiary that is a Guarantor shall be treated as an Excluded Subsidiary
Guarantor for purposes of this Agreement if legal opinions and other evidence
are delivered to the holders of Notes sufficient to establish to the reasonable
satisfaction of the Required Holders and their legal advisers that the
obligations of such Guarantor under the Note Guarantee ranks and will continue
to rank at least pari passu with all other unsecured and unsubordinated
Financial Indebtedness of such Guarantor, including in a bankruptcy or
insolvency proceeding.
"Fair Market Value" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"Finance Charges" means, for any period, the sum (without duplication)
of (a) all interest expense in respect of Financial Indebtedness (including
imputed interest on Capital Leases) for such period plus (b) all debt discount
and expense (including, without limitation, expenses relating to the issuance
of instruments representing Financial Indebtedness) amortized during such
period plus (c) amortization of discounts on sales of receivables during such
period plus (d) all factoring charges for such period plus (e) all guarantee
charges for such period plus (f) any charges analogous to the foregoing
relating to Off-Balance-Sheet Transactions for such period, all determined on a
consolidated basis in accordance with Spanish GAAP.
"Financial Indebtedness" means, without duplication, any indebtedness
for or in respect of:
(a) moneys borrowed (including, but not limited to, any amount raised
by acceptance under any acceptance credit facility and receivables sold or
discounted on a recourse basis (it being understood that Permitted
Securitizations shall be deemed not be on a recourse basis));
(b) any amount raised pursuant to any note purchase facility or the
issue of bonds, notes, debentures, loan stock or any similar instrument;
(c) the amount of any liability in respect of any lease or hire
purchase contract that would, in accordance with Spanish GAAP, be treated as a
Capital Lease;
(d) deferred purchase price of assets or the deferred payment of
services, except trade accounts payable in the ordinary course of business;
(e) obligations of a Person under repurchase agreements for the stock
issued by such person or another Person;
(f) obligations of a Person with respect to product invoices incurred
in connection with exporting financing;
(g) all Financial Indebtedness of others secured by a Lien on any
asset of a Person, regardless of whether such Financial Indebtedness is assumed
by such person in an amount equal to the lower of (i) the net book value of
such asset and (ii) the amount secured thereby; and
(h) Guaranties of Financial Indebtedness of other Persons.
"Financing Documents" mean this Agreement, the Notes and the Note
Guarantee.
"Foreign Pension Plan" means any plan, fund or similar program (a)
established or maintained outside the United States of America by any one or
more of Cemex Espana and its Subsidiaries primarily for the benefit of
employees (substantially all of whom are Persons not residing in the United
States of America) of one or more of Cemex Espana and its Subsidiaries, which
plan, fund or other similar program provides for retirement income for such
employees or results in a deferral of income for such employees in
contemplation of retirement and (b) not otherwise subject to ERISA.
"GAAP" means, in relation to an Obligor, the generally accepted
accounting principles applicable to it in the country of its organization from
time to time.
"Governmental Authority" means
(a) the government of
(i) the Kingdom of Spain, The Netherlands, the United States
of America or any State or other political subdivision thereof, or
(ii) any jurisdiction in which Cemex Espana or any
Subsidiary conducts all or any part of its business, or that asserts
jurisdiction over any properties of Cemex Espana or any Subsidiary or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"Guarantor" means (a) each of (i) Cemex Espana, (ii) Cemex Caracas
Investments B.V., a limited liability company organized under the laws of The
Netherlands, (iii) Cemex Caracas II Investments B.V., a limited liability
company organized under the laws of The Netherlands, (iv) Cemex Egyptian
Investments B.V., a limited liability company organized under the laws of The
Netherlands, (v) Cemex Manila Investments B.V., a limited liability company
organized under the laws of The Netherlands, and (vi) Sandworth Plaza Holding
B.V., a limited liability company organized under the laws of The Netherlands,
(b) any Person that, as a result of a consolidation, merger or asset transfer
permitted by Section 10.2, assumes the obligations of a Person described in
clause (a) above under the Note Guarantee and (if applicable) this Agreement
and (c) any other Person that executes a joinder of the Note Guarantee from
time to time; provided that any of the foregoing Persons may cease to be a
Guarantor as provided in Section 10.2(a).
"Guaranty" means any guaranty or indemnity (in the case of the latter
for any specified amount or otherwise in the amount specified in or for which
provision has been made in the accounts of the indemnifier) in any form made
other than in the ordinary course of business of the guarantor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety,
the removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"Holding Company" means, in relation to a company or a corporation, a
company or corporation in respect of which the first company or corporation is
a Subsidiary.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than $5,000,000 of the aggregate
principal amount of the Notes then outstanding and (c) any bank, trust company,
savings and loan association or other financial institution, any pension plan,
any investment company, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of legal form.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person.
"Long-Term Indebtedness" means Financial Indebtedness the maturity of
which is more than one year after the date on which it was incurred.
"Make-Whole Amount" is defined in Section 8.8.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of Cemex Espana
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
Cemex Espana and its Subsidiaries taken as a whole, (b) the ability of Cemex
Espana or the Company to perform its obligations under this Agreement and the
other Financing Documents or (c) the validity or enforceability of this
Agreement or any other Financing Document.
"Material Subsidiary" means those Persons identified as such in
Schedule 5.4 and any other Subsidiary of Cemex Espana which, at any time after
the date hereof:
(i) has total assets representing 5% or more of the total
Consolidated Total Assets; and/or
(ii) has revenues representing 5% or more of the consolidated
net turnover of Cemex Espana and its Subsidiaries.
in each case calculated on a consolidated basis and any Holding Company of any
such Subsidiary (unless such company is a Guarantor hereunder).
Compliance with the conditions set out in clauses (i) and (ii) shall
be determined by reference to the most recent financial statements supplied by
Cemex Espana pursuant to Section 7.1(a) or 7.1(b).
"Memorandum" is defined in Section 5.3.
"Moody's" means Moody's Investor Services Inc.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Net Borrowings" means, at any time, the remainder of (a) Total
Borrowings at such time less (b) the aggregate amount of the following items
held by Cemex Espana and its Subsidiaries at such time: cash on hand, any
fixed-rate or floating-rate marketable debt security that is rated A or better
by S&P or A2 or better by Moody's, commercial paper that is rated A-2 or better
by S&P or P-2 or better by Moody's, investments in money market funds, banker's
acceptances, short-term deposits and other liquid investments.
"Net Proceeds Amount" means, with respect to any sale or transfer of
property by any Person, an amount equal to (a) the aggregate amount of the
consideration (valued at the Fair Market Value of such consideration at the
time of the consummation of such sale or transfer) received by such Person in
respect of such sale, minus (b) the sum of (i) all ordinary and reasonable
out-of-pocket costs and expenses actually incurred by such Person in connection
with such sale or transfer, (ii) taxes paid or reasonably estimated by such
Person to be payable as a result thereof, (iii) amounts required to be applied
to the repayment of any Financial Indebtedness secured by a Lien on the asset
subject to such sale or transfer, (iv) appropriate amounts to be provided by
such Person as a reserve against any liabilities associated with the assets
sold or transferred in such sale or disposition and retained by such Person
after such sale or disposition, including pension and other post-employment
benefit liabilities and liabilities related to environmental matters and
liabilities under any indemnification obligation associated with the assets
sold or disposed of in such sale or transfer and (v) amounts applied to the
acquisition of assets as contemplated by Section 10.4(2) within one year of
such sale or transfer.
"Notarization" is defined in Section 10.7(a).
"Note Guarantee" means a Note Guarantee to be entered into by Cemex
Espana and the other Guarantors in favor of the holders of Notes, as amended,
modified or supplemented from time to time.
"Notes" is defined in Section 1.
"Obligor" means the Company, Cemex Espana and each other Guarantor.
"Off-Balance-Sheet Transactions" means any present or future financing
transaction not reflected as indebtedness on the consolidated balance sheet of
Cemex Espana, but being structured in a way that may result in payment
obligations by Cemex Espana and its Subsidiaries for credit-related losses,
excluding any financing transaction in the form of:
(a) interest rate and currency exchange rate hedging
agreements to hedge risks arising in the normal course of business;
(b) transactions containing potential payments by Cemex
Espana and its Subsidiaries (e.g., via a put-option agreement or
similar structures) under which payments are incapable of being
triggered until June 15, 2015; or
(c) any supply arrangement or equipment lease in respect of
energy or raw material sourcing containing contingent obligations to
directly or indirectly purchase (including through the purchase of
shares or other equity participation) the underlying operations or
assets up to an aggregate maximum of $100,000,000.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of Cemex Espana or of an officer of the manager
of the Company whose responsibilities extend to the subject matter of such
certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Lien" is defined in Section 10.3(a).
"Permitted Notarization" is defined in Section 10.7(a).
"Permitted Securitization" means a sale, transfer or other
securitization of receivables and related assets by Cemex Espana or its
Subsidiaries, including a sale at a discount, provided that (i) such
receivables have been transferred, directly or indirectly, by the originator
thereof to a Special Purpose Vehicle in a manner that satisfies the
requirements for an absolute conveyance, and not merely a pledge, under the
laws of the jurisdiction in which such originator is organized, (ii) such
Special Purpose Vehicle issues notes, certificates or other obligations which
are to be repaid from collections and other proceeds of such receivables and
(iii) except for customary representations, warranties, covenants and
indemnities, holders of such obligations of such Special Purpose Vehicle do not
have recourse to Cemex Espana or its Subsidiaries (other than a Special Purpose
Vehicle) for credit-related losses on such receivables.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is subject to Title IV of ERISA and that is or, within the
preceding five years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been made or
required to be made, by Cemex Espana or any ERISA Affiliate or with respect to
which Cemex Espana or any ERISA Affiliate may have any liability, but excluding
any Foreign Pension Plan.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Priority Indebtedness" means, at any time and without duplication,
(i) Financial Indebtedness of Cemex Espana or its Subsidiary as to which a
valid Notarization is in effect, excluding Permitted Notarizations of the type
described in clauses (i), (ii) and (iv) of Section 10.7(a), (ii) Financial
Indebtedness of Subsidiaries (other than Excluded Subsidiary Guarantors and the
Company), excluding Financial Indebtedness of the type described in clauses (a)
through (h) of Section 10.6 and (iii) Financial Indebtedness secured by Liens
on the assets of Cemex Espana or its Subsidiaries, other than Financial
Indebtedness secured by Liens described in clauses (i) through (x) of Section
10.3(a).
"Pro Rata Amount", for any Note at any time with respect to any
payment of Senior Debt in connection with a Substantial Asset Disposition,
means an amount equal to the product of (x) an amount equal to the Net Proceeds
Amount of such Substantial Asset Disposition being applied to the payment of
Senior Debt multiplied by (y) a fraction the numerator of which is the
outstanding principal amount of such Note and the denominator of which is the
aggregate principal amount of Senior Debt of Cemex Espana and its Subsidiaries.
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"PTE" is defined in Section 6.2.
"Purchasers" means the purchasers of the Notes named on Schedule A to
the Agreement.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Related Taxes" is defined in Section 14.3(a).
"Relevant Period" means each period of twelve months ending on the
last day of the second quarter of Cemex Espana's fiscal year and each period of
twelve months ending on the last day of Cemex Espana's fiscal year.
"Required Holders" means, at any time, the holders of more than 50% of
the aggregate principal amount of the Notes at the time outstanding (exclusive
of Notes then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of Cemex Espana with responsibility for the administration of the
relevant portion of this Agreement.
"Rolling Basis" means the calculation of a ratio or an amount made
with respect to a Relevant Period in respect to the twelve immediately
preceding months ending on the last day of such Relevant Period.
"S&P" means Standard and Poor's Ratings Group.
"Section 8.4 Notice" is defined in Section 8.4.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Senior Debt" means all Financial Indebtedness of Cemex Espana and its
Subsidiaries including interest thereon, whether outstanding on the Closing
date or thereafter incurred, unless in the instrument creating or evidencing
the same or pursuant to which the same is outstanding it is provided that such
obligations are subordinated in right of payment to the Notes or to the Note
Guarantee; provided that "Senior Debt" shall not include (1) any obligation of
Cemex Espana or the Company to any Subsidiary or of any Subsidiary to another
Subsidiary, (2) any liability for Federal, state, local or other taxes or (3)
any accounts payable to trade creditors in the ordinary course of business.
"Senior Financial Officer" means the Financing Director or the
Treasurer of Cemex Espana or any other person authorized by the Board of
Directors of Cemex Espana to act on behalf of Cemex Espana.
"Short-Term Indebtedness" means Financial Indebtedness the maturity of
which is less than or equal to one year after the date on which it was
incurred.
"Source" is defined in Section 6.2.
"Spanish GAAP" means accounting principles generally accepted in Spain
from time to time.
"Spanish Public Document" means any obligation in an Escritura Publica
or documento intervenido.
"Special Purpose Vehicle" means a trust, limited liability company,
partnership or other special purpose Person established to implement a
securitization of receivables, provided that the business of such Person is
limited to acquiring, servicing and funding receivables and related assets and
activities incidental thereto.
"Stake" means a number of shares in Subsidiary held by Cemex Espana or
another Subsidiary, the disposal of which would cause the first such Person to
cease to be a Subsidiary of the second such Person.
"Subordinated Debt" means debt granted by Cemex or any of its
Subsidiaries other than Cemex Espana or one of its Subsidiaries to Cemex Espana
or any of its Subsidiaries on terms such that no payments of principal may be
made thereunder (including but not limited to following any winding up,
suspension de pagos or quiebra or other like event of Cemex Espana) until all
Notes have been paid in full.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person
or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of
its Subsidiaries). Unless the context otherwise clearly requires, any reference
to a "Subsidiary" is a reference to a Subsidiary of Cemex Espana.
"Substantial Asset Disposition" is defined in Section 10.4.
"SVO" means the Securities Valuation Office of the National
Association of Insurance Commissioners, or any successor thereto.
"Tax Prepayment Date" is defined in Section 8.3.
"Tax Prepayment Notice" is defined in Section 8.3.
"Taxing Jurisdiction" is defined in Section 14.3(a).
"Total Borrowings" means, with respect to Cemex Espana and its
Subsidiaries, without duplication and determined on a consolidated basis, all
Guaranties granted by such Person, plus all Off-Balance-Sheet Transactions
entered into by Cemex Espana and its Subsidiaries, plus all Financial
Indebtedness of Cemex Espana and its Subsidiaries, but excluding any
Subordinated Debt.
"Tranche 1 Notes" is defined in Section 1.
"Tranche 2 Notes" is defined in Section 1.
"Tranche 3 Notes" is defined in Section 1.
"Voting Stock" means, with respect to any corporation, any Capital
Stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time Capital Stock of any other class or
classes shall have or might have voting powers by reason of the happening of
any contingency).
SCHEDULE 4.9
CHANGES IN CORPORATE STRUCTURE
None.
SCHEDULE 5.3
DISCLOSURE EXCEPTIONS
None.
SCHEDULE 5.4
SUBSIDIARIES (INCLUDING IDENTIFICATION OF MATERIAL SUBSIDIARIES)
AS OF MAY 31, 2003
- ---------------------------------------------------------- ------------------------- ----------------------------
COMPANY'S NAME PLACE OF INCORPORATION SHAREHOLDING PARTICIPATION
- ---------------------------------------------------------- ------------------------- ----------------------------
AGROPECUARIA ROSARITO, C.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ALTAIR (INDIA) PRIVATE LIMITED India 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
APO CEMENT CORPORATION Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
APO LAND & QUARRY CORPORATION Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ARICEMEX, S.A. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ARIDOS SILICIOS, S.A. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ARIDOS Y ASFALTOS CANARIOS, S.A. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ARRENDAMIX DE VENEZUELA, S.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ASESORIAS Y GESTIONES LIMITADA Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ASSIUT CEMENT COMPANY Egypt 80%
- ---------------------------------------------------------- ------------------------- ----------------------------
AYFER TEKSTIL LTD. STI. Turkey 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
BEDROCK HOLDINGS, INC. Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
C.A. VENCEMOS Venezuela 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CANADIAN MEDUSA CEMENT LIMITED Ontario 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CARIBBEAN FUNDING LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CECAR INC. Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMAR INC. Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMENT TRANSIT COMPANY Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMENTIFICIO DI MONTALTO SPA Italy 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMENTILCE SRL Italy 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMENTO BAYANO, S.A. Panama 99%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMENTO CERRO BLANCO, S.A. Argentina 65%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMENTOS DEL PACIFICO, S.A. Costa Rica 98%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMENTOS NACIONALES, S.A. Dominican Republic 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX (CAMBODIA) CO. LTD. Cambodia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX (THAILAND) CO. LTD. Thailand 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ADMINISTRACIONES LTDA. Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ASIA HOLDINGS LTD. Singapore 92%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ASIA PACIFIC INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ASIA PTE. LTD. Singapore 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ASIA VENTURES INC. Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ASIAN INVESTMENTS N.V. Netherlands Antilles 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX BETON, S.A.S. France 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CALIFORNIA CEMENT LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CAPE VERDIAN INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CAPITAL DE COLOMBIA, S.A. Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CARACAS II INVESTMENTS B.V. Netherlands 100% (G)
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CARACAS INVESTMENTS B.V. Netherlands 100% (G)
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CARIBE II INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CEMENT (BANGLADESH) LIMITED Bangladesh 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CEMENT OF TEXAS, L.P. Texas 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CEMENT, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CHILE INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX COLOMBIA, S.A. Colombia 98%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CONCRETE HOLDINGS, LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CONCRETOS DE COLOMBIA, S.A. Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CONCRETOS, S.A. Panama 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CONSTRUCTION MATERIALS, L.P. Texas 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX CORP. Delaware 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX DANISH INVESTMENTS B.V. Netherlands 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX EGYPT FOR DISTRIBUTION COMPANY Egypt 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX EGYPT FOR SERVICES Egypt 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX EGYPTIAN INVESTMENTS B.V. Netherlands 100% (G)
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ELEVEN INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ENVIRONMENTAL LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ESPANA FINANCE LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX ESPANA INTERNATIONAL CAPITAL LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX FINANCE EUROPE B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX FINANCE, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX FOUNDATION Ohio 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX FOURTEEN INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX GENERACION Y COMERCIALIZACION DE ENERGIA, S.A. Colombia 100%
E.S.P.
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX GLOBAL INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX GRANULATS, SAS France 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX HOLDINGS INC. Delaware 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX HUNGARY KFT Hungary 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX INDONESIA INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX INTERNATIONAL CAPITAL LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX INVESTMENTS AKTIENGESELLSCHAFT Liechtenstein 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX INVESTMENTS, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX LAND COMPANY Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX LEASING, INC. Arizona 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX MANAGEMENT, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX MANILA INVESTMENTS B.V. Netherlands 100% (G)
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX NETHERLANDS, B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX NICARAGUA, S.A. Nicaragua 98%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX NY CORPORATION Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX PACIFIC COAST CEMENT CORPORATION Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX PUERTO RICO, INC. Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX READY MIX LLKHARASANAH EL-JHAZAA Egypt 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX SIERRA INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX SIX INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX SMI HOLDINGS LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX STRATEGIC PHILIPPINES INC. Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX TEN INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX THIRTEEN INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX TRADING EUROPE, S.A. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX TRANSPORTES DE COLOMBIA, S.A. Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX TRUCKING, INC. California 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX TWELVE INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX VENEZUELA, S.A.C.A. Venezuela 76%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX VENTURES, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMEX, INC. Louisiana 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CEMSAL Ltd. Ghana 75%
- ---------------------------------------------------------- ------------------------- ----------------------------
CENTRAL DE MEZCLAS, S.A. Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CETACEA INVESTMENTS LIMITED Trinidad & Tobago 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CETRA INC. Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CHIQUIOJOS, S.A. Costa Rica 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
COLOMBIA HOLDINGS INC. Cayman Islands 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
COMERCIALIZADORA FERREX, C.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CONOMITA, S.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CONSTRUCCIONES E INVERSIONES DIAMANTE LTDA. Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CONSTRUCTION FUNDING CORPORATION Ireland 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CORBIN INVESTMENTS Cayman Islands 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
CUBIC HOLDINGS LTD Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
CX (THAILAND) LIMITED Thailand 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
DESARROLLOS DIADANILO, C.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
DESARROLLOS MULTIPLES INSULARES, INC. Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
DIAMANTE TRANSPORTES LIMITADA Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
DISTRIBUIDORA DE CEMENTO, S.A. Panama 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
EDGEWATER VENTURES CORPORATION Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ENTREPRISES PASTORELLO TRAVAUX ROUTIERS, SAS France 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ESPARTANA SHIPPING CO. Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
FLORIDA LIME CORPORATION Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
FUNDACION DIAMANTE SAMPER Colombia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
GANDALF HOLDINGS CORPORATION Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
GESTION FRANCAZAL ENTREPRISES, SAS France 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
GOOD ASSETS LIMITED Thailand 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
GRANINTRA, S.A. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
GULF COAST PORTLAND CEMENT CO. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
HISPAGOLD INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
HORMICEMEX, S.A. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
HORMISOL CANARIAS, S.A. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
IMPORTADORA CANARIA DE ARIDOS, S.L. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
INDEPENDIENTE SHIPPING CO. Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
INDUSTRIAS E INVERSIONES SAMPER, S.A. Colombia 98%
- ---------------------------------------------------------- ------------------------- ----------------------------
INMOBILIARIA VALLE DOS C.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
INMOBILIARIA Y ARRENDAMIENTO BAYANO, S.A. Panama 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
INTERNATIONAL COMPANY FOR SILOS LTD. Egypt 70%
- ---------------------------------------------------------- ------------------------- ----------------------------
INVERSIONES CALLEGARI, C.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
ISLAND QUARRY AND AGGREGATES CORP. Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
JAMES H. DREW CORPORATION Indiana 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
KOSMOS CEMENT COMPANY Kentucky 75%
- ---------------------------------------------------------- ------------------------- ----------------------------
LAI LIMITED Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
LATINASIAN INVESTMENTS PTE. LTD. Singapore 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
LIMESTONE MATERIALS, INC. Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
LOMAS DEL TEMPISQUE, S.R.L. Costa Rica 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
LOTHLORIEN HOLDINGS CORPORATION Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
MACORIS INVESTMENTS Cayman Islands 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
MADISA B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
MEXAM TRADE, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
MILTON INTERNATIONAL CORP. Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
MOJAVE NORTHERN RAILROAD COMPANY California 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
NORTH TRANSPORT, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
OCCITAN INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PACIFIC ASSETS N.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PANAMA PACIFIC INVESTMENTS B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PARMA CEMENTI SPA Italy 70%
- ---------------------------------------------------------- ------------------------- ----------------------------
PCG HOLDINGS, INC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PETROLEUM COKE GRINDING, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
POLY BAGS AND PACKAGING, INC. Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PONCE CAPITAL CORPORATION Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PONCE EQUIPMENT AND MAINTENANCE COMPANY Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PT BINTANG POLINA PERKASA Indonesia 95%
- ---------------------------------------------------------- ------------------------- ----------------------------
PT CEMEX INDONESIA Indonesia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PUERTO RICAN CEMENT COMPANY, INC. Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
PUERTO RICO FINANCE LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
READY MIX CONCRETE, INC. Puerto Rico 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
RIVENDELL HOLDINGS CORPORATION Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
RODNEY H. GREENWAY, INC. Georgia 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
SANDSTONE STRATEGIC HOLDINGS, INC. Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
SANDWORTH PLAZA HOLDING B.V. Netherlands 100% (G)
- ---------------------------------------------------------- ------------------------- ----------------------------
SERVICIOS MUNDIALES DE CONSULTORIA SEMUCOSA, S.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
SERVICRETO LTDA. Colombia 70%
- ---------------------------------------------------------- ------------------------- ----------------------------
SHIRE HOLDINGS CORPORATION Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
SIERRA TRADING Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
SOLID CEMENT CORP. Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
SUNBELT CEMENT HOLDINGS, INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
SUNBELT INVESTMENTS INC. Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
SUNBULK SHIPPING N.V. Netherlands Antilles 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
TENNESSEE GUARDRAIL, INC. Tennessee 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
TOULOUSE MIDI PYRENNEES ENROBES, S.A. France 57%
- ---------------------------------------------------------- ------------------------- ----------------------------
TRANSENERGY, INC. Texas 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
TRANSPORTES DE CEMENTO, S.A. Spain 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
TRANSPORTES SAN PEDRO, S.A. Dominican Republic 99%
- ---------------------------------------------------------- ------------------------- ----------------------------
TRICAP INVESTMENTS I-A, LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
TRICAP OPTION FUND A, LLC Delaware 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
TRIPLE DIME HOLDINGS INC. Philippines 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
TUNWOO CO. LTD Taiwan 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
UCIM, A.S. Turkey 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
VALCEM INTERNATIONAL B.V. Netherlands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
VALENCIANA DENMARK APS Denmark 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
VENCEMENT INVESTMENTS Cayman Islands 100%*
- ---------------------------------------------------------- ------------------------- ----------------------------
VENMARCA OCCIDENTE, C.A. Venezuela 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
VOGAN INVESTMENTS Cayman Islands 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
WESTERN RAIL ROAD COMPANY Texas 100%
- ---------------------------------------------------------- ------------------------- ----------------------------
* In Bold, material subsidiaries
(G) In Bold, Guarantor
As of May 31, 2003
BOARD OF DIRECTORS OF CEMEX ESPANA
LORENZO H. ZAMBRANO TREVINO
JOSE LUIS SAENZ DE MIERA ALONSO
IGNACIO ORTIZ MARTIN
HECTOR MEDINA AGUIAR
VICTOR MANUEL ROMO MUNOZ
RAMIRO VILLARREAL MORALES
MARCELO ZAMBRANO LOZANO
CEMEX ESPANA FINANCE LLC
MANAGER OF THE COMPANY:
CEMEX NETHERLANDS B.V., A DUTCH COMPANY WITH ITS REGISTERED OFFICE AT
RIVIERSTAETE, AMSTELDIJK 166 1079 LH AMSTERDAM, THE NETHERLANDS.
OFFICERS OF THE MANAGER:
HANS S. LEIJDESDORFF
JUAN M. PORTAL
SCHEDULE 5.8
LITIGATION
None.
SCHEDULE 5.11
LICENSE, ETC. EXCEPTIONS
None.
SCHEDULE 5.15
EXISTING FINANCIAL INDEBTEDNESS
[GRAPHIC OMITTED]
SCHEDULE 10.3
EXISTING LIENS
CONSOLIDATED GROUP
LIEN SCHEDULE (M (euro))
[GRAPHIC OMITTED]
SCHEDULE 10.7
EXISTING NOTARIZATIONS
Total Principal Amount of
Type of Indebtedness notarized as
Agreement Borrower/Guarantor Maturity date of May 31, 2003
Bilateral lines Cemex Espana S.A./n.a. Between June 2003 EUR 77,052,847 (1) (2)
and April 2006
Capital Lease contract Cemex Espana S.A./n.a. December 21st, 2003 EUR 1,060,362
Deferred purchase price Aricemex S.A./n.a. July, 2005 EUR 1,442,429
5-year term loan Cementos Diamante/ October 19th, 2004 US$ 55,672,250
Cemex Espana S.A.
5-year term loan Cemex Inc./ November 6th, 2005 US$ 325,000,000
Cemex Espana S.A.
(1) Corresponds to the total committed amount under the facilities
(2) (euro)21,459,227 matured on June 3,2003
EXHIBIT 1(a)
[FORM OF TRANCHE 1 NOTE]
CEMEX ESPANA FINANCE LLC
4.77% SENIOR NOTE, SERIES 2003, TRANCHE 1, DUE JUNE 15, 2010
No.[_____] [Date]
$[____________] PPN 15128@AA 1
FOR VALUE RECEIVED, the undersigned, CEMEX ESPANA FINANCE LLC (herein
called the "Company"), a limited liability company organized and existing under
the laws of Delaware, hereby promises to pay to [_________________________], or
registered assigns, the principal sum of [_______________________________]
DOLLARS on June 15, 2010, with interest (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of
4.77% per annum from the date hereof, payable semiannually, on the 15th day of
June and December in each year, commencing with the June 15th or December 15th
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreement referred to below), payable semiannually as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 6.77% or (ii) 2% over the
rate of interest publicly announced by Citibank, N.A. from time to time in New
York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Citibank, N.A, 111 Wall Street, 14th Floor, New York, New York
10043, Corporate Agency and Trust Department or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of June 23,
2003 (as from time to time amended, supplemented or modified, the "Note
Purchase Agreement"), among the Company, Cemex Espana, S.A. and the respective
Purchasers named therein and is entitled to the benefits thereof. Each holder
of this Note will be deemed, by its acceptance hereof, (i) to have agreed to
the confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Sections 6.1
and 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the issuer and holder hereof shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would require the application of the laws of a jurisdiction other than
such State.
CEMEX ESPANA FINANCE LLC
By______________________
[Title]
EXHIBIT 1(b)
[FORM OF TRANCHE 2 NOTE]
CEMEX ESPANA FINANCE LLC
5.36% SENIOR NOTE, SERIES 2003, TRANCHE 2, DUE JUNE 15, 2013
No.[_____] [Date]
$[____________] PPN 15128@AB 9
FOR VALUE RECEIVED, the undersigned, CEMEX ESPANA FINANCE LLC (herein
called the "Company"), a limited liability company organized and existing under
the laws of Delaware, hereby promises to pay to [_________________________], or
registered assigns, the principal sum of [_______________________________]
DOLLARS on June 15, 2013, with interest (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of
5.36% per annum from the date hereof, payable semiannually, on the 15th day of
June and December in each year, commencing with the June 15th or December 15th
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreement referred to below), payable semiannually as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 7.36% or (ii) 2% over the
rate of interest publicly announced by Citibank, N.A. from time to time in New
York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Citibank, N.A, 111 Wall Street, 14th Floor, New York, New York
10043, Corporate Agency and Trust Department or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of June 23,
2003 (as from time to time amended, supplemented or modified, the "Note
Purchase Agreement"), among the Company, Cemex Espana, S.A. and the respective
Purchasers named therein and is entitled to the benefits thereof. Each holder
of this Note will be deemed, by its acceptance hereof, (i) to have agreed to
the confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representations set forth in Sections 6.1
and 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the issuer and holder hereof shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would require the application of the laws of a jurisdiction other than
such State.
CEMEX ESPANA FINANCE LLC
By______________________
[Title]
EXHIBIT 1(c)
[FORM OF TRANCHE 3 NOTE]
CEMEX ESPANA FINANCE LLC
5.51% SENIOR NOTE, SERIES 2003, TRANCHE 3, DUE JUNE 15, 2015
No.[_____] [Date]
$[____________] PPN 15128@AC 7
FOR VALUE RECEIVED, the undersigned, CEMEX ESPANA FINANCE LLC (herein
called the "Company"), a limited liability company organized and existing under
the laws of Delaware, hereby promises to pay to [_________________________], or
registered assigns, the principal sum of [_______________________________]
DOLLARS on June 15, 2015, with interest (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of
5.51% per annum from the date hereof, payable semiannually, on the 15th day of
June and December in each year, commencing with the June 15th or December 15th
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreement referred to below), payable semiannually as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 7.51% or (ii) 2% over the
rate of interest publicly announced by Citibank, N.A. from time to time in New
York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Citibank, N.A, 111 Wall Street, 14th Floor, New York, New York
10043, Corporate Agency and Trust Department or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of June 23,
2003 (as from time to time amended, supplemented or modified, the "Note
Purchase Agreement"), among the Company, Cemex Espana, S.A. and the respective
Purchasers named therein and is entitled to the benefits thereof. Each holder
of this Note will be deemed, by its acceptance hereof, (i) to have agreed to
the confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representations set forth in Sections 6.1
and 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the issuer and holder hereof shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would require the application of the laws of a jurisdiction other than
such State.
CEMEX ESPANA FINANCE LLC
By______________________
[Title]
EXHIBIT 4.4(a)
FORM OF OPINION OF COUNSEL
FOR CEMEX ESPANA
[To be completed]
EXHIBIT 4.4(b)
FORM OF OPINION OF SPECIAL NEW YORK
COUNSEL TO THE COMPANY
Matters To Be Covered In
Opinion of Special New York Counsel To the Company
1. The Company being duly formed, validly existing and in good
standing and having requisite limited liability company power and authority to
issue and sell the Notes and to execute and deliver the documents.
2. Due authorization and execution of the documents by the Company,
and such documents being legal, valid, binding and enforceable against the
Company and the Guarantors.
3. No conflicts with US or NY laws or other material English language
debt agreements.
4. All US and NY consents required to issue and sell the Notes and to
execute and deliver the documents having been obtained.
5. The Notes not requiring registration under the Securities Act of
1933, as amended; no need to qualify an indenture under the Trust Indenture Act
of 1939, as amended.
6. Company not an "investment company", or a company "controlled" by
an "investment company", under the Investment Company Act of 1940, as amended.
EXHIBIT 4.4(c)
FORM OF OPINION OF SPECIAL
NETHERLANDS COUNSEL
[To be completed]
EXHIBIT 4.4(d)
FORM OF OPINION OF SPECIAL US COUNSEL
TO THE PURCHASERS
[To be completed]
EXHIBIT 4.4(e)
FORM OF OPINION OF SPECIAL SPANISH COUNSEL
TO THE PURCHASERS
[To be completed]
Exhibit 4.12
EXECUTION COPY
===============================================================================
FIRST AMENDED AND RESTATED
REIMBURSEMENT AND CREDIT AGREEMENT
among
CEMEX, S.A. de C.V.,
as Issuer
CEMEX MEXICO, S.A. de C.V.,
as Guarantor
EMPRESAS TOLTECA DE MEXICO, S.A. de C.V.,
as Guarantor
BARCLAYS BANK PLC,
NEW YORK BRANCH,
as Issuing Bank, Documentation Agent and
Administrative Agent
and
The Several Lenders Party Hereto,
and
BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION
OF BARCLAYS BANK PLC,
as Joint Arranger
and
BANC OF AMERICA SECURITIES LLC
as Joint Arranger and Syndication Agent
US$400,000,000
Dated as of August 8, 2003
===============================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS..........................................................................8
1.01 Certain Definitions..............................................................8
1.02 Other Definitional Provisions...................................................25
1.03 Accounting Terms and Determinations.............................................26
ARTICLE II THE LETTER OF CREDIT FACILITY......................................................26
2.01 Issuance of the Letter of Credit................................................26
2.02 Reimbursement Obligations.......................................................26
2.03 Obligations Absolute............................................................27
2.04 Participating Interests.........................................................28
2.05 Limited Liability of the Issuing Bank...........................................31
2.06 Defaulting Lenders..............................................................31
2.07 Non-Default Disruption Event....................................................33
2.08 Maximum Interest Rate...........................................................34
ARTICLE III THE LOAN FACILITY.................................................................35
3.01 Commitments to Lend.............................................................35
3.02 Notice of Borrowing.............................................................36
3.03 Notice to Lenders; Funding of Loans.............................................37
3.04 Notes 38
3.05 Conversion and Continuation of Loans............................................39
3.06 Maturity of Loans...............................................................40
3.07 Interest Rates..................................................................40
3.08 Computation of Interest.........................................................40
3.09 Optional Prepayments............................................................41
3.10 Mandatory Prepayments...........................................................41
3.11 Maximum Interest Rate...........................................................42
ARTICLE IV THE STANDBY L/C FACILITY...........................................................42
4.01 Issuance of the Standby L/C.....................................................42
4.02 Reimbursement Obligations.......................................................43
4.03 Obligations to reimburse Standby L/C Drawing Absolute...........................43
4.04 Participating Interests.........................................................45
4.05 Limited Liability of the Issuing Bank...........................................47
ARTICLE V TERMINATION AND REDUCTION OF COMMITMENTS; FEES, TAXES, PAYMENT PROVISIONS...........48
5.01 Termination or Reduction of Commitments.........................................48
(a) Mandatory Termination.................................................48
(b) Voluntary Termination.................................................48
(c) Reduction of Letter of Credit Facility................................48
5.02 Extension of Stated Termination Date............................................49
(b) Requests for Extension................................................49
(c) Additional Commitment Lenders.........................................49
(d) Minimum Extension Requirement.........................................49
5.03 Fees 50
(a) Participation Fee.....................................................50
(b) Letter of Credit Fees.................................................50
(c) Standby L/C Fees......................................................50
(d) Agency Fees...........................................................50
(e) Arrangement Fees......................................................50
(f) Depositary Fees.......................................................50
(g) Up-Front Fee..........................................................51
5.04 Computation of Fees.............................................................51
5.05 Taxes 51
5.06 General Provisions as to Payments...............................................53
5.07 Funding Losses..................................................................54
5.08 Basis for Determining Interest Rate Inadequate or Unfair........................54
5.09 Illegality......................................................................54
5.10 Increased Costs; Capital Adequacy...............................................54
5.11 Substitute Lenders..............................................................56
5.12 Sharing of Payments, Etc........................................................56
ARTICLE VI CONDITIONS PRECEDENT...............................................................57
6.01 Conditions to Effectiveness.....................................................57
(a) Agreement.............................................................57
(b) Notes.................................................................57
(c) Depositary Agreement and Dealer Agreements............................57
(d) Opinions of Issuer's and each Guarantor's Counsel.....................57
(e) Opinion of Counsel to the Administrative Agent........................58
(f) Opinion of Counsel to the Issuing Bank................................58
(h) Governmental Approvals................................................58
(i) Organizational Documents of the Issuer and the Guarantors.............58
(j) Agent for Service of Process..........................................58
(k) Ratings...............................................................58
(l) Fees and Expenses.....................................................58
(m) No Default............................................................59
(n) Representations and Warranties........................................59
(o) No Material Adverse Effect............................................59
(p) Other Documents.......................................................59
(q) Fees, Costs and Expenses under the Prior Agreement....................59
(r) Prior Agreement.......................................................59
(s) Non-Extending Lenders.................................................59
(t) Additional Commitment Lenders and Lenders.............................59
6.02 Conditions Precedent to the Issuance of Commercial Paper Notes..................59
6.03 Conditions Precedent to Borrowings, Continuation or
Conversion of the Loans and Issuances of Standby L/Cs.........................60
6.04 Conditions Precedent to Effectiveness of Extensions Amendment
and Restatement...............................................................61
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE ISSUER......................................62
7.01 Corporate Existence and Power...................................................62
7.02 Power and Authority; Enforceable Obligations....................................62
7.03 Compliance with Law and Other Instruments.......................................62
7.04 Governmental Approvals..........................................................63
7.05 Financial Information...........................................................63
7.06 Litigation......................................................................63
7.07 No Immunity.....................................................................63
7.08 Investment Company Act..........................................................64
7.09 Direct Obligations; Pari Passu; Liens...........................................64
7.10 Subsidiaries....................................................................64
7.11 Ownership of Property...........................................................64
7.12 No Recordation Necessary........................................................64
7.13 Taxes 65
7.14 Compliance with Laws............................................................65
7.15 Absence of Default..............................................................65
7.16 Full Disclosure.................................................................65
7.17 Choice of Law; Submission to Jurisdiction and Waiver of Sovereign
Immunity......................................................................65
7.18 Aggregate Outstandings..........................................................65
7.19 Standby L/C's...................................................................66
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS.................................66
8.01 Corporate Existence and Power...................................................66
8.02 Power and Authority; Enforceable Obligations....................................66
8.03 Compliance with Law and Other Instruments.......................................66
8.04 Governmental Approvals..........................................................66
8.05 No Immunity.....................................................................67
8.06 Direct Obligations; Pari Passu..................................................67
8.07 No Recordation Necessary........................................................67
8.08 Choice of Law; Submission to Jurisdiction and Waiver of Sovereign
Immunity......................................................................67
ARTICLE IX AFFIRMATIVE COVENANTS..............................................................68
9.01 Financial Reports and Other Information.........................................68
9.02 Notice of Default and Litigation................................................69
9.03 Compliance with Laws and Contractual Obligations, Etc...........................69
9.04 Payment of Obligations..........................................................69
9.05 Maintenance of Insurance........................................................69
9.06 Conduct of Business and Preservation of Corporate Existence.....................69
9.07 Books and Records...............................................................70
9.08 Maintenance of Properties, Etc..................................................70
9.09 Use of Proceeds.................................................................70
9.10 Pari Passu Ranking..............................................................70
9.11 Transactions with Affiliates....................................................70
9.12 Maintenance of Governmental Approvals...........................................71
ARTICLE X NEGATIVE COVENANTS..................................................................71
10.01 The Commercial Paper Notes.....................................................71
10.02 Securities Act.................................................................71
10.03 Offering Statements............................................................71
10.04 Depositary; Dealers; Depositary Agreement......................................72
10.05 Financial Conditions...........................................................72
10.06 Liens..........................................................................72
10.07 Consolidations and Mergers.....................................................73
10.08 Sales of Assets, Etc...........................................................74
10.09 Change in Nature of Business...................................................75
10.10 Margin Regulations.............................................................75
ARTICLE XI OBLIGATIONS OF GUARANTORS..........................................................75
11.01 The Guaranty...................................................................75
11.02 Nature of Liability............................................................75
11.03 Unconditional Obligations......................................................75
11.04 Independent Obligation.........................................................76
11.05 Waiver of Notices..............................................................76
11.06 Waiver of Defenses.............................................................76
11.07 Bankruptcy and Related Matters.................................................77
11.08 No Subrogation.................................................................78
11.09 Right of Contribution..........................................................79
11.10 General Limitation on Guaranty.................................................79
11.11 Covenants of the Guarantors....................................................79
ARTICLE XII EVENTS OF DEFAULT.................................................................80
12.01 Events of Default..............................................................80
(a) Payment Defaults......................................................80
(b) Representation and Warranties.........................................80
(c) Specific Defaults.....................................................80
(d) Other Defaults........................................................80
(e) Defaults under Other Agreements.......................................80
(f) Voluntary Bankruptcy..................................................80
(g) Involuntary Bankruptcy................................................81
(h) Monetary Judgment.....................................................81
(i) Pari Passu............................................................81
(j) Validity of Agreement.................................................81
(k) Governmental Authority................................................81
(l) Expropriation, Etc....................................................81
(m) Moratorium; Availability of Foreign Exchange..........................81
(n) Material Adverse Effect...............................................82
(o) Attachments of Accounts...............................................82
(p) Change of Ownership or Control........................................82
12.02 Remedies.......................................................................82
12.03 Notice of Default..............................................................84
12.04 Default Interest...............................................................84
ARTICLE XIII THE ADMINISTRATIVE AGENT.........................................................84
13.01 Appointment and Authorization..................................................84
13.02 Delegation of Duties...........................................................84
13.03 Liability of Administrative Agent..............................................85
13.04 Reliance by Administrative Agent...............................................85
13.05 Notice of Default..............................................................85
13.06 Credit Decision................................................................86
13.07 Indemnification................................................................86
13.08 Administrative Agent in Individual Capacity....................................87
13.09 Successor Administrative Agent.................................................87
ARTICLE XIV THE ISSUING BANK..................................................................88
14.01 Appointment....................................................................88
14.02 Liability of Issuing Bank......................................................88
14.03 Reliance by Issuing Bank.......................................................88
14.04 Credit Decision................................................................89
14.05 Indemnification................................................................89
14.06 Issuing Bank in Its Individual Capacity........................................90
14.07 Notice of Default..............................................................90
ARTICLE XV THE ARRANGERS......................................................................90
15.01 The Arrangers..................................................................90
15.02 Liability of Arrangers.........................................................90
15.03 Arrangers in their respective Individual Capacities............................91
15.04 Credit Decision................................................................91
ARTICLE XVI MISCELLANEOUS.....................................................................91
16.01 Notices........................................................................91
16.02 Amendments and Waivers.........................................................92
16.03 No Waiver; Cumulative Remedies.................................................93
16.04 Payment of Expenses, Etc.......................................................93
16.05 Indemnification................................................................94
16.06 Successor and Assigns..........................................................94
16.07 Right of Set-off...............................................................96
16.08 Confidentiality................................................................97
16.09 Use of English Language........................................................97
16.10 GOVERNING LAW..................................................................97
16.11 Submission to Jurisdiction.....................................................97
16.12 Appointment of Agent for Service of Process....................................98
16.13 Waiver of Sovereign Immunity...................................................99
16.14 Judgment Currency..............................................................99
16.15 Counterparts...................................................................99
16.16 Effect of Termination of Commitments...........................................99
16.17 Severability..................................................................100
16.18 Survival of Agreements and Representations....................................100
SCHEDULES
Schedule 1.01(a) Commitments
Schedule 1.01(b) Lending Offices
Schedule 7.06 Litigation
Schedule 7.10 Subsidiaries
Schedule 7.19 Outstanding Standby L/Cs
Schedule 10.06 Liens
EXHIBITS
Exhibit A Form of Letter of Credit
Exhibit B Form of Note
Exhibit C Form of Depositary Agreement Borrowing
Exhibit E Form of Notice of Continuation/Conversion
Exhibit F Form of Assignment and Assumption Agreement
Exhibit G Form of Opinion of Special New York Counsel to the Issuer and the
Guarantors
Exhibit H Form of Opinion of Mexican Counsel to the Issuer and the
Guarantors
Exhibit I-1 Form of Standby Letter of Credit
Exhibit I-2 Form of Standby Letter of Credit
REIMBURSEMENT AND CREDIT AGREEMENT
FIRST AMENDED AND RESTATED REIMBURSEMENT AND CREDIT AGREEMENT, dated
as of August 8, 2003 among CEMEX, S.A. de C.V., a sociedad anonima de capital
variable organized and existing pursuant to the laws of the United Mexican
States (the "Issuer"), CEMEX MEXICO, S.A. de C.V., a sociedad anonima de
capital variable organized and existing pursuant to the laws of the United
Mexican States, EMPRESAS TOLTECA DE MEXICO, S.A. de C.V., a sociedad anonima
de capital variable organized and existing pursuant to the laws of the United
Mexican States (each a "Guarantor" and together, the "Guarantors"), BARCLAYS
BANK PLC, NEW YORK BRANCH, as Issuing Bank, Documentation Agent and
Administrative Agent, the several Lenders party hereto, and BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, as a Joint Arranger and
BANC OF AMERICA SECURITIES LLC, as a Joint Arranger and Syndication Agent.
RECITALS
(1) Barclays Bank PLC, New York Branch issued its letter of credit in
the maximum face amount of US$275,000,000 to provide for the repayment of
outstanding promissory notes of the Issuer issued in the United States
commercial paper market and issued certain standby letters of credit all in
accordance with the provisions of (i) a Reimbursement and Credit Agreement,
dated as of August 26, 2002 (the "Prior Agreement") among the Issuer, the
Guarantors, Barclays Bank PLC, New York Branch, as issuing bank, documentation
agent and administrative agent, the several lenders party thereto, and
Barclays Capital, the Investment Banking Division of Barclays Bank PLC, as a
joint arranger and Banc of America Securities LLC, as a joint arranger and
syndication agent, and (ii) an existing Depositary Agreement, dated as of
August 26, 2002 upon the terms and subject to the conditions set forth
therein.
(2) The Issuer proposes (i) to issue and sell a new series of its
promissory notes in the United States commercial paper market supported by a
letter of credit issued by the Issuing Bank, (ii) to obtain from the Lenders
commitments to make loans and (iii) to request the Issuing Bank to issue
Standby L/Cs (as defined herein) for its account in an aggregate principal
amount (together with any outstanding commercial paper notes and outstanding
standby letters of credit pursuant to the Prior Agreement and unreimbursed
drawings under the letters of credit issued hereunder) not in excess of
U.S.$400,000,000 at any one time outstanding.
(3) The Issuer has requested the Documentation Agent and Issuing Bank
(i) to amend and restate the Prior Agreement and the letter of credit issued
in connection with the Prior Agreement; (ii) to extend the Stated Termination
Date, to increase the amount of the Commitments to US$400,000,000; (iii) to
increase the sublimit for issuance of Standby L/C's issued and to be issued to
US$200,000,000; (iv) to permit a change in the Participation Percentages and
in the amount of the Commitments of certain of the lenders party thereto; and
(v) to provide for the addition of certain lenders as Lenders party hereto.
(4) Upon the terms and subject to the conditions set forth below, (a)
the Issuing Bank is willing to issue an amended and restated irrevocable
direct-pay letter of credit in the stated amount of US$400,000,000; (b) the
Administrative Agent, the Joint Arrangers, the Lenders and the Issuing Bank
are willing to amend and restate the Prior Agreement in its entirety to extend
the Stated Termination Date and to incorporate other provisions as requested
by the Issuer; and (c) the Lenders are willing to participate in (i) the new
irrevocable direct-pay letter of credit, (ii) the standby letters of credit
issued and outstanding under the Prior Agreement and deemed to be made
pursuant to this Agreement as of the date hereof, (iii) any new Standby L/Cs
to be issued hereunder, and (iv) to make loans to the Issuer upon the terms
and subject to the conditions hereinafter set forth.
NOW, THEREFORE, the Issuer, the Issuing Bank, the Lenders, the
Administrative Agent and the Joint Arrangers hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Acquired Subsidiary" means any Subsidiary acquired by the
Issuer or any other Subsidiary after the date hereof in an
Acquisition, and any Subsidiaries of such Acquired Subsidiary on the
date of such Acquisition.
"Acquiring Subsidiary" means any Subsidiary formed by the
Issuer or one of its Subsidiaries solely for the purpose of
participating as the acquiring party in any Acquisition, and any
Subsidiaries of such Acquiring Subsidiary acquired in such
Acquisition.
"Acquisition" means any merger, consolidation, acquisition
or lease of assets, acquisition of securities or business combination
or acquisition, or any two or more of such transactions, if upon the
completion of such transaction or transactions, the Issuer or any
Subsidiary thereof has acquired an interest in any Person who is
deemed to be a Subsidiary under this Agreement and was not a
Subsidiary prior thereto.
"Additional Commitment Lender" has the meaning specified in
Section 5.02(c).
"Adjusted Consolidated Net Tangible Assets" means, with
respect to any Person, the total assets of such Person and its
Subsidiaries (less applicable depreciation, amortization and other
valuation reserves), including any write-ups or restatements required
under Mexican GAAP (other than with respect to items referred to in
clause (ii) below), after deducting therefrom (i) all current
liabilities of such Person and its Subsidiaries (excluding the
current portion of long-term debt) and (ii) all goodwill, trade
names, trademarks, licenses, concessions, patents, unamortized debt
discount and expense and other intangibles, all as determined on a
consolidated basis in accordance with Mexican GAAP.
"Administrative Agent" means Barclays Bank PLC, New York
Branch, in its capacity as administrative agent for the Issuing Bank
and the Lenders, and its successors in such capacity.
"Administrative Agent's Payment Office" means the
Administrative Agent's address for payments set forth on the
signature pages hereof or such other address as the Administrative
Agent may from time to time specify to the other parties hereto
pursuant to the terms of this Agreement.
"Affected Lender" has the meaning specified in Section
5.10(a).
"Affiliate" of any specified Person means any other Person
who directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with such
specified Person. For the purposes of this definition, "control" when
used with respect to any specified Person means the power to direct
the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Reported Proceeds" means the aggregate net sales
price of any Commercial Paper Notes, i.e., the Face Amount thereof
less discount for interest and fees.
"Aggregate Outstandings" means the sum of (i) Face Amount of
Commercial Paper Notes issued and unpaid; (ii) the amount of any
Standby L/C issued and outstanding; (iii) the principal amount of any
Loans outstanding; and (iv) the amount of any unreimbursed Drawing or
Standby L/C Drawing.
"Agreement" means this Reimbursement and Credit Agreement,
as from time to time amended, supplemented or otherwise modified.
"Applicable Base Rate" has the meaning specified in Section
3.07(a).
"Applicable Eurodollar Rate" has the meaning specified in
Section 3.07(b).
"Arrangers" or "Joint Arrangers" means Barclays Capital, the
Investment Banking Division of Barclays Bank PLC, and Banc of America
Securities LLC, in their capacity as joint arrangers hereunder, and
each of their successors in such capacity.
"Assignee" has the meaning specified in Section 16.06(b).
"Assignment and Assumption Agreement" means an assignment
and assumption agreement in substantially the form of Exhibit F.
"Available Commitments" has the meaning specified in Section
3.01(f).
"Available Standby L/C Sublimit" means, at any time, the
lesser of (a)(i) Standby L/C Sublimit minus (ii) the Standby L/C
Exposure at such time, and (b) the Available Commitments.
"Base Rate" means, for any day, the higher of (a) the Prime
Rate or (b) the Federal Funds Rate plus 1/2% per annum, in each case
as in effect for such day. Any change in the Prime Rate announced by
Bank of America, N.A. shall take effect at the opening of business on
the day specified in the public announcement of such change.
"Base Rate Loan" means any Loan made or maintained at a rate
of interest calculated with reference to the Base Rate.
"Borrowing" means the aggregate amount of Loans hereunder to
be made to the Issuer pursuant to Article III on a particular date by
the Lenders pro rata in accordance with their respective
Participation Percentages.
"Business Day" means any day other than a Saturday or Sunday
or other day on which commercial banks in New York City are
authorized or required by law to close.
"Capital Adequacy Regulation" means any guideline, request
or directive of any central bank or other similar Governmental
Authority, or any other law, rule or regulation, whether or not
having the force of law, in each case, regarding capital adequacy of
the Issuing Bank or any Lender.
"Capital Lease" means, as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of
such Person under Mexican GAAP and, for the purposes of this
Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with
Mexican GAAP.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designed) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants, rights
or options to purchase any of the foregoing.
"Commercial Paper Account" means a special purpose account
established by the Depositary for the benefit of the Issuing Bank
pursuant to the Depositary Agreement.
"Commercial Paper Notes" means, collectively, the promissory
notes of the Issuer in book-entry form represented by the master note
in the form of Annex A to the Depositary Agreement, in each case
issued in accordance with the terms of the Depositary Agreement.
"Commitment" means, with respect to each Lender, the amount
set forth opposite the name of such Lender in Schedule 1.01(a) or in
any Assignment and Assumption Agreement, as such amount may be
reduced from time to time pursuant to Section 5.01 or 16.06 or
increased pursuant to Section 5.02, 5.11 or 16.06. The aggregate
amount of the Commitments of all the Lenders is referred to as the
"Commitments".
"Confidential Information" means information that the Issuer
or a Guarantor furnishes to the Administrative Agent or the Arrangers
or any Lender in a writing designated as confidential, but does not
include any such information that is or becomes generally available
to the public or that is or becomes available to the Administrative
Agent or the Arrangers or such Lender from a source other than the
Issuer or a Guarantor that is not, to the best of the Administrative
Agent's, the Arrangers' or such Lender's knowledge, acting in
violation of a confidentiality agreement with the Issuer or Guarantor
or any other Person.
"Consolidated" refers to the consolidation of accounts in
accordance with Mexican GAAP.
"Consolidated EBITDA" means, for any period, the sum for the
Issuer and its Subsidiaries, determined on a consolidated basis of
(a) operating income (utilidad de operacion), (b) cash interest
income and (c) depreciation and amortization expense, in each case
determined in accordance with Mexican GAAP consistently applied for
such period. For the purposes of calculating Consolidated EBITDA for
any period of four consecutive fiscal quarters (each, a "Reference
Period") pursuant to any determination of the Consolidated Leverage
Ratio (but not Consolidated Fixed Charge Coverage Ratio), (i) if at
any time during such Reference Period the Issuers or any of its
Subsidiaries shall have made any Material Disposition, the
Consolidated EBITDA for such Reference Period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) attributable to
the property that is the subject of such Material Disposition for
such Reference Period and (ii) if at any time during such Reference
Period the Issuer or any of its Subsidiaries shall have made any
Material Acquisition, Consolidated EBITDA for such Reference Period
shall be calculated after giving pro forma effect thereto (including
the incurrence or assumption of any Debt) as if such Material
Acquisition had occurred on the first day of such Reference Period.
Additionally, if since the beginning of such Reference Period any
Person that subsequently shall have become a Subsidiary or was merged
or consolidated with the Issuer or any of its Subsidiaries as a
result of a Material Acquisition occurring during such Reference
Period shall have made any Disposition or Acquisition of property
that would have required an adjustment pursuant to clause (i) or (ii)
above if made by the Issuer or any of its Subsidiaries during such
Reference Period, Consolidated EBITDA for such period shall be
calculated after giving pro forma effect thereto as if such
Disposition or Acquisition had occurred on the first day of such
period.
"Consolidated Fixed Charges" means, for any period, means
the sum (without duplication) of (a) Consolidated Interest Expense
for such period, (b) mandatory dividend payments during such period
in respect of preferred Capital Stock of the Issuer or any of its
Subsidiaries and (c) to the extent not included in (a) above,
payments during such period in respect of the financing costs of
financial derivatives in the form of equity swaps.
"Consolidated Fixed Charge Coverage Ratio" means, for any
period, the ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Fixed Charges for such period.
"Consolidated Interest Expense" means, for any period, the
total gross interest expense of the Issuer and its consolidated
Subsidiaries allocable to such period in accordance with Mexican
GAAP.
"Consolidated Leverage Ratio" means, at any time during any
fiscal quarter, the ratio of (a) Consolidated Net Debt at such time
to (b) Consolidated EBITDA for the four consecutive fiscal quarters
immediately preceding such fiscal quarter.
"Consolidated Net Debt" means, at any date, the sum (without
duplication) of (a) the aggregate amount of all Debt of the Issuer
and its Subsidiaries at such date, plus (b) to the extent not
included in Debt the aggregate amount of all derivative financing in
the form of equity swaps outstanding at such date plus (c) to the
extent not included in Debt, all payment obligations of such Person
under (i) the 9.66% Puttable Capital Securities issued by CEMEX
International Capital LLC on May 14, 1998 or (ii) the Framework
Agreement, dated November 6, 2000, relating to the financing of the
subscription by New Sunward Holdings B.V. of the equivalent in euro
of U.S.$1,500,000,000 for common stock of Cia. Valenciana de Cementos
Portland, S.A. in connection with the acquisition of Southdown, Inc.
(the "Framework Agreement"), the Facility Agreement (as such term is
defined in the Framework Agreement) and the other documents and
instruments executed in connection with the Framework Agreement, or
under any transaction similar to (i) or (ii), minus (d) all Temporary
Investments of the Issuer and its Subsidiaries at such date.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any indenture,
mortgage, deed of trust, loan agreement or other agreement to which
such Person is a party or by which it or any of its property or
assets is bound.
"CP Disruption Event" has the meaning specified in the
definition of "Non-Default Disruption Event" in this Section 1.01.
"Dealer" means Banc of America Securities LLC., Banc One
Capital Markets, Inc., Barclays Capital Inc. and any other dealer or
placement agent of the Commercial Paper Notes appointed by the Issuer
and approved by the Arrangers and the Issuing Bank.
"Dealer Agreement" means any agreement between the Issuer
and any Dealer with respect to the issue and sale or placement of
Commercial Paper Notes, as amended, modified or supplemented from
time to time.
"Debt" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of
such Person as lessee under Capital Leases, (v) all Debt of others
secured by a Lien on any asset of such Person, up to the value of
such asset, as recorded in such Person's most recent balance sheet,
(vi) all obligations of such Person with respect to product invoices
incurred in connection with export financing, and (vii) all
obligations of such Person under repurchase agreements for the stock
issued by such Person or another Person.
"Default" means any condition, event or circumstance which,
with the giving of notice or lapse of time or both, would, unless
cured or waived, become an Event of Default.
"Defaulting Lender" has the meaning specified in Section
2.06(a).
"Depositary" means U.S. Bank Trust National Association, in
its capacity as depositary, issuing agent and paying agent under the
Depositary Agreement and any successor depositary appointed in
accordance with the terms hereof and thereof.
"Depositary Agreement" means the First Amended and Restated
Depositary Agreement among the Issuer, the Issuing Bank, the
Administrative Agent and the Depositary in substantially the form of
Exhibit C, as from time to time amended, supplemented or otherwise
modified.
"Disbursement Date" means, with respect to a Drawing, the
Business Day on which such Drawing is paid by the Issuing Bank, with
respect to a Standby L/C Drawing, the Business Day on which such
Standby L/C Drawing is paid by the Issuing Bank and, with respect to
a Loan under Section 3.01(f), the date on which such Loan is made.
"Disposition" means, with respect to any property, any sale,
lease, sale and leaseback, assignment, conveyance, transfer or other
disposition thereof. The terms "Dispose" and "Disposed of" shall have
correlative meanings.
"Dollars" and "U.S.$" each means the lawful currency of the
United States.
"Dow Jones Page 3750" means the display designated as page
"3750" on the Dow Jones Market Screen (formerly known as the Telerate
Service) or such other page as may replace the "3750" page on that
service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London
interbank offered rates for Dollar deposits.
"Downgrading Event" has the meaning set forth in the
definition of "Non-Default Disruption Event" in this Section 1.01.
"Drawing" means a drawing made by the Depositary under the
Letter of Credit.
"Effective Date" has the meaning specified in Section 6.01.
"Environmental Action" means any audit procedure, action,
suit, demand, demand letter, claim, notice of non-compliance or
violation, notice of liability or potential liability, investigation,
proceeding, consent order or consent agreement relating in any way to
any Environmental Law, Environmental Permit or Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or
the environment, including (a) by any Governmental Authority for
enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any Governmental Authority or any third party for
damages, contribution, indemnification, cost recovery, compensation
or injunctive relief.
"Environmental Law" means any federal, state, local or
foreign statute, law, ordinance, rule, regulation, technical standard
(norma tecnica or norma oficial Mexicana), code, order, judgment,
decree or judicial agency interpretation, policy or guidance relating
to pollution or protection of the environment, health, safety or
natural resources, including those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required under
any Environmental Law.
"Eurocurrency Liabilities" means, with respect to the
Issuing Bank or any Lender, the full reserve requirement percentage
imposed in respect of "Eurocurrency liabilities", as such term is
defined in Regulation D (or any successor provision) (including any
marginal, emergency, supplemental, special or other reserves) of the
Federal Reserve Board, applicable to the Issuing Bank or such Lender
for any day during an Interest Period.
"Eurodollar Business Day" means any Business Day on which
commercial banks are open in London for the transaction of
international business, including dealings in Dollar deposits in the
international interbank markets.
"Eurodollar Loan" means any Loan made or maintained at a
rate of interest calculated with reference to LIBOR.
"Events of Default" has the meaning specified in Section
12.01.
"Face Amount" of any Commercial Paper Note means the full
amount thereof payable at maturity.
"Federal Funds Rate" means, for any relevant day, the
overnight Federal funds rate as published for such day in the Federal
Reserve Statistical Release H.15 (519) or any successor publication,
or, if such rate is not published for any day, the rate for such day
will be the rate set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotation for U.S. Government
Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the
"Composite 3:30 p.m. Quotation" for such day under the caption
"Federal Funds Effective Rate"). If on any relevant day the
appropriate rate for such previous day is not yet published in either
H.15 (519) or the Composite 3:30 p.m. Quotations, the rate for such
day will be the arithmetic mean as determined by the Administrative
Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of recognized standing of Federal funds
transactions in New York City selected by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System of the United States.
"Fee Letter" means any written agreement as to the payment
of fees referred to in Section 5.03.
"Foreign Financial Institution" means an institution
registered as a foreign financial institution with the Ministry of
Finance in the Mexican Banking and Financial Institutions, Pensions,
Retirement and Foreign Investment Funds Registry for purposes of
Article 154 of the Mexican Income Tax Law.
"Governmental Authority" means any branch of power or
government or any state, department or other political subdivision
thereof, or any governmental body, agency, authority (including any
central bank or taxing authority), any entity or instrumentality
(including any court or tribunal) exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Guarantor" shall have the meaning specified in the preamble
hereto.
"Hazardous Materials" means (a) radioactive materials,
asbestos-containing materials, polychlorinated biphenyls, radon gas
and (b) any other chemicals, materials or substances designated,
classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any applicable Environmental Law.
"Illegality Event" has the meaning set forth in the
definition of "Non-Default Disruption Event" in this Section 1.01.
"Indemnified Party" has the meaning specified in Section
16.05.
"Interest Period" means, with respect to each Borrowing of
Eurodollar Loans, the period (i) commencing (A) on the date of such
Borrowing or conversion of Base Rate Loans into Eurodollar Loans or
(B) in the case of the continuation of Eurodollar Loans for a further
Interest Period, on the last day of the immediately preceding
Interest Period and (ii) ending one, two or three months thereafter
as the Issuer may elect in the applicable Notice of Borrowing or
Notice of Continuation/Conversion; provided, however, that:
(a) any Interest Period which would otherwise end on a day
which is not a Eurodollar Business Day shall, subject to paragraph
(c) below, be extended to the next succeeding Eurodollar Business Day
unless such Eurodollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the immediately
preceding Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to paragraph (c) below, end on
the last Eurodollar Business Day of a calendar month;
(c) any Interest Period which would otherwise end after the
last day of the Loan Period shall end on the last day of the Loan
Period; and
(d) any Interest Period which would otherwise end after the
Maturity Date shall end on the Maturity Date.
"Issuer" has the meaning specified in the preamble hereto.
"Issuer Deposit Amount" has the meaning specified in Section
2.02(d).
"Issuing Bank" means Barclays Bank PLC, New York Branch, in
its capacity as issuer of the Letter of Credit and of Standby L/Cs,
and its successors in such capacity.
"Lender" means each financial institution listed on the
signature pages hereof, each Assignee which becomes a Lender pursuant
to Section 5.02(c) or 16.06(b), each Substitute Lender and each of
their respective successors or assigns.
"Lending Office" means, with respect to any Lender, (a) the
office or offices of such Lender specified as its "Lending Office" or
"Lending Offices" in Schedule 1.01(b) or (b) such other office or
offices of such Lender as it may designate as its Lending Office by
notice to the Issuer and the Administrative Agent and with the
consent of the Issuing Bank (which shall not be unreasonably
withheld).
"Letter of Credit" means the first amended and restated
irrevocable direct-pay letter of credit of the Issuing Bank in
substantially the form of Exhibit A, issued to the Depositary, as the
Letter of Credit may be amended or replaced from time to time
pursuant to the terms of this Agreement.
"Letter of Credit Account" has the meaning specified in the
Depositary Agreement.
"Letter of Credit Exposure" means, at any time, the sum,
without duplication, of (a) the Face Amount of all Outstanding
Commercial Paper Notes plus (b) the aggregate unpaid amount at such
time of all unreimbursed Drawings made under the Letter of Credit
which have not been converted into Loans pursuant to Article III.
"Letter of Credit Facility" means the Letter of Credit, any
drafts presented thereunder, any Drawings (including any unreimbursed
Drawings), any obligations of the Issuer in respect of the foregoing
and any payments received by the Issuing Bank in respect of any of
the foregoing.
"Letter of Credit Fees" has the meaning specified in Section
5.03(b).
"LIBOR", applicable to any Interest Period, means the rate
for deposits in Dollars for a period equal to such Interest Period
quoted on the second Eurodollar Business Day prior to the first day
of such Interest Period, as such rate appears on Dow Jones Page 3750
as of 11:00 a.m. (London time) on such date as determined by the
Administrative Agent and notified to the Lenders and the Issuer on
such second prior Eurodollar Business Day. If LIBOR cannot be
determined based on the Dow Jones Page 3750, LIBOR means the
arithmetic mean (rounded upwards to the nearest 1/16%) of the rates
per annum, as supplied to the Administrative Agent, quoted by the
Reference Banks to prime banks in the London interbank market for
deposits in Dollars at approximately 11:00 a.m. (London time) two
Eurodollar Business Days prior to the first day of such Interest
Period in an amount approximately equal to the principal amount of
the Loans to which such Interest Period is to apply and for a period
of time comparable to such Interest Period.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. The Issuer or any Subsidiary of the Issuer
shall be deemed to own, subject to a Lien, any asset that it has
acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, Capital Lease or other title
retention lease relating to such asset, or any account receivable
transferred by it with recourse (including any such transfer subject
to a holdback or similar arrangement that effectively imposes the
risk of collectability on the transferor).
"Loan" has the meaning specified in Section 3.01(a).
"Loan Period" has the meaning specified in Section 3.01(a).
"Material Acquisition" any (a) acquisition of property or
series of related acquisitions of property that constitutes assets
comprising all or substantially all of an operating unit, division or
line of business or (b) acquisition of or other investment in the
Capital Stock of any Subsidiary or any Person which becomes a
Subsidiary or is merged or consolidated with the Issuer or any of its
Subsidiaries, in each case, which involves the payment of
consideration by the Issuer and its Subsidiaries in excess of
U.S.$25,000,000 (or the equivalent in other currencies).
"Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Issuer and its
Subsidiaries taken as a whole, (b) the rights and remedies of the
Administrative Agent or any Lender under this Agreement or any Note
or (c) the ability of the Issuer and/or the Guarantors to perform
their Obligations under this Agreement or any other Transaction
Document.
"Material Debt" means Debt (other than the Notes, the Letter
of Credit Exposure and the Standby L/C Exposure) of the Issuer and/or
one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal amount outstanding
exceeding U.S.$50,000,000 (or the equivalent thereof in other
currencies).
"Material Disposition" means any Disposition of property or
series of related Dispositions of property that yields gross proceeds
to the Issuer or any of its Subsidiaries in excess of U.S.$25,000,000
(or the equivalent in other currencies).
"Material Subsidiary" means, at any date, (a) each
Subsidiary of the Issuer (if any) (i) the assets of which, together
with those of its Subsidiaries, on a consolidated basis, without
duplication, constitute 5% or more of the consolidated assets of the
Issuer and its Subsidiaries as of the end of the then most recently
ended fiscal quarter or (ii) the operating profit of which, together
with that of its Subsidiaries, on a consolidated basis, without
duplication, constitutes 5% or more of the consolidated operating
profit of the Issuer and its Subsidiaries for the then most recently
ended fiscal quarter and (b) each Guarantor.
"Maturity Date" means, with respect to any Loan, the earlier
of (a) the Termination Date and (b) the last day of the Loan Period.
"Mexican GAAP" means, generally accepted accounting
principles in Mexico as in effect from time to time, except that for
purposes of Section 10.05, Mexican GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent
with those used in the preparation of the most recent audited
financial statements referred to in Section 7.05. In the event that
any change in Mexican GAAP shall occur and such change results in a
change in the method of calculation of financial covenants, standards
or terms in this Agreement, then the Issuer and the Administrative
Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such change
in Mexican GAAP with the desired result that the criteria for
evaluating the Issuer's financial condition shall be the same after
such change as if such change had not been made. Until such time as
such an amendment shall have been executed and delivered by the
Issuer, the Administrative Agent and the Required Lenders, all
financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such change in Mexican
GAAP had not occurred.
"Mexico" means the United Mexican States.
"Ministry of Finance" means the Ministry of Finance and
Public Credit of Mexico.
"Moody's" means Moody's Investors Service, Inc. or any
successor to the rating business thereof.
"Non-Default Disruption Date" means the first date to occur
which is both (a) a Disbursement Date and (b) a date on which a
Non-Default Disruption Event has occurred or is continuing.
"Non-Default Disruption Event" means (a) that for any reason
the cost of funds to the Issuer (which shall include all costs
associated with a borrowing, including commitment fees, Letter of
Credit Fees, Mexican withholding tax and all other out-of-pocket
costs actually incurred by or supported by the Issuer directly
related to the borrowing of funds which are customarily included in
determining the all-in cost of funds) from the issuance of Commercial
Paper Notes exceeds the cost to the Issuer of borrowing Loans or as a
result of a disruption in the market for Commercial Paper Notes the
Issuer is unable to sell new Commercial Paper Notes to repay maturing
Commercial Paper Notes (a "CP Disruption Event") as notified in
writing by the Issuer to the Issuing Bank, the Arrangers and the
Administrative Agent in accordance with the terms and provisions of
Section 2.07(a); or (b) (i) any introduction of, or change in, or
change in the interpretation or application of, any Requirement of
Law by any Governmental Authority that would make it unlawful for the
Issuing Bank to issue or maintain the Letter of Credit or (ii) any
declaration of a general banking moratorium by any of the United
States, the State of New York or Mexican banking authority (an
"Illegality Event"); or (c) a downgrading of the Issuing Bank's
short-term credit rating below A-2 by S&P or below P-2 by Moody's, as
notified by the Issuing Bank or the Administrative Agent to the
Issuer and the Dealers (a "Downgrading Event"); provided, however,
that so long as any Default or Event of Default has occurred and is
continuing, no Non-Default Disruption Event shall be deemed to exist.
"Non-Extending Lender" means, in connection with extending
the Stated Termination Date and the Commitments in accordance with
Section 5.02, (a) any Lender that gives written notice to the
Arrangers and Administrative Agent that it does not agree to extend
its Commitment and (b) any Lender that fails to give any notice
within five Business Days prior to the effective date of such
extension, whether or not such Lender agrees to such extension, and
shall, for purposes of the effectiveness of this Agreement, also
include any lender under the Prior Agreement that elected not to
extend its commitment under the Prior Agreement to be a Lender
hereunder.
"Note" means a promissory note of the Issuer in
substantially the form of Exhibit B, evidencing the obligation of the
Issuer to repay the Loans made by a Lender.
"Notice of Acceleration" means a notice from the
Administrative Agent to the Depositary pursuant to Section 12.02(b)
in substantially the form of Annex F to the Letter of Credit.
"Notice of Borrowing" has the meaning specified in Section
3.02(a).
"Notice of Continuation/Conversion" has the meaning
specified in Section 3.05(b).
"Notice of Default" means a notice from the Issuing Bank to
the Issuer and the Depositary pursuant to Section 12.02(a) in
substantially the form of Annex E-1 to the Letter of Credit.
"Notice of Default Reduction" means a notice from the
Depositary to the Issuing Bank pursuant to Section 12.02(a) in
substantially the form of Annex E-2 to the Letter of Credit.
"Notice of Reduction of Stated Amount" means a notice from
the Issuing Bank to the Depositary pursuant to Section 2.06(d),
5.01(c) or 5.11 in substantially the form of Annex G to the Letter of
Credit.
"Notice of Termination" means a notice from the Issuing Bank
to the Issuer and the Depositary pursuant to Section 12.02(a) in
substantially the form of Annex D to the Letter of Credit.
"Obligations" means, (a) as to the Issuer, all of the
indebtedness, obligations and liabilities of the Issuer to the
Lenders, the Issuing Bank, the Arrangers and the Administrative Agent
now or in the future existing under or in connection with the
Transaction Documents, whether direct or indirect, absolute or
contingent, due or to become due and (b) as to each Guarantor, all
the indebtedness, obligations and liabilities of such Guarantor to
the Lenders the Issuing Bank, the Arrangers and the Administration
Agent now or in the future existing under or in connection with this
Agreement, whether direct or indirect, absolute or contingent, due or
to become due.
"Obligor" means the Issuer and each Guarantor.
"OECD Bank shall mean any bank organized under the laws of a
member of the Organization for Economic Cooperation and Development.
"Offering Statements" means (a) the Commercial Paper
Offering Memoranda of Barclays Capital Inc. and Banc of America
Securities LLC., relating to the offering of the Commercial Paper
Notes and any amendment or supplement thereto and (b) each other
document used by a Dealer in offering Commercial Paper Notes for
sale.
"Other Taxes" means any present or future stamp or
documentary taxes or any other excise or property taxes, charges,
imposts, duties, fees, or similar levies which arise from any payment
made hereunder or under the Notes or from the execution, delivery,
registration, performance or enforcement of, or otherwise with
respect to, this Agreement or any other Transaction Document and
which are imposed, levied, collected or withheld by any Governmental
Authority.
"Outstanding" means all or any Commercial Paper Notes issued
at any time under the Depositary Agreement, except Commercial Paper
Notes (a) that have been paid through the Depositary or (b) that have
matured but have not been presented for payment on the date of such
maturity, but as to which funds for payment are available in the
Letter of Credit Account or as to which the Presentment Deadline has
passed. Funds which are subject to any writ, order, judgment, warrant
of attachment, execution or similar process or which the Depositary
determines were deposited in the Letter of Credit Account in error
shall be deemed not to be available for payment in the Letter of
Credit Account.
"Participant" has the meaning specified in Section 16.06(d).
"Participation Fee" has the meaning specified in Section
5.03(a).
"Participation Percentage" means, for any Lender, at any
time of determination thereof, a fraction having (a) as its numerator
the Total Exposure of such Lender as in effect at such time and (b)
as its denominator the aggregate amount of the Total Exposures of all
of the Lenders as in effect at such time.
"Participation Rate" has the meaning specified in Section
5.03(a).
"Permitted Liens" has the meaning specified in Section
10.06.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, limited liability company,
trust, unincorporated association, joint venture or other business
entity or Governmental Authority, whether or not having a separate
legal personality.
"Presentment Deadline" means, as to any Commercial Paper
Note, the date which is two Business Days after the maturity date
thereof.
"Prior Agreement" has the meaning specified in the Recitals
hereto.
"Prime Rate" means the rate of interest publicly announced
by Bank of America N.A. from time to time as its Prime Rate in New
York City, the Prime Rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of
interest charged by Bank of America N.A. or any Lender in connection
with extensions of credit to debtors of any class, or generally.
"Process Agent" has the meaning specified in Section
16.12(a).
"Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Issuer or any
Subsidiary pursuant to which the Issuer or any Subsidiary may sell,
convey or otherwise transfer to a Special Purpose Vehicle (in the
case of a transfer by the Issuer or any other Seller) and any other
person (in the case of a transfer by a Special Purpose Vehicle), or
may grant a security interest in, any Receivables Program Assets
(whether now existing or arising in the future); provided that:
(a) no portion of the indebtedness or any other obligations
(contingent or otherwise) of a Special Purpose Vehicle (i) is
guaranteed by the Issuer or any other Seller or (ii) is recourse to
or obligates the Issuer or any other Seller in any way such that the
requirements for off balance sheet treatment under Financial
Accounting Standards Bulletin 140 are not satisfied; and
(b) the Issuer and the other Sellers do not have any
obligation to maintain or preserve the financial condition of a
Special Purpose Vehicle or cause such entity to achieve certain
levels of operating results.
"Rating Agencies" means Moody's and S&P.
"Receivables" means all rights of the Issuer or any other
Seller to payments (whether constituting accounts, chattel paper,
instruments, general intangibles or otherwise, and including the
right to payment of any interest or finance charges), which rights
are identified in the accounting records of the Issuer or such Seller
as accounts receivable.
"Receivables Documents" means (a) a receivables purchase
agreement, pooling and servicing agreement, credit agreement,
agreements to acquire undivided interests or other agreement to
transfer, or create a security interest in, Receivables Program
Assets, in each case as amended, modified, supplemented or restated
and in effect from time to time entered into by the Issuer, another
Seller and/or a Special Purpose Vehicle, and (b) each other
instrument, agreement and other document entered into by the Issuer,
any other Seller or a Special Purpose Vehicle relating to the
transactions contemplated by the items referred to in clause (a)
above, in each case as amended, modified, supplemented or restated
and in effect from time to time.
"Receivables Program Assets" means (a) all Receivables which
are described as being transferred by the Issuer, another Seller or a
Special Purpose Vehicle pursuant to the Receivables Documents, (b)
all Receivables Related Assets in respect of such Receivables, and
(c) all collections (including recoveries) and other proceeds of the
assets described in the foregoing clauses.
"Receivables Program Obligations" means (a) notes, trust
certificates, undivided interests, partnership interests or other
interests representing the right to be paid a specified principal
amount from the Receivables Program Assets and (b) related
obligations of the Issuer, a Subsidiary of the Issuer or a Special
Purpose Vehicle (including, without limitation, rights in respect of
interest or yield hedging obligations, breach of warranty claims and
expense reimbursement and indemnity provisions).
"Receivables Related Assets" means with respect to any
"Receivables" (i) any rights arising under the documentation
governing or relating to such Receivables (including rights in
respect of liens securing such Receivables), (ii) any proceeds of
such Receivables, (iii) other assets which are customarily
transferred or in respect of which security interests are customarily
granted in connection with asset securitization transactions
involving accounts receivable.
"Reference Banks" means Bank of America N.A. and Barclays
Bank PLC.
"Required Lenders" means, at any time, Lenders (other than
Defaulting Lenders) having more than 50% of the sum of the Total
Exposures of all of the Lenders (other than Defaulting Lenders) at
such time.
"Requirement of Law" means, as to any Person, any law,
ordinance, rule, regulation or requirement of any Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer" of any Person means the Chief
Financial Officer, the Corporate Planning and Finance Director, the
Finance Director or the Comptroller of such Person.
"Seller" means the Issuer and any Subsidiary or other
affiliate of the Issuer (other than a Subsidiary or affiliate that is
a Special Purpose Vehicle) which is a party to a Receivables
Document.
"Settlement Limits" has the meaning specified in Section
10.01.
"S&P" means Standard & Poor's Ratings Corporation or any
successor to the rating agency business thereof.
"Special Purpose Vehicle" means a trust, partnership or
other special purpose person established by the Issuer and/or its
Subsidiaries to implement a Qualified Receivables Transaction.
"Standby L/C" means (i) a standby letter of credit of the
Issuing Bank in substantially the form of Exhibit I-1 or Exhibit I-2
as may be amended or replaced from time to time pursuant to the terms
of this Agreement, and (ii) a standby letter of credit of the Issuing
Bank, issued and outstanding on the Effective Date pursuant to the
terms of the Prior Agreement.
"Standby L/C Drawing" means a drawing made under a Standby
L/C.
"Standby L/C Exposure" means, at any time, the sum of (a)
the aggregate undrawn amount at such time of all outstanding Standby
L/Cs plus (b) the aggregate unpaid amount at such time of all
unreimbursed Standby L/C Drawings under all outstanding Standby L/Cs.
"Standby L/C Facility" means the Standby L/Cs, any Standby
L/C Drawing (including any unreimbursed Standby L/C Drawing), any
obligations of the Issuer in respect of the foregoing and the
payments received by the Issuing Bank in respect of any of the
foregoing.
"Standby L/C Sublimit" means initially US$200,000,000 as
such amount as may be reduced or increased in connection with an
extension of the Stated Termination Date and the Commitments in
accordance with Section 5.02(d).
"Stated Amount" means the stated amount of the Letter of
Credit, initially, US$400,000,000, as such amount may be reduced,
increased or reinstated from time to time in accordance with the
terms of the Letter of Credit.
"Stated Termination Date" means, at any time, the date
specified in the Letter of Credit as the Stated Termination Date,
initially August 5, 2005.
"Subsidiary" means with respect to any Person, any
corporation, partnership, joint venture, limited liability company,
trust, estate or other entity of which (or in which) more than 50% of
(a) in the case of a corporation, the issued and outstanding capital
stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency not
in the control of such Person), (b) in the case of a limited
liability company, partnership or joint venture, the interest in the
capital or profits of such limited liability company, partnership or
joint venture or (c) in the case of a trust or estate, the beneficial
interest in such trust or estate, is at the time directly or
indirectly owned or controlled by (X) such Person, (Y) such Person
and one or more of its other Subsidiaries or (Z) one or more of such
Person's other Subsidiaries. For purposes of determining whether a
trust formed in connection with a Qualified Receivables Transaction
is a Subsidiary, notes, trust certificates, undivided interests,
partnership interests or other interests of the type described in
clause (a) of the definition of Receivables Program Obligations shall
be counted as beneficial interests in such trust.
"Substitute Lender" means a commercial bank or other
financial institution, acceptable to the Issuer, the Issuing Bank and
the Administrative Agent, each in its sole discretion, and approved
by the Arrangers (including such a bank or financial institution
which is already a Lender hereunder) which assumes all or a portion
of the Commitment of a Lender pursuant to the terms of this
Agreement.
"Taxes" means any and all present or future income, stamp,
sales or other taxes, levies, imposts, duties, deductions, fees,
charges or withholdings, and all liabilities with respect thereto
collected, withheld or assessed by any Governmental Authority,
excluding, (a) in the case of each Lender, the Issuing Bank and the
Administrative Agent, such taxes (including income taxes or franchise
taxes) as are imposed on or measured by its net income by the
jurisdiction (or any political subdivision thereof) under the laws of
which such Lender, the Issuing Bank or the Administrative Agent, as
the case may be, is organized or maintains a Lending Office or its
principal office or performs its functions as Administrative Agent or
as are imposed on the Lender, the Issuing Bank or the Administrative
Agent (as the case may be) as a result of a present or former
connection between the Lender, the Issuing Bank and the
Administrative Agent and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising
solely from the Lender, the Issuing Bank or such Administrative Agent
having executed, delivered or performed its obligations or received a
payment under, or enforced, the Transaction Documents) and (b) any
taxes, levies, imposts, deductions, charges or withholdings imposed
by reason of any Lender's or Administrative Agent's failure to (i)
register as a Foreign Financial Institution with the Ministry of
Finance and (ii) be a resident (or have a principal office which is a
resident, if such Lender lends through a branch or agency) for tax
purposes of a jurisdiction with which Mexico has in effect a treaty
for the avoidance of double taxation (but only in respect of those
taxes payable in excess of taxes that would have been payable had
such Lender complied with those conditions).
"Temporary Investments" means, at any date, all amounts that
would, in conformity with Mexican GAAP consistently applied, be set
forth opposite the caption "cash and cash equivalent" ("efectivo y
equivalentes de efectivo") or "temporary investments" ("inversiones
temporales") on a consolidated balance sheet of the Issuer at such
date.
"Termination Date" means the date which is the earliest of
(a) the date on which the Letter of Credit is surrendered by the
Depositary to the Issuing Bank for cancellation, (b) the Stated
Termination Date and (c) the date specified in a Notice of
Termination or a Notice of Default delivered by the Issuing Bank in
accordance with the terms of this Agreement.
"Total Exposure" means at any time, as to any Lender, the
amount of its Commitment at such time, or, if the Commitments shall
have terminated, its Total Outstandings at such time.
"Total Outstandings" means at any time, as to any Lender,
the sum of the aggregate outstanding principal amount of such
Lender's Loans, its share of the aggregate outstanding Letter of
Credit Exposure and its share of the aggregate outstanding Standby
L/C Exposure.
"Transaction Documents" means this Agreement, the Notes, the
Letter of Credit, the Standby L/Cs, the Depositary Agreement, the
Commercial Paper Notes and the Dealer Agreements.
"United States" means the United States of America,
including the States and the District of Columbia, but excluding its
territories and possessions.
"Up-Front Fee" has the meaning specified in Section 5.03(g).
1.02 Other Definitional Provisions.
(a) The terms "including" and "include" are not limiting and
mean "including but not limited to" and "include but are not limited
to".
(b) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
Article, Section, paragraph, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein are equally
applicable to both the singular and plural forms of such terms.
(d) In this Agreement, in the computation of periods of time
from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means
"to but excluding". Periods of days referred to in this Agreement
shall be counted in calendar days unless Business Days or Eurodollar
Business Days are expressly prescribed.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation
of this Agreement.
1.03 Accounting Terms and Determinations. All accounting and
financing terms not specifically defined herein shall be construed in
accordance with Mexican GAAP.
ARTICLE II
THE LETTER OF CREDIT FACILITY
2.01 Issuance of the Letter of Credit.
(a) Upon at least one Business Day's prior notice from the Issuer to
the Issuing Bank, the Issuing Bank agrees, on the terms and subject to the
conditions hereinafter set forth, to issue and deliver the Letter of Credit to
the Depositary (with a copy to the Administrative Agent and the Issuer) on the
Effective Date, in the Stated Amount and expiring on or, subject to the terms
and conditions thereof, before the Stated Termination Date. The Letter of
Credit No. SB00197 issued and outstanding pursuant to the Prior Agreement
shall, upon effectiveness of this Agreement, be superceded and replaced by a
First Amended and Restated Irrevocable Direct-Pay Letter of Credit in
substantially the form as Exhibit A hereto.
(b) Each Lender hereby irrevocably authorizes the Issuing Bank to
issue the Letter of Credit under and in accordance with this Agreement, to pay
the amount of any draft presented under the Letter of Credit in accordance
with the terms and conditions thereof, to receive from the Issuer
reimbursement for Drawings and to take such action on its behalf under the
provisions of this Agreement and the Depositary Agreement and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Issuing Bank by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto.
2.02 Reimbursement Obligations.
(a) The Issuer agrees to reimburse the Issuing Bank for the full
amount of any Drawing paid by the Issuing Bank on the Disbursement Date;
provided, however, that in no event shall such reimbursement be made prior to
the time such Drawing is paid by the Issuing Bank. The Issuer may cause the
Issuing Bank to be reimbursed as provided in accordance with paragraph (d) of
this Section 2.02.
(b) If a Non-Default Disruption Event occurs or continues to exist on
a Disbursement Date, the unreimbursed amount of the Drawing honored on such
date may, during the Loan Period and subject to the conditions of Section
6.03, be converted into Loans in accordance with Section 3.01, and, at the
time such conversion becomes effective, the obligation of the Issuer to
reimburse the Issuing Bank under paragraph (a) above shall be discharged in an
amount equal to the aggregate principal amount paid by the Lenders to the
Administrative Agent for the account of the Issuing Bank pursuant to Section
3.03(b) and retained by the Issuing Bank. Any Drawing not converted into Loans
in accordance with Section 3.01 shall remain an unconditional and immediate
payment obligation of the Issuer.
(c) If the amount of any Drawing is not reimbursed in full on the
Disbursement Date (or as of the Disbursement Date as provided in Section
3.03(e)), then the amount thereof which is not so reimbursed shall bear
interest from the Disbursement Date until the date of actual payment thereof
or the date of conversion into Loans pursuant to Section 3.01 at a rate per
annum equal to the Base Rate plus 2.00%, payable on demand.
(d) Except as otherwise provided in Sections 2.02(b) and 3.01, the
Issuer agrees that it will meet its obligations under paragraph (a) above by
causing to be deposited on each maturity date of any Commercial Paper Note in
the Commercial Paper Account in immediately available funds an amount equal to
the aggregate Face Amount of all Commercial Paper Notes scheduled to mature on
such day less the Aggregate Reported Proceeds payable on or before 4:30 p.m.
(New York City time) on account of the purchase price of Commercial Paper
Notes duly issued and delivered on such day in accordance with the provisions
of this Agreement and the Depositary Agreement and to be deposited in the
Commercial Paper Account (the amount to be so deposited by the Issuer in the
Commercial Paper Account being the "Issuer Deposit Amount").
(e) Except for the first issuance of Commercial Paper Notes under the
Depositary Agreement after the Effective Date, each issuance of Commercial
Paper Notes pursuant to the provisions of the Depositary Agreement shall be
deemed (i) an unconditional, irrevocable and absolute assignment by the Issuer
to the Issuing Bank of the proceeds of the sale of such Commercial Paper Notes
in an amount not to exceed the amount required to reimburse the Issuing Bank
in respect of any Drawing made on the same day under the Letter of Credit and
otherwise not reimbursed by the Issuer and (ii) an irrevocable and absolute
assignment by the Issuer to the Administrative Agent of any remaining proceeds
of the sale of such Commercial Paper Notes; provided, however, that, the
Administrative Agent shall remit or instruct the Depositary to remit to the
Issuer a portion of such remaining proceeds in an amount equal to the excess
of such remaining proceeds over such amount as the Administrative Agent may
instruct the Depositary to apply to payment of principal and interest due and
payable with respect to the Loans or any other amounts due and payable under
this Agreement (including any amounts due under Section 12.02(c)).
2.03 Obligations Absolute.
(a) The obligations of the Issuer to reimburse the Issuing Bank for
any Drawing shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of any
Transaction Document;
(ii) any amendment to or waiver of or any consent to
departure from the terms of any Transaction Document;
(iii) the existence of any claim, set-off, defense or other
right which the Issuer may have at any time against the Depositary or
any transferee of the Letter of Credit (or any Person for whom the
Depositary or any such transferee may be acting), any Dealer, the
Administrative Agent, the Issuing Bank or any Lender or any other
Person, whether in connection with this Agreement, any other
Transaction Document or any unrelated transaction;
(iv) any draft, statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect whatsoever; or
(v) payment by the Issuing Bank under the Letter of Credit
against presentation of a draft or document which does not comply
with the terms of the Letter of Credit.
(b) The Issuing Bank shall not be responsible to any Person:
(i) for the validity, genuineness or legal effect of any
document submitted to the Issuing Bank by any Person in connection
with the issuance of, or any Drawing under, the Letter of Credit;
provided, however, that nothing in this clause (i) shall relieve the
Issuing Bank from its obligations to honor a Drawing under the Letter
of Credit that strictly complies with the terms of the Letter of
Credit;
(ii) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(iii) for any loss or delay in the transmission or otherwise
of any document required in order to make a Drawing under the Letter
of Credit or of the proceeds thereof;
(iv) for the misapplication by the beneficiary of the Letter
of Credit of the proceeds of any Drawing under the Letter of Credit;
or
(v) for any consequences arising from causes beyond the
control of the Issuing Bank (including, any acts of any Governmental
Authority);
provided, however, that the provisions of this Section 2.03 shall not limit
any right or claim the Issuer may have against the Issuing Bank to the extent
of any direct, as opposed to consequential or special, damages suffered by the
Issuer which the Issuer proves were caused by the Issuing Bank's gross
negligence or willful misconduct, it being understood that the existence of
any such right or claim shall not in any way affect the obligation of the
Issuer to reimburse the Issuing Bank for all Drawings under the Letter of
Credit.
2.04 Participating Interests.
(a) Each Lender, by its execution and delivery of this Agreement,
severally purchases from the Issuing Bank, without recourse to the Issuing
Bank, and the Issuing Bank hereby sells to each Lender, an undivided interest,
to the extent of such Lender's Participation Percentage, in the Letter of
Credit, all Drawings, all interest thereon and all other rights of the Issuing
Bank hereunder and under the Letter of Credit with respect thereto.
(b) The liability of each Lender to the Issuing Bank as described in
Section 2.04(a) shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever and shall not be affected by any circumstance,
including:
(i) any set-off, counterclaim, defense or other right which
such Lender or any other Person may have against the Administrative
Agent, the Issuing Bank or any other Person for any reason
whatsoever;
(ii) the occurrence or continuance of a Default or Event of
Default or the termination of the Commitments or the expiration of
the Letter of Credit;
(iii) any adverse change in the condition (financial or
otherwise) of the Issuer;
(iv) any breach of any Transaction Document by any party
thereto;
(v) the fact that any condition precedent to the issuance of
Commercial Paper Notes was not in fact met;
(vi) any violation or asserted violation of law by any
Lender or any affiliate thereof;
(vii) the failure of any Lender to perform its obligations
hereunder; or
(viii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing;
provided, however, that no Lender shall be liable for any portion of such
liability resulting from the Issuing Bank's gross negligence or willful
misconduct.
(c) As promptly as practicable upon becoming aware that the Issuer
has not reimbursed or will not reimburse or cause the Issuing Bank to be
reimbursed in full for any Drawing under the Letter of Credit in accordance
with Section 2.02(a) or 2.02(b) on any Disbursement Date, the Issuing Bank
shall notify the Administrative Agent which shall promptly notify each Lender
to such effect and each Lender shall (i) not later than 4:30 p.m. (New York
City time) on the Business Day such notice is received from the Administrative
Agent (if such notice is received at or prior to 12:00 noon (New York City
time)) or (ii) not later than 11:00 a.m. (New York City time) on the Business
Day following receipt of such notice (if such notice is received after 12:00
noon (New York City time)) pay to the Administrative Agent, at the
Administrative Agent's Payment Office, for the account of the Issuing Bank, an
amount equal to such Lender's Participation Percentage of such unreimbursed
Drawing. Notwithstanding clause (ii) of this paragraph (c), if a Lender does
not make available to the Administrative Agent on the Disbursement Date such
Lender's Participation Percentage of any unreimbursed Drawing, such Lender
shall be required to pay interest to the Administrative Agent for the account
of the Issuing Bank on its Participation Percentage of the amount of such
unreimbursed Drawing at the Federal Funds Rate from such Disbursement Date
until the date payment is received by the Administrative Agent; provided,
however, that if the Federal Funds Rate does not cover the Issuing Bank's cost
of funds, the applicable rate of interest shall be such rate as determined by
the Issuing Bank, in good faith, to be equal to its cost of funds; and
provided, further, that if any amount remains unpaid by any Lender for more
than five Business Days after receipt of notice, such Lender shall, commencing
on the day next following such fifth Business Day, pay interest to the
Administrative Agent for the account of the Issuing Bank at a rate per annum
equal to the Federal Funds Rate plus 2%. Upon receipt of any such funds, the
Administrative Agent shall promptly pay such funds to the Issuing Bank.
(d) If the Administrative Agent receives a Lender's Participation
Percentage of any unreimbursed Drawing on the Disbursement Date therefor, or
if the Administrative Agent receives such payment together with interest
thereon in accordance with the provisions of the preceding paragraph (c), such
Lender shall be entitled to receive interest on its Participation Percentage
of such Drawing, as provided in paragraph (e)(ii) below, from the Disbursement
Date.
(e) The Issuing Bank agrees to pay promptly upon receipt to the
Administrative Agent for the account of each Lender (i) such Lender's
Participation Percentage of all amounts received from the Issuer directly or
indirectly (from the Commercial Paper Account or otherwise) in payment, in
whole or in part, of any unreimbursed Drawing, but only to the extent that
such Lender has paid in full its Participation Percentage of such Drawing to
the Administrative Agent for the account of the Issuing Bank pursuant to
paragraph (c) above and (ii) such Lender's Participation Percentage of any
interest received from the Issuer with respect to any such unreimbursed
Drawing, but only to the extent such Lender has paid in full its Participation
Percentage of such Drawing to the Administrative Agent for the account of the
Issuing Bank pursuant to paragraph (c) above.
(f) If, on account of the bankruptcy, insolvency, concurso mercantil
or governmental intervention (or similar event) of the Issuer, the Issuing
Bank or the Administrative Agent is required at any time (whether before or
after the Termination Date) to return to the Issuer or to a trustee, receiver,
liquidator, custodian or other similar official or any other Person, any
portion of the payments made by (or on behalf of) the Issuer to the
Administrative Agent for the account of the Issuing Bank (or directly to the
Issuing Bank) in reimbursement of any unreimbursed Drawing and interest
thereon, each Lender shall, on demand of the Issuing Bank or the
Administrative Agent, forthwith return to the Issuing Bank or the
Administrative Agent for the account of the Issuing Bank any amounts
transferred to such Lender by the Issuing Bank or the Administrative Agent in
respect thereof pursuant to the terms hereof plus such Lender's pro rata share
of any interest on such payments required to be paid to the Person recovering
such payments plus interest on all amounts so demanded from the day such
amounts are returned by the Issuing Bank or the Administrative Agent, as the
case may be, to the day such amounts are returned by such Lender to the
Issuing Bank or the Administrative Agent at a rate per annum for each day
equal to the Federal Funds Rate; provided, however, that if the Federal Funds
Rate does not cover the Issuing Bank's or the Administrative Agent's cost of
funds, the applicable rate of interest shall be such rate as determined by the
Issuing Bank or the Administrative Agent, in good faith, to be equal to its
cost of funds; and provided, further, that if any amount remains unpaid by any
Lender for more than five Business Days after demand, such Lender shall,
commencing on the day next following such fifth Business Day, pay interest to
the Issuing Bank or the Administrative Agent, as the case may be, at a rate
per annum equal to the Federal Funds Rate plus 2.00%. In any case when an
amount is returned to any Person pursuant to this paragraph (f), the
reimbursement obligation of the Issuer contained in Section 2.02(a) will be
reinstated as of the original date such reimbursement obligation arose.
(g) The Issuer hereby confirms and acknowledges that each Lender
shall have a direct claim against the Issuer for the principal of and interest
on each portion of any unreimbursed Drawing advanced by such Lender to the
Issuing Bank and that each Lender shall to the extent applicable be entitled
to all the rights of the Issuing Bank against the Issuer (to the extent not
exercised by the Issuing Bank) as if such Lender had funded its Participation
Percentage of the Drawing directly to the Depositary.
(h) The Issuing Bank and each Lender, with respect to the amounts
payable to it in respect of any unreimbursed Drawing, and the Administrative
Agent, with respect to all amounts payable in respect of unreimbursed
Drawings, shall maintain on its books in accordance with its usual practice,
loan accounts, setting forth its Participation Percentage of each Drawing, the
applicable interest rate and the amounts of principal and interest paid and
payable by the Issuer from time to time hereunder with respect thereto;
provided, however, that the failure by the Issuing Bank, any Lender or the
Administrative Agent to record any such amount on its books or any error in
such recordation shall not affect the obligations of the Issuer with respect
thereto. In the case of any dispute, action or proceeding relating to any
amount payable in respect of any unreimbursed Drawings, the entries in each
such account shall be prima facie evidence of such amount. In case of any
discrepancy between the entries in the Administrative Agent's books and a
Lender's books, such Lender's books shall be considered correct in the absence
of manifest error. In the case of any discrepancy between the entries in the
Issuing Bank's books and any Lender's books or the Administrative Agent's
books, the Issuing Bank's books shall be considered correct in the absence of
manifest error.
2.05 Limited Liability of the Issuing Bank. As between the Issuing
Bank on the one hand, and the Issuer on the other, the Issuer assumes all
risks of any acts or omissions of the Depositary with respect to its use of
the Letter of Credit or the proceeds thereof. Neither the Issuing Bank nor any
of its employees, officers, directors or agents shall be liable or responsible
for any acts or omissions of the Depositary in connection therewith.
2.06 Defaulting Lenders.
(a) If any Lender (i) fails to reimburse the Issuing Bank as provided
in Section 2.04(c) for any Drawing or Section 4.04(c) for any Standby L/C
Drawing or to make available its Participation Percentage of any Borrowing as
provided in Section 3.03(b) within five Business Days after the Disbursement
Date, (ii) is in receivership or liquidation, (iii) advises the Issuing Bank
or the Administrative Agent or the Issuer that it will be unable or unwilling
to fund its Participation Percentage of any future unreimbursed Drawing or
Standby L/C Drawing, as the case may be, or make available its Participation
Percentage of any Borrowing or (iv) is prohibited by the central bank having
jurisdiction over such Lender from performing its obligations hereunder (any
such Lender, a "Defaulting Lender"), then the Issuing Bank may (but shall not
be obligated to) acquire, in exchange for the sum or sums due to it from such
Defaulting Lender, such Defaulting Lender's Participation Percentage of the
defaulted amount, without, however, relieving such Defaulting Lender from any
liability to the Issuing Bank as a result of its failure to make payment due
the Issuing Bank or make funds available to the Issuing Bank. Subject to
paragraph (b) below, the Issuing Bank, until repaid in full, shall be entitled
to receive all subsequent payments which the Defaulting Lender would otherwise
have received with respect to principal or interest on its Participation
Percentage of any unreimbursed Drawing, Standby L/C Drawing or any Loan, as
the case may be, or any fees or other amounts otherwise payable to it
hereunder, in each case to the extent the Issuing Bank has acquired such
participation. If a Lender shall fail, for any reason, to fund its
participation in any Drawing or Standby L/C Drawing, as the case may be, or
make available its Participation Percentage of any Borrowing, no other Lender
shall be obligated to purchase such Defaulting Lender's Participation
Percentage or make funds available for such Defaulting Lender's Participation
Percentage of any Borrowing and no such failure shall release the Issuer from
its obligation to reimburse the Issuing Bank.
(b) Upon a Lender becoming a Defaulting Lender, the Arrangers, at the
request of the Issuer, shall use their commercially reasonable efforts to find
one or more Substitute Lenders willing to assume the Commitment of the
Defaulting Lender and, if applicable, purchase such Defaulting Lender's
Participation Percentage of any unreimbursed Drawings or Standby L/C Drawing,
as the case may be, or any outstanding Loans hereunder and become an Assignee
of such Defaulting Lender in accordance with the provisions of Section
16.06(b). Upon such assignment, the Defaulting Lender shall no longer be a
party hereto or have any rights hereunder and the Substitute Lender or
Substitute Lenders shall succeed to the rights and obligations of the
Defaulting Lender hereunder, including the obligation to reimburse the Issuing
Bank in accordance with Section 2.04(c) for any Drawing and 4.04(c) for any
Standby L/C Drawing or to make Loans pursuant to Section 3.03(b) except that
such Defaulting Lender shall continue (i) to have the rights of a Lender that
survive assignment as provided in Section 16.18(b) and (ii) to be entitled to
be paid for all amounts previously advanced by it not theretofore paid and not
assigned to the Substitute Lender and to be paid interest thereon and any
other amounts to which such Lender is entitled in accordance with this
Agreement.
(c) No Lender shall be deemed to be a Defaulting Lender solely as a
result of its inability to fund its Participation Percentage of any
unreimbursed Drawing or Standby L/C Drawing, as the case may be, or to make
available its Participation Percentage of any Borrowing in a timely manner as
a result of a difference in time zones or a breakdown or delay in the wire
transfer of funds.
(d) In the event a Lender has become a Defaulting Lender and the
Arrangers have been unable to find a Substitute Lender within fifteen Business
Days after payment was due to the Issuing Bank, the Arrangers shall so notify
the Issuer and the Issuing Bank. At the request of the Issuing Bank, upon
delivery of a Notice of Reduction of Stated Amount, the Commitments will be
reduced by an amount equal to the Commitment of the Defaulting Lender with
respect to the Letter of Credit Facility and Loans (but not with respect to
the Standby L/C Facility) and the Participation Percentage of each other
Lender shall be increased to equal the percentage equivalent of a fraction,
the numerator of which is the Commitment of such other Lender and the
denominator of which is the Commitments of the Lenders minus the Commitment of
the Defaulting Lender. No such reduction in the Commitments shall in any way
release any Defaulting Lender from any of its direct or indirect obligations
under Section 2.04 in respect of any Commercial Paper Notes issued prior to
the termination of its Commitment and under Section 4.04 in respect of Standby
L/Cs issued prior to the termination of its Commitment. Upon the termination
of the Commitment of the Defaulting Lender and the payment of all Commercial
Paper Notes issued prior to such termination, the Issuing Bank shall cause the
Stated Amount of the Letter of Credit to be reduced, each time Commercial
Paper Notes mature until an amount equal to the Defaulting Lender's Commitment
is reached, by submitting to the Depositary a Notice of Reduction of Stated
Amount. Notwithstanding any reduction of the Commitments pursuant hereto, the
Arrangers will continue to use their commercially reasonable efforts to find a
Substitute Lender to replace the Defaulting Lender in the manner described in
Section 2.06(b). If a Substitute Lender is found, the Letter of Credit
Facility and Loans (but not the Standby L/C Facility) shall be increased by an
amount equal to the Commitment of the Substitute Lender, and the total
Commitments will be increased by an amount equal to the Commitment of the
Substitute Lender and the Participation Percentage of each other Lender shall
be reduced to a fraction, the numerator of which is the Commitment of such
other Lender and the denominator of which equals the Commitments of all the
Lenders, including the Substitute Lender. Upon a subsequent increase in the
Commitments as a result of a Substitute Lender becoming a party hereto, the
Stated Amount of the Letter of Credit shall be increased by an amount equal to
the Commitment of the Substitute Lender but in no event by more than the
Commitment of the Defaulting Lender being replaced. The Issuing Bank may
deliver a new Letter of Credit to the Depositary in the reduced or increased
Stated Amount or deliver an amendment to the same effect.
(e) In the event a Lender has become a Defaulting Lender and the
Arrangers have been unable to find a Substitute Lender therefor within ten
Business Days after such Lender became a Defaulting Lender, the Issuer shall
pay to the Administrative Agent for the account of the Issuing Bank within
five Business Days after demand from the Issuing Bank all amounts then owing
by such Defaulting Lender to the Issuing Bank, together with interest thereon
at the Federal Funds Rate from the date such amounts became due; provided,
however, that if any amount remains unpaid by the Issuer for more than five
Business Days after demand, the Issuer shall, commencing on the day next
following such fifth Business Day, pay interest to the Issuing Bank at a rate
per annum equal to the Federal Funds Rate plus 2%.
2.07 Non-Default Disruption Event.
(a) If, based upon information provided by the Dealers regarding
prevailing interest rates in the United States commercial paper market, the
Issuer shall determine on any Business Day that a CP Disruption Event shall
have occurred, the Issuer shall cease issuing Commercial Paper Notes, and
written notice of such determination shall be given to the Issuing Bank, the
Arrangers and the Administrative Agent by the Issuer not later than 11:00
a.m., New York City time, on such Business Day. The Administrative Agent as
promptly thereafter as is possible under the circumstances shall give notice
of such determination to the Lenders. The Issuer shall also give notice to the
Depositary pursuant to the Depositary Agreement not to issue and deliver any
Commercial Paper Notes.
(b) If the Issuing Bank shall determine on any Business Day that a
Downgrading Event or an Illegality Event shall have occurred, then the Issuing
Bank shall immediately give notice to the Depositary pursuant to the
Depositary Agreement not to issue and deliver any Commercial Paper Notes. The
Issuing Bank shall give notice of such determination to the Issuer, the
Arrangers, the Administrative Agent and the Dealers as promptly thereafter as
is possible under the circumstances. The Administrative Agent as promptly as
is possible under the circumstances shall give notice of such determination to
the Lenders.
(c) In the event that the issuance of Commercial Paper Notes by the
Issuer is suspended as a result of this Section 2.07, the Issuer may incur
Loans in accordance with the terms and provisions of Sections 3.01 and 3.02 by
submitting to the Administrative Agent a Notice of Borrowing.
(d) If the Dealers shall have advised the Issuer that a CP Disruption
Event has ceased to exist, then notice of such advice or determination shall
be given to the Issuing Bank, the Arrangers and the Depositary and, if
applicable, the Issuing Bank and the Administrative Agent as soon as
practicable. If any Loans are then outstanding, the Issuer shall promptly
either repay such Loans with its own funds or, if the Termination Date has not
yet occurred, instruct the Depositary and the Dealers to recommence issuing
Commercial Paper Notes and apply the Aggregate Reported Proceeds of such
issuance to fully repay the Loans and so notify the Administrative Agent and
the Administrative Agent shall in turn promptly notify the Lenders and the
Issuing Bank; provided, however, that if such Loans are Eurodollar Loans, the
Issuer shall not be required to repay such Loans prior to the end of the
applicable Interest Period therefor.
(e) If the Issuing Bank shall determine that a Downgrading Event or
an Illegality Event, as the case may be, shall have ceased to exist, then the
Issuing Bank shall immediately give written notice of such determination to
the Depositary, the Arrangers, the Administrative Agent, the Dealers, the
Lenders and the Issuer, whereupon the Issuer may recommence issuing Commercial
Paper Notes and the Issuing Bank shall revoke forthwith any instructions to
the Depositary not to issue and deliver Commercial Paper Notes. If any Loans
are then outstanding, the Issuer shall promptly either repay such Loans with
its own funds or, if the Termination Date has not yet occurred, instruct the
Depositary and the Dealers to recommence issuing Commercial Paper Notes and
apply the Aggregate Reported Proceeds of such issuance to fully repay the
Loans and so notify the Administrative Agent and the Administrative Agent
shall in turn promptly notify the Lenders and the Issuing Bank; provided,
however, that if such Loans are Eurodollar Loans, the Issuer shall not be
required to repay such Loans prior to the end of the applicable Interest
Period therefor.
(f) No suspension or termination of the issuance of Commercial Paper
Notes pursuant to this Section 2.07 shall affect, terminate or reduce (i) the
liability of the Issuing Bank under the Letter of Credit with respect to
Commercial Paper Notes validly issued in accordance with the Depositary
Agreement, (ii) the liability of the Issuer with respect to any Drawing under
the Letter of Credit, any Standby L/C Drawing under a Standby L/C or any Loan
hereunder or (iii) the liability of the Lenders to reimburse the Issuing Bank
for any unreimbursed Drawings or any unreimbursed Standby L/C Drawing.
2.08 Maximum Interest Rate. Anything in this Agreement or any other
Transaction Document to the contrary notwithstanding, (a) the Issuer shall not
issue any Commercial Paper Notes if the discount factor thereof would be in
excess of the maximum permitted by applicable law and (b) if the interest rate
provided for in Sections 2.02(c) or 4.04(c) would exceed the maximum rate
permitted by applicable law, such interest rate shall be automatically reduced
to the maximum rate legally allowable.
ARTICLE III
THE LOAN FACILITY
3.01 Commitments to Lend.
(a) If at any time during the term of this Agreement there shall
occur a Non-Default Disruption Event, then, on the terms and subject to the
conditions of this Agreement, including the conditions precedent specified in
Section 6.03, each Drawing paid by the Issuing Bank on any Disbursement Date
while such Non-Default Disruption Event is in existence in respect of
Commercial Paper Notes issued and Outstanding on such Non-Default Disruption
Date may be reimbursed by loans made pursuant to this Article III (such loans,
together with any Loans made pursuant to Section 3.01(f), being referred to
herein, collectively, as the "Loans"); provided, however, that no Loans may be
made, based on such Non-Default Disruption Event, after the end of the period
beginning on the Non-Default Disruption Date and ending on the date which is
the earlier of (i) the Stated Termination Date, (ii) 90 days after the
Non-Default Disruption Date and (iii) the date such Non-Default Disruption
Event ceases to exist and; provided, further, that there may be only one
Non-Default Disruption Event during the term of this Agreement (such period,
the "Loan Period"). In the event that more than one Non-Default Disruption
Event occurs, the parties hereto agree to negotiate in good faith the terms of
any further Loans, provided, however, that the parties hereto agree that
nothing herein shall be deemed to be a commitment on the part of (A) any
Lender to agree to make or to make any further Loans, or (B) the Issuer to
accept any terms offered by the Lenders with respect to Loans.
(b) Each Lender severally agrees, on the terms and subject to the
conditions set forth in this Agreement, to make a Loan to the Issuer pursuant
to this Section 3.01, on the Disbursement Date in respect of each Drawing made
during the Loan Period, in an amount such that:
(i) the Total Outstandings of such Lender at any time will
not exceed the amount of its Commitment at such time; and
(ii) the amount of any Borrowing will not exceed the amount
of any Drawing being reimbursed with the proceeds of such Borrowing.
(c) The proceeds of Loans made under Section 3.01(a) hereof shall be
used solely to reimburse the Issuing Bank for payments made under the Letter
of Credit during the Loan Period (i) to pay Commercial Paper Notes maturing on
the Non-Default Disruption Date or (ii) during the continuance of the
Non-Default Disruption Event existing on the Non-Default Disruption Date, to
pay as they mature Commercial Paper Notes that were issued and Outstanding on
the Non-Default Disruption Date.
(d) The commitment of each Lender hereunder to make Loans is not
revolving in nature and any amounts borrowed hereunder during a Loan Period
and repaid or prepaid prior to the end of such Loan Period may not be
reborrowed during such Loan Period.
(e) Each Borrowing shall be made from the several Lenders ratably in
accordance with their Participation Percentages.
(f) During the existence of a Non-Default Disruption Event and prior
to the earlier of (i) the Stated Termination Date, (ii) 90 days after the
Non-Default Disruption Date and (iii) the date such Non-Default Disruption
Event ceases to exist, on the terms and subject to the conditions set forth in
this Agreement, including the conditions precedent specified in Section 6.03,
the Issuer may borrow Loans other than under Section 3.01(a) above under the
Available Commitments (as defined below) in a minimum amount of U.S.$5,000,000
or in integral multiples of U.S.$1,000,000 in excess thereof on any Business
Day; provided that the Issuer shall give the Administrative Agent notice as
provided in Section 3.02. As used in this paragraph (f), "Available
Commitments" shall mean, as of any date, the total amount of the Commitments
minus the sum of (A) the aggregate principal amount of Commercial Paper Notes
Outstanding and unreimbursed Drawings, (B) the aggregate principal amount of
any Loans made under this Section 3.01 (whether or not still outstanding) and
(C) the Standby L/C Exposure.
3.02 Notice of Borrowing.
(a) Upon the occurrence of a Non-Default Disruption Event, the Issuer
may (but shall not be obligated to) request under Section 3.01(a) that an
amount up to the amount of any Drawing or Drawings made during the Loan Period
be converted into Loans by giving notice to the Administrative Agent on or
prior to 12:00 Noon (New York City time) on the date of any such Drawing. In
addition, the Issuer may (but shall not be obligated to) request Loans under
Section 3.01(f) by giving notice to the Administrative Agent by 3:00 p.m. (New
York City time) at least three Business Days prior to the date of Borrowing.
Each such notice (a "Notice of Borrowing") may be made by telephone to the
Administrative Agent, if promptly confirmed in writing in substantially the
form of Exhibit D, and may be made by facsimile transmission to the
Administrative Agent in substantially the form of Exhibit D.
(b) The Notice of Borrowing shall specify (i) the aggregate amount of
such Borrowing, which shall be in a minimum amount equal to U.S.$5,000,000 or
multiples of U.S.$1,000,000 in excess thereof, or such lesser amount, if
necessary, pursuant to Section 3.01(b), (ii) whether the Loans comprising such
Borrowing shall bear interest based on the Base Rate or LIBOR (provided that,
in the case of Loans made under Section 3.01(a), all such Loans will be Base
Rate Loans during the initial period of at least three Eurodollar Business
Days after the date of the Notice of Borrowing) and (iii) if such Loans are to
be made as (in the case of Loans made under Section 3.01(f)) or converted into
(in the case of any Loans made under Section 3.01(a)) Eurodollar Loans, the
commencement date and the duration of the initial Interest Period applicable
to such Loans. The Notice of Borrowing shall further certify that as of the
date of such Notice of Borrowing:
(A) in the case of Loans made under Section 3.01(a), the
amount of such Borrowing does not exceed the aggregate amount of the
unreimbursed Drawing made on or prior to the date of such Notice of
Borrowing and that the Issuer elects to make a Borrowing in order to
reimburse the amount of such Drawing;
(B) no Default or Event of Default has occurred and is
continuing on such date or will result from such Borrowing;
(C) the representations and warranties of the Issuer
contained in this Agreement are true and correct in all material
respects on and as of such date; and
(D) a Non-Default Disruption Event has occurred and is
continuing.
The Notice of Borrowing shall not be revocable by the Issuer after
the Administrative Agent has notified any Lender thereof.
3.03 Notice to Lenders; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Administrative Agent
shall promptly notify each Lender of the contents thereof and of such Lender's
Participation Percentage of such Borrowing.
(b) On the date of each Borrowing, each Lender shall, to the extent
such Lender has not already funded its Participation Percentage of the
corresponding unreimbursed Drawing being converted into Loans pursuant to
Section 2.04(c), make available its Participation Percentage of such
Borrowing, in immediately available funds, to the Administrative Agent at the
Administrative Agent's Payment Office not later than 3:00 p.m. (New York City
time) on the date notice is received from the Administrative Agent pursuant to
paragraph (a) above (if such notice is received at or prior to 1:30 p.m. (New
York City time)) or not later than 12:00 noon (New York City time) on the
Business Day following such notice (if such notice is received after 1:30 p.m.
(New York City time)). Unless the Administrative Agent determines that any
applicable condition specified in Section 6.03 has not been satisfied, the
funds so received from the Lenders shall be paid on the date of such Borrowing
(i) in the case of a Borrowing under Section 3.01(a), to the Issuing Bank on
behalf of the Issuer of the then outstanding unreimbursed Drawing and (ii) in
the case of a Borrowing under Section 3.01(f), to the Issuer by transfer to
the Issuer's account with the Administrative Agent. Upon receipt of such
funds, the Administrative Agent shall promptly pay such funds to the Issuing
Bank or to the Issuer, as the case may be.
(c) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's Participation Percentage
of such Borrowing, the Administrative Agent may assume that such Lender has
made its Participation Percentage available to the Administrative Agent on the
date of such Borrowing in accordance with paragraph (b) above and the
Administrative Agent may (but shall not be required to do so), in reliance
upon such assumption, make available to the Issuing Bank or the Issuer, as the
case may be, on such date a corresponding amount. If such amount is made
available to the Administrative Agent on a date after the date on which the
Administrative Agent pays the proceeds of the Borrowing to the Issuing Bank or
the Issuer, as the case may be, such Lender shall pay to the Administrative
Agent on demand interest on such amount at the Federal Funds Rate for the
period from the date of such payment until such amount is made available to
the Administrative Agent. If such amount is not made available to the
Administrative Agent within five Business Days after the date of such payment,
the Issuer agrees to pay such amount to the Administrative Agent together with
interest thereon from the date of such payment at a rate per annum equal to
the Federal Funds Rate plus 2.00%; provided, however, that in the case of a
Borrowing under Section 3.01(a), if the Issuer fails to pay such amount to the
Administrative Agent within five Business Days after demand, the Issuing Bank
will return to the Administrative Agent the funds made available to it
together with interest thereon at the Federal Funds Rate from the date of
payment to it. If such Lender shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Lender's Loan
included in such Borrowing for purposes of this Agreement. Nothing contained
in this paragraph (c) shall be construed to excuse any Lender from performing
its obligations under this Agreement or to relieve any Lender from any
liability it may have to the Issuing Bank or the Issuer for any default by
such Lender in the performance of its obligations hereunder. Upon receipt of
such funds, the Administrative Agent shall promptly pay such funds to the
Issuing Bank or the Issuer, as the case may be.
(d) If and to the extent that any Lender is a Defaulting Lender, the
provisions of paragraphs (a), (b) and (e) of Section 2.06 shall apply and (i)
the Issuing Bank shall be entitled to receive all payments which the
Defaulting Lender would otherwise have received in respect of its unfunded
Participation Percentage of the Loans, (ii) the Arrangers, at the request of
the Issuer, may seek one or more Substitute Lenders willing to assume the
Commitment of the Defaulting Lender and to become an Assignee of such
Defaulting Lender in accordance with the provisions of Section 16.06(b) and
(iii) the Issuer shall reimburse the Issuing Bank as provided in paragraph (e)
of Section 2.06 without releasing the Defaulting Lender from any liability to
the Issuer for the default in the performance of its obligations hereunder.
(e) All Loans made to the Issuer shall be deemed made as of the
relevant Disbursement Date. If for any reason a Lender does not fund any Loan
to be made by it under Section 3.01(a) on such Disbursement Date (because
notice from the Administrative Agent was received after 1:30 p.m. (New York
City time) on such date or for any other reason) and the Administrative Agent
does not make the corresponding funds available to the Issuing Bank pursuant
to paragraph (c), such Lender shall also pay interest to the Administrative
Agent for the account of the Issuing Bank on its Participation Percentage of
the unreimbursed Drawing accrued from the Disbursement Date to the date of
payment by such Lender at the Federal Funds Rate; provided, however, that if
the Federal Funds Rate does not cover the Issuing Bank's cost of funds, the
applicable rate of interest shall be such rate as determined by the Issuing
Bank, in good faith, to be equal to its cost of funds; and provided, further,
however, that if any such amount remains unpaid by any Lender for more than
five Business Days after the Disbursement Date, such Lender shall, commencing
on the day next following such fifth Business Day, pay interest to the
Administrative Agent for the account of the Issuing Bank at a rate per annum
equal to the Federal Funds Rate plus 2%. Upon receipt of any such funds, the
Administrative Agent shall promptly pay such funds to the Issuing Bank.
3.04 Notes. The Loans made by each Lender shall be evidenced by a
Note appropriately completed, representing the obligation of the Issuer to pay
to such Lender the unpaid principal amount of all Loans made by such Lender
pursuant to Section 3.01, plus interest thereon as provided in Section 3.07.
The date, type, and principal amount of each Loan made by such Lender and the
date and amount of each payment or prepayment of the principal amount of each
such Loan, the date of each conversion and each continuation pursuant to
Section 3.05 and, in the case of Eurodollar Loans, the rate of interest with
respect thereto, shall be recorded by such Lender on the Schedules annexed to
its Note and such Schedules shall constitute prima facie evidence of the
accuracy of the information so recorded; provided, however, that the failure
of any Lender to make such recordation (or any error in such recordation)
shall not affect the obligations of the Issuer hereunder or under the Notes.
3.05 Conversion and Continuation of Loans.
(a) All Loans made under Section 3.01(a) shall initially be made as
Base Rate Loans. If so specified in the applicable Notice of Borrowing, Loans
made under Section 3.01(a) will be converted into Eurodollar Loans on or after
the third Eurodollar Business Day after the date of such Borrowing as provided
in the Notice of Borrowing.
(b) (i) All Eurodollar Loans shall initially have the Interest Period
specified by the Issuer in the applicable Notice of Borrowing. Subject to the
conditions set forth in Section 6.03, on the last day of the Interest Period
for such Loans, (A) provided such day is at least one month prior to the end
of the Loan Period, the Issuer may from time to time elect to continue such
Loans as Eurodollar Loans for an additional identical or different Interest
Period or (B) the Issuer may elect to convert such Eurodollar Loans into Base
Rate Loans.
(ii) Subject to the conditions set forth in Section
6.03, on any Eurodollar Business Day prior to the Maturity Date of any Base
Rate Loans, provided such day is at least one month prior to the end of the
Loan Period, the Issuer may elect to convert such Base Rate Loans into
Eurodollar Loans with an Interest Period ending no later than the last day of
the Loan Period.
(iii) Each election to convert or continue any Loans
shall be made by giving the Administrative Agent irrevocable notice in
substantially the form of Exhibit E (a "Notice of Continuation/Conversion")
not later than 11:00 a.m. (New York City time) at least three Eurodollar
Business Days before the date on which continuation or conversion selected in
such notice is to be effective.
(iv) Each Notice of Continuation/Conversion shall specify:
(A) the Loans to which such notice applies;
(B) the date on which the continuation or conversion
selected in such notice is to be effective; and
(C) the duration of the Interest Period to be applicable to
the Loans to be continued as, or converted into, Eurodollar Loans
(which must comply with the provisions of the definition of Interest
Period); provided, however, that if the Issuer fails to select the
duration of any Interest Period, it will be deemed to have selected
an Interest Period of one month.
(c) If the Issuer fails to deliver a Notice of
Continuation/Conversion to the Administrative Agent for any Eurodollar Loans
on or prior to the third Eurodollar Business Day before the end of the
Interest Period therefor, the Issuer will be deemed to have elected to
continue such Eurodollar Loans for a further Interest Period of one month or,
if the last day of such Interest Period is less than one month prior to the
end of the Loan Period, to convert such Eurodollar Loans to Base Rate Loans.
If the conditions of Section 6.03 have not been satisfied, such Loans shall
automatically become due and payable on the last day of the then current
Interest Period.
(d) Upon receipt of a Notice of Continuation/Conversion from the
Issuer, the Administrative Agent shall promptly notify the Lenders thereof.
3.06 Maturity of Loans. Each Loan included in any Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the
Maturity Date.
3.07 Interest Rates.
(a) Each Base Rate Loan shall bear interest on the unpaid principal
amount thereof at a rate per annum equal to the sum of the Base Rate minus
0.50% plus the Participation Rate then in effect (the "Applicable Base Rate").
(b) Each Eurodollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a
rate per annum equal to the sum of LIBOR plus 0.50% plus the Participation
Rate then in effect (the "Applicable Eurodollar Rate").
(c) If all or a portion of the principal amount of any Loan shall not
be paid when due (whether at maturity, by acceleration or otherwise), (i) all
Eurodollar Loans then outstanding shall be converted to Base Rate Loans at the
end of the then current Interest Period with respect thereto and until such
conversion shall bear interest at a rate per annum equal to the sum of the
Applicable Eurodollar Rate plus 2.00% and (ii) the principal amount of all
Base Rate Loans (including any Eurodollar Loans converted to Base Rate Loans
pursuant to this paragraph (c)) shall bear interest at a rate per annum equal
to the sum of the Applicable Base Rate plus 2.00% from the date of non-payment
(or the date of conversion) until paid in full (after as well as before
judgment) and shall be payable on demand. If all or any portion of (A) any
interest payable on the principal amount of any Loan or (B) any fee or other
amount payable hereunder shall not be paid when due, such overdue amount shall
bear interest at a rate per annum equal to the sum of the Base Rate plus 2.00%
from the date of such non-payment until such amount is paid in full (after as
well as before judgment) and shall be payable on demand.
(d) Except as otherwise provided in paragraph (c) above, interest
shall be payable in arrears on the Maturity Date of each Loan, on the last day
of each Interest Period therefor, on the date of conversion of Base Rate Loans
into Eurodollar Loans pursuant to Section 3.05(a) or 3.05(b) and on each date
of prepayment or repayment of any Loans on the amount prepaid or repaid.
3.08 Computation of Interest.
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by reference to the Prime Rate shall be made on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed. All
other computations of interest shall be made on the basis of a 360-day year
and actual days elapsed. Interest shall accrue during each period during which
interest is computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Issuer and the Lenders in the
absence of demonstrable error.
3.09 Optional Prepayments.
(a) The Issuer may, without premium or penalty, (i) upon at least
three Business Days' prior notice to the Administrative Agent prepay Base Rate
Loans in whole or in part and (ii) subject to the provisions of Section 5.07,
upon at least three Eurodollar Business Days' prior notice to the
Administrative Agent, prepay Eurodollar Loans, in whole or in part, by paying
the principal amount to be prepaid together with accrued interest thereon to
the date of prepayment. Each such optional prepayment shall be applied to
prepay the Loans to the Lenders ratably based on their Participation
Percentages. Amounts so applied to the prepayment or repayment of Loans shall
be applied first, if the payment date is the last day of an Interest Period
for any Loans, to pay such Loans until paid in full; and second to pay such
other Loans as the Issuer may, by notice to the Administrative Agent, elect
(or if the Issuer fails to give timely notice of such election, as the
Required Lenders at such time may select).
(b) Upon receipt of a notice of prepayment pursuant to this Section
3.09, the Administrative Agent shall promptly notify each Lender of the
contents thereof and of such Lender's Participation Percentage of such
prepayment, and such notice of prepayment shall not thereafter be revocable by
the Issuer.
(c) Optional prepayments of Loans shall be in a minimum amount equal
to U.S.$5,000,000 and in integral multiples of U.S.$1,000,000 in excess
thereof or, if less, the aggregate principal amount of the Loans then
outstanding.
3.10 Mandatory Prepayments.
(a) If at any time the aggregate Total Outstandings of the Lenders
exceed the Commitments then in effect, the Issuer shall immediately prepay
outstanding Loans, repay unreimbursed Drawings, if any, and repay unreimbursed
Standby L/C Drawings, if any, to the extent of such excess, ratably among the
Lenders.
(b) Upon determination that a Non-Default Disruption Event has ceased
to exist and any Loans are then outstanding, the Issuer shall, as provided in
Sections 2.07(d) or (e), either repay such Loans with its own funds or, if the
Termination Date has not already occurred, instruct the Depositary and the
Dealers to recommence issuing Commercial Paper Notes as soon as practicable
(provided, that, in the case of Eurodollar Loans, the Issuer shall recommence
issuing Commercial Paper Notes not later than the last day of the then current
Interest Period therefor) and apply the Aggregate Reported Proceeds of such
issuance to repay such Loans. For so long as any Loans are outstanding
hereunder, the Issuer shall prepay or repay, on each date that the Issuer
issues Commercial Paper Notes, an aggregate principal amount of Loans equal to
the Aggregate Reported Proceeds of issuance of such Commercial Paper Notes
less the Face Amount of the Commercial Paper Notes, if any, maturing on that
date. All such prepayments or repayments shall be made together with accrued
and unpaid interest to the date of payment.
(c) Amounts applied to the prepayment or repayment of Loans pursuant
to this Section 3.10 shall be applied to prepay or repay the Loans of the
Lenders ratably in accordance with their Participation Percentages. Amounts so
applied to the prepayment or repayment of Loans shall be applied first, if the
payment date is the last day of an Interest Period for any Loans, to pay such
Loans until paid in full; and second to pay such other Loans as the Issuer
may, by notice to the Administrative Agent, elect (or if the Issuer fails to
give timely notice of such election, as the Required Lenders at such time may
select).
(d) Any prepayments of Eurodollar Loans pursuant to this Section 3.10
shall be subject to the provisions of Section 5.07.
3.11 Maximum Interest Rate. Anything in this Agreement or any other
Transaction Document to the contrary notwithstanding, (a) the interest rate on
any Loan or other amount due hereunder shall in no event be in excess of the
maximum permitted by applicable law and (b) if the interest rate provided for
in this ARTICLE III would exceed the maximum rate permitted by applicable law,
such interest rate shall be automatically reduced to the maximum rate legally
allowable.
ARTICLE IV
THE STANDBY L/C FACILITY
4.01 Issuance of the Standby L/C.
(a) Subject to the terms and conditions set forth herein, including
but not limited to the conditions precedent specified in Section 6.03, and so
long as no Default or Event of Default shall have occurred and be continuing,
the Issuer may request the Issuing Bank to issue, in support of certain
obligations of the Issuer and any of its Subsidiaries including, without
limitation, contingent liabilities arising in connection with forward sales
contracts, leases, insurance contracts and arrangements, service contracts,
equipment contracts, financing transactions and other payment obligations, and
the Issuing Bank agrees to issue at any time from time to time during the
period from and including the Effective Date to but excluding the date that is
five Business Days prior to the Termination Date, a Standby L/C denominated in
Dollars for the Issuer's own account, and having a stated amount not exceeding
the Available Standby L/C Sublimit at the time of issuance; provided, however,
that the issuance of such requested Standby L/C shall not cause the Issuing
Bank to violate any law or regulation to which it is subject. The Standby L/C
shall be substantially in the form indicated in Exhibit I-1, I-2 or I-3, as
determined by the Issuer.
(b) There currently are outstanding Standby L/Cs issued pursuant to
the Prior Agreement, the outstanding balance of each of which is set forth on
Schedule [7.19] hereto. From and after the date hereof and upon fulfillment of
the conditions specified in Section [6.04] hereof, each such existing letter
of credit, as such may have been amended, shall be deemed and treated for all
purposes hereof as a "Standby L/C" hereunder, and each Lender, without further
act on its part, shall be deemed to have purchased a participation in each
such Standby L/C as provided in Section 5 hereof in accordance with its
Commitment.
(c) To request the issuance of a Standby L/C, the Issuer shall
deliver notice to the Issuing Bank requesting the issuance of a Standby L/C,
specifying the date of issuance (which shall be a Business Day that is no
earlier than either (i) the Business Day following the Business Day on which
the Issuing Bank shall have received the request for the issuance of the
Standby L/C, if such request is received by the Issuing Bank prior to 11:00
a.m. (New York City time), or (ii) the Business Day that is two (2) Business
Days following the Business Day on which the Issuing Bank shall have received
the request for the issuance of the Standby L/C, if such request is received
is by the Issuing Bank after 11:00 a.m. (New York City time) but before 5:00
p.m. (New York City time); provided however, that the Issuing Bank, in its
sole discretion and on a request by request basis, may elect to accept a
request for issuance of a Standby L/C specifying an issuance date not
complying with the terms of this parenthetical), the date on which such
Standby L/C is to expire, the amount of such Standby L/C, the name and address
of the beneficiary thereof and any such other information as shall be
necessary to prepare such Standby L/C. On the requested date of issuance, the
Issuing Bank shall, subject to the terms and conditions set forth herein and
so long as no Default or Event of Default shall have occurred or be
continuing, issue a Standby L/C in accordance with the Issuer's request
pursuant to this clause (c).
(d) Each Standby L/C shall have a minimum stated amount equal to
U.S.$3,000,000 and shall expire at or prior to the close of business on the
earlier of (a) the date that is 360 days after the date of issuance of such
Standby L/C and (b) the date that is five Business Days prior to the Stated
Termination Date.
(e) Each Lender hereby irrevocably authorizes the Issuing Bank
to issue Standby L/Cs under and in accordance with this Agreement, to pay the
amount of any draft presented under any Standby L/C in accordance with the
terms and conditions thereof, to receive from the Issuer reimbursement for
Standby L/C Drawings and to take such action on its behalf under the
provisions of this Agreement and the other Transaction Documents and to
exercise such powers and to perform such duties hereunder and thereunder as
are specifically delegated to or required of the Issuing Bank by the terms
hereof or thereof, together with such powers as are reasonably incidental
thereto.
4.02 Reimbursement Obligations.
(a) The Issuer agrees to reimburse the Issuing Bank for the full
amount of any Standby L/C Drawing paid by the Issuing Bank on the Disbursement
Date; provided, however, that in no event shall such reimbursement be made
prior to the time such Standby L/C Drawing is paid by the Issuing Bank.
(b) If the amount of any Standby L/C Drawing is not reimbursed in
full on the Disbursement Date, then the amount thereof which is not so
reimbursed shall bear interest from the Disbursement Date until the date of
actual payment thereof at a rate per annum equal to the Base Rate plus 2.00%,
payable on demand.
4.03 Obligations to reimburse Standby L/C Drawing Absolute.
(a) The obligations of the Issuer to reimburse the Issuing Bank for
any Standby L/C Drawing shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of any
Transaction Document;
(ii) any amendment to or waiver of or any consent to
departure from the terms of any Transaction Document;
(iii) the existence of any claim, set-off, defense or other
right which the Issuer may have at any time against the beneficiary
of any Standby L/C or any transferee of any Standby L/C (or any
Person for whom any such transferee may be acting), the
Administrative Agent, the Issuing Bank or any Lender or any other
Person, whether in connection with this Agreement, any other
Transaction Document or any unrelated transaction;
(iv) any draft, statement or any other document presented
under a Standby L/C proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever; or
(v) payment by the Issuing Bank under a Standby L/C against
presentation of a draft or document which does not comply with the
terms of such Standby L/C.
(b) The Issuing Bank shall not be responsible to any Person:
(i) for the validity, genuineness or legal effect of any
document submitted to the Issuing Bank by any Person in connection
with the issuance of, or any Standby L/C Drawing under, any Standby
L/C; provided, however, that nothing in this clause (i) shall relieve
the Issuing Bank from its obligations to honor a Standby L/C Drawing
under a Standby L/C that strictly complies with the terms of such
Standby L/C;
(ii) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(iii) for any loss or delay in the transmission or otherwise
of any document required in order to make a Standby L/C Drawing under
a Standby L/C or of the proceeds thereof;
(iv) for the misapplication by the beneficiary of a Standby
L/C of the proceeds of a Standby L/C Drawing under such Standby L/C;
or
(v) for any consequences arising from causes beyond the
control of the Issuing Bank (including, any acts of any Governmental
Authority);
provided, however, that the provisions of this Section 4.03 shall not limit
any right or claim the Issuer may have against the Issuing Bank to the extent
of any direct, as opposed to consequential or special, damages suffered by the
Issuer which the Issuer proves were caused by the Issuing Bank's gross
negligence or willful misconduct, it being understood that the existence of
any such right or claim shall not in any way affect the obligation of the
Issuer to reimburse the Issuing Bank for all Standby L/C Drawings under
Standby L/Cs.
4.04 Participating Interests.
(a) Without further action on the part of the Issuing Bank and the
Lenders, each Lender severally purchases from the Issuing Bank, without
recourse to the Issuing Bank, and the Issuing Bank hereby sells to each such
Lender, an undivided interest, to the extent of such Lender's Participation
Percentage, in each Standby L/C issued or to be issued hereunder or issued
pursuant to the Prior Agreement, all Standby L/C Drawings, all interest
thereon and all other rights, costs and expenses of the Issuing Bank hereunder
and under such Standby L/C with respect thereto.
(b) As promptly as practicable upon becoming aware that the Issuer
has not reimbursed or will not reimburse the Issuing Bank in full for a
Standby L/C Drawing under any Standby L/C in accordance with Section 4.02(a)
or 4.02(b) on applicable Disbursement Date, the Issuing Bank shall notify the
Administrative Agent which shall promptly notify each Lender to such effect
and each Lender shall (i) not later than 4:30 p.m. (New York City time) on the
Business Day such notice is received from the Administrative Agent (if such
notice is received at or prior to 12:00 noon (New York City time)) or (ii) not
later than 11:00 a.m. (New York City time) on the Business Day following
receipt of such notice (if such notice is received after 12:00 noon (New York
City time)) pay to the Administrative Agent, at the Administrative Agent's
Payment Office, for the account of the Issuing Bank, an amount equal to such
Lender's Participation Percentage of such unreimbursed Standby L/C Drawing.
Notwithstanding clause (ii) of this paragraph (c), if a Lender does not make
available to the Administrative Agent on the applicable Disbursement Date such
Lender's Participation Percentage of any unreimbursed Standby L/C Drawing,
such Lender shall be required to pay interest to the Administrative Agent for
the account of the Issuing Bank on its Participation Percentage of the amount
of such unreimbursed Standby L/C Drawing at the Federal Funds Rate from such
Disbursement Date until the date payment is received by the Administrative
Agent; provided, however, that if the Federal Funds Rate does not cover the
Issuing Bank's cost of funds, the applicable rate of interest shall be such
rate as determined by the Issuing Bank, in good faith, to be equal to its cost
of funds; and provided, further, that if any amount remains unpaid by any
Lender for more than five Business Days after receipt of notice, such Lender
shall, commencing on the day next following such fifth Business Day, pay
interest to the Administrative Agent for the account of the Issuing Bank at a
rate per annum equal to the Federal Funds Rate (or such other rate as may be
determined by the Issuing Bank as set forth herein) plus 2%. Upon receipt of
any such funds, the Administrative Agent shall promptly pay such funds to the
Issuing Bank.
(c) If the Administrative Agent receives a Lender's Participation
Percentage of an unreimbursed Standby L/C Drawing on the corresponding
Disbursement Date therefor, or if the Administrative Agent receives such
payment together with interest thereon in accordance with the provisions of
the preceding paragraph (c), such Lender shall be entitled to receive interest
on its Participation Percentage of such Standby L/C Drawing, as provided in
paragraph (e)(ii) below, from the applicable Disbursement Date.
(d) The payment obligations of each Lender to the Issuing Bank as
described in this Section 4.04 shall be absolute, irrevocable and
unconditional under any and all circumstances whatsoever and shall not be
affected by any circumstance, including:
(i) any set-off, counterclaim, defense or other right which
such Lender or any other Person may have against the Administrative
Agent, the Issuing Bank or any other Person for any reason
whatsoever;
(ii) the occurrence or continuance of a Default or Event of
Default or the termination of the Commitments or the expiration the
applicable Standby L/C;
(iii) any adverse change in the condition (financial or
otherwise) of the Issuer;
(iv) any breach of any Transaction Document by any party
thereto;
(v) any violation or asserted violation of law by any Lender
or any affiliate thereof;
(vi) the failure of any Lender to perform its obligations
hereunder;
(vii) any amendment to or extension of an issued and
outstanding Standby L/C; or
(viii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing;
provided, however, that no Lender shall be liable for any portion of such
liability resulting from the Issuing Bank's gross negligence or willful
misconduct.
(e) The Issuing Bank agrees to pay promptly upon receipt to the
Administrative Agent for the account of each Lender (i) such Lender's
Participation Percentage of all amounts received from the Issuer in payment,
in whole or in part, of an unreimbursed Standby L/C Drawing, but only to the
extent that such Lender has paid in full its Participation Percentage of such
Standby L/C Drawing to the Administrative Agent for the account of the Issuing
Bank pursuant to paragraph (c) above and (ii) such Lender's Participation
Percentage of any interest received from the Issuer with respect to any such
unreimbursed Standby L/C Drawing, but only to the extent such Lender has paid
in full its Participation Percentage of such Standby L/C Drawing to the
Administrative Agent for the account of the Issuing Bank pursuant to paragraph
(c) above.
(f) If, on account of the bankruptcy, insolvency, concurso mercantil
or governmental intervention (or similar event) of the Issuer, the Issuing
Bank or the Administrative Agent is required at any time (whether before or
after the Termination Date) to return to the Issuer or to a trustee, receiver,
liquidator, custodian or other similar official or any other Person, any
portion of the payments made by (or on behalf of) the Issuer to the
Administrative Agent for the account of the Issuing Bank (or directly to the
Issuing Bank) in reimbursement of any unreimbursed Standby L/C Drawing and
interest thereon, each Lender shall, on demand of the Issuing Bank or the
Administrative Agent, forthwith return to the Issuing Bank or the
Administrative Agent for the account of the Issuing Bank any amounts
transferred to such Lender by the Issuing Bank or the Administrative Agent in
respect thereof pursuant to the terms hereof plus such Lender's pro rata share
of any interest on such payments required to be paid to the Person recovering
such payments plus interest on all amounts so demanded from the day such
amounts are returned by the Issuing Bank or the Administrative Agent, as the
case may be, to the day such amounts are returned by such Lender to the
Issuing Bank or the Administrative Agent at a rate per annum for each day
equal to the Federal Funds Rate; provided, however, that if the Federal Funds
Rate does not cover the Issuing Bank's or the Administrative Agent's cost of
funds, the applicable rate of interest shall be such rate as determined by the
Issuing Bank or the Administrative Agent, in good faith, to be equal to its
cost of funds; and provided, further, that if any amount remains unpaid by any
Lender for more than five Business Days after demand, such Lender shall,
commencing on the day next following such fifth Business Day, pay interest to
the Issuing Bank or the Administrative Agent, as the case may be, at a rate
per annum equal to the Federal Funds Rate plus 2.00%. In any case when an
amount is returned to any Person pursuant to this paragraph (f), the
reimbursement obligation of the Issuer contained in Section 4.02(a) will be
reinstated as of the original date such reimbursement obligation arose.
(g) The Issuer hereby confirms and acknowledges that each Lender
shall have a direct claim against the Issuer for the principal of and interest
on each portion of any unreimbursed Standby L/C Drawing advanced by such
Lender to the Issuing Bank and that each Lender shall to the extent applicable
be entitled to all the rights of the Issuing Bank against the Issuer (to the
extent not exercised by the Issuing Bank) as if such Lender had funded its
Participation Percentage of the Standby L/C Drawing directly to the
beneficiary of the applicable Standby L/C.
(h) The Issuing Bank and each Lender, with respect to the amounts
payable to it in respect of any unreimbursed Standby L/C Drawing, and the
Administrative Agent, with respect to all amounts payable in respect of
unreimbursed Standby L/C Drawings, shall maintain on its books in accordance
with its usual practice, loan accounts, setting forth its Participation
Percentage of each Standby L/C Drawing, the applicable interest rate and the
amounts of principal and interest paid and payable by the Issuer from time to
time hereunder with respect thereto; provided, however, that the failure by
the Issuing Bank, any Lender or the Administrative Agent to record any such
amount on its books or any error in such recordation shall not affect the
obligations of the Issuer with respect thereto. In the case of any dispute,
action or proceeding relating to any amount payable in respect of any
unreimbursed Standby L/C Drawings, the entries in each such account shall be
prima facie evidence of such amount. In the case of any discrepancy between
the entries in the Issuing Bank's books and any Lender's books or the
Administrative Agent's books, the Issuing Bank's books shall be considered
correct in the absence of manifest error.
4.05 Limited Liability of the Issuing Bank. As between the Issuing
Bank on the one hand, and the Issuer on the other, the Issuer assumes all
risks of any acts or omissions of the beneficiaries of Standby L/Cs with
respect to their use of the Standby L/Cs or the proceeds thereof. Neither the
Issuing Bank nor any of its employees, officers, directors or agents shall be
liable or responsible for any acts or omissions of the beneficiaries in
connection therewith.
ARTICLE V
TERMINATION AND REDUCTION OF
COMMITMENTS; FEES, TAXES, PAYMENT PROVISIONS
5.01 Termination or Reduction of Commitments.
(a) Mandatory Termination: Subject to Section 5.02, the Commitments
shall terminate on the Stated Termination Date.
(b) Voluntary Termination: Upon at least five Business Days' notice
to the Administrative Agent, the Arrangers, the Issuing Bank and the
Depositary (with a copy thereof to each Dealer and each of Moody's and S&P),
but no sooner than six months after the Effective Date unless a Non-Default
Disruption Event has occurred and is continuing, in which case such
termination may occur at any time upon five Business Days' prior notice, the
Issuer may terminate the existing Commitments by instructing the Depositary to
surrender the Letter of Credit and each beneficiary of a Standby L/C to
surrender such Standby L/C to the Issuing Bank for cancellation; provided,
however, that in connection with an extension of the term of this Agreement
pursuant to Section 5.02, the Issuer may terminate the existing Commitments
upon one Business Day's prior notice; and provided, further, however, that the
existing Commitments may not be terminated so long as (i) any Commercial Paper
Note is Outstanding or (ii) any Standby L/C is outstanding or (iii) any Loan
is outstanding or (iv) any Drawing, Standby L/C Drawing, interest, fee or
expenses remain unpaid. Upon at least five Business Days prior notice to the
Administrative Agent and the Issuing Bank, the Issuer may terminate any
Standby L/C, in accordance with its terms, by surrendering, or causing the
beneficiary thereof to surrender, such Standby L/C to the Issuing Bank for
cancellation.
(c) Reduction of Letter of Credit Facility: Upon at least five
Business Days' prior notice to the Administrative Agent, the Arrangers, the
Issuing Bank and the Depositary (with a copy thereof to each Dealer and each
of Moody's and S&P), but no sooner than six months after the Effective Date,
the Issuer may permanently reduce the amount of the Letter of Credit Facility
and, accordingly, the Stated Amount of the Letter of Credit by a minimum
amount of U.S.$5,000,000 or any integral multiple of U.S.$1,000,000 in excess
thereof provided, however, that if such reduction is to an amount below the
Standby L/C Sublimit, then the Standby L/C Sublimit should also be reduced in
an amount equal to such amount. To effect any such reduction, the Issuer shall
cause the Issuing Bank to deliver a Notice of Reduction of Stated Amount and
instruct the Depositary either (i) to surrender the Letter of Credit to the
Issuing Bank for cancellation in exchange for a new Letter of Credit having
the reduced Stated Amount or (ii) to obtain an amendment to the Letter of
Credit to the same effect. Any reduction of the Stated Amount pursuant to this
paragraph (c) shall be irrevocable. Upon at least five Business Days prior
notice to the Administrative Agent and the Issuing Bank, the Issuer may reduce
the stated amount of any Standby L/C to be reduced, in accordance with its
terms, by surrendering, or causing the beneficiary thereof to surrender, such
Standby L/C to the Issuing Bank for cancellation in exchange for a new Standby
L/C having the reduced stated amount and otherwise having the same terms as
the Standby L/C being cancelled; provided, however, that the stated amount of
any Standby L/C shall not as a result of such reduction be reduced below
U.S.$3,000,000. Without limitation of the foregoing, the Stated Amount of the
Letter of Credit shall not, as a result of any reduction, be reduced below the
Aggregate Outstandings.
(d) (i) Any reduction in the Stated Amount pursuant to paragraph (c)
above shall cause the aggregate amount of the Commitments to be reduced by the
same amount.
(ii) Any reduction of the Commitments shall reduce the
Commitment of each Lender pro rata except as otherwise specified in
Section 5.02(c).
(iii) No reduction of the Stated Amount will be permitted
if, after giving effect thereto, the aggregate amount of the
Commitments would be less than the Aggregate Outstandings.
(e) The Stated Amount shall be automatically reduced or reinstated,
as the case may be, as specified in the Letter of Credit.
(f) In accordance with the terms thereof, the Letter of Credit may be
terminated as provided in Section 12.02(a) and the Stated Amount may also be
reduced as provided in Section 2.06.
(g) No reduction or termination of the Commitments shall in any event
release any Lender from any of its direct or indirect obligations to the
Issuing Bank in respect of (i) any Commercial Paper Notes, Loans or Standby
L/Cs issued prior to such termination or reduction or (ii) any Drawing or
(iii) any Standby L/C Drawing.
5.02 Extension of Stated Termination Date.
(a) The Commitment of each Lender will expire on the Stated
Termination Date except as otherwise provided herein.
(b) Requests for Extension. The Issuer may, by notice to the
Arrangers, Issuing Bank and Administrative Agent (which shall promptly notify
the Lenders) not later than five (5) Business Days prior to the Stated
Termination Date request that each Lender extend such Lender's Commitment for
an additional period by an amendment and restatement of this Agreement,
subject to the conditions of Section 6.04.
(c) Additional Commitment Lenders. The Issuer shall have the right on
or before the Stated Termination Date to request the Arrangers replace each
Non-Extending Lender with, and add as Lenders under this Agreement in place
thereof, one or more Assignees (each, an "Additional Commitment Lender") with
the approval of the Administrative Agent (which approval shall not be
unreasonably withheld), and the approval of the Issuing Bank in its sole
discretion. Each Additional Commitment Lender shall enter into an agreement in
form and substance satisfactory to the Arrangers, the Issuing Bank, and the
Administrative Agent pursuant to which such Additional Commitment Lender
shall, as of the effective date of the extension amendment and restatement,
undertake a Commitment. If any such Additional Commitment Lender is already a
Lender, its Commitment shall be increased by the amount of the Commitment of
the Non-Extending Lender it is replacing.
(d) Minimum Extension Requirement. If the total of the Commitments of
the Lenders that have agreed to extend their Commitment and the additional
Commitments of the Additional Commitment Lenders shall be more than the
Aggregate Outstandings, then, effective as of the effective date of the
extension amendment and restatement, the Stated Termination Date of each
Extending Lender and of each Additional Commitment Lender shall be extended to
the new Stated Termination Date specified in such amendment and restatement
(except that, if such date is not a Business Day, such date as so extended
shall be the next Business Day) and each Additional Commitment Lender shall
thereupon become a "Lender" for all purposes of this Agreement.
(e) If, in connection with an extension of the term of this
Agreement, any Lender elects to be a Non-Extending Lender, such Non-Extending
Lender agrees that such amendment and restatement will become effective
without the signature of such Non-Extending Lender subject to the termination
of its Commitment on the effective date of such extension, the payment of all
amounts owed to such Non-Extending Lender by the Issuer and the payment by
such Non-Extending Lender of all amounts owed by it to the Issuing Bank.
5.03 Fees.
(a) Participation Fee. The Issuer agrees to pay to the Administrative
Agent for the account of the Lenders ratably in accordance with their
Participation Percentages a participation fee (the "Participation Fee") at the
rate of 0.70% per annum from the Effective Date until August 6, 2004, and at
the rate of 0.90% per annum anytime after August 6, 2004 (each such rate being
the "Participation Rate") on the amount of the Commitments as from time to
time in effect less the aggregate amount of (i) any unreimbursed Drawings not
converted into Loans (ii) any unreimbursed Standby L/C Drawing and (iii) any
outstanding Loans. The Participation Fee shall accrue from August 8, 2003 to
the Termination Date and shall be payable in arrears on the 8th day in each of
November, February, May and August and on the Termination Date commencing on
August 8, 2003, provided that if any day or the Termination Date is not a
Business Day, then the Participation Fee shall be payable on the next
preceding Business Day.
(b) Letter of Credit Fees. The Issuer will pay to the Issuing Bank
Letter of Credit administration fees (the "Letter of Credit Fees") in the
amounts and at the times agreed to by the Issuing Bank and the Issuer in a
separate fee letter among the Administrative Agent and the Issuer, dated
August 8, 2003 (the "Fee Letter").
(c) Standby L/C Fees. The Issuer will pay to the Issuing Bank Standby
L/C administration fees (the "Standby L/C Fees") in the amounts and at the
times agreed to by the Issuing Bank and the Issuer in the Fee Letter.
(d) Agency Fees. The Issuer will pay to the Administrative Agent, for
the sole account of the Administrative Agent, an agency fee (the "Agency
Fees") in the amount and at the times agreed to by the Administrative Agent
and the Issuer in the Fee Letter.
(e) Arrangement Fees. The Issuer will pay to the Arrangers, for the
sole account of the Arrangers, the arrangement fees (the "Arrangement Fees")
and other fees in the amounts and at the times agreed to by the Arrangers and
the Issuer in the Fee Letter.
(f) Depositary Fees. The Issuer will pay to the Depositary, for the
sole account of the Depositary, a depositary fee (the "Depositary Fees") in
the amount and at the times agreed to by the Depositary and the Issuer in a
separate fee letter (the "Depositary Fee Letter").
(g) Up-Front Fee. The Issuer will pay to the Administrative Agent,
for the account of the Lenders, an up-front fee (the "Up-front Fee") in
accordance with the Summary of Terms and Conditions agreed to by the Issuer
and the Arrangers on June 18, 2003.
5.04 Computation of Fees. All fees calculated on a per annum basis
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed.
5.05 Taxes.
(a) Any and all payments by the Issuer or the Guarantor, as the case
may be, to any Lender, the Issuing Bank or the Administrative Agent under this
Agreement and the other Transaction Documents shall be made free and clear of,
and without deduction or withholding for or on account of, any Taxes. In
addition, the Issuer shall promptly pay all Other Taxes.
(b) Except as otherwise provided in Section 5.05(c), the Issuer and
the Guarantors agree to indemnify and hold harmless each Lender, the Issuing
Bank and the Administrative Agent for the full amount of Taxes or Other Taxes,
excluding in each case United States backup withholding Taxes imposed because
of payee underreporting (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 5.05) paid by or assessed
against any Lender, the Issuing Bank or the Administrative Agent in respect of
any sum payable hereunder and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted,
unless such penalties, interest, additions to tax or expenses are incurred
solely as a result of any gross negligence or willful misconduct of such
Lender, Issuing Bank or Administrative Agent, as the case may be. Payment
under this indemnification shall be made within 30 days after the date any
Lender, the Issuing Bank or the Administrative Agent makes written demand
therefore, setting forth in reasonable detail the basis and calculation of
such amounts (such written demand shall be presumed correct, absent
significant error).
(c) If the Issuer or the Guarantors, as the case may be, shall be
required by law to deduct or withhold any Taxes or Other Taxes from or in
respect of any sum payable hereunder to any Lender, the Issuing Bank or the
Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable
under this Section 5.05, but excluding in each case United States
backup withholding Taxes imposed because of payee underreporting),
such Lender, the Issuing Bank or the Administrative Agent receives an
amount equal to the sum it would have received had no such deductions
or withholdings been made; provided, that, the Issuer shall not be
required to increase any amounts payable to such Lender, Issuing Bank
or the Administrative Agent to the extent such increased amounts
would be in excess of the increased amounts that would have been
payable to such Lender or Issuing Bank had such Lender, Issuing Bank
or Administrative Agent complied with the requirements of paragraph
(f) of this section;
(ii) the Issuer or the Guarantors, as the case may be, shall
make such deductions and withholdings; and
(iii) the Issuer or the Guarantors, as the case may be,
shall pay the full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with applicable law.
(d) Within 30 days after the date of any payment by the Issuer
or the Guarantors, as the case may be, of Taxes or Other Taxes, the Issuer or
the Guarantors, as the case may be, shall furnish to the Administrative Agent
the original or a certified copy of a receipt evidencing payment thereof or
other evidence of payment reasonably satisfactory to the Administrative Agent.
(e) If the Issuer or the Guarantors, as the case may be, is required
to pay additional amounts to any Lender or the Issuing Bank pursuant to
paragraph (c) of this Section 5.05, then such Lender or the Issuing Bank, as
the case may be, shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office or
issuing office, as the case may be, so as to eliminate the obligation of the
Issuer or the Guarantor, as the case may be, to pay any such additional
amounts which may thereafter accrue or to indemnify such Lender or the Issuing
Bank in the future, if such change in the reasonable judgment of such Lender
or the Issuing Bank is not otherwise disadvantageous to such Lender or the
Issuing Bank.
(f) The Issuing Bank, each Lender and the Administrative Agent shall,
from time to time at the request of the Issuer or the Administrative Agent (as
the case may be), promptly furnish to the Issuer and the Administrative Agent
(as the case may be), such forms, documents or other information (which shall
be accurate and complete) as may be reasonably required to establish any
available exemption from, or reduction in the amount of, applicable Taxes;
provided, however, that neither the Issuing Bank nor any Lender nor the
Administrative Agent shall be obliged to disclose information regarding its
tax affairs or computations to the Issuer in connection with this paragraph
(f). Each of the Issuer and the Administrative Agent shall be entitled to rely
upon the accuracy of any such forms, documents or other information furnished
to it by any Person and shall have no obligation to make any additional
payment or indemnify any Person for any Taxes, interest or penalties that
would not have become payable by such Person had such documentation been
accurate.
(g) If the Issuing Bank, the Administrative Agent or any Lender
receives a refund or credit in respect of Taxes or Other Taxes as to which it
has been indemnified by the Issuer or a Guarantor, as the case may be,
pursuant to Section 5.05(b) and such refund or credit is directly and clearly
attributable to this Agreement, it shall notify the Issuer or such Guarantor,
as the case may be, of the amount of such refund or credit and shall return to
the Issuer or such Guarantor, as the case may be, such refund or the benefit
of such credit; provided, however, that (A) the Issuing Bank, the
Administrative Agent or such Lender, as the case may be, shall not be
obligated to make any effort to obtain such refund or credit or to provide the
Issuer or the Guarantors with any information on or justification for the
arrangement of its tax affairs or otherwise disclose to the Issuer, the
Guarantors or any other Person any information that it considers to be
proprietary or confidential, and (B) the Issuer or such Guarantor, as the case
may be, upon the request of the Issuing Bank, the Administrative Agent or such
Lender, as the case may be, shall return the amount of such refund or the
benefit of such credit to the Issuing Bank, the Administrative Agent or such
Lender, as the case may be, if the Issuing Bank, the Administrative Agent or
such Lender, as the case may be, is required to repay the amount of such
refund or the benefit of such credit to the relevant authorities within six
years of the date the Issuer or such Guarantor, as the case may be, is paid
such amount by the Issuing Bank, the Administrative Agent or such Lender, as
the case may be.
5.06 General Provisions as to Payments.
(a) All payments to be made by the Issuer or the Guarantors, as the
case may be, shall be made without set-off, counterclaim or other defense.
Except as otherwise expressly provided herein and in the Depositary Agreement,
all payments by the Issuer shall be made to the Administrative Agent for the
account of the Lenders or the Issuing Bank, as the case may be, at the
Administrative Agent's Payment Office, and shall be made in Dollars and in
immediately available funds, no later than 3:30 p.m. (New York City time) (but
not earlier than 11:30 a.m. (New York City time)) in respect of any Drawing
under the Letter of Credit or any Standby L/C Drawing under a Standby L/C, on
the dates specified herein but in no event prior to the payment by the Issuing
Bank of such Drawing or Standby L/C Drawing, as the case may be, to be
reimbursed. The Administrative Agent will promptly distribute to the Issuing
Bank or to each Lender its Participation Percentage (or other applicable share
as expressly provided herein) of each payment in like funds as received. Any
payment received by the Administrative Agent later than 3:30 p.m. (New York
City time) shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue until such
following Business Day.
(b) Except and to the extent otherwise specifically provided herein,
whenever any payment to be made hereunder is due on a day which is not a
Business Day, the date for payment thereof shall be extended to the
immediately following Business Day and, if interest is stated to be payable in
respect thereof, interest shall continue to accrue to such immediately
following Business Day.
(c) Unless the Administrative Agent shall have received notice from
the Issuer prior to the date on which any payment is due to the Issuing Bank
or the Lenders hereunder that the Issuer will not make such payment in full,
the Administrative Agent may assume that the Issuer has made such payment in
full to the Administrative Agent on such date and the Administrative Agent may
(but shall not be so required), in reliance upon such assumption, cause to be
distributed to the Issuing Bank or each Lender, as the case may be, on such
due date an amount equal to the amount then due the Issuing Bank or such
Lender. If and to the extent that the Issuer shall not have made such payment,
the Issuing Bank or each Lender, as the case may be, shall repay to the
Administrative Agent forthwith on demand such amount distributed to the
Issuing Bank or such Lender together with accrued interest thereon, for each
day from the date such amount is distributed to the Issuing Bank or such
Lender until the date the Issuing Bank or such Lender repays such amount to
the Administrative Agent, at the Federal Funds Rate; provided, however, that
if any amount remains unpaid by the Issuing Bank or any Lender for more than
five Business Days after the Administrative Agent has made a demand for such
amount, the Issuing Bank or such Lender shall, commencing on the day next
following such fifth Business Day, pay interest to the Administrative Agent at
a rate per annum equal to the Federal Funds Rate plus 1%, and, provided
further, that if any such amount remains unpaid by the Issuing Bank or any
Lender for more than ten Business Days, the Issuing Bank or such Lender shall,
commencing on the day next following such tenth Business Day, pay interest to
the Administrative Agent at a rate per annum equal to the Federal Funds Rate
plus 2%.
5.07 Funding Losses. If the Issuer makes any payment of principal
with respect to any Eurodollar Loan on any day other than the last day of the
Interest Period applicable thereto (including a prepayment pursuant to Section
3.09, 3.10 or 12.02), or if the Issuer fails to borrow any Eurodollar Loans
after notice has been given to any Lender in accordance with Section 3.02 or
to convert or continue a Loan as a Eurodollar Loan after a Notice of
Continuation/Conversion has been delivered by the Issuer pursuant to Section
3.05, or if the Issuer fails to prepay any Eurodollar Loans after notice has
been given pursuant to Section 3.09, the Issuer shall reimburse each Lender
within 15 days after demand for any resulting loss or expense incurred by it,
including any loss incurred in obtaining, liquidating or reemploying deposits
bearing interest by reference to LIBOR from third parties, provided such
Lender shall have delivered to the Issuer a certificate setting forth in
reasonable detail the computations for the amount of such loss or expense,
which certificate shall be conclusive in the absence of manifest error.
5.08 Basis for Determining Interest Rate Inadequate or Unfair. If on
or prior to the first day of any Interest Period for any Eurodollar Loan:
(a) the Administrative Agent determines that by reason of
circumstances affecting the London interbank market, adequate means do not
exist for ascertaining LIBOR applicable to such Interest Period or that
deposits in Dollars (in the applicable amounts) are not being offered in the
London interbank market for such Interest Period, or
(b) the Required Lenders advise the Administrative Agent that LIBOR
as determined by the Administrative Agent will not adequately and fairly
reflect the cost to such Lenders of funding their Loans for such Interest
Period, the Administrative Agent shall forthwith give notice thereof to the
Issuer and the Lenders. Thereafter, for so long as paragraph (a) or paragraph
(b) above applies, all Loans hereunder shall be made or continued as Base Rate
Loans.
5.09 Illegality. If any Requirement of Law or any change therein or
in the interpretation or application thereof shall make it unlawful for any
Lender to make or maintain Loans as contemplated by this Agreement, (a) the
obligation of such Lender hereunder to make Loans shall forthwith be cancelled
to the extent required by law and (b) all outstanding Loans, if any, shall (i)
if so required by law be repaid or (ii) in the case of Eurodollar Loans, if so
permitted by law, at the option of the Issuer either (A) be repaid or (B) be
converted to Base Rate Loans, in each case, on the last day of the Interest
Period therefor. If any such repayment or conversion of a Eurodollar Loan is
made on a day which is not the last day of the Interest Period therefor, the
Issuer shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 5.07.
5.10 Increased Costs; Capital Adequacy.
(a) If the Issuing Bank or any Lender determines that due to either
(x) the introduction of any Requirement of Law, including any Capital Adequacy
Regulation, or any change in any Requirement of Law or in the interpretation
thereof (including those relating to reserves, special deposits, the basis of
taxation, capital adequacy or Eurocurrency Liabilities or any other form of
banking or monetary requirements or controls) or (y) compliance therewith by
the Issuing Bank or any Lender:
(i) the cost to the Issuing Bank or such Lender of
maintaining its Commitment or maintaining the Letter of Credit or
maintaining the Standby L/Cs or making or maintaining its Loans or
its participation in the Letter of Credit Facility or Standby L/C
Facility is increased;
(ii) the Issuing Bank or such Lender incurs a cost or
suffers a reduction in yield (including the cost of, or reduction in
yield arising from, complying with such taxation, reserve, special
deposit, cash ratio, liquidity, capital adequacy, Eurocurrency
Liabilities or other requirement or control as aforesaid) as a result
of its having agreed to issue the Letter of Credit, to participate in
the Letter of Credit Facility, to issue the Standby L/Cs or to
participate in the Standby L/C Facility or to give effect to its
obligations contemplated hereunder; or
(iii) the Issuing Bank or such Lender makes any additional
payment or suffers a reduction in yield or forgoes any interest or
other return on or calculated by reference to any amount received or
receivable by it hereunder or calculated by reference to the amount
of its Loans, its issuance of the Letter of Credit or its
participation in the Letter of Credit Facility, its issuance of
Standby L/Cs, or participation in the Standby L/C Facility or its
Commitment;
then and in each such case:
(A) the Issuing Bank or such Lender (an "Affected Lender")
shall notify the Issuer through the Administrative Agent in writing
of such event promptly upon its becoming aware of the event entitling
it to make a claim; provided, however, that the failure to give such
notice shall not affect the rights of any Affected Lender under this
Section 5.10(a); and
(B) upon demand from time to time by such Affected Lender
through the Administrative Agent, the Issuer shall pay to the
Administrative Agent for the account of such Affected Lender such
amount as shall compensate such Affected Lender for such increased
cost, reduction in yield, or shortfall in return, additional payment
or forgone interest or other return. The certificate of such Affected
Lender specifying the amount of such compensation shall be conclusive
except in the case of manifest error.
(b) The Issuing Bank and each Lender agree that, upon the occurrence
of any event giving rise to the operation of paragraph (a) above as to it, it
will, if so requested by the Issuer, use its commercially reasonable efforts
to avoid or minimize the consequences of such event; provided, however, that
such action shall not, in the judgment of the Issuing Bank or such Lender, as
the case may be, be illegal or economically or otherwise disadvantageous to
it.
(c) It is understood that paragraph (a) above does not apply to the
introduction of or any increase in the income or franchise taxes of the
Issuing Bank, the Administrative Agent or any Lender levied by any
jurisdiction (or political subdivision or taxing authority thereof) under the
laws of which the Issuing Bank, the Administrative Agent or any Lender is
organized or in which a Lending Office or the principal place of business of
the Issuing Bank, the Administrative Agent or such Lender is located or where
the Administrative Agent performs its functions as Administrative Agent or as
are imposed on the Lender, the Issuing Bank or the Administrative Agent (as
the case may be) as a result of a present or former connection between the
Lender, the Issuing Bank or the Administrative Agent and the jurisdiction of
the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Lender, the Issuing Bank or such Administrative Agent having
executed, delivered or performed its obligations or received a payment under,
or enforced, the Transaction Documents).
5.11 Substitute Lenders. If any Lender has demanded compensation
pursuant to Section 5.05(c) or to Section 5.10(a), and such Lender does not
waive its right to future additional compensation pursuant to Section 5.05(c)
or Section 5.10(a), the Issuer shall have the right (a) to replace such Lender
with a Substitute Lender or Substitute Lenders that shall succeed to the
rights of such Lender under this Agreement upon execution of an Assignment and
Assumption Agreement and payment by the Issuer of the related processing fee
of U.S.$3,500 to the Administrative Agent and a fee of U.S.$1,500 payable
directly to the Issuing Bank; or (b) to remove such Lender, reduce the
Commitments by the amount of the Commitment of such Lender, adjust the
Participation Percentage of each Lender in the manner set forth in Section
2.06 and, by requesting the Issuing Bank to submit a Notice of Reduction of
Stated Amount to cause the Stated Amount of the Letter of Credit to be reduced
by an amount equal to the Commitment of such Lender; provided, however, that
such Lender shall not be replaced or removed hereunder until such Lender has
been repaid in full all amounts owed to it pursuant to this Agreement and the
other Transaction Documents (including Section 5.05(c) and Section 5.10(a))
unless any such amount is being contested by the Issuer in good faith and;
provided, further, however, that no such reduction shall be permitted if after
giving effect thereto, the sum of the aggregate Face Amount of Commercial
Paper Notes Outstanding, any unreimbursed Drawings, the Standby L/C Exposure
and any Loans then outstanding would exceed the Commitments as so reduced or
the Commitments as so reduced would aggregate less than the Aggregate
Outstandings.
5.12 Sharing of Payments, Etc.
(a) If, other than as expressly provided elsewhere herein, any Lender
shall obtain on account of the Obligations owing to it any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Participation Percentage of payments on account of
the Obligations obtained by all the Lenders (an "excess payment"), such Lender
shall forthwith (i) notify the Administrative Agent of such fact, and (ii)
purchase from the other Lenders such participations in such Obligations owing
to them as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Lender, such purchase shall to that extent be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price paid therefor,
together with an amount equal to such paying Lender's Participation Percentage
(according to the proportion of (A) the amount of such paying Lender's
required repayment to (B) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Administrative Agent
will keep records (which shall be conclusive and binding in the absence of
demonstrable error) of participations purchased pursuant to this Section 5.12
and will in each case notify the Lenders following any such purchases.
(b) If any Lender shall commence any action or proceeding in any
court to enforce its rights hereunder after consultation with the other
Lenders and, as a result thereof or in connection therewith, it shall receive
any excess payment, then such Lender shall not be required to share any
portion of such excess payment with any Lender which has the legal right to,
but does not, join in any such action or proceeding or commence and diligently
prosecute a separate action or proceeding to enforce its rights in another
court.
(c) The Issuer agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 5.12 may exercise all its rights
of set-off with respect to such participation as fully as if such Lender were
the direct creditor of the Issuer in the amount of such participation.
ARTICLE VI
CONDITIONS PRECEDENT
6.01 Conditions to Effectiveness. The obligation of the Issuing Bank
to issue the Letter of Credit is subject to the satisfaction or waiver of the
following conditions precedent (the date on which all such conditions
precedent are satisfied or waived being the "Effective Date"):
(a) Agreement. The Administrative Agent shall have received
counterparts of this Agreement duly executed by each party hereto.
(b) Notes. All the Notes shall have been duly executed and delivered
by the Issuer to the Administrative Agent.
(c) Depositary Agreement and Dealer Agreements. The Administrative
Agent shall have received (i) counterparts of the Depositary Agreement duly
executed by each party thereto together with evidence from the Depositary that
the Commercial Paper Account and the Letter of Credit Account have been
established at the office of the Depositary and copies of all documents to be
delivered pursuant to the Depositary Agreement, (ii) copies of each Dealer
Agreement duly executed by the parties thereto and (iii) evidence reasonably
satisfactory to it that each Dealer has approved the Offering Statement to be
used in connection with the issuance and sale of the Commercial Paper Notes.
(d) Opinions of Issuer's and each Guarantor's Counsel. The
Administrative Agent shall have received (i) the opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, New York counsel to the Issuer and the Guarantors,
in substantially the form of Exhibit G, (ii) the opinion of Lic. Ramiro G.
Villareal Morales, Mexican counsel to the Issuer, in substantially the form of
Exhibit H and (iii) a favorable opinion of Skadden, Arps, Slate, Meagher &
Flom LLP, New York counsel to the Issuer and the Guarantors, as to certain
securities laws issues as the Dealers may request and bankruptcy law issues as
the Rating Agencies may request.
(e) Opinion of Counsel to the Administrative Agent. The
Administrative Agent shall have received a favorable opinion of Basham, Ringe
y Correa, special Mexican counsel to the Administrative Agent.
(f) Opinion of Counsel to the Issuing Bank. The Administrative Agent
shall have received (i) the opinion of Lovells, English counsel to the Issuing
Bank, and (ii) the opinion of Hughes Hubbard & Reed LLP, New York counsel to
the Issuing Bank, each as to the enforceability of the Letter of Credit.
(g) Governmental Approvals. The Administrative Agent shall have
received certified copies of all necessary approvals, authorizations, or
consents of, or notices to, or registrations with, any Governmental Authority
required for the Issuer and each Guarantor to enter into, or perform its
obligations under, the Transaction Documents, including the approval of the
Mexican National Banking and Securities Commission (Comision Nacional Bancaria
y de Valores) for the registration of the Commercial Paper Notes with the
Special Section of the National Registry of Securities and Intermediaries
(Registro Nacional de Valores e Intermediarios).
(h) Organizational Documents of the Issuer and the Guarantors. The
Administrative Agent shall have received certified copies of (i) the acta
constitutiva and estatutos sociales in effect on the Effective Date of the
Issuer and each Guarantor, (ii) the powers-of-attorney of each Person
executing any Transaction Document on behalf of the Issuer and each Guarantor,
together with specimen signatures of such Person and (iii) all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to the authorization for the execution, delivery and
performance of each such Transaction Document and the transactions
contemplated hereby and thereby. All certificates shall state that the
resolutions or other information referred to in such certificates have not
been amended, modified, revoked or rescinded as of the date of such
certificates (which shall not be earlier than five Business Days before the
Effective Date).
(i) Agent for Service of Process. The Administrative Agent shall have
received a power of attorney, notarized under Mexican law, granted by the
Issuer and each Guarantor to the Process Agent in respect of the Transaction
Documents together with evidence that the Process Agent has accepted its
appointment as Process Agent pursuant to Section 16.12.
(j) Ratings. The Administrative Agent shall have received copies of
letters, addressed to the Issuer and delivered by the Issuer to each Dealer,
from Moody's and S&P confirming that upon the issuance of the Letter of Credit
the Commercial Paper Notes will be rated at least P-1 by Moody's and A-1 by
S&P or similarly rated by another nationally recognized rating agency mutually
acceptable to the Issuer and the Arrangers.
(k) Fees and Expenses. The Issuer shall have paid (i) to the
Administrative Agent, the Agency Fees and the Up-Front Fee due on the
Effective Date, (ii) to the Arrangers the fees specified in the Fee Letter due
on the Effective Date, (iii) to the Issuing Bank the Letter of Credit Fees due
on the Effective Date, (iv) to the Depositary, the fees specified in the
Depositary Fee Letter due on the Effective Date, and (v) all other reasonable
fees and amounts payable by the Issuer hereunder pursuant to Section 16.04 on
or prior to the Effective Date and as otherwise agreed.
(l) No Default. No Default or Event of Default shall have occurred
and be continuing as of the Effective Date and the Issuer and each Guarantor
shall have provided a certificate from a Responsible Officer of the Issuer to
such effect to the Administrative Agent.
(m) Representations and Warranties. The representations and
warranties of the Issuer and of each Guarantor contained in this Agreement and
each other Transaction Document shall be true on and as of the Effective Date
and the Issuer and each Guarantor shall have provided a certificate to such
effect to the Administrative Agent.
(n) No Material Adverse Effect. No Material Adverse Effect shall have
occurred since December 31, 2002 and there shall have occurred no circumstance
and/or event of a financial, political or economic nature in Mexico which has
a reasonable likelihood of having a material adverse effect on the ability of
the Issuer or the Guarantors to perform their obligations under this Agreement
and the other Transaction Documents.
(o) Other Documents. The Administrative Agent shall have received
such other certificates, powers of attorney and other documents and
undertakings relating to the authority for, and the execution, delivery and
validity of, the Transaction Documents, as may be reasonably requested by the
Administrative Agent or the Issuing Bank or any Lender through the
Administrative Agent.
(p) Fees, Costs and Expenses under the Prior Agreement. The Issuer
shall have paid all accrued and unpaid fees payable under the Prior Agreement
to the extent due and payable on or before the Effective Date of this
Agreement.
(q) Prior Agreement. All notes in favor of or commitments issued by
each lender under the Prior Agreement shall be simultaneously paid, cancelled,
refinanced or replaced hereunder, except with regard to Standby L/C's pursuant
to Section 4.01(b).
(r) Non-Extending Lenders. Each Non-Extending Lender shall, subject
to Section 5.02 and Section 16.06, be released from its obligations as under
this Agreement and shall no longer be a Lender hereunder, but shall continue
to be entitled to the benefits of Sections 5.05, 5.07, 5.10 with respect to
facts and circumstances occurring prior to the Effective Date of this
Agreement.
(s) Additional Commitment Lenders and Lenders. Each Additional
Commitment Lender and each lender party to the Prior Agreement that elected to
extend its Commitment hereunder by signing this Agreement shall have become a
Lender for all purposes of this Agreement and confirms its obligations under
Section 2.04 with respect to the Letter of Credit Facility and 4.04 with
respect to the Standby L/C Facility and Standby L/Cs existing on the Effective
Date.
6.02 Conditions Precedent to the Issuance of Commercial Paper Notes.
Each issuance of Commercial Paper Notes is subject to the satisfaction of the
following conditions precedent on the date of issuance:
(a) other than in connection with the first issuance of Commercial
Paper Notes on the Effective Date, the Issuer shall have deposited or caused
to be deposited in the Commercial Paper Account an amount equal to the Issuer
Deposit Amount for such date;
(b) immediately after giving effect to such issuance, the aggregate
Face Amount of all Commercial Paper Notes issued and Outstanding shall not be
greater than the Stated Amount of the Letter of Credit;
(c) immediately after giving effect to such issuance, the aggregate
Face Amount of all Commercial Paper Notes Outstanding shall not exceed an
amount equal to (i) the amount of the Commitments at such time less (ii) the
sum of (A) the aggregate principal amount of all outstanding Loans, (B) the
aggregate amount of all unreimbursed Drawings not converted into Loans and (C)
the Standby L/C Exposure;
(d) immediately before and after such issuance, no Default or Event
of Default shall have occurred and be continuing;
(e) (i) no Notice of Termination or Notice of Default shall have been
delivered by the Issuing Bank, (ii) no Notice of Acceleration shall have been
delivered by the Administrative Agent and (iii) no instruction to cease
issuing Commercial Paper Notes shall have been delivered to the Depositary by
the Administrative Agent, the Issuer or the Issuing Bank pursuant to Section
2.07 or 12.02(e) or as provided in the Depositary Agreement;
(f) no writ, order, judgment, warrant of attachment, execution or
similar process or stay or legal restraint shall have been imposed on the
Commercial Paper Account or the Letter of Credit Account or on the proceeds of
the Commercial Paper Notes;
(g) the Commercial Paper Notes shall be rated at least P-2 by Moody's
and A-2 by S&P;
(h) no Non-Default Disruption Event shall have occurred and be
continuing; and
(i) each of the representations and warranties made by the Issuer in
or pursuant to the Transaction Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such date.
6.03 Conditions Precedent to Borrowings, Continuation or Conversion
of the Loans and Issuances of Standby L/Cs. The obligation of any Lender to
make a Loan on the occasion of any Borrowing or to continue or convert any
Loan or for the Issuing Bank to issue a Standby L/C is subject to the
satisfaction of the following conditions:
(a) in the case of Borrowings, continuance or conversion of Loans,
the Administrative Agent shall have received a Notice of Borrowing or a Notice
of Continuation/Conversion as required by Section 3.02 or 3.05 respectively
and, in the case of issuances of Standby L/Cs, the Issuing Bank shall have
received the notice and all other documents, instruments and agreements
referred to in Section 4.01(c);
(b) in the case of Borrowings continuance or conversion of Loans, (i)
the Issuer shall have certified to the Administrative Agent no later than
11:00 a.m. (New York City time) on the date of such Borrowing or continuation
or conversion of any Loan that a CP Disruption Event has occurred and is
continuing or that the CP Disruption Event which existed on the Non-Default
Disruption Date is continuing to exist or (ii) the Issuing Bank shall have
confirmed to the Administrative Agent that a Downgrading Event or an
Illegality Event, as the case may be, has occurred and is continuing or that
the Downgrading Event or the Illegality Event, as the case may be, which
existed on the Non-Default Disruption Date is continuing to exist;
(c) immediately after such Borrowing (after giving effect to the
payment of any unreimbursed Drawing with the proceeds of such Borrowing), the
continuation or conversion of any Loan or the issuance of the Standby L/C, as
the case may be, the Total Outstandings shall not exceed the Commitments;
(d) in the case of Borrowings of Loans pursuant to Section 3.01(a),
the amount of such Borrowing shall not exceed the amount of the payment under
the Letter of Credit in respect of a Drawing being reimbursed with the
proceeds of such Borrowing;
(e) in the case of issuances of Standby L/Cs, the stated amount of
the Standby L/C subject of such issuance shall not exceed the Available
Standby Sublimit.
(f) immediately before and after such Borrowing or the continuation
or conversion of any Borrowing or the issuance of such Standby L/C, no Default
or Event of Default shall have occurred and be continuing and such Borrowing
or continuation or conversion of any Loan or issuance of a Standby L/C thereof
will not cause or result in a Default or Event of Default; and
(g) the representations and warranties of the Issuer contained in
this Agreement and in each other Transaction Document and of each Guarantor
contained in this Agreement shall be true and correct in all material respects
on and as of the date of any Borrowing, continuation or conversion of any Loan
or issuance of a Standby L/C thereof.
(h) in the case of issuances of Standby L/Cs the Issuer shall have
paid to the Issuing Bank all of the Standby L/C Fees due and payable on or
before the issuance of such Standby L/C.
6.04 Conditions Precedent to Effectiveness of Extension Amendment and
Restatement. In addition to the foregoing, an extension of the Stated
Termination Date, including the extension of the Prior Agreement embedded in
this Agreement, shall not be effective unless:
(x) no Default or Event of Default shall have occurred and
be continuing on the date of such extension and after giving effect
thereto;
(y) the representations and warranties contained in this
Agreement are true and correct on and as of the date of such
extension and after giving effect thereto, as though made on and as
of such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific
date); and
(z) on or before the effective date of each extension
amendment and restatement, (1) the Issuer shall have paid in full the
principal of and interest on all of the Loans made by each
Non-Extending Lender to the Issuer under the Prior Agreement, (2) the
Issuer shall have paid in full all other amounts owing to such
Non-Extending Lender under the Prior Agreement, (3) the aggregate
amount of the Commitments shall not be less than the Aggregate
Outstandings, and (4) each Non-Extending Lender shall have paid all
amounts owed by it to the Issuing Bank.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer represents and warrants that:
7.01 Corporate Existence and Power.
(a) The Issuer is a corporation (sociedad anonima de capital
variable) duly incorporated, validly existing and in good standing under the
laws of Mexico and has all requisite corporate power and authority (including
all governmental licenses, permits and other approvals except for such
licenses, permits and approvals the absence of which will not have a Material
Adverse Effect) to own its assets and carry on its business as now conducted
and as proposed to be conducted.
(b) All of the outstanding stock of the Issuer has been validly
issued and is fully paid and non-assessable.
7.02 Power and Authority; Enforceable Obligations.
(a) The execution, delivery and performance by the Issuer of each
Transaction Document to which it is or will be a party, and the consummation
of the transactions contemplated hereby and thereby, are within the Issuer's
corporate powers and have been duly authorized by all necessary corporate
action pursuant to the estatutos sociales of the Issuer.
(b) This Agreement and the other Transaction Documents to which the
Issuer is a party have been duly executed and delivered by the Issuer and
constitute, and each Commercial Paper Note, when executed by the Issuer,
countersigned by the Depositary as provided in the Depositary Agreement, and
delivered, will constitute, legal, valid and binding obligations of the Issuer
enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable concurso mercantil, bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or general equity principles.
7.03 Compliance with Law and Other Instruments. The execution,
delivery and performance of this Agreement and any of the other Transaction
Documents to which the Issuer is a party and the consummation of the
transactions herein or therein contemplated, and compliance with the terms and
provisions hereof and thereof, do not and will not (a) conflict with, or
result in a breach or violation of, or constitute a default under, or result
in the creation or imposition of any Lien upon the assets of the Issuer
pursuant to, any Contractual Obligation of the Issuer or (b) result in any
violation of the estatutos sociales of the Issuer or any provision of any
Requirement of Law applicable to the Issuer.
7.04 Governmental Approvals. No order, permission, consent, approval,
license, authorization, registration or validation of, or notice to or filing
with, or exemption by, any Governmental Authority is required to authorize, or
is required in connection with, the execution, delivery and performance by the
Issuer of this Agreement and the other Transaction Documents to which the
Issuer is a party or the taking of any action contemplated hereby or by any
other Transaction Document except for the registration of the Commercial Paper
Notes with the Special Section of the Registro Nacional de Valores e
Intermediarios of the Comision Nacional Bancaria y de Valores, in respect of
which an authorization has been obtained and is in full force and effect.
7.05 Financial Information.
(a) The consolidated balance sheet of the Issuer and its Subsidiaries
as at December 31, 2002, and the related consolidated statements of income and
cash flows of the Issuer and its Subsidiaries for the fiscal year then ended,
accompanied by an opinion of KPMG Cardenas Dosal, S.C., independent public
accountants, and the consolidated balance sheet of the Issuer and its
Subsidiaries as at June 30, 2003, and the related consolidated statements of
income and cash flows of the Issuer and its Subsidiaries for the six months
then ended, duly certified by the chief financial officer of the Issuer,
copies of which have been furnished to each Lender, fairly present, subject,
in the case of said balance sheet as at June 30, 2003, and said statements of
income and cash flows for the six months then ended, to year-end audit
adjustments, the consolidated financial condition of the Issuer and its
Subsidiaries as at such dates and the consolidated results of the operations
of the Issuer and its Subsidiaries for the periods ended on such dates, all in
accordance with Mexican GAAP, consistently applied.
(b) Since December 31, 2002 there has been no development or event
which has had or is reasonably likely to have a Material Adverse Effect.
7.06 Litigation. Except as set forth in Schedule 7.06, there is no
pending or threatened action, suit, investigation, litigation or proceeding,
including any Environmental Action, affecting the Issuer or any of its
Subsidiaries before any court, Governmental Authority or arbitrator that (a)
would be reasonably likely to have a Material Adverse Effect or (b) purports
to affect the legality, validity or enforceability of any Transaction Document
or the consummation of the transactions contemplated thereby, and there has
been no adverse change in the status, or financial effect on the Issuer or any
of its Subsidiaries, of the litigation described in Schedule 7.06.
7.07 No Immunity. The Issuer is subject to civil and commercial law
with respect to its obligations under this Agreement and each other
Transaction Document to which it is a party and the execution, delivery and
performance of this Agreement or any such other Transaction Document by the
Issuer constitute private and commercial acts rather than public or
governmental acts. Under the laws of Mexico neither the Issuer nor any of its
property has any immunity from jurisdiction of any court or any legal process
(whether through service or notice, attachment prior to judgment or attachment
in aid of execution).
7.08 Investment Company Act. The Issuer is not, and is not controlled
by, an "investment company" within the meaning of the United States Investment
Company Act of 1940, as amended.
7.09 Direct Obligations; Pari Passu; Liens.
(a) (i) This Agreement constitutes a direct, unconditional
unsubordinated and unsecured obligation of the Issuer, and (ii) the Notes and
the Commercial Paper Notes, when issued and delivered, will constitute direct,
unconditional unsubordinated and unsecured obligations of the Issuer.
(b) The obligations of the Issuer under this Agreement and the Notes
rank and will rank in priority of payment at least pari passu with all other
senior unsecured Debt of the Issuer.
(c) There are no Liens on the property of the Issuer or any of its
Subsidiaries other than Permitted Liens.
7.10 Subsidiaries. All Material Subsidiaries of the Issuer are listed
on Schedule 7.10.
7.11 Ownership of Property. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, each of the Issuer
and its Subsidiaries has title in fee simple to, or a valid leasehold interest
in, all its real property, and good title to, or a valid leasehold interest
in, all its other property, and none of such property is subject to any Lien
except Permitted Liens.
7.12 No Recordation Necessary.
(a) This Agreement and the Notes are in proper legal form under the
law of Mexico for the enforcement thereof against the Issuer under the law of
Mexico. Except for the registration referred to in Section 7.04, to ensure the
legality, validity, enforceability or admissibility in evidence of this
Agreement and each other Transaction Document in Mexico, it is not necessary
that this Agreement or any other Transaction Document be filed or recorded
with any Governmental Authority in Mexico or that any stamp or similar tax be
paid on or in respect of this Agreement or any other document to be furnished
under this Agreement, unless such stamp or similar taxes have been paid by the
Issuer; provided, however, that in the event any legal proceedings are brought
in the courts of Mexico, an official Spanish translation of the documents
required in such proceedings, including this Agreement, would have to be
approved by the court after the defendant is given an opportunity to be heard
with respect to the accuracy of the translation, and proceedings would
thereafter be based upon the translated documents.
(b) It is not necessary (i) in order for the Administrative Agent,
the Issuing Bank or any Lender to enforce any rights or remedies under the
Transaction Documents or (ii) solely by reason of the execution, delivery and
performance of this Agreement by the Administrative Agent, the Issuing Bank or
any Lender, that the Administrative Agent, the Issuing Bank or such Lender be
licensed or qualified with any Mexican Governmental Authority or be entitled
to carry on business in Mexico.
7.13 Taxes.
(a) Each Obligor has filed all material tax returns which are
required to be filed by it and has paid all taxes due pursuant to such returns
or pursuant to any material assessment received by the Issuer, except where
the same may be contested in good faith by appropriate proceedings and as to
which such Obligor maintains reserves to the extent it is required to do so by
law or pursuant to Mexican GAAP. The charges, accruals and reserves on the
books of each Obligor in respect of taxes or other governmental charges are,
in the opinion of the Issuer, adequate.
(b) Except for tax imposed by way of withholding on interest, fees
and commissions remitted from Mexico, there is no tax (other than taxes on, or
measured by, income or profits), levy, impost, deduction, charge or
withholding imposed, levied, charged, assessed or made by or in Mexico or any
political subdivision or taxing authority thereof or therein either (i) on or
by virtue of the execution or delivery of this Agreement or any of the other
Transaction Documents or (ii) on any payment to be made by the Issuer pursuant
to this Agreement or any of the other Transaction Documents. The Issuer is
permitted to pay any additional amounts payable pursuant to Section 5.05.
7.14 Compliance with Laws. The Issuer and its Subsidiaries are in
compliance in all material respects with all applicable Requirements of Law
(including with respect to the licenses, certificates, permits, franchises,
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses,
antitrust laws or Environmental Laws and the rules and regulations and laws
with respect to social security, workers' housing funds, and pension funds
obligations), except where the failure to so comply would not have a Material
Adverse Effect.
7.15 Absence of Default. No Default or Event of Default has occurred
and is continuing.
7.16 Full Disclosure. All information heretofore furnished by the
Issuer to the Administrative Agent, the Arrangers, the Issuing Bank or any
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by the
Issuer to the Administrative Agent, the Arrangers, the Issuing Bank or any
Lender will be, true and accurate in all material respects on the date as of
which such information is stated or certified. The Issuer has disclosed to the
Lenders in writing any and all facts which may have a Material Adverse Effect.
7.17 Choice of Law; Submission to Jurisdiction and Waiver of
Sovereign Immunity. In any action or proceeding involving the Issuer arising
out of or relating to this Agreement in any Mexican court or tribunal, a
Lender, the Issuing Bank, the Arrangers and the Administrative Agent would be
entitled to the recognition and effectiveness of the choice of law, submission
to jurisdiction and waiver of sovereign immunity provisions of Sections 16.10,
16.11 and 16.13.
7.18 Aggregate Outstandings. The Aggregate Outstandings do not exceed
the aggregate amount of the Commitments.
7.19 Standby L/C's. Attached hereto as Schedule 7.19 is a complete
and accurate list of the outstanding Standby L/C's issued hereunder or under
the Prior Agreement for the account of the Issuer, listed by L/C Number,
stated amount, date of issue and expiry.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS
Each of the Guarantors separately represents and warrants that:
8.01 Corporate Existence and Power.
(a) Such Guarantor is a corporation (sociedad anonima de capital
variable) duly incorporated, validly existing and in good standing under the
laws of Mexico and has all requisite corporate power and authority (including
all governmental licenses, permits and other approvals except for such
licenses, permits and approvals the absence of which will not have a Material
Adverse Effect) to own its assets and carry on its business as now conducted
and as proposed to be conducted.
(b) All of the outstanding stock of such Guarantor has been validly
issued and is fully paid and non-accessible.
8.02 Power and Authority; Enforceable Obligations.
(a) The execution, delivery and performance by such Guarantor of each
Transaction Document to which it is or will be a party, and the consummation
of the transactions contemplated hereby and thereby, are within such
Guarantor's corporate powers and have been duly authorized by all necessary
corporate action pursuant to the estatutos sociales of such Guarantor.
(b) This Agreement and the other Transaction Documents to which such
Guarantor is a party have been duly executed and delivered by such Guarantor
and constitute legal, valid and binding obligations of such Guarantor
enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable concurso mercantil, bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or general equity principals.
8.03 Compliance with Law and Other Instruments. The execution,
delivery and performance of this Agreement and any of the other Transaction
Documents to which such Guarantor is a party and the consummation of the
transactions herein or therein contemplated, and compliance with the terms and
provisions hereof and thereof, do not and will not (a) conflict with, or
result in a breach or violation of, or constitute a default under, or result
in the creation or imposition of any Lien upon the assets of such Guarantor
pursuant to, any Contractual Obligation of such Guarantor or (b) result in any
violation of the estatutos sociales of such Guarantor or any provision of any
Requirement of Law applicable to such Guarantor.
8.04 Governmental Approvals. No order, permission, consent, approval,
license, authorization, registration or validation of, or notice to or filing
with, or exemption by, any Governmental Authority is required to authorize, or
is required in connection with, the execution, delivery and performance by
such Guarantor of this Agreement and the other Transaction Documents to which
such Guarantor is a party or the taking of any action contemplated hereby or
by any other Transaction Document except for the registration of the
Commercial Paper Notes with the Special Section of the Registro Nacional de
Valores e Intermediarios of the Comision Nacional Bancaria y de Valores, in
respect of which an authorization has been obtained and is in full force and
effect.
8.05 No Immunity. Such Guarantor is subject to civil and commercial
law with respect to its obligations under this Agreement and each other
Transaction Document to which it is a party and the execution, delivery and
performance of this Agreement or any such other Transaction Document by such
Guarantor constitute private and commercial acts rather than public or
governmental acts. Under the laws of Mexico neither such Guarantor nor any of
its property has any immunity from jurisdiction of any court or any legal
process (whether through service or notice, attachment prior to judgment or
attachment in aid of execution).
8.06 Direct Obligations; Pari Passu.
(a) This Agreement constitutes a direct, unconditional unsubordinated
and unsecured obligation of such Guarantor.
(b) The obligations of such Guarantor under this Agreement rank and
will rank in priority of payment at least pari passu with all other senior
unsecured Debt of such Guarantor.
8.07 No Recordation Necessary. This Agreement is in proper legal form
under the law of Mexico for the enforcement thereof against such Guarantor
under the law of Mexico. Except for the registration referred to in Section
8.04, to ensure the legality, validity, enforceability or admissibility in
evidence of this Agreement and each other Transaction Document in Mexico, it
is not necessary that this Agreement or any other Transaction Document be
filed or recorded with any Governmental Authority in Mexico or that any stamp
or similar tax be paid on or in respect of this Agreement or any other
document to be furnished under this Agreement unless such stamp or similar
taxes have been paid by the Issuer or the Guarantors; provided, however, that
in the event any legal proceedings are brought in the courts of Mexico, an
official Spanish translation of the documents required in such proceedings,
including this Agreement, would have to be approved by the court after the
defendant is given an opportunity to be heard with respect to the accuracy of
the translation, and proceedings would thereafter be based upon the translated
documents.
8.08 Choice of Law; Submission to Jurisdiction and Waiver of
Sovereign Immunity. In any action or proceeding involving such Guarantor
arising out of or relating to this Agreement in any Mexican court or tribunal,
a Lender, the Issuing Bank, the Arrangers and the Administrative Agent would
be entitled to the recognition and effectiveness of the choice of law,
submission to jurisdiction and waiver of sovereign immunity provisions of
Sections 16.10, 16.11 and 16.13.
ARTICLE IX
AFFIRMATIVE COVENANTS
The Issuer covenants and agrees that for so long as any Obligation
under this Agreement or any other Transaction Document remains unpaid, the
Letter of Credit remains outstanding, any Standby L/Cs remain outstanding or
any Lender has any Commitment hereunder:
9.01 Financial Reports and Other Information. The Issuer will deliver
to the Administrative Agent (with a copy for each Lender):
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of the Issuer, a copy of the annual audit report for
such year for the Issuer and its Subsidiaries containing consolidated and
consolidating balance sheets of the Issuer and its Subsidiaries, as of the end
of such fiscal year and consolidated statements of income and cash flows of
the Issuer and its Subsidiaries, for such fiscal year, in each case
accompanied by an opinion acceptable to the Required Lenders by KPMG Cardenas
Dosal, S.C. or other independent public accountants of recognized standing
acceptable to the Required Lenders, together with (i) a certificate of such
accounting firm to the Lenders stating that in the course of the regular audit
of the business of the Issuer and its Subsidiaries, which audit was conducted
by such accounting firm in accordance with Mexican GAAP, such accounting firm
has obtained no knowledge that a Default or Event of Default has occurred and
is continuing, or if, in the opinion of such accounting firm a Default or
Event of Default has occurred and is continuing, a statement as to the nature
thereof and (ii) a certificate of a Responsible Officer of the Issuer, stating
that no Default or Event of Default has occurred and is continuing or, if a
Default or Event of Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Issuer has taken and proposes to
take with respect thereto; provided that in the event of any change in the
Mexican GAAP used in the preparation of such financial statements, the Issuer
shall also provide, for informational purposes only, a statement of
reconciliation conforming such financial statements to Mexican GAAP consistent
with those applied in the preparation of the financial statements referred to
in Section 7.05 and provided further that all such documents will be prepared
in English; and
(b) as soon as available and in any event within 60 days after the
end of each of the first three quarters of each fiscal year of the Issuer,
consolidated balance sheets of the Issuer and its Subsidiaries, as of the end
of such quarter and consolidated statements of income and cash flows of the
Issuer and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, duly certified
(subject to year-end audit adjustments) by any Responsible Officer of the
Issuer as having been prepared in accordance with Mexican GAAP and together
with a certificate of a Responsible Officer of the Issuer, as to compliance
with the terms of this Agreement and stating that no Default or Event of
Default has occurred and is continuing or, if a Default or Event of Default
has occurred and is continuing, a statement as to the nature thereof and the
action that the Issuer has taken and proposes to take with respect thereto;
provided that in the event of any change in the Mexican GAAP used in the
preparation of such financial statements, the Issuer shall also provide, for
informational purposes only, a statement of reconciliation conforming such
financial statements to Mexican GAAP consistent with those applied in the
preparation of the financial statements referred to in Section 7.05 and
provided further that all such documents will be prepared in English.
9.02 Notice of Default and Litigation. The Issuer will furnish to the
Administrative Agent (and the Administrative Agent will notify the Issuing
Bank, each Lender, the Depositary and each Dealer):
(a) as soon as practicable and in any event within five days after
the occurrence of each Default or Event of Default continuing on the date of
such statement, a statement of the chief financial officer of the Issuer
setting forth details of such Default or Event of Default and the action that
the Issuer has taken and proposes to take with respect thereto; and
(b) promptly after the commencement thereof, notice of all actions
and proceedings before any court, Governmental Authority or arbitrator
affecting the Issuer or any of its Subsidiaries of the type described in
Section 7.06.
9.03 Compliance with Laws and Contractual Obligations, Etc. The
Issuer will comply, and cause each of its Subsidiaries to comply, in all
material respects, with all applicable Requirements of Law (including with
respect to the licenses, approvals, certificates, permits, franchises,
notices, registrations and other governmental authorizations necessary to the
ownership of its respective properties or to the conduct of its respective
business, antitrust laws or Environmental Laws and laws with respect to social
security and pension funds obligations) and all material Contractual
Obligations, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect.
9.04 Payment of Obligations. The Issuer will pay and discharge, and
cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent, (a) all taxes, assessments and governmental charges or
levies assessed, charged or imposed upon it or upon its property and (b) all
lawful claims that, if unpaid, might by law become a Lien upon its property,
except where the failure to make such payments or effect such discharges could
not reasonably be expected to have a Material Adverse Effect; provided,
however, that neither the Issuer nor any of its Subsidiaries shall be required
to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim that is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being maintained,
unless and until any Lien resulting therefrom attaches to its property and
becomes enforceable against its other creditors.
9.05 Maintenance of Insurance. The Issuer will maintain, and cause
each of its Subsidiaries to maintain, insurance with reputable insurance
companies or associations in such amounts and covering such risks as is
usually carried by companies of established reputation engaged in similar
businesses and owning similar properties in the same general areas in which
the Issuer or such Subsidiary operates.
9.06 Conduct of Business and Preservation of Corporate Existence. The
Issuer will continue to engage in business of the same general type as now
conducted by the Issuer and will preserve and maintain, and cause each of its
Material Subsidiaries to preserve and maintain, its corporate existence,
rights (charter and statutory), licenses, consents, permits, notices or
approvals and franchises deemed material to its business; provided that
neither the Issuer nor any of its Subsidiaries shall be required to maintain
its corporate existence in connection with a merger or consolidation in
compliance with Section 10.07; and provided, further that neither the Issuer
nor any of its Subsidiaries shall be required to preserve any right or
franchise if the Issuer or any such Subsidiary shall in its good faith
judgment, determine that the preservation thereof is no longer in the best
interests of the Issuer or such Subsidiary, as the case may be, and that the
loss thereof could not reasonably be expected to have a Material Adverse
Effect.
9.07 Books and Records. The Issuer will keep, and cause each of its
Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Issuer and each such Subsidiary in accordance with Mexican
GAAP, consistently applied.
9.08 Maintenance of Properties, Etc. The Issuer will:
(a) maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, all of its properties that are used or useful in the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and
(b) maintain, preserve and protect all intellectual property and all
necessary governmental and third party approvals, franchises, licenses and
permits, material to the business of the Issuer or its Subsidiaries, provided
neither paragraph (a) nor this paragraph (b) shall prevent the Issuer or any
of its Subsidiaries from discontinuing the operation and maintenance of any of
its properties or allowing to lapse certain approvals, licenses or permits
which discontinuance is desirable in the conduct of its business and which
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.09 Use of Proceeds.
(a) The Issuer will use the proceeds of the Commercial Paper Notes
and the proceeds of Loans made under Section 3.01(f) for general corporate
purposes, including but not limited to the repayment of short term debt.
(b) The Issuer will use the proceeds of the Loans made under Section
3.01(a) to reimburse the Issuing Bank as provided in Section 3.01(c).
(c) The Issuer will ensure that at no time shall the Aggregate
Outstandings exceed the aggregate amount of the Commitments then in effect.
9.10 Pari Passu Ranking. The Issuer will ensure that at all times the
Obligations of the Issuer under the Transaction Documents and the Obligations
of the Guarantors under this Agreement constitute unconditional general
obligations of such Obligor ranking in priority of payment at least pari passu
with all other senior unsecured, unsubordinated Debt of such Obligor.
9.11 Transactions with Affiliates. The Issuer will conduct, and cause
each of its Subsidiaries to conduct, all transactions otherwise permitted
under this Agreement with any of its Affiliates on terms that are commercially
reasonable and no less favorable to the Issuer or such Subsidiary than it
would obtain in a comparable arm's-length transaction with a Person not an
Affiliate.
9.12 Maintenance of Governmental Approvals. The Issuer will maintain
in full force and effect at all times all approvals of and filings with any
Governmental Authority required under applicable law for the conduct of its
business (including, without limitation, antitrust laws or Environmental Laws)
and the performance of the Obligors' obligations hereunder and under the other
Transaction Documents by the Issuer and/or the Guarantors, as applicable, and
for the validity or enforceability hereof and thereof, except where failure to
maintain any such approvals or filings could not reasonably be expected to
have a Material Adverse Effect.
ARTICLE X
NEGATIVE COVENANTS
The Issuer covenants and agrees that for so long as any Obligation
under this Agreement or any other Transaction Document remains unpaid, the
Letter of Credit remains outstanding, any Standby L/C remain outstanding or
any Lender has any Commitment hereunder:
10.01 The Commercial Paper Notes. The Issuer shall not permit (a) any
Commercial Paper Note to have a stated date of maturity more than 360 days
after its date of issuance, (b) any Commercial Paper Notes to mature after the
Stated Termination Date or (c) Commercial Paper Notes having an aggregate Face
Amount in excess of an amount equal to the product of (i) 50% and (ii) the
Stated Amount to mature on any one Business Day (the "Settlement Limits");
provided, however, that in connection with an extension of the Stated
Termination Date, the aggregate Face Amount of all Commercial Paper Notes
Outstanding may mature on one Business Day on or prior to such Stated
Termination Date and provided, further, notwithstanding any provision
contained herein to the contrary, these Settlement Limits are for the benefit
of the Issuing Bank, which may in its sole discretion waive these requirements
without the prior written consent of any party to any Transaction Document.
10.02 Securities Act. The Issuer shall not take or permit to be
taken, to the extent within the control of the Issuer, any action that would
result in the issuance and sale of the Commercial Paper Notes being subject to
the registration requirements of the United States Securities Act of 1933, as
amended.
10.03 Offering Statements. The Issuer shall not issue Commercial
Paper Notes except pursuant to an Offering Statement and shall not include in
any Offering Statement in connection with the issuance, sale and distribution
of the Commercial Paper Notes any information with respect to the Issuing
Bank, the Letter of Credit, the Standby L/Cs, the Administrative Agent or any
Lender unless the same shall have been previously approved in writing, in the
case of the Issuing Bank, the Letter of Credit and the Standby L/Cs, by the
Issuing Bank or, in the case of the Administrative Agent or a Lender, by the
Administrative Agent or such Lender, as the case may be, prior to the
inclusion in such Offering Statement.
10.04 Depositary; Dealers; Depositary Agreement.
(a) The Issuer shall not replace, or agree to any replacement of, the
Depositary without the prior consents of the Issuing Bank and the
Administrative Agent, which consents shall not be unreasonably withheld or
delayed.
(b) The Issuer shall not appoint or replace any Dealer without the
approvals of the Issuing Bank and the Arrangers, which approvals shall not be
unreasonably withheld or delayed.
(c) The Issuer shall not agree to any amendment to the Depositary
Agreement or waive any of its rights thereunder without the consent of the
Administrative Agent, which consent shall not be unreasonably withheld or
delayed.
10.05 Financial Conditions.
(a) The Issuer shall not permit the Consolidated Leverage Ratio at
any time to exceed 3.5 to 1.
(b) The Issuer shall not permit the Consolidated Fixed Charge
Coverage Ratio for any period of four consecutive fiscal quarters to be less
than 2.5 to 1.
(c) Concurrently with the delivery by the Issuer of any financial
statements pursuant to Section 9.01 the Issuer shall deliver to Administrative
Agent (with a copy to each Lender) a certificate from a Responsible Officer
containing all information and calculations necessary for determining
compliance by the Issuer with Sections 10.5(a) and (b) above.
10.06 Liens. The Issuer shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of the Issuer or
any Subsidiary, whether now owned or held or hereafter acquired, other than
the following Liens ("Permitted Liens"):
(a) Liens for taxes, assessments and other governmental charges the
payment of which is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and for which such reserves or
other appropriate provision, if any, as shall be required by Mexican GAAP
shall have been made;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business for sums
not yet due or the payment of which is being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and for
which such reserves or other appropriate provision, if any, as shall be
required by Mexican GAAP shall have been made;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security;
(d) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay;
(e) Liens existing on the date of this Agreement as described in
Schedule 10.06 hereto;
(f) any Lien on property acquired by the Issuer after the date hereof
that was existing on the date of acquisition of such property; provided that
such Lien was not incurred in anticipation of such acquisition, and any Lien
created to secure all or any part of the purchase price, or to secure Debt
incurred or assumed to pay all or any part of the purchase price, of property
acquired by the Issuer or any of its Subsidiaries after the date hereof;
provided, further, that (A) any such Lien permitted pursuant to this clause
(f) shall be confined solely to the item or items of property so acquired
(including, in the case of any Acquisition of a corporation through the
acquisition of 51% or more of the voting stock of such corporation, the stock
and assets of any Acquired Subsidiary or Acquiring Subsidiary) and, if
required by the terms of the instrument originally creating such Lien, other
property which is an improvement to, or is acquired for specific use with,
such acquired property; and (B) if applicable, any such Lien shall be created
within nine months after, in the case of property, its acquisition, or, in the
case of improvements, their completion;
(g) any Lien renewing, extending or refunding any Lien permitted by
clause (f) above; provided that the principal amount of Debt secured by such
Lien immediately prior thereto is not increased or the maturity thereof
reduced and such Lien is not extended to other property;
(h) any Liens created on shares of capital stock of the Issuer or any
of its Subsidiaries solely as a result of the deposit or transfer of such
shares into a trust or a special purpose vehicle (including any entity with
legal personality) of which such shares constitute the sole assets; provided
that (A) any shares of Subsidiary stock held in such trust, corporation or
entity could be sold by the Issuer; and (B) proceeds from the deposit or
transfer of such shares into such trust, corporation or entity and from any
transfer of or distributions in respect of the Issuer's or any Subsidiary's
interest in such trust, corporation or entity are applied as provided under
Section 10.08; and provided, further that such Liens may not secure Debt of
the Issuer or any Subsidiary (unless permitted under another clause of this
Section 10.06);
(i) any Liens on securities securing repurchase obligations in
respect of such securities;
(j) any Liens in respect of any Receivables Program Assets which are
or may be sold or transferred pursuant to a Qualified Receivables Transaction;
and
(k) in addition to the Liens permitted by the foregoing clauses (a)
through (j), Liens securing Debt of the Issuer and its Subsidiaries (taken as
a whole) not in excess of 5% of the Adjusted Consolidated Net Tangible Assets
of the Issuer and its Subsidiaries;
unless, in each case, the Issuer has made or caused to be made effective
provision whereby the Obligations hereunder are secured equally and ratably
with, or prior to, the Debt secured by such Liens (other than Permitted Liens)
for so long as such Debt is so secured.
10.07 Consolidations and Mergers. The Issuer shall not, and shall not
permit any Material Subsidiary to, in one or more related transactions, (x)
consolidate with or merge into any other Person or permit any other Person to
merge into it or (y), directly or indirectly, transfer, convey, sell, lease or
otherwise dispose of all or substantially all of its properties or assets to
any Person, unless, with respect to any transaction described in clause (x) or
(y), immediately after giving effect to such transaction:
(a) the Person formed by any such consolidation or merger, if it is
not the Issuer or such Material Subsidiary, or the Person that acquires by
transfer, conveyance, sale, lease or other disposition all or substantially
all of the properties and assets of the Issuer or such Material Subsidiary
(any such Person, a "Successor") (i) shall be a corporation organized and
validly existing under the laws of its place of incorporation, which in the
case of a Successor to the Issuer shall be Mexico, the United States, Canada,
France, Belgium, Germany, Italy, Luxembourg, the Netherlands, Portugal, Spain,
Switzerland or the United Kingdom, or any political subdivision thereof, (ii)
in the case of a Successor to the Issuer, shall expressly assume, pursuant to
a written agreement in form and substance satisfactory to the Required
Lenders, the Obligations of the Issuer pursuant to this Agreement and the
performance of every covenant on part of the Issuer to be performed and
observed and (iii) in the case of a Successor to any Guarantor, shall
expressly assume, pursuant to a written agreement in form and substance
satisfactory to the Required Lenders, the performance of every covenant of
this Agreement on part of such Guarantor to be performed and observed;
(b) in the case of any such transaction involving the Issuer or any
Guarantor, the Issuer or such Guarantor, or the Successor of any thereof, as
the case may be, shall expressly agree to indemnify each Lender, the
Administrative Agent and the Issuing Bank against any tax, levy, assessment or
governmental charge payable by withholding or deduction thereafter imposed on
such Lender, the Administrative Agent and/or the Issuing Bank solely as a
consequence of such transaction with respect to payments under the Transaction
Documents;
(c) immediately after giving effect to such transaction, including
for purposes of this clause (c) the substitution of any Successor to the
Issuer for the Issuer or the substitution of any Successor to a Subsidiary for
such Subsidiary and treating any Debt or Lien incurred by the Issuer or any
Successor to the Issuer, or by a Subsidiary of the Issuer or any Successor to
such Subsidiary, as a result of such transactions as having been incurred at
the time of such transaction, no Event of Default or an event or condition
which, after the giving of notice or lapse of time, or both, would have become
an Event of Default shall have occurred and be continuing; and
(d) the Issuer shall have delivered to the Administrative Agent an
officer's certificate and an opinion of counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a written
agreement is required in connection with such transaction, such written
agreement comply with the relevant provisions of this Article X and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with.
10.08 Sales of Assets, Etc. The Issuer will not, and will not permit
any of its Material Subsidiaries to, sell, lease or otherwise dispose of its
assets (including the capital stock of any Subsidiary), other than (a)
inventory, trade receivables and assets surplus to the needs of the business
of the Issuer or any Subsidiary sold in the ordinary course of business and
(b) assets not used, usable or held for use in connection with cement
operations and related operations, unless the proceeds of the sale of such
assets are retained by the Issuer or such Subsidiary, as the case may be, and,
as promptly as practicable after such sale (but in any event within 180 days
of such sale), the proceeds are applied to (i) expenditures for property,
plant and equipment usable in the cement industry or related industries; (ii)
the repayment of senior Debt of the Issuer or any of its Subsidiaries, whether
secured or unsecured; or (iii) investments in companies engaged in the cement
industry or related industries.
10.09 Change in Nature of Business. The Issuer shall not make, or
permit any of its Material Subsidiaries to make, any material change in the
nature of its business as carried on at the date hereof.
10.10 Margin Regulations. The Issuer shall not use any part of the
proceeds of the Commercial Paper Notes or the Loans for any purpose which
would result in any violation (whether by the Issuer, the Administrative
Agent, the Issuing Bank or the Lenders) of Regulation T, U or X of the Federal
Reserve Board or to extend credit to others for any such purpose. The Issuer
shall not engage in, or maintain as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (as defined in such regulations).
ARTICLE XI
OBLIGATIONS OF GUARANTORS
11.01 The Guaranty. Each of the Guarantors jointly and severally
hereby unconditionally and irrevocably guarantee (as a primary obligor and not
merely as surety) payment in full as provided herein of all Obligations
payable by the Issuer to the Issuing Bank, each Lender, the Administrative
Agent and, the Arrangers under this Agreement and the other Transaction
Documents and any Fee Letter, as and when such amounts become payable (whether
at stated maturity, by acceleration or otherwise).
11.02 Nature of Liability. The obligations of the Guarantors
hereunder are guarantees of payment and shall remain in full force and effect
until all Obligations of the Issuer have been validly, finally and irrevocably
paid in full, and shall not be affected in any way by the absence of any
action to obtain such amounts from the Issuer or by any variation, extension,
waiver, compromise or release of any or all Obligations from time to time
therefor. Each Guarantor waives all requirements as to promptness, diligence,
presentment, demand for payment, protest and notice of any kind with respect
to this Agreement and the other Transaction Documents.
11.03 Unconditional Obligations. Notwithstanding any contrary
principles under the laws of any jurisdiction other than the State of New
York, the obligations of each of the Guarantors hereunder shall be
unconditional, irrevocable and absolute and, without limiting the generality
of the foregoing, shall not be impaired, terminated, released, discharged or
otherwise affected by the following:
(a) the existence of any claim, set-off or other right which either
of the Guarantors may have at any time against the Issuer, the Administrative
Agent, the Issuing Bank, any Lenders or any other Person, whether in
connection with this transaction or with any unrelated transaction;
(b) any invalidity or unenforceability of this Agreement or any other
Transaction Document relating to or against the Issuer or either of the
Guarantors for any reason (including for the reason that the obtaining of the
Letter of Credit or the Standby L/Cs may be in excess of the powers of the
Issuer or of its officers, directors or other agents, acting or purporting to
act on its behalf, or be in any way irregular or defective);
(c) any provision of applicable law or regulation purporting to
prohibit the payment by the Issuer of any amount payable by the Issuer under
this Agreement or any of the other Transaction Documents or the payment,
observance, fulfillment or performance of any other Obligations;
(d) any change in the name, purposes, business, capital stock
(including the ownership thereof) or constitution of the Issuer; or
(e) any other act or omission to act or delay of any kind by the
Issuer, the Administrative Agent, the Issuing Bank, the Lenders or any other
Person or any other circumstance whatsoever which might otherwise constitute a
legal or equitable discharge of or defense to either of the Guarantors'
obligations hereunder.
11.04 Independent Obligation. The obligations of each of the
Guarantors hereunder are independent of the Issuer's obligations under the
Transaction Documents and of any guaranty or security that may be obtained for
the Obligations. The Administrative Agent, the Issuing Bank and the Lenders
may neglect or forbear to enforce payment hereunder, under any Transaction
Document or under any guaranty or security, without in any way affecting or
impairing the liability of each Guarantor hereunder. The Administrative Agent,
the Issuing Bank or the Lenders shall not be obligated to exhaust recourse or
take any other action against the Issuer or under any agreement to purchase or
security which the Administrative Agent, the Issuing Bank or the Lenders may
hold before being entitled to payment from the Guarantors of the obligations
hereunder or proceed against or have resort to any balance of any deposit
account or credit on the books of the Administrative Agent, the Issuing Bank
or the Lenders in favor of the Issuer or each of the Guarantors. Without
limiting the generality of the foregoing, the Administrative Agent, the
Issuing Bank or the Lenders shall have the right to bring suit directly
against either of the Guarantors, either prior or subsequent to or
concurrently with any lawsuit against, or without bringing suit against, the
Issuer and/or the other Guarantor.
11.05 Waiver of Notices. Each of the Guarantors hereby waives notice
of acceptance of this Article XI and notice of any liability to which it may
apply, and waives presentment, demand for payment, protest, notice of dishonor
or nonpayment of any such liability, suit or the taking of other action by the
Administrative Agent, the Issuing Bank or the Lenders against, and any other
notice, to the Guarantors.
11.06 Waiver of Defenses. To the extent permitted by New York law and
notwithstanding any contrary principles under the laws of any other
jurisdiction, each of the Guarantors hereby waives any and all defenses to
which it may be entitled, whether at common law, in equity or by statute which
limits the liability of, or exonerates, guarantors or which may conflict with
the terms of this Article XI, including failure of consideration, breach of
warranty, statute of frauds, merger or consolidation of the Issuer, statute of
limitations, accord and satisfaction and usury. Without limiting the
generality of the foregoing, each of the Guarantors consents that, without
notice to such Guarantor and without the necessity for any additional
endorsement or consent by such Guarantor, and without impairing or affecting
in any way the liability of such Guarantor hereunder, the Administrative
Agent, the Issuing Bank and the Lenders may at any time and from time to time,
upon or without any terms or conditions and in whole or in part, (a) change
the manner, place or terms of payment of, and/or change or extend the time or
payment of, renew or alter, any of the Obligations, any security therefor, or
any liability incurred directly or indirectly in respect thereof, and this
Article XI shall apply to the Obligations as so changed, extended, renewed or
altered; (b) exercise or refrain from exercising any right against the Issuer
or others (including the Guarantors) or otherwise act or refrain from acting,
(c) settle or compromise any of the Obligations, any security therefor or any
liability (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof, and may subordinate the payment of all or any
part thereof to the payment of any such liability (whether due or not) of the
Issuer to creditors of the Issuer other than the Administrative Agent, the
Issuing Bank and the Lenders and the Guarantors, (d) apply any sums by
whomsoever paid or howsoever realized, other than payments of the Guarantors
of the Obligations, to any liability or liabilities of the Issuer under the
Transaction Documents or any instruments or agreements referred to herein or
therein, to the Issuing Bank, the Administrative Agent and the Lenders
regardless of which of such liability or liabilities of the Issuer under the
Transaction Documents or any instruments or agreements referred to herein or
therein remain unpaid; (e) consent to or waive any breach of, or any act,
omission or default under the Obligations or any of the instruments or
agreements referred to in this Agreement and the other Transaction Documents,
or otherwise amend, modify or supplement the Obligations or any of such
instruments or agreements, including the Transaction Documents; and/or (f)
request or accept other support of the Obligations or take and hold any
security for the payment of the Obligations or the obligations of the
Guarantors under this Article XI, or allow the release, impairment, surrender,
exchange, substitution, compromise, settlement, rescission or subordination
thereof. Furthermore, each of the Guarantors hereby waives to the extent
permitted by law any right to which it may be entitled to under Articles 2830,
2836, 2842, 2845, 2846, 2848 and 2849 of the Mexican Federal Civil Code and
related Articles contained in the Civil Codes of the States in Mexico. The
Guarantors further expressly waive the benefits of order, excusion y division
contained in Articles 2814, 2815, 2817, 2818, 2820, 2821, 2822, 2823, 2837,
2838, 2840, 2841 and other related Articles of the Mexican Federal Civil Code
and related Articles contained in other Civil Codes of the States of Mexico.
11.07 Bankruptcy and Related Matters.
(a) So long as any of the Obligations remain outstanding, each of the
Guarantors shall not, without the prior written consent of the Administrative
Agent (acting with the consent of the Issuing Bank), commence or join with any
other Person in commencing any bankruptcy, liquidation, reorganization,
concurso mercantil or insolvency proceedings of, or against, the Issuer.
(b) If acceleration of the time for payment of any amount payable by
the Issuer under this Agreement or the Notes is stayed upon the insolvency,
bankruptcy, reorganization, concurso mercantil or any similar event of the
Issuer or otherwise, all such amounts otherwise subject to acceleration under
the terms of this Agreement shall nonetheless be payable by the Guarantors
hereunder forthwith on demand by the Administrative Agent made at the request
of the Lenders.
(c) The obligations of each of the Guarantors under this Article XI
shall not be reduced, limited, impaired, discharged, deferred, suspended or
terminated by any proceeding or action, voluntary or involuntary, involving
the bankruptcy, insolvency, concurso mercantil, receivership, reorganization,
marshalling of assets, assignment for the benefit of creditors, readjustment,
liquidation or arrangement of the Issuer or similar proceedings or actions or
by any defense which the Issuer may have by reason of the order, decree or
decision of any court or administrative body resulting from any such
proceeding or action. Without limiting the generality of the foregoing, the
Guarantors' liability shall extend to all amounts and obligations that
constitute the Obligations and would be owed by the Issuer but for the fact
that they are unenforceable or not allowable due to the existence of any such
proceeding or action.
(d) Each of the Guarantors acknowledges and agrees that any interest
on any portion of the Obligations which accrues after the commencement of any
proceeding or action referred to above in paragraph (c) (or, if interest on
any portion of the Obligations ceases to accrue by operation of law by reason
of the commencement of said proceeding or action, such interest as would have
accrued on such portion of the Obligations if said proceedings or actions had
not been commenced) shall be included in the Obligations, it being the
intention of the Guarantors, the Administrative Agent, the Issuing Bank and
the Lenders that the Obligations which are to be purchased by the Guarantors
pursuant to this Article XI shall be determined without regard to any rule of
law or order which may relieve the Issuer of any portion of such Obligations.
The Guarantors will take no action to prevent any trustee in bankruptcy,
receiver, debtor in possession, assignee for the benefit of creditors or
similar person from paying the Administrative Agent, or allowing the claim of
the Administrative Agent, for the benefit of the Administrative Agent, the
Issuing Bank and the Lenders, in respect of any such interest accruing after
the date of which such proceeding is commenced, except to the extent any such
interest shall already have been paid by the Guarantors.
(e) Notwithstanding anything to the contrary contained herein, if all
or any portion of the Obligations are paid by or on behalf of the Issuer, the
obligations of the Guarantors hereunder shall continue and remain in full
force and effect or be reinstated, as the case may be, in the event that all
or any part of such payment(s) are rescinded or recovered, directly or
indirectly, from the Administrative Agent, the Issuing Bank and/or the Lenders
as a preference, preferential transfer, fraudulent transfer or otherwise, and
any such payments which are so rescinded or recovered shall constitute
Obligations for all purposes under this Article XI, to the extent permitted by
applicable law.
11.08 No Subrogation. Notwithstanding any payment or payments made by
any of the Guarantors hereunder or any set-off or application of funds of any
of the Guarantors by the Issuing Bank, the Administrative Agent or any Lender,
no Guarantor shall be entitled to be subrogated to any of the rights of the
Issuing Bank, the Administrative Agent or any Lender against the Issuer or any
other Guarantor or any collateral security or guarantee or right of offset
held by the Issuing Bank, the Administrative Agent or any Lender for the
payment of the Obligations, nor shall any Guarantor seek or be entitled to
seek any contribution or reimbursement from the Issuer or any other Guarantor
in respect of payments made by such Guarantor hereunder, until all amounts
owing to the Issuing Bank, the Administrative Agent and the Lenders by the
Issuer on account of the Obligations shall have been indefeasibly paid in full
in cash. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been
indefeasibly paid in full in cash, such amount shall be held by such Guarantor
in trust for the Issuing Bank, the Administrative Agent and the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to the Administrative Agent in the
exact form received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Administrative Agent may
determine.
11.09 Right of Contribution. Subject to Section 11.08, each Guarantor
hereby agrees that to the extent that a Guarantor shall have paid more than
its proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder who has not paid its proportionate share of such payment. The
provisions of this Section 11.09 shall in no respect limit the obligations and
liabilities of any Guarantor to the Issuing Bank, the Administrative Agent,
the Arrangers and the Lenders, and each Guarantor shall remain liable to the
Issuing Bank, the Administrative Agent, the Arrangers and the Lenders for the
full amount guaranteed by such Guarantor hereunder.
11.10 General Limitation on Guaranty. In any action or proceeding
involving any applicable corporate law, or any applicable bankruptcy,
insolvency, reorganization, concurso mercantil or other law affecting the
rights of creditors generally, if the obligations of any Guarantor under this
Section 11.01 would otherwise, taking into account the provisions of Section
11.09, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 11.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any
further action by such Guarantor, any Lender, the Administrative Agent, the
Issuing Bank or any other Person, be automatically limited and reduced to the
highest amount that is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or proceeding.
11.11 Covenants of the Guarantors. Each Guarantor hereby covenants
and agrees that, so long as any Obligations under this Agreement and any other
Transaction Document remains unpaid, the Letter of Credit remain outstanding,
any Standby L/C remain outstanding or any Lender has any Commitment hereunder,
it shall comply with the covenants contained or incorporated by reference in
this Agreement to the extent applicable to it as a Subsidiary of the Issuer.
ARTICLE XII
EVENTS OF DEFAULT
12.01 Events of Default. The following specified events shall
constitute "Events of Default" for the purposes of this Agreement:
(a) Payment Defaults. The Issuer shall (i) fail to reimburse any
Drawing or Standby L/C Drawing or fail to pay any principal of any Loan when
due in accordance with the terms hereof or (ii) fail to pay any interest on
any Drawing, Standby L/C Drawing or any Loan, any fee or any other amount
payable under this Agreement or any Note within three Business Days after the
same becomes due and payable; or
(b) Representation and Warranties. Any representation or warranty
made by the Issuer herein or in any other Transaction Document on or made by
either Guarantor herein or which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any other Transaction Document, as applicable, shall prove
to have been incorrect in any material respect on or as of the date made if
such failure shall remain unremedied for 30 days after the earlier of the date
on which (i) the Chief Financial Officer of the Issuer or such Guarantor, as
the case may be, becomes aware of such incorrectness or (ii) written notice
thereof shall have been given to the Issuer by the Administrative Agent; or
(c) Specific Defaults. The Issuer or a Guarantor, as applicable,
shall fail to perform or observe any term, covenant or agreement contained in
Section 9.01, 9.02(a), 9.06 (with respect to the Issuer's and each Guarantor's
existence only), 9.09(b) or 9.10 or ARTICLE X; or
(d) Other Defaults. The Issuer or a Guarantor, as applicable, shall
fail to perform or observe any term, covenant or agreement contained in this
Agreement or any other Transaction Document (other than as provided in
paragraphs (a) and (c) above) and such failure shall continue unremedied for a
period of 30 days after the earlier of the date on which (i) the Chief
Financial Officer of the Issuer becomes aware of such failure or (ii) written
notice thereof shall have been given to the Issuer by the Administrative Agent
at the request of any Lender; or
(e) Defaults under Other Agreements. The occurrence of a default or
event of default under any indenture, agreement or instrument relating to any
Material Debt of the Issuer or any of its Subsidiaries, and (unless any
principal amount of such Material Debt is otherwise due and payable) such
default or event of default results in the acceleration of the maturity of any
principal amount of such Material Debt prior to the date on which it would
otherwise become due and payable; or
(f) Voluntary Bankruptcy. The Issuer or any Material Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization, concurso mercantil or other relief with respect to itself or
its debts under any bankruptcy, insolvency, suspension de pagos,
reorganization or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing or the equivalent thereof under
Mexican law (including the Ley de Concursos Mercantiles); or
(g) Involuntary Bankruptcy. An involuntary case or other proceeding
shall be commenced against the Issuer or any Material Subsidiary seeking
liquidation, reorganization, suspension de pagos or other relief with respect
to it or its debts under any bankruptcy, insolvency, concurso mercantil or
other similar law now or hereafter in effect (including but not limited to the
Ley de Concursos Mercantiles) or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
consecutive days; or an order for relief shall be entered against the Issuer
or any Material Subsidiaries under any bankruptcy, insolvency suspension de
pagos or other similar law as now or hereafter in effect; or
(h) Monetary Judgment. A final judgment or judgments or order or
orders not subject to further appeal for the payment of money in an aggregate
amount in excess of U.S.$50,000,000 shall be rendered against the Issuer
and/or any of its one or more Subsidiaries of the Issuer that are neither
discharged nor bonded in full within 30 days thereafter; or
(i) Pari Passu. The Obligations of the Issuer under this Agreement or
the Commercial Paper Notes or of any Guarantor under this Agreement shall fail
to rank at least pari passu with all other senior unsecured Debt of the Issuer
or such Guarantor, as the case may be; or
(j) Validity of Agreement. The Issuer shall contest the validity or
enforceability of any Transaction Document or shall deny generally the
liability of the Issuer under any Transaction Documents or either Guarantor
shall contest the validity of or the enforceability of their guarantee
hereunder or any obligation of either Guarantor under ARTICLE XI hereof shall
not be (or is claimed by either Guarantor not to be) in full force and effect;
(k) Governmental Authority. Any governmental or other consent,
license, approval, permit or authorization which is now or may in the future
be necessary or appropriate under any applicable Requirement of Law for the
execution, delivery, or performance by the Issuer or either Guarantor of any
Transaction Document to which it is a party or to make such Transaction
Document legal, valid, enforceable and admissible in evidence shall not be
obtained or shall be withdrawn, revoked or modified or shall cease to be in
full force and effect or shall be modified in any manner that would have an
adverse effect on the rights or remedies of the Administrative Agent, the
Issuing Bank or Lenders; or
(l) Expropriation, Etc. Any Governmental Authority shall condemn,
nationalize, seize or otherwise expropriate all or any substantial portion of
the property of, or capital stock issued or owned by, the Issuer or either
Guarantor or take any action that would prevent the Issuer or either Guarantor
from performing its obligations under the Transaction Documents; or
(m) Moratorium; Availability of Foreign Exchange. A moratorium shall
be agreed or declared in respect of any Debt of the Issuer or either Guarantor
or any restriction or requirement not in effect on the date hereof shall be
imposed, whether by legislative enactment, decree, regulation, order or
otherwise, which limits the availability or the transfer of foreign exchange
by the Issuer or either Guarantor for the purpose of performing any material
obligation under any Transaction Document to which it is a party; or
(n) Material Adverse Effect. There shall occur any circumstance,
event or condition of a financial or other nature which the Required Lenders
determine in good faith is reasonably likely to have a material adverse effect
on the ability of the Issuer or either Guarantor to perform its obligations
under this Agreement or any of the other Transaction Documents; or
(o) Attachments of Accounts. The Commercial Paper Account or the
Letter of Credit Account or funds on deposit in, or otherwise to the credit
of, the Commercial Paper Account or the Letter of Credit Account shall be
subject to any writ, order, judgment, warrant of attachment, execution or
similar process or stay or other similar legal restraint; or
(p) Change of Ownership or Control. The beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 20% or
more in voting power of the outstanding voting stock of the Issuer or either
Guarantor is acquired by any Person; provided that the acquisition of
beneficial ownership of capital stock of the Issuer or either Guarantor by
Lorenzo H. Zambrano or any member of his immediate family shall not constitute
an Event of Default.
12.02 Remedies. If any Event of Default has occurred and is
continuing, the Administrative Agent shall, at the request of, or may, with
the consent of, the Required Lenders, do any or all of the following:
(a) direct the Issuing Bank (i) if and only if no Commercial Paper
Notes are Outstanding and there are no Standby L/C's outstanding, to deliver a
Notice of Termination to the Issuer and the Depositary (with a copy to the
Administrative Agent and each Dealer) whereupon the Letter of Credit shall
terminate upon the terms and subject to the conditions stated in the Letter of
Credit and the Notice of Termination and whereupon the Commitments shall
terminate or (ii) if any Commercial Paper Notes are Outstanding or there are
any Standby L/C's outstanding, to deliver a Notice of Default to the Issuer
and the Depositary (with a copy to the Administrative Agent and each Dealer)
whereupon (A) the Stated Amount shall be reduced, as directed by the
Depositary pursuant to a Notice of Default Reduction delivered to the Issuing
Bank, such that the Stated Amount equals the aggregate Face Amount of the
Commercial Paper Notes then Outstanding plus the aggregate amount of Standby
L/C's then outstanding, (B) no amounts shall be reinstated to the Stated
Amount of the Letter of Credit and (C) the Letter of Credit shall expire and
the Commitments shall terminate two Business Days following the later of (i)
the date which the Depositary advises the Issuing Bank is the latest maturity
date of any Commercial Paper Note Outstanding on the date of such Notice of
Default and (ii) the date which is the latest expiration date of any Standby
L/C then outstanding;
*[(b) deliver a Notice of Acceleration to the Depositary with a copy
to the Issuer, the Issuing Bank and each Dealer directing the Depositary to
make a Drawing under the Letter of Credit in the aggregate amount required to
pay in full all Outstanding Commercial Paper Notes entitled to the benefit of
the Letter of Credit upon maturity, the proceeds of such Drawing to be
deposited in the Letter of Credit Account, and require from the Issuer
immediate reimbursement for payments pursuant to such Drawing;]
- --------------------
* Should Standby L/C's also be drawn?
(c) if no Notice of Acceleration has been delivered pursuant to
paragraph (b) above, direct the Issuer immediately to pay into an account
specified by the Administrative Agent, and under the exclusive dominion and
control of the Administrative Agent, an amount in immediately available funds
(to which neither the Issuing Bank nor the Lenders shall have any right in
respect of any Drawing until the Issuing Bank shall have honored the same)
equal to the Stated Amount or, if less, the aggregate Face Amount of all
Commercial Paper Notes Outstanding, whereupon such amount shall become
immediately due and payable without presentment, demand, protest or other
notice, all of which are hereby expressly waived;
(d) declare by notice to the Issuer the principal amount of all
outstanding Loans to be forthwith due and payable, whereupon such principal
amount, together with accrued interest thereon and any fees and all other
Obligations accrued hereunder, shall become immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived; provided, however, that in the case of any Event
of Default specified in paragraph (f) or (g) of Section 12.01, without notice
or any other act by the Lenders, the Loans (together with accrued interest
thereon) and all other Obligations of the Issuer hereunder shall become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Issuer;
(e) notify the Issuer, the Depositary and each Dealer (which notice
may be by telephone to be confirmed in writing within two Business Days) that
an Event of Default has occurred and is continuing and in such notice direct
the Issuer and the Depositary not to issue any Commercial Paper Notes from and
after the actual receipt by the Depositary of such notice until such Event of
Default has been waived or cured and such notice has been rescinded in
writing; and/or
(f) direct the Issuer immediately to pay into an account specified by
the Administrative Agent, and under the exclusive dominion and control of the
Administrative Agent, an amount in immediately available funds (to which
neither the Issuing Bank nor the Lenders shall have any right in respect of
any Standby L/C Drawing until the Issuing Bank shall have honored the same)
equal to the aggregate stated amount of all Standby L/Cs issued and
outstanding hereunder, whereupon such amount shall become immediately due and
payable without presentment, demand, protest or other notice, all of which are
hereby expressly waived.
provided, however, that nothing in this Section 12.02 shall (x) impair the
obligation of the Issuing Bank to make payments in accordance with the Letter
of Credit with respect to maturing Commercial Paper Notes or in accordance
with the Standby L/Cs or (y) impair the obligation of the Issuer to reimburse
the Issuing Bank for, or the obligation of any Lender to fund its
participation in, any Drawing or Standby L/C Drawing, as the case may be, made
subsequent to the time any remedy provided in this paragraph shall have been
exercised and, provided, further, that nothing in this Section 12.02 shall
give the Issuing Bank the right to request the Depositary to debit the
Commercial Paper Account on any Business Day until after such time as the
Issuing Bank shall have honored any demand for payment under the Letter of
Credit required to be paid on such Business Day.
12.03 Notice of Default. The Administrative Agent shall give notice
to the Issuer of any event occurring under Section 12.01(b) or (d) promptly
upon being requested to do so by any Lender and shall thereupon notify all the
Lenders thereof.
12.04 Default Interest. In the event of default by the Issuer in the
payment on the due date of any sum due under this Agreement, the Issuer shall
pay interest on demand on such sum from the date of such default to the day of
actual receipt of such sum by the Administrative Agent (as well after as
before judgment) at the rate specified in Section 2.02(c), 3.07(c) or 4.02(c).
So long as the default continues, the default interest rate shall be
recalculated on the same basis at intervals of such duration as the
Administrative Agent may select, provided that the amount of unpaid interest
at the above rate accruing during the preceding period (or such longer period
as may be the shortest period permitted by applicable law for the
capitalization of interest) shall be added to the amount in respect of which
the Issuer is in default.
ARTICLE XIII
THE ADMINISTRATIVE AGENT
13.01 Appointment and Authorization. Each Lender and the Issuing Bank
hereby irrevocably designate and appoint Barclays Bank PLC, New York Branch as
the Administrative Agent of such Lender and the Issuing Bank under this
Agreement, and each Lender and the Issuing Bank hereby irrevocably authorize
the Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Transaction Document and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement or any other Transaction
Document, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Transaction Document, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or the Issuing Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Transaction Document or
otherwise exist against the Administrative Agent.
13.02 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Transaction Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects with reasonable care.
13.03 Liability of Administrative Agent. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall (a) be liable for any action taken or omitted to be taken
by it or any such Person under or in connection with this Agreement or any
other Transaction Document or the transactions contemplated hereby (except for
its or such Person's own gross negligence or willful misconduct), or (b) be
responsible in any manner to any of the Lenders or the Issuing Bank for any
recital, statement, representation or warranty made by the Issuer, the
Guarantors or any officer thereof contained in this Agreement or in any other
Transaction Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Transaction
Document, or for the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Transaction Document, or for any
failure of the Issuer, the Guarantors or any other party to any Transaction
Document to perform its obligations hereunder or thereunder. Except as
otherwise expressly stated herein, the Administrative Agent shall not be under
any obligation to any Lender or the Issuing Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Transaction Document, or to inspect
the properties, books or records of the Issuer or the Guarantors.
13.04 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or teletype
message, statement, order or other document or telephone conversation believed
by it in good faith to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other
Transaction Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of failing to
take, taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Transaction Document in accordance with a
request or consent of the Required Lenders (or when expressly required hereby,
all the Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 6.01, each Lender that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction on or before the Effective
Date.
13.05 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default (except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of
the Issuing Bank and the Lenders) unless the Administrative Agent shall have
received written notice from a Lender, the Issuing Bank or the Issuer
referring to this Agreement and describing such Default or Event of Default
and stating that such notice is a "Notice of Default". The Administrative
Agent shall promptly notify the Issuing Bank and the Lenders of its receipt of
any such notice. The Administrative Agent shall take such action with respect
to such Default or Event of Default as may be requested by the Required
Lenders; provided, however, that unless and until the Administrative Agent has
received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of the Lenders and the Issuing Bank.
13.06 Credit Decision. Each Lender expressly acknowledges that
neither the Administrative Agent nor any of its Affiliates, officers,
directors, employees, agents or attorneys-in-fact has made any representation
or warranty to it, and that no act by the Administrative Agent hereafter
taken, including any review of the affairs of the Issuer, the Guarantors, or
any of their Affiliates, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender acknowledges
to the Administrative Agent that it has, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial
and other condition and creditworthiness of the Issuer, the Guarantors, and
their Affiliates and all applicable Lender regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Transaction Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Issuer or the Guarantors. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by the Administrative Agent, the Administrative Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Issuer or the
Guarantors which may come into the possession of the Administrative Agent or
any of its Affiliates, officers, directors, employees, agents or
attorneys-in-fact.
13.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders agree to indemnify upon demand the
Administrative Agent and its Affiliates, directors, officers, agents and
employees (to the extent not reimbursed by the Issuer and without limiting the
obligation of the Issuer to do so), ratably according to the respective
amounts of their Participation Percentages in effect on the date the cause for
indemnification arose, from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including at any time following the payment of the Obligations or the
Termination Date) be imposed on, incurred by or asserted against the
Administrative Agent (or any of its Affiliates, directors, officers, agents
and employees) in any way relating to or arising out of this Agreement or any
other Transaction Document, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment of any
portion of such claims, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent it
results from the gross negligence or willful misconduct of the Administrative
Agent or its Affiliates, directors, officers, agents or employees. Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any reasonable and documented costs
or out-of-pocket expenses (including legal fees) incurred by the
Administrative Agent in connection with the preparation, execution,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Transaction Document, or any
document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of
the Issuer.
13.08 Administrative Agent in Individual Capacity. Barclays Bank PLC,
New York Branch may make loans to, issue letters of credit for the account of,
accept deposits from and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Issuer, the
Guarantors or any of their Affiliates as though Barclays Bank PLC, New York
Branch were not the Administrative Agent hereunder and without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Barclays Bank PLC, New York Branch or its Affiliates may receive
information regarding the Issuer, the Guarantors and their Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Issuer or the Guarantors) and acknowledge that the Administrative
Agent shall be under no obligation to provide such information to them. With
respect to the Obligations, Barclays Bank PLC, New York Branch shall have the
same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Administrative Agent, and the
terms "Lender" and "Lenders" include Barclays Bank PLC, New York Branch in its
individual capacity.
13.09 Successor Administrative Agent. The Administrative Agent may,
and at the request of the Required Lenders shall, resign as Administrative
Agent upon 30 days' notice to the Lenders and the Issuer. If the
Administrative Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
appointment shall be subject to the approval of the Issuer, such approval not
to be unreasonably withheld (unless a Default or Event of Default shall have
occurred and be continuing, in which case such approval shall not be
required). If no successor agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and the Issuer, a successor agent
from among the Lenders. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Administrative Agent and the term "Administrative
Agent" shall mean such successor agent effective upon its appointment, and the
retiring Administrative Agent's rights, powers and duties as Administrative
Agent shall be terminated, without any other or further act on the part of
such retiring Administrative Agent. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this ARTICLE
XIII and Sections 16.04 and 16.05 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under
this Agreement. If no successor Administrative Agent has accepted the
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective and either the Issuer or the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which shall
be a commercial bank organized or licensed under the laws of the United States
or of any State thereof and having a combined capital and surplus of at least
U.S.$400,000,000.
ARTICLE XIV
THE ISSUING BANK
14.01 Appointment. Each Lender hereby irrevocably designates and
appoints Barclays Bank PLC, New York Branch, as the Issuing Bank under this
Agreement, and each Lender hereby irrevocably authorizes Barclays Bank PLC,
New York Branch, as the Issuing Bank, to take such action under the provisions
of this Agreement and each other Transaction Document and to exercise such
powers and perform such duties as are expressly delegated to the Issuing Bank
by the terms of this Agreement or any other Transaction Document, together
with such other powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary elsewhere in this Agreement or in any other
Transaction Document, the Issuing Bank shall not have any duties or
responsibilities, except those expressly set forth herein or in any other
Transaction Document, nor shall the Issuing Bank have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Transaction Document or otherwise exist against the
Issuing Bank; provided, however, that nothing contained in this ARTICLE XIV
shall be deemed to limit or impair the rights and obligations of the Issuing
Bank under the Letter of Credit or Standby L/Cs issued hereunder.
14.02 Liability of Issuing Bank. Neither the Issuing Bank nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall (a) be liable for any action taken or omitted to be taken by it or any
such Person under or in connection with this Agreement or any other
Transaction Document (except for its or such Person's own gross negligence or
willful misconduct), or (b) be responsible in any manner to any Lender for any
recital, statement, representation or warranty made by the Issuer or any
officer thereof contained in this Agreement or in any other Transaction
Document, or in any certificate, report, statement or other document referred
to or provided for in, or received by the Issuing Bank under or in connection
with, this Agreement or any other Transaction Document, or for the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Transaction Document, or for any failure of the Issuer or any other
party to any Transaction Document to perform its obligations hereunder or
thereunder. Except as otherwise expressly stated herein, and except for the
obligation to examine all documents stipulated in the Letter of Credit or any
Standby L/C issued hereunder, in accordance with the Uniform Customs and
Practice for Documentary Credits and applicable law, the Issuing Bank shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the
properties, books or records of the Issuer or the Guarantors.
14.03 Reliance by Issuing Bank. The Issuing Bank shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
teletype message, statement, order or other document or telephone conversation
believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel, independent accountants and other experts
selected by the Issuing Bank. Except for the issuance of the Letter of Credit,
or any Standby L/Cs issued hereunder, in accordance with the terms of this
Agreement and the payment of Drawings or Standby L/C Drawings, as the case may
be, thereunder, the Issuing Bank shall be fully justified in failing or
refusing to take any action under this Agreement or any other Transaction
Document unless it shall first receive such advice or concurrence of the
Required Lenders as the Issuing Bank deems appropriate and, if it so requests,
it shall first be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of failing
to take, taking or continuing to take any such action. The Issuing Bank shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Transactions Documents in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.
14.04 Credit Decision. Each Lender expressly acknowledges that
neither the Issuing Bank nor any of its Affiliates, officers, directors,
employees, agents or attorneys-in-fact has made any representation or warranty
to it, and that no act by the Issuing Bank hereafter taken, including any
review of the affairs of the Issuer, the Guarantors or any of their
Affiliates, shall be deemed to constitute any representation or warranty by
the Issuing Bank to any Lender. Each Lender acknowledges to the Issuing Bank
that it has, independently and without reliance upon the Issuing Bank, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Issuer,
the Guarantors and their Affiliates and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Issuing Bank, and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit analysis, appraisals and decisions in taking or not
taking action under this Agreement and the other Transaction Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects operations, property, financial and other condition and
creditworthiness of the Issuer and the Guarantors.
14.05 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders agree to indemnify upon demand the Issuing
Bank and its Affiliates, directors, officers, agents and employees (to the
extent not reimbursed by the Issuer and without limiting the obligation of the
Issuer to do so in accordance with Section 16.05), ratably according to the
respective amounts of their Participation Percentages in effect on the date
the cause for indemnification arose, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including at any time following the payment of the Obligations or the
Termination Date) be imposed on, incurred by or asserted against the Issuing
Bank (or any of its Affiliates, directors, officers, agents or employees) in
any way relating to or arising out of this Agreement or any other Transaction
Document, or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by the Issuing
Bank under or in connection with any of the foregoing; provided, however, that
no Lender shall be liable for (a) the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent it results from the
Issuing Bank's gross negligence or willful misconduct or (b) any untrue
statement of a material fact in the material furnished in writing by the
Issuing Bank to the Issuer for inclusion in any Offering Statement or any
omission in such Offering Statement to state a material fact required to be
stated therein in light of the circumstances under which they were made.
Notwithstanding the foregoing, no Lender shall be required to fund any other
Lender's portion of an unreimbursed Drawing or Standby L/C Drawing, as the
case may be, which such other Lender fails to fund hereunder.
14.06 Issuing Bank in Its Individual Capacity. Barclays Bank PLC and
its Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Issuer or any of
its Affiliates as though Barclays Bank PLC, New York Branch were not the
Issuing Bank hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, the Issuing Bank or its
Affiliates may receive information regarding the Issuer, the Guarantors and
their Affiliates (including information that may be subject to confidentiality
obligations in favor of the Issuer or the Guarantors) and acknowledge that the
Issuing Bank shall be under no obligation to provide such information to them.
With respect to the Obligations, Barclays Bank PLC, New York Branch shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Issuing Bank, and the terms
"Lender" and "Lenders" shall include Barclays Bank PLC, New York Branch in its
individual capacity.
14.07 Notice of Default. The Issuing Bank shall not be deemed to have
knowledge or notice of any Default or Event of Default unless the Issuing Bank
shall have received written notice from the Administrative Agent, any Lender,
the Issuer or a Guarantor referring to this Agreement and describing such
Default or Event of Default.
ARTICLE XV
THE ARRANGERS
15.01 The Arrangers. The Issuer hereby confirms the designation of
Barclays Capital, the Investment Banking Division of Barclays Bank PLC, and
Banc of America Securities LLC, as arrangers and book-runners of the Letter of
Credit Facility and the Standby L/C Facility. The Arrangers assume no
responsibility or obligation hereunder for servicing, enforcement or
collection of the Obligations, or any duties as agent for the Lenders. The
title "Arranger" or "Book-runner" implies no fiduciary responsibility on the
part of the Arrangers to the Administrative Agent, the Issuing Bank or the
Lenders and the use of either such title does not impose on the Arrangers any
duties or obligations under this Agreement except as may be expressly set
forth herein.
15.02 Liability of Arrangers. Neither the Arrangers nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall (a) be liable for any action lawfully taken or omitted to be
taken by them or any such Person under or in connection with this Agreement or
any other Transaction Document (except for the Arrangers or such Person's own
gross negligence or willful misconduct), or (b) be responsible in any manner
to any Lender for any recital, statement, representation or warranty made by
the Issuer or any officer thereof, contained in this Agreement or in any other
Transaction Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Arrangers under or
in connection with, this Agreement or any other Transaction Document or for
the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Transaction Document or for any failure of the
Issuer or any other party to any other Transaction Document to perform its
obligations hereunder or thereunder. Except as otherwise expressly stated
herein, the Arrangers shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other
Transaction Document, or to inspect the properties, books or records of the
Issuer.
15.03 Arrangers in their respective Individual Capacities. Each of
Barclays Capital, the Investment Banking Division of Barclays Bank PLC and its
Affiliates, and Banc of America Securities LLC, and its Affiliates may make
loans to, accept deposits from and generally engage in any kind of business
with the Issuer or any of its Affiliates as though they were not the Arrangers
or Book-runners hereunder.
15.04 Credit Decision. Each Lender expressly acknowledges that
neither the Arrangers nor any of their respective Affiliates, officers,
directors, employees, agents or attorneys-in-fact have made any representation
or warranty to it, and that no act by the Arrangers hereafter taken, including
any review of the affairs of the Issuer or the Guarantors, shall be deemed to
constitute any representation or warranty by the Arrangers to any Lender. Each
Lender acknowledges to the Arrangers that it has, independently and without
reliance upon the Arrangers, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Issuer or the Guarantors and their Affiliates and made
its own decision to enter into this Agreement. Each Lender also acknowledges
that it will, independently and without reliance upon the Arrangers, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Transaction Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Issuer or the Guarantors. The Arrangers shall not
have any duty or responsibility to provide any Lender with any information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Issuer which may come into the possession
of the Arrangers or any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
ARTICLE XVI
MISCELLANEOUS
16.01 Notices.
(a) Except as otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon any party hereunder shall
be in writing (including facsimile transmission) and shall be sent by an
overnight courier service, transmitted by facsimile or delivered by hand to
such party: (i) in the case of the Issuer, the Guarantors, the Issuing Bank,
the Arrangers or the Administrative Agent, at its address or facsimile number
set forth on the signature pages hereof or at such other address or facsimile
number as such party may designate by notice to the other parties hereto and
(ii) in the case of any Lender, at its address or facsimile number set forth
in Schedule 1.01(b) or at such other address or facsimile number as such
Lender may designate by notice to the Issuer, the Issuing Bank, the Arrangers
and the Administrative Agent.
(b) Unless otherwise expressly provided for herein, each such notice,
request, demand or other communication shall be effective (i) if sent by
overnight courier service or delivered by hand, upon delivery, (ii) if given
by facsimile, when transmitted to the facsimile number specified pursuant to
paragraph (a) above and confirmation of receipt of a legible copy thereof is
received, or (iii) if given by any other means, when delivered at the address
specified pursuant to paragraph (a) above; provided, however, that notices to
the Administrative Agent under ARTICLE II or III or IV or V or ARTICLE XIII
shall not be effective until received.
16.02 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement, and no consent to any departure by the Issuer or any
Guarantor from the terms of this Agreement, shall in any event be effective
unless the same shall be in writing, consented to by the Issuer or the
applicable Guarantors, as the case may be, and acknowledged by the
Administrative Agent (which shall be a purely ministerial action), and signed
or consented to by the Required Lenders, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or
consent shall:
(a) (i) except as specifically provided herein, increase or decrease
the Commitment of any Lender;
(ii) extend the maturity of any of the Obligations, extend
the time of payment of interest thereon, or, other than as provided
in Section 5.02, extend the Stated Termination Date;
(iii) forgive any Obligation, reduce the principal amount of
the Obligations, reduce the rate of interest thereon, or reduce the
amount or change the method of calculation of any Fee hereunder
(other than the Letter of Credit Fees, Standby L/C Fees, Agency Fees
or Arrangement Fees);
in each case without the consent of the Issuer and each Lender directly
affected thereby;
(b) (i) amend, modify or waive any provision of this Section 16.02;
(ii) change the percentage specified in the definition of
Required Lenders or the number of Lenders which shall be required for
the Lenders or any of them to take any action under this Agreement
(except as provided in Article V for Non-Extending Lenders); or
(iii) amend, modify or waive any provision of Section 6.01;
(iv) amend or modify the definition of "Available Standby
L/C Sublimit" in Section 1.01 hereof;
(v) amend, modify or waive any provision of Section 5.12; or
(vi) amend, modify or waive any provision of Section 16.06;
in each case without the consent of the Issuer and all the Lenders;
(c) amend, modify or waive any provision of ARTICLE XIII without the
written consent of the Administrative Agent;
(d) amend, modify or waive any provision of ARTICLE II, IV, V or XIV
or any other provision of this Agreement (including an increase in the initial
Stated Amount and waiver of the Settlement Limits in Section 10.01) affecting
the Issuing Bank without the consent of the Issuing Bank; or
(e) amend, modify or waive any provision of ARTICLE XV without the
consent of the Arrangers.
In addition, no amendment, waiver or consent to or under this
Agreement which could reasonably be expected to affect adversely the rights of
the holders of Commercial Paper Notes will become effective unless Moody's and
S&P have confirmed that such amendment, waiver or consent will not cause their
rating of the Commercial Paper Notes to be lowered or withdrawn.
16.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Issuing Bank, the Administrative Agent
or any Lender, any right, remedy, power or privilege hereunder or under any
other Transaction Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies provided
by law.
16.04 Payment of Expenses, Etc. The Issuer agrees to pay on demand
(a) all reasonable and documented out-of-pocket costs and expenses
(including reasonable legal fees and disbursements of special Mexican counsel
to the Administrative Agent, English and New York counsel to the Issuing Bank
and the allocated cost of in-house counsel to the Administrative Agent),
syndication (including printing, distribution and bank meetings), travel,
telephone and duplication expenses and other reasonable and documented costs
and out of- pocket expenses in connection with the arrangement, documentation,
negotiation and closing of the Transactions Documents, subject to the maximum
amount set forth in a letter agreement between the Issuer and the Arrangers;
(b) all reasonable and documented out-of-pocket costs and expenses
incurred by the Administrative Agent and the Issuing Bank in connection with
any amendment to, waiver of, or consent to any Transaction Document or the
transactions contemplated hereby, including the reasonable fees and reasonable
and documented out-of-pocket expenses of counsel for the Administrative Agent
and the Issuing Bank and the allocated cost of in-house counsel thereof; and
(c) all reasonable and documented out-of-pocket costs and expenses
incurred by the Administrative Agent, the Issuing Bank or any Lender in
connection with the enforcement of and/or preservation of any rights under
this Agreement or any other Transaction Document (whether through
negotiations, legal proceedings or otherwise), including the reasonable fees
and reasonable and documented out-of-pocket expenses of counsel for the
Administrative Agent, the Issuing Bank or such Lender and the allocated costs
of in-house counsel thereof.
16.05 Indemnification. The Issuer agrees to indemnify and hold
harmless the Arrangers, the Administrative Agent, the Issuing Bank and each
Lender and each of their Affiliates and their officers, directors, employees,
agents and advisors (each, an "Indemnified Party") from and against any and
all claims, damages, losses, liabilities and expenses (including reasonable
fees and expenses of counsel and the allocated cost of in-house counsel), but
excluding taxes that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including in connection with any investigation, litigation or
proceeding or preparation of a defense in connection therewith) (a) the
Transaction Documents, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the Commercial Paper Notes or (b) or
any Environmental Action relating in any way to the Issuer or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence
or willful misconduct or to have been incurred by reason of any untrue
statement contained in information furnished in writing by the Indemnified
Party expressly for use in an Offering Statement. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 16.05 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Issuer, its
directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated. The Issuer also
agrees not to assert any claim against the Arrangers, the Administrative
Agent, the Issuing Bank, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to the Transaction Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Transaction Documents. Neither the Arranger, the Administrative Agent,
the Issuing Bank nor any Lender shall be deemed to have any fiduciary
relationship with the Issuer or the Guarantor.
16.06 Successor and Assigns.
(a) The provisions of this Agreement shall be binding upon the
Issuer, the Guarantors, their successors and assigns and shall inure to the
benefit of the Issuing Bank, the Arrangers, the Administrative Agent and the
Lenders and their respective successors and assigns, except that the Issuer
and the Guarantors may not assign or otherwise transfer any of their rights or
obligations under this Agreement without the prior written consent of all
Lenders except pursuant to the terms of this Agreement.
(b) Any Lender (other than the Issuing Bank in its capacity as
Issuing Bank) may at any time, and any Lender, if demanded by the Issuer or
the Issuing Bank pursuant to Section 2.06 or Section 5.11 upon at least five
Business Days' notice to such Lender and the Administrative Agent, shall,
assign to one or more commercial banks either (i) registered as a Foreign
Financial Institution and a resident (or having its principal office as a
resident, if lending through a branch or agency) for tax purposes in a
jurisdiction that is a party to an income tax treaty to avoid double taxation
with Mexico on the date of such assignment, qualified to receive the benefits
of said treaty or (ii) organized and existing under the laws of Mexico on the
date of such assignment (each an "Assignee") all, or a proportionate part of
all, of its Commitment and its rights and obligations under this Agreement and
the Notes, and such Assignee shall assume such rights and obligations,
pursuant to an Assignment and Assumption Agreement executed by such Assignee
and such transferor Lender, with (and subject to) the subscribed consent of
the Issuer and the Administrative Agent (which consents shall not be
unreasonably withheld and shall not be required by the Issuer if a Default or
an Event of Default has occurred and is continuing) and the Issuing Bank
(which consent may be withheld for any reason; except that where such Assignee
is an OECD Bank, consent may not be unreasonably withheld); provided, however,
that if an Assignee is an Affiliate of such transferor Lender, which Affiliate
is registered as a Foreign Financial Institution and meets the tax residence
and qualification requirements of clause (ii) above and, at the time of such
assignment, the additional amounts payable with respect to Taxes to such
Assignee will not exceed such amounts payable to the transferor Lender, no
such consent shall be required other than from the Issuing Bank; and provided
further that, in the case of an assignment of only part of such rights and
obligations, the Assignee shall acquire a Total Exposure of not less than
U.S.$3,000,000 and integral multiples of U.S.$1,000,000 in excess thereof.
Upon execution and delivery of an Assignment and Assumption Agreement and
payment by the Assignee to the transferor Lender of an amount equal to the
purchase price agreed between such transferor Lender and such Assignee, such
Assignee shall be a Lender party to this Agreement and shall have all the
rights and obligations of a Lender with a Commitment as set forth in such
instrument of assumption (in addition to any Commitment previously held by
it), and the transferor Lender shall be released from its obligations
hereunder to a corresponding extent (except to the extent the same arose prior
to the assignment), and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this paragraph
(b), the transferor Lender, the Administrative Agent and the Issuer shall make
appropriate arrangements so that a new Note is issued to the Assignee at the
expense of the Assignee. In connection with any such assignment (other than a
transfer by a Lender to one of its Affiliates), the transferor Lender (or in
the case of Section 2.06(b) or 5.11, the Issuer), without prejudice to any
claims the Issuer may have against any Defaulting Lender, shall pay to the
Administrative Agent an administrative fee for processing such assignment in
the amount of U.S.$2,000 and to the Issuing Bank a fee of U.S.$1,000.
(c) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank of the United States in
accordance with applicable law and without compliance with the foregoing
provisions of this Section 16.06; provided, however, that such pledge or
assignment shall not release such Lender from its obligations hereunder.
(d) Any Lender may, without any consent of the Issuer, the
Administrative Agent, the Issuing Bank or any other third party at any time
grant to one or more banks or other institutions (i) registered as a Foreign
Financial Institution and (ii) resident (or having its principal office as a
resident, if lending through a branch or agency) for tax purposes in a
jurisdiction that is a party to an income tax treaty to avoid double taxation
with Mexico on the date of such assignment and qualified to receive the
benefits of said treaty and having (at the time such Lender or financial
institution becomes a Participant) a withholding tax rate under such treaty
applicable to payments hereunder no higher than that applicable to payments to
such Lender (each a "Participant") participating interests in its Commitment
or any or all of its Loans or its share of the Letter of Credit Exposure or
its share of the Standby L/C Exposure. In the event of any such grant by a
Lender of a participating interest to a Participant, whether or not upon
notice to the Issuer, the Issuing Bank and the Administrative Agent, such
Lender shall remain responsible for the performance of its obligations
hereunder, and the Issuer and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement. Any agreement pursuant to which any
Lender may grant such a participating interest shall provide that such Lender
shall retain the sole right and responsibility to enforce the obligations of
the Issuer hereunder, including the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided, however,
that such participation agreement may provide that such Lender will not agree
to any modification, amendment or waiver of this Agreement extending the
maturity of any Obligation in respect of which the participation was granted,
or reducing the rate or extending the time for payment of interest thereon or
reducing the principal thereof, or reducing the amount or basis of calculation
of any fees to accrue in respect of the participation, without the consent of
the Participant. The Issuer agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of
Sections 5.07 and 5.10 with respect to its participating interest as if it
were a Lender named herein; provided, however, that the Issuer shall not be
required to pay any greater amounts pursuant to such Sections than it would
have been required to pay but for the sale to such Participant of such
Participant's participation interest. An assignment or other transfer which is
not permitted by paragraph (b) or (c) above shall be given effect for purposes
of this Agreement only to the extent of a participating interest granted in
accordance with this paragraph (d).
(e) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
16.06, disclose to the Assignee or Participant or proposed Assignee or
Participant, any information relating to the Issuer furnished to such Lender
by or on behalf of the Issuer; provided that, prior to any such disclosure,
the Assignee or Participant or proposed Assignee or Participant shall agree to
preserve the confidentiality of any Confidential Information relating to the
Issuer received by it from such Lender.
16.07 Right of Set-off. In addition to any rights and remedies of the
Lenders and the Issuing Bank provided by law, each Lender and the Issuing Bank
shall have the right, without prior notice to the Issuer or the Guarantors,
any such notice being expressly waived by the Issuer and the Guarantors to the
extent permitted by applicable law, upon any amount becoming due and payable
by the Issuer or the Guarantors hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or the Issuing
Bank, as the case may be, or any branch or agency thereof to or for the credit
or the account of the Issuer or the Guarantors. Each Lender and the Issuing
Bank agree promptly to notify the Issuer, or such Guarantor, as the case may
be, and the Administrative Agent after any such set-off and application made
by such Lender or the Issuing Bank, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
16.08 Confidentiality. Neither the Administrative Agent, the Issuing
Bank nor any Lender shall disclose any Confidential Information to any other
Person without the prior written consent of the Issuer, other than (a) to the
Administrative Agent's, the Issuing Bank's or such Lender's Affiliates and
their officers, directors, employees, agents and advisors and, as contemplated
by Section 16.06(e), to actual or prospective Assignees and Participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation (including as may be required in connection with an audit by the
Administrative Agent's, the Issuing Bank's or such Lender's independent
auditors) or as may be required by or necessary in connection with any
judicial process and (c) as requested by any state, federal or foreign
authority or examiner regulating banks or banking. Notwithstanding the
foregoing or anything contained in any Transaction Document to the contrary,
the parties (and each employee, representative, or other agent of the parties)
may disclose to any and all persons, without limitation of any kind, the tax
treatment and any facts that may be relevant to the tax structure of the
transactions contemplated by this Agreement, provided, however, that no party
(and no employee, representative, or other agent thereof) shall disclose any
other information that is not relevant to understanding the tax treatment and
tax structure of such transactions (including the identity of any party and
any information that could lead another to determine the identity of any
party), or any other information to the extent that such disclosure could
result in a violation of any federal or state securities law.
16.09 Use of English Language. All certificates, reports, notices and
other documents and communications given or delivered pursuant to this
Agreement shall be in the English language (other than the documents required
to be provided pursuant to Sections 6.01(i)(i), (ii) and (iii) which shall be
in the English language or in the Spanish language accompanied by an English
translation or summary). Except in the case of the laws of, or official
communications of, Mexico, the English language version of any such document
shall control the meaning of the matters set forth therein.
16.10 GOVERNING LAW. THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK.
16.11 Submission to Jurisdiction
(a) Each of the parties hereto hereby irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York and of any New York State court located
in the Borough of Manhattan in New York City and any appellate court thereof
and, with respect to the Issuer and the Guarantors, to the competent courts of
their own corporate domicile for purposes of any suit, legal action or
proceeding arising out of or relating to this Agreement, any other Transaction
Document or the transactions contemplated hereby, and each of the parties
hereto hereby irrevocably agrees that all claims in respect of such suit,
action or proceeding may be heard and determined in such federal or New York
State court and, with respect to the Issuer and the Guarantors, as well as in
the competent court of their own corporate domicile.
(b) Each of the parties hereto hereby irrevocably waives, to the
fullest extent it may effectively do so, any objection that it may now or
hereafter have to the laying of venue of any such suit, action or proceeding
in any such federal or New York State court or, with respect to the Issuer and
the Guarantors, any such competent court in the place of their corporate
domicile and irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of any such suit, action
or proceeding.
(c) Each of the parties hereto irrevocably waives the right to
object, with respect to such claim, suit, action or proceeding brought in any
such court, that such court does not have jurisdiction over it.
(d) Each of the parties hereto agrees, to the fullest extent it may
effectively do so under applicable law, that a final judgment in any suit,
action or proceeding of the nature referred to in paragraph (a) above brought
in any such court shall be conclusive and binding upon such party and may be
enforced in other jurisdictions by suit on the judgment or in any manner
provided by law.
(e) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR THE ACTIONS OF THE ARRANGER, THE ADMINISTRATIVE AGENT, THE
ISSUING BANK OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.
16.12 Appointment of Agent for Service of Process.
(a) The Issuer and each Guarantor hereby irrevocably appoints CT
Corporation System, with an office on the date hereof at 111 Eighth Avenue,
13th Floor, New York, New York 10011, as its agent (the "Process Agent") to
receive on behalf of itself and its property, service of copies of the summons
and complaint and any other process which may be served in any such action or
proceeding brought in any New York State or federal court sitting in New York
City. Such service may be made by delivering a copy of such process to the
Issuer or the Guarantor, as the case may be, in care of the Process Agent at
its address specified above, and the Issuer or the Guarantor, as the case may
be, hereby authorizes and directs the Process Agent to accept such service on
its behalf. The appointment of the Process Agent shall be irrevocable until
the appointment of a successor Process Agent. The Issuer and each Guarantor,
further agrees to promptly appoint a successor Process Agent in New York City
prior to the termination for any reason of the appointment of the initial
Process Agent.
(b) Nothing in Section 16.11 or in this Section 16.12 shall affect
the right of any party hereto to serve process in any manner permitted by law
or limit any right that any party hereto may have to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other jurisdiction.
16.13 Waiver of Sovereign Immunity. To the extent that the Issuer or
a Guarantor has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, or otherwise) with respect
to itself or its property, the Issuer or the Guarantor, as the case may be,
hereby irrevocably waives such immunity in respect of its obligations
hereunder to the extent permitted by applicable law. Without limiting the
generality of the foregoing, the Issuer and each Guarantor agrees that the
waivers set forth in this Section 16.13 shall have force and effect to the
fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of
the United States and are intended to be irrevocable for purposes of such Act.
16.14 Judgment Currency.
(a) All payments made under this Agreement and the other Transaction
Documents shall be made in Dollars. If for the purposes of obtaining judgment
in any court it is necessary to convert a sum due from the Issuer in Dollars
into another currency, the parties hereto agree to the fullest extent that
they may legally and effectively do so that the rate of exchange used shall be
that at which in accordance with normal banking procedures (based on
quotations from four major dealers in the relevant market) the Administrative
Agent, the Issuing Bank or each Lender, as the case may be, could purchase
Dollars with such currency at or about 11:00 a.m. (New York City time) on the
Business Day preceding that on which final judgment is given.
(b) The Obligations in respect of any sum due to any Lender, the
Issuing Bank or the Administrative Agent hereunder or under any other
Transaction Document shall, to the extent permitted by applicable law
notwithstanding any judgment expressed in a currency other than Dollars, be
discharged only to the extent that on the Business Day following receipt by
such Lender, the Issuing Bank or the Administrative Agent of any sum adjudged
to be so due in such other currency such Lender, the Issuing Bank or the
Administrative Agent may in accordance with normal banking procedures purchase
Dollars with such other currency. If the amount of Dollars so purchased is
less than the sum originally due to the Issuing Bank, such Lender or the
Administrative Agent, the Issuer and each of the Guarantors agree, to the
fullest extent it may legally do so, as a separate obligation and
notwithstanding any such judgment, to indemnify the Issuing Bank, such Lender
or the Administrative Agent against such resulting loss.
16.15 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this
Agreement.
16.16 Effect of Termination of Commitments. Any Commercial Paper
Notes issued and sold in accordance with the terms of the Transaction
Documents and which are Outstanding on the date of the termination of any
Commitment hereunder shall remain valid obligations of the Issuer and shall be
entitled to the benefits of the Letter of Credit to the extent provided
therein.
16.17 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction, and the remaining portion of such provision and all other
remaining provisions hereof will be construed to render them enforceable to
the fullest extent permitted by law.
16.18 Survival of Agreements and Representations.
(a) All representations and warranties made herein or in any other
Transaction Document shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(b) The covenants and agreements contained in Sections 5.05, 5.07,
5.09, 5.10, 16.04, 16.05, 16.08, 16.09, 16.11 and 16.12, and the obligations
of the Lenders under Sections 13.07 and 14.05, shall survive the termination
of the Commitments, the expiration of Standby L/Cs and the expiration of the
Letter of Credit and, in the case of any Lender that may assign any interest
in its Commitment or obligations hereunder, with respect to matters occurring
before such assignment, shall survive the making of such assignment to the
extent any claim arising thereunder relates to any period prior to such
assignment, notwithstanding that such assigning Lender may cease to be a
"Lender" hereunder.
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
CEMEX, S.A. de C.V.,
as Issuer,
By: /s/ Rodrigo Trevino
----------------------------
Name: Rodrigo Trevino
Title: Attorney-in-Fact
CEMEX, S.A. de C.V.
Ave. Ricardo Margain Zozava #325
Col. Valle del Campestre
Garza Garcia, N.L.
66265 Mexico
Telephone: 011-52818-888-4132
Fax: 011-52818-888-4402
Attention: Ramiro Villareal
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
CEMEX MEXICO, S.A. de C.V.,
as Guarantor,
By: /s/ Rodrigo Trevino
--------------------------------
Name: Rodrigo Trevino
Title: Attorney-in-Fact
CEMEX MEXICO, S.A. de C.V.
Ave. Ricardo Margain Zozava #325
Col. Valle del Campestre
Garza Garcia, N.L.
66265 Mexico
Telephone: 011-52818-888-4132
Fax: 011-52818-888-4402
Attention: Ramiro Villareal
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
EMPRESAS TOLTECA DE MEXICO, S.A.
de C.V.,
as Guarantor,
By: /s/ Rodrigo Trevino
------------------------------
Name: Rodrigo Trevino
Title: Attorney-in-Fact
EMPRESAS TOLTECA DE MEXICO, S.A. de C.V.
Ave. Ricardo Margain Zozava #325
Col. Valle del Campestre
Garza Garcia, N.L.
66265 Mexico
Telephone: 011-52818-888-4132
Fax: 011-52818-888-4402
Attention: Ramiro Villareal
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BARCLAYS BANK PLC, NEW YORK
BRANCH,
as Issuing Bank,
By: /s/ Douglas Bernegger
----------------------------
Name: Douglas Bernegger
Title: Director
Barclays Bank PLC, New York Branch
200 Park Avenue
New York, NY 10166
Telephone: 212-412-6888
Fax: 212-412-1615
Attention: Thomas C. Janson
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Documentation Agent,
By: /s/ Nicholas A. Bell
-------------------------------
Name: Nicholas A. Bell
Title: Director Loan Transaction
Management
Barclays Bank PLC, New York Branch
200 Park Avenue
New York, NY 10166
Telephone: 212-412-6888
Fax: 212-412-1615
Attention: Thomas C. Janson
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Administrative Agent,
By: /s/ Nicholas A. Bell
--------------------------------
Name: Nicholas A. Bell
Title: Director Loan Transaction
Management
Barclays Bank PLC, New York Branch
222 Broadway
New York, NY 10038
Telephone: 212-412-3724
Fax: 212-412-5306
Attention: Mayerlin Jaramillo
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BARCLAYS CAPITAL, THE INVESTMENT
BANKING DIVISION OF BARCLAYS BANK PLC,
as Joint Arranger,
By: /s/ Thomas C. Janson
------------------------------------
Name: Thomas C. Janson
Title: Associate Director
Barclays Capital, The Investment Banking Division of Barclays Bank, PLC
200 Park Avenue
New York, NY 10166
Telephone: 212-412-6888
Fax: 212-412-1615
Attention: Thomas C. Janson
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BANC OF AMERICA SECURITIES LLC,
as Joint Arranger,
By: /s/ Rosemary Halpin
----------------------------------
Name: Rosemary Halpin
Title: Vice President
Banc of America Securities LLC
9 West 57 Street, 32nd Floor
NY1-301-32-03
New York, NY 10019
Telephone: 212-847-5069
Fax: 212-847-6677
Attention: Rosemary Halpin
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BANC OF AMERICA SECURITIES LLC,
as Syndication Agent,
By: /s/ Rosemary Halpin
-----------------------------
Name: Rosemary Halpin
Title: Vice President
Banc of America Securities LLC
9 West 57 Street, 32nd Floor
NY1-301-32-03
New York, NY 10019
Telephone: 212-847-5069
Fax: 212-847-6677
Attention: Rosemary Halpin
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
ABN AMRO BANK N.V.,
as a Bank,
By: /s/ Guillermo Mulville
------------------------------
Name: Guillermo Mulvill
Title: Vice President
By: /s/ Oscar Herrera
---------------------------
Name: Oscar Herrera
Title: AVP
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BANCO BILBAO VIZCAYA ARGENTARIA
S.A., as a Bank,
By: /s/ Santiago Hernandez
------------------------------
Name: Santiago Hernandez
Title: Vice President Global
Corporate Banking
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BANCO SANTANDER CENTRAL HISPANO,
S.A., NEW YORK BRANCH,
as a Bank,
By: /s/ Javier Guibert
--------------------------------
Name: Javier Guibert
Title: Executive Director--Manager
Santander Central Hispano
By: /s/ L. Ruben Perez-Bomo
--------------------------------
Name: L. Ruben Perez-Bomo
Title: Country Specialist (Mexico)
Banco Santander Central
Hispano
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BANK BOSTON, N.A.,
as a Bank,
By: /s/ Pamela Prisco Carpenter
---------------------------------
Name: Pamel Prisco Carpenter
Title: Attorney in Fact
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANK
OF AMERICA SECURITIES LLC AS JOINT ARRANGER AND SYNDICATION AGENT AND CERTAIN
BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BANK OF AMERICA, NA,
as a Bank,
By: /s/ Mauricio Reballedo
--------------------------------
Name: Mauricio Reballedo
Title: Managing Director
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
THE BANK OF NOVA SCOTIA,
as a Bank,
By: /s/ Robert Hirsh
-----------------------------
Name: Robert Hirsh
Title: Representative
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
THE BANK OF TOKYO-MITSUBISHI, LTD.,
New York Branch
By: /s/ Hiroshi Azuma
---------------------------------
Name: Hiroshi Azuma
Title: Vp & Head of EMD
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BANK ONE, NATIONAL ASSOCIATION,
as a Bank,
By: /s/ Catherine J. Duffy
---------------------------------
Name: Catherine J. Duffy
Title: Managing Director
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BARCLAYS BANK, PLC,
NEW YORK BRANCH,
as a Bank,
By: /s/ Thomas C. Janson
---------------------------------
Name: Thomas C. Janson
Title: Associate Director
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
BAYERISCHE HYPO- UND VEREINSBANK
AG, NY BRANCH,
as a Bank,
By: /s/ Jorge Wilmer
---------------------------------
Name: Jorge Wilmer
Title: Managing Director
By: /s/ Lara Cunha
---------------------------------
Name: Lara Cunha
Title: Associate
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
CREDIT LYONNAIS NEW YORK BRANCH,
as a Bank,
By: /s/ Silvia Rubio
---------------------------------
Name: Silvia Rubio
Title: Vice President
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES,
as a Bank,
By: /s/ Brian Schneider
---------------------------------
Name: Brian Schneider
Title: Vice President
By: /s/ Brian M. Smith
---------------------------------
Name: Brian M. Smith
Title: Director
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
LANDESBANK RHEINLAND-PFALZ -
GIROZENTRALE,
as a Bank,
By: /s/ Fred Molich
---------------------------------
Name: Fred Molich
Title: Senior Vice President
By: /s/ Anke Gorg
---------------------------------
Name: Anke Gorg
Title: Creditanalyst
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
MIZUHO CORPORATE BANK, Ltd.,
as a Bank,
By: /s/ Tsukasa Takasawa
---------------------------------
Name: Tsukasa Takasawa
Title: Senior Vice President
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
SANPAOLO IMI S.p.A.,
as a Bank,
By: /s/ Carlo Persico
---------------------------------
Name: Carlo Persico
Title: CEO for the Americas
By: /s/ Barbara Bassi
---------------------------------
Name: Barbara Bassi
Title: Vice President
THIS PAGE IS A SIGNATURE PAGE TO THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AS OF AUGUST 8, 2003, AMONG CEMEX, S.A. DE C.V.,
AS ISSUER, CEMEX MEXICO, S.A. DE C.V., AS GUARANTOR, EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V., AS GUARANTOR, BARCLAYS BANK PLC, NEW YORK BRANCH, AS
ISSUING BANK, DOCUMENTATION AGENT AND ADMINISTRATIVE AGENT, BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC, AS JOINT ARRANGER, BANC
OF AMERICA SECURITIES LLC, AS JOINT ARRANGER AND SYNDICATION AGENT AND THE
CERTAIN BANKS PARTY HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
above written.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Bank,
By: /s/ J. Calvin Ratcliff, Jr.
------------------------------
Name: J. Calvin Ratcliff, Jr.
Title: Director
SCHEDULE 1.01(B)
Notice Addresses and Lending Offices
Name of Bank and Address for Notices
ABN AMRO BANK N.V.
Prolongacion Reforma 600-320
Col. Santa Fe Pena Blanca
Mexico DF 01210
Attention: Rosalia Noble
Telephone: 011-52-55-5257-7842
Fax: 011-52-55-5257-7829
Email: rosalia.noble@abnamro.com
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
1345 Avenue of the Americas 45th Floor
New York, NY 10105
Attention: Francisco Miguens
Telephone: 212-728-1682
Fax: 212-333-2926
Email: francisco.miguens@bbvany.com
BANCO SANTANDER CENTRAL HISPANO, S.A., NEW YORK BRANCH
45 East 53rd Street
New York, NY 10022
Attention: Ruben Perez-Romo
Telephone: 212-350-0645
Fax: 212-407-1141
BANK BOSTON, N.A.
125 Dupont Drive
Providence RI 02907
Attention: Jorge Garcia
Telephone: 401-865-7486
Fax: 401-865-7335
BANK OF AMERICA, NA
1850 Gateway Blvd., 5th Floor
Concord, CA 94520
Attention: Julia del Rio
Telephone: 925-675-8019
Fax: 925-675-8051
THE BANK OF NOVA SCOTIA
720 King Street West, 4th Floor
MSV 2T3
Toronto, Ontario, Canada
Attention: Nancy Buccat
Telephone: 416-866-6471
Fax: 416-866-5991
THE BANK OF TOKYO-MITSUBISHI, LTD.
1251 Avenue of the Americas
New York, NY 10020-1104
Attention: Marina Gomez, IOD
Telephone: 212-413-8823
Fax: 212-413-8817
Email: mgomez@btmna.com
BANK ONE, NATIONAL ASSOCIATION
300 South Riverside, Suite ILI-0236
7th Floor
Chicago, IL 60606-0236
Attention: Kathrine M. Giuseppi
Telephone: 312-954-7076
Fax: 312-954-6207
BARCLAYS BANK PLC, NEW YORK BRANCH
200 Park Avenue
New York, NY 10167
Attention: Thomas C. Janson
Telephone: 212-412-6888
Fax: 212-412-1615
Email: Thomas.Janson@barclayscapital.com
BAYERISCHE HYPO - UND VEREINSBANK
AG, NY BRANCH
245 Park Avenue
New York, NY 10017
Attention: Antoinnette Wynn
Telephone: 212-672-5337
Fax: 212-672-5506
Email: Antoinnette.Wynn@hvbamericas.com
CREDIT LYONNAIS NEW YORK BRANCH
1301 Avenue of Americas, 20th Floor
New York, NY 10019
Attention: Yolanda Santana
Telephone: 212-261-7489
Fax: 212-261-3402
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
75 Wall Street
New York, NY 10005
Attention: Joyanna Dennis
Telephone: 212-429-3154
Email: joyanna.dennis@drkw.com
LANDESBANK RHEINLAND-PFALZ -GIROZENTRALE
Grosse Bleiche 54-56
55098 Mainz, Germany
Attention: Fred Molich/Anke Gorg
Telephone: 011-49-6131-13-6561 (Fred Molich)
Telephone: 011-49-6131-13-3914 (Anke Gorg)
Fax: 011-49-6131-13-2599
MIZUHO CORPORATE BANK, Ltd.
1800 Plaza 10
Jersey City, NJ 07311-4098
Attention: Joann Olivencia
Telephone: 201-626-9347
Fax: 201-626-9913
Email: joann.olivencia@mizuhocbus.com
SANPAOLO IMI S.p.A.
245 Park Avenue, 35th Floor
New York, NY 10167
Attention: Marco Fracchia
Telephone: 212-692-3132
Fax: 212-599-5307
WACHOVIA BANK, NATIONAL ASSOCIATION
201 S. College Street
Charlotte, NC 28244-0002
Attention: Roshenna Smith
Telephone: 704-374-6171
Telecopier: 704-715-0091
Email: roshenna.smith@wachovia.com
Domestic Lending Offices
ABN AMRO BANK N.V.
Prolongacion Reforma 600-320
Col. Santa Fe Pena Blanca
Mexico, D.F. 01210
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
1345 Avenue of the Americas, 45th Floor
New York, NY 10105
Attention: Maite Vizan
Telephone: 212-728-1697
Fax: 212-333-2904
Email: maite.vizan@bbvany.com
BANCO SANTANDER CENTRAL HISPANO, S.A., NEW YORK BRANCH
45 East 53rd Street
New York, NY 10022
BANK BOSTON, N.A.
100 Federal Street
Boston, MA
BANK OF AMERICA, NA
1850 Gateway Blvd., 5th Floor
Concord, CA 94520
Attention: Credit Services West
THE BANK OF NOVA SCOTIA
Mexico Representative Office
Blvd. M. Avila Camacho No. 1, Piso 18
Col. Lomas de Chapultepec
Mexico, DF 11009
THE BANK OF TOKYO-MITSUBISHI, LTD.
1251 Avenue of the Americas
New York, NY 10020-1104
BANK ONE, NATIONAL ASSOCIATION
1 Bank One Plaza
Chicago, IL 60670
BARCLAYS CAPITAL, THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC
200 Park Avenue
New York, NY 10166
Attention: Thomas C. Janson
Telephone: 212-412-6888
Fax: 212-412-1615
BAYERISCHE HYPO-UND VEREINSBANK AG, NEW YORK BRANCH
150 East 42nd Street
New York, NY 10017
CREDIT LYONNAIS NEW YORK BRANCH
1301 Avenue of Americas, 20th Floor
New York, NY 10019
Attention: Silvia Rubio
Telephone: 212-261-7485
Fax: 212-261-3402
DRESDNER KLEINWORT WASSERSTEIN
75 Wall Street
New York, NY 10005
LANDESBANK RHEINLAND-PFALZ -GIROZENTRALE
Grosse Bleiche 54-56
55098 Mainz, Germany
MIZUHO CORPORATE BANK, Ltd.
1251 Avenue of the Americas, 32nd Floor
New York, NY 10020
SANPAOLO IMI S.p.A.
245 Park Avenue, 35th Floor
New York, NY 10167
WACHOVIA BANK, NATIONAL ASSOCIATION
Wachovia Securities 29th Floor
191 Peachtree St., NE
Atlanta, GA 30303
Attention: Kay Reedy
Telephone: 404-332-5262
Fax: 404-332-5905
Eurodollar Lending Offices
ABN AMRO BANK N.V.
Prolongacion Reforma 600-320
Col. Santa Fe Pena Blanca
Mexico DF 01210
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
1345 Avenue of the Americas, 45th Floor
New York, NY 10105
Attention: Maite Vizan
Telephone: 212-728-1697
Telecopier: 212-333-2904
Email: maite.vizan@bbvany.com
BANCO SANTANDER CENTRAL HISPANO, S.A., NEW YORK BRANCH
45 East 53rd Street
New York, NY 10022
BANK BOSTON, N.A.
100 Federal Street
Boston, MA
BANK OF AMERICA, NA
Credit Services West
1850 Gateway Blvd., 5th Floor
Concord, C A94520
THE BANK OF NOVA SCOTIA
720 King Street West, 4th Floor
MSV 2T3
Toronto, Ontario, Canada
THE BANK OF TOKYO-MITSUBISHI, LTD.
1251 Avenue of the Americas
New York, NY 10020
BANK ONE, NATIONAL ASSOCIATION
300 South Riverside,
Suite ILI-0236 7th Floor
Chicago, IL 60606-0236
BARCLAYS CAPITAL,
THE INVESTMENT BANKING DIVISION OF BARCLAYS BANK PLC
200 Park Avenue
New York, NY 10166
Attention: Thomas C. Janson
Telephone: 212-412-6888
Fax: 212-412-1615
BAYERISCHE HYPO-UND VEREINSBANK AG, IBF
150 East 42nd Street
New York, NY 10017
CREDIT LYONNAIS NEW YORK BRANCH
1301 Avenue of Americas, 20th Floor
New York, NY 10019
Attention: Silvia Rubio
Telephone: 212-261-7485
Fax: 212-261-3402
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
75 Wall Street
New York, NY 10005
LANDESBANK RHEINLAND-PFALZ -GIROZENTRALE
Grosse Bleiche 54-56
55098 Mainz, Germany
MIZUHO CORPORATE BANK, Ltd.
1251 Avenue of the Americas, 32nd Floor
New York, NY 10020
SANPAOLO IMI S.p.A. - NASSAU BRANCH
c/o New York Branch
245 Park Avenue, 35th Floor
New York, NY 10167
WACHOVIA BANK, NATIONAL ASSOCIATION
191 Peachtree St., NE
Atlanta, GA 30303
Attention: Kay Reedy
Telephone: 404-332-5262
Fax: 404-332-5905
Payment Instructions
BANKS PAYMENT ADDRESS
ABN AMRO BANK, N.V. Bank Name: ABN AMRO Bank, N.V.
ABA#: Chips 958
For credit to: ABN AMRO Bank, N.V.
Acct.#: 574-07000-2941
Ref: OBCA Cemex
BANCO BILBAO VIZCAYA Bank Name: Banco Bilbao Vizcaya Argentaria
ARGENTARIA S.A. ABA#: 026001847
For credit to: BBVA CHIPS NY
Acct.#: 00000 30444
Re: CEMEX S.A. de CV US$300,000,000 USCP PROGRAM
BANCO SANTANDER Bank Name: Banco Santander Central, S.A.,
CENTRAL HISPANO, S.A., New York Branch
NEW YORK BRANCH ABA#: 026007692
For credit to: Bridge Loans
Acct.#: 107144001
Ref: CEMEX, S.A.
BANK BOSTON, N.A. Bank Name: Bank Boston, N.A.
ABA#: 011-000-138
For credit to: Bank Boston, N.A.
Acct.#: 009-07309
Ref: Cemex USCP Program
BANK OF AMERICA, NA Bank Name: Bank of America, NA
ABA#: 121000358
For credit to: Credit Services #6910
Acct.#: 12338-17137
Re: Cemex USCP
THE BANK OF NOVA SCOTIA Bank Name: The Bank of Nova Scotia
ABA#: 02600253-2
For credit to: BNS International Banking Division
Acct.#: 6027-36
Re: Loan Administration and Agency Services
THE BANK OF TOKYO- Bank Name: The Bank of Tokyo-Mitsubishi, Ltd.
MITSUBISHI, LTD. ABA#: 0260-0963-2
For credit to: The Bank of Tokyo-Mitsubishi, Ltd.
Acct.#: 97770094
Re: Cemex - USCP
BANK ONE, NATIONAL ASSOCIATION Bank Name: Bank One, NA
ABA #: 071000013
For credit to: Cash Account
Acct. #: 481152860000
Re: Cemex, S.A. de C.V.
BARCLAYS CAPITAL, Bank Name: Barclays Bank PLC
THE INVESTMENT BANKING ABA#: 026002574
DIVISION OF BARCLAYS BANK PLC For credit to: CEMEX
Acct.#: 050019104
BAYERISCHE HYPO - UND Bank Name: The Federal Bank of New York
VEREINSBANK AG, NY BRANCH ABA#: 026 008 808
For credit to: Bayerische Hypo - und Vereinsbank AG,
New York Branch
Acct.#: 594-012025-4055-01
Re: CEMEX USCP
CREDIT LYONNAIS NEW YORK BRANCH Bank Name: Federal Reserve Bank of New York
ABA#: 026008073
For credit to: Credit Lyonnais New York, further credit
to Credit Lyonnais NY IBF
Acct.#: 01-13058-0090-00
Re: CEMEX
DRESDNER BANK AG, NEW YORK Bank Name: Dresdner Bank AG, New York
AND GRAND CAYMAN BRANCHES ABA#: 026008303
Acct.#: 000995068000
Re: Cemex, S.A. de C.V.
LANDESBANK RHEINLAND- Bank Name: Deutsche Bank Trust Company
PFALZ-GIROZENTRALE ABA#: 021001033
Acct.#: 04101861
Re: 3-511 Pazandeh/Cemex
MIZUHO CORPORATE BANK, Ltd. Bank Name: Federal Reserve Bank of New York
ABA#: 026004307
Acct.#: H79--740-222205
Re: August 2003 Reimbursement and Credit Agreement for
Cemex SA de CV
SANPAOLO IMI S.p.A. Bank Name: Bank One International, New York
ABA#: 0265-009-797
For credit to: SANPAOLO IMI Bank New York
Acct.#: 1002209
Re: Cemex
Bank Name: Wachovia Bank, National Association
WACHOVIA BANK, NATIONAL ASSOCIATION ABA#: 053000219
For credit to: ICB
Acct.#: 01459168118013
Reference: CEMEX
EXHIBIT A
FORM OF FIRST AMENDED
AND RESTATED IRREVOCABLE DIRECT-PAY
LETTER OF CREDIT NO. SB00197
August 8, 2003
U.S. Bank Trust National Association,
as Depositary for the holders of
certain commercial paper notes of
CEMEX, S.A. de C.V.
100 Wall Street, Suite 1600
New York, NY 10005
Attention: Commercial Paper Department
Ladies and Gentlemen:
We refer to the Irrevocable Direct-Pay Letter of Credit No. SB00197,
issued in favor of U.S. Bank Trust National Association, dated August 26, 2002
(the "Prior Letter of Credit"). This First Amended and Restated Irrevocable
Direct-Pay Letter of Credit (the "Letter of Credit") amends and restates such
Prior Letter of Credit, and supersedes and replaces the Prior Letter of Credit
in its entirety.
At the request and for the account of CEMEX, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of the United Mexican
States ("Mexico") (the "Issuer"), we hereby establish our above-referenced
letter of credit (the "Letter of Credit") in the stated amount of
U.S.$400,000,000 (as subject to adjustment as provided herein, the "Stated
Amount") in your favor, as Depositary under the First Amended and Restated
Depositary Agreement dated as of August 8, 2003 (as from time to time amended,
supplemented or otherwise modified, the "Depositary Agreement"), among the
Issuer, you, and us, in our capacity as Administrative Agent (the
"Administrative Agent") and in our capacity as Issuing Bank, pursuant to which
the Issuer's commercial paper notes (collectively, the "Commercial Paper
Notes") in an aggregate amount not in excess of U.S.$400,000,000 at any time
outstanding may, from time to time, be issued. We irrevocably agree to honor
your demands for payment and transfer which comply with the terms and
conditions of this Letter of Credit.
This Letter of Credit is effective immediately and will expire on the
Termination Date (as defined below).
Funds under this Letter of Credit will be made available to you
against receipt by us of a certificate in the form of Annex B or Annex C
hereto (each, a "Drawing Certificate") appropriately completed and purportedly
signed by you, in each case accompanied by your sight draft in the form of
Annex A hereto (each, a "Draft") drawn on us, stating on its face: "Drawn
under Barclays Bank PLC, New York Branch, Irrevocable Direct-Pay Letter of
Credit No. SB00197." Each Draft and Drawing Certificate presented hereunder
shall be dated the date of presentation and shall be presented by hand
delivery or by facsimile (such facsimile transmission to be immediately
confirmed by you by telephone; provided, however, that the absence of such
confirmation shall not affect our obligation to honor any drawing hereunder)
to the New York office of Barclays Bank PLC located at 222 Broadway, 11th
Floor, New York, NY 10038, Attention: Letter of Credit Department, Facsimile:
(212) 412-5306 (or such other facsimile number of which we notify you in
writing), Telephone: (212) 412-3708 or (212) 412-3726 (or at such other office
in New York City which may be designated by us upon prior written notice
delivered to you, which office for all purposes hereof shall thereupon be the
issuing office of this Letter of Credit).
Payment shall be made to you of the amount specified in each Draft
(up to the Stated Amount), (a) if a drawing is made by you hereunder at or
prior to 4:00 p.m. (New York City time) on a Business Day (as defined below),
not later than 11:00 a.m. (New York City time) on the next succeeding Business
Day, or (b) if a drawing is made by you hereunder after 4:00 p.m. (New York
City time) on a Business Day, not later than 1:00 p.m. (New York City time) on
the next succeeding Business Day, provided, in each case, such drawing and the
documents presented therewith conform to the terms and conditions hereof.
Payment under this Letter of Credit will be made to you solely out of our own
funds and not with the funds of the Issuer by wire transfer of immediately
available funds to you or to your account. If a non-conforming demand for
payment is made, we shall notify you of our dishonor on or before the
applicable time specified above for honoring such demand, and our notice of
dishonor shall state the reasons therefor and that we will, upon your
instructions, hold any documents at your disposal or return the same to you.
Upon being notified that the demand was dishonored, you may attempt to correct
such non-conforming demand for payment to the extent that you are entitled to
do so, provided the revised documentation is submitted on or before the
Termination Date (as defined below), and any such submission by you of such
revised (or any other) documentation shall be deemed to be a new drawing for
purposes of the time for payment to you hereunder.
The Stated Amount shall be reduced by the amount of each payment of
any drawing hereunder pursuant to a Drawing Certificate or to the amount
specified pursuant to a Notice of Default Reduction in the form of Annex E-2
hereto or by the amount specified pursuant to a Notice of Reduction of Stated
Amount of Letter of Credit in the form of Annex G hereto; provided, however,
that the amount of any payment pursuant to a Drawing Certificate in the form
of Annex B hereto shall be reinstated automatically upon the issuance of
Commercial Paper Notes to the extent of the full amount thereof payable at
maturity (the "Face Amount") unless at or prior to the time we make such
payment you shall have received from us a notice of termination in the form of
Annex D hereto (a "Notice of Termination") or a notice of default in the form
of Annex E-1 hereto (a "Notice of Default") or we shall have received from the
Administrative Agent a copy of a notice of acceleration in the form of Annex F
hereto (a "Notice of Acceleration") directing you to make a drawing in respect
of all Commercial Paper Notes then outstanding.
We may deliver to you a new Letter of Credit in exchange herefor, or
an amendment hereto, as provided in the Reimbursement Agreement (as defined
below). Simultaneously with delivery of a new Letter of Credit, you will
surrender this Letter of Credit (and any amendments thereto) for cancellation.
Upon the payment to you or to your account of the amount in respect
of a Draft hereunder, we shall be fully discharged of our obligation under
this Letter of Credit with respect to such Draft, and we shall not thereafter
be obligated to make any further payments under this Letter of Credit in
respect of such Draft to you or any other person who may have made to you or
makes to you a demand for payment in respect of any Commercial Paper Note. By
paying to you an amount demanded in accordance herewith, we make no
representation as to the correctness of the amount demanded, and we shall not
be liable to you or to any other person for or in respect of any amount so
paid or disbursed for any reason whatsoever, including any non-application or
misapplication by you of the proceeds of such payment or disbursement.
This Letter of Credit expires at 5:00 p.m. (New York City time) on
the date which is the earliest to occur of (i) the date on which this Letter
of Credit is surrendered by you to us for cancellation, (ii) August 5, 2005
(the "Stated Termination Date"), (iii) the date specified in a Notice of
Termination delivered by us and (iv) the date specified in the Notice of
Default Reduction to be delivered by you to us upon receipt of a Notice of
Default from us. The date of termination of this Letter of Credit as provided
in this paragraph is herein referred to as the "Termination Date" upon which
date this Letter of Credit shall automatically terminate.
Communications with respect to this Letter of Credit (other than a
drawing hereunder, the procedure for which is specified above) shall be in
writing and shall be addressed to us at 200 Park Avenue, 11th Floor, New York,
NY 10166 Attention: Thomas Janson, with a copy to us at 222 Broadway, 11th
Floor, New York, NY 10038, Attention: Client Services Unit, Letter of Credit
Department, or such other address which we may designate by written notice to
you, specifically referring to this Letter of Credit by number.
You may transfer your rights to demand payment and request transfer
under this Letter of Credit only to a successor Depositary and by presentation
to us at our office on a Business Day of a request in the form of Annex H
hereto, completed and signed by you, your transferee and the Administrative
Agent. Upon acceptance by us of such request (as evidenced by our execution
thereof), your transferee shall be deemed to be the addressee of this Letter
of Credit and the sole permitted signatory of any further demands under this
Letter of Credit for payment and transfer.
As used herein, "Business Day" shall mean a day other than a Saturday
or Sunday or other day on which commercial banks in New York, New York are
authorized or required by law to close.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
the First Amended and Restated Reimbursement and Credit Agreement dated as of
August 8, 2003 (as from time to time amended, supplemented or otherwise
modified, the "Reimbursement Agreement"), among the Issuer, CEMEX Mexico, S.A.
de C.V., as a Guarantor, Empresas Tolteca de Mexico, S.A. de C.V., as a
Guarantor, us, as Issuing Bank and Administration Agent, the several Lenders
party thereto, Barclays Capital, the Investment Banking Division of Barclays
Bank PLC, as a Joint Arranger and Banc of America Securities LLC, as a Joint
Arranger and Syndication Agent, or by reference to any document, instrument or
agreement referred to herein (including the Reimbursement Agreement, the
Depositary Agreement or and the Commercial Paper Notes), except only the
Drawing Certificates and notices in the form attached hereto and the Drafts
referred to herein, and any such reference shall not be deemed to incorporate
herein by reference any document, instrument or agreement except for such
Drawing Certificates, such notices and such Drafts.
This Letter of Credit shall be governed and construed in
accordance with the laws of the State of New York (including, without
limitation, Article 5 of the Uniform Commercial Code of the State of New York)
except that with respect to presentations of drafts and certificates by
telecopy transmission, the Uniform Customs and Practice for Documentary
Credits (1993 Revision), Publication No. 500 of the International Chamber of
Commerce, shall govern, to the extent not inconsistent with the laws of the
State of New York.
Very truly yours,
BARCLAYS BANK PLC, NEW YORK BRANCH
By:
------------------------------
Name:
Title:
Annex A
to the Letter of Credit
FORM OF SIGHT DRAFT
[Date]
Barclays Bank PLC, New York Branch,
as Administrative Agent
222 Broadway
New York, New York 10038
Attention: Letter of Credit Department
Barclays Bank PLC, New York Branch
as Issuing Bank
200 Park Avenue
New York, New York 10166
Attention: Thomas Janson
Pay to the order of U.S. Bank Trust National Association*, as
Depositary, for deposit in account number ____________ (the "Letter of Credit
Account") maintained at its office in ____________ and entitled "CEMEX Letter
of Credit Account," U.S.$[amount], drawn under your First Amended and Restated
Irrevocable Direct-Pay Letter of Credit No. SB00197.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Depositary
By:______________________________
Title:___________________________
- ------------
* If the Letter of Credit has been transferred in accordance with its
terms, all references to "U.S. Bank Trust National Association" in
this and the other annexes to the Letter of Credit shall be replaced
with the name of the then current Depositary.
Annex B
to the Letter Of Credit
FORM OF CERTIFICATE FOR DRAWING
Barclays Bank PLC, New York Branch,
as Administrative Agent
222 Broadway
New York, New York 10038
Attention: Letter of Credit Department
Barclays Bank PLC, New York Branch
as Issuing Bank
200 Park Avenue
New York, New York 10166
Attention: Thomas Janson
Re: First Amended and Restated Irrevocable Direct-Pay Letter of
Credit No. SB00197 (the "Letter of Credit")
The undersigned, a duly authorized officer of U.S. Bank Trust
National Association (the "Depositary"), hereby certifies to you as follows.
Terms defined in the Letter of Credit and not defined herein shall have the
meanings given to them in the Letter of Credit.
1. The undersigned, acting as the Depositary under the
Depositary Agreement on behalf of the holders of the Commercial Paper
Notes, is making demand for payment under the Letter of Credit in the
amount of U.S.$__________________ to pay maturing Commercial Paper
Notes.
2. The aggregate amount due, the date of issuance and the
maturity date of each Commercial Paper Note in respect of which this
demand for payment is being made are listed in the attached Schedule
A. No previous drawing under the Letter of Credit with respect to any
such Commercial Paper Note has been honored by you.
3. Each Commercial Paper Note in respect of which this
demand for payment is being made was authenticated and delivered by
us pursuant to our authority under and in accordance with the terms
of the Depositary Agreement.
4. Demand for payment is hereby made upon you under the
Letter of Credit for the amount specified in Paragraph 1. The amount
of the Draft accompanying this Drawing Certificate does not exceed
the Stated Amount on the date hereof and is equal to the aggregate
Face Amount of the Commercial Paper Notes which will become due and
payable on the Business Day next succeeding the date hereof.
5. (a) Upon our receipt of the amount demanded pursuant
hereto, we will deposit the same directly into the Letter of Credit
Account (as defined in the Depositary Agreement) maintained by us
pursuant to the Depositary Agreement and apply the same to the
payment of the Commercial Paper Notes in respect of which this demand
for payment is being made upon presentment thereof on or after their
maturity and (b) no portion of said amount shall be deposited by us
in any other account maintained by or for the account of the Issuer
or applied by us for any purpose other than to pay the Commercial
Paper Notes in respect of which this demand for payment is being made
on or after their maturity.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate on the ____ day of ___________, 200__.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Depositary
By:______________________________
Title:___________________________
Schedule A To Annex B
to the Letter Of Credit
COMMERCIAL PAPER NOTES ISSUED BY
CEMEX, S.A. de C.V.
Date of Issuance Amount Maturity Date
- ---------------- ------ -------------
Annex C
to the Letter of Credit
FORM OF CERTIFICATE FOR DRAWING
(AFTER RECEIPT OF NOTICE OF ACCELERATION)
Barclays Bank PLC, New York Branch,
as Administrative Agent
222 Broadway
New York, New York 10038
Attention: Letter of Credit Department
Barclays Bank PLC, New York Branch
As Issuing Bank
200 Park Avenue
New York, New York 10038
Attention: Thomas Janson
Re: First Amended and Restated Irrevocable Direct-Pay Letter of
Credit No SB00197 (the "Letter of Credit")
The undersigned, a duly authorized officer of U.S. Bank Trust
National Association (the "Depositary"), hereby certifies to you as follows.
Terms defined in the Letter of Credit and not defined herein shall have the
meanings given to them in the Letter of Credit.
1. The undersigned, acting as the Depository under the
Depository Agreement on behalf of the holders of the Commercial Paper
Notes, is making demand for payment under the Letter of Credit in the
amount of U.S.$____________________ to pay all outstanding Commercial
Paper Notes.
2. The undersigned has received from the Administrative
Agent a "Notice of Acceleration" pursuant to Section 12.02(b) of the
Reimbursement Agreement.
3. The aggregate amount due, the date of issuance and the
maturity date of the Commercial Paper Notes in respect of which this
demand for payment is being made are listed in the attached Schedule
A. No previous drawing under the Letter of Credit with respect to any
such Commercial Paper Note has been honored by you.
4. Each Commercial Paper Note in respect of which this
demand for payment is being made was authenticated and delivered by
us pursuant to our authority under and in accordance with the terms
of the Depositary Agreement.
5. Demand for payment is hereby made upon you under the
Letter of Credit for the amount specified in Paragraph l.
6. (a) Upon our receipt of the amount demanded under the
Letter of Credit in respect of the Commercial Paper Notes, we will
deposit the same directly into the Letter of Credit Account (as
defined in the Depositary Agreement) maintained by us pursuant to the
Depositary Agreement and apply the same to the payment of the
Commercial Paper Notes in respect of which this demand for payment is
being made upon presentment thereof on or after their maturity and
(b) no portion of said amount shall be deposited by us in any other
account maintained by or for the account of the Issuer or applied by
us for any purpose other than to pay the Commercial Paper Notes in
respect of which this demand for payment is being made on or after
their maturity.
7. Upon receipt of payment as provided herein, we shall
return to you the original Letter of Credit (and any amendments
thereto) for cancellation.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate on the ____ day of ___________, 200__.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Depositary
By:____________________________
Title:_________________________
Schedule A To Annex C
to the Letter Of Credit
COMMERCIAL PAPER NOTES ISSUED BY
CEMEX, S.A. de C.V.
Date of Issuance Amount Maturity Date
- ---------------- ------ -------------
Annex D
to the Letter of Credit
FORM OF NOTICE OF TERMINATION
[Date]
CEMEX, S.A. de C.V.
Ave. Constitucion 444 Pte
Monterey, N.L.
Mexico 64000
U.S. Bank Trust National Association,
as Depositary
100 Wall Street, Suite 1600
New York, NY 10005
Attention: Commercial Paper Department
Re: First Amended and Restated Irrevocable Direct-Pay Letter
of Credit No. SB00197
Ladies and Gentlemen:
We refer to our First Amended and Restated Irrevocable Direct-Pay
Letter of Credit No. SB00197 (the "Letter of Credit") dated August 8, 2003.
Capitalized terms used herein that are not defined herein shall have the
meanings specified in the Letter of Credit.
We hereby notify you pursuant to Section 12.02(a)(i) of the
Reimbursement Agreement that the Letter of Credit will terminate at 5:00 p.m.
(New York City time) on _________________________. Please deliver to us for
cancellation the original of the Letter of Credit (and all amendments thereto)
immediately following such expiration date.
If U.S. Bank Trust National Association, as Depositary, advises us in
writing (which may be by fax) on the date hereof that there are Commercial
Paper Notes outstanding on the date hereof, this Notice of Termination shall
be deemed to be a Notice of Default in the form of Annex E-1 to the Letter of
Credit.
Very truly yours,
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Issuing Bank
By:______________________________
Title:___________________________
cc: Each Dealer
Barclays Bank PLC, New York Branch,
as Administrative Agent
Annex E-1
to the Letter of Credit
FORM OF NOTICE OF DEFAULT
[Date]
CEMEX, S.A. de C.V.
Ave. Constitucion 444 Pte
Monterey, N.L.
Mexico 64000
U.S. Bank Trust National Association,
as Depository
100 Wall Street, Suite 1600
New York, NY 10005
Attention: Commercial Paper Department
Re: First Amended and Restated Irrevocable Direct-Pay Letter
of Credit No. SB00197
Ladies and Gentlemen:
We refer to our First Amended and Restated Irrevocable Direct-Pay
Letter of Credit No. SB00197 (the "Letter of Credit") dated August 8, 2003.
Capitalized terms used herein that are not defined herein have the meaning
specified in the Letter of Credit.
This is a Notice of Default as referred to in the Letter of Credit.
Effective immediately (a) the Stated Amount is reduced to the amount which is
(i) the amount which U.S. Bank Trust National Association shall advise us is
equal to the aggregate Face Amount of Commercial Paper Notes outstanding on
the date hereof plus (ii) the aggregate amount of all Standby L/C's
outstanding on the date hereof (as the Administrative Agent shall have advised
to U.S. Bank Trust National Association pursuant to Section 4(j) of the
Depositary Agreement), and (b) no amount shall hereafter be reinstated to the
Stated Amount.
The Letter of Credit will terminate two Business Days following the
later of (i) the date which U.S. Bank Trust National Association, as
Depository, shall advise us is the latest maturity date of any Commercial
Paper Note outstanding on the date of this Notice of Default and (ii)
__________________________, being the latest expiration date of any Standby
L/C outstanding on the date hereof. Please deliver to us for cancellation the
original of the Letter of Credit (and all amendments thereto) following such
termination.
In accordance with the Depositary Agreement, you shall no longer
issue or deliver additional Commercial Paper Notes.
Very truly yours,
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Issuing Bank
By:______________________________
Title:___________________________
cc: Each Dealer
Barclays Bank PLC, New York Branch,
as Administrative Agent
Annex E-2
to the Letter of Credit
FORM OF NOTICE OF DEFAULT REDUCTION
(AFTER RECEIPT OF NOTICE OF DEFAULT)
[Date]
Barclays Bank PLC, New York Branch
as Administrative Agent
222 Broadway
New York, New York 10038
Attention: Letter of Credit Department
Barclays Bank PLC, New York Branch
as Issuing Bank
200 Park Avenue
New York, New York 10166
Attention: Thomas Janson
Re: First Amended and Restated Irrevocable Direct-Pay Letter of
Credit No. SB00197 (the "Letter of Credit")
The undersigned, a duly authorized officer of U.S. Bank Trust
National Association (the "Depositary"), hereby certifies to you as follows.
Terms defined in the Letter of Credit and not defined herein shall have the
meanings given to them in the Letter of Credit and in the Notice of Default
referred to below.
l. The undersigned, acting as the Depositary under the
Depositary Agreement on behalf of the holders of the Commercial Paper
Notes has received from you a Notice of Default dated ______________.
2. The aggregate Face Amount of the Commercial Paper Notes
outstanding on the date of the Notice of Default is
U.S.$______________. We acknowledge that the Stated Amount shall be
reduced to an amount equal to such amount, plus U.S.$___________ (the
aggregate amount of Standby L/C's outstanding, as the Administrative
Agent has notified to us pursuant to Section 4(j) of the Depositary
Agreement).
3. The latest maturity date of any Commercial Paper Note
outstanding on the date of the Notice of Default is ______________.
4. You have notified us in the Notice of Default that the
latest date of expiration of any outstanding Standby L/C is
_______________.
5. We acknowledge that the Letter of Credit shall terminate
on _____________ which is two Business Days following the later of
the dates specified in paragraphs 3 and 4 above.
6. We confirm that we shall not issue or deliver any
additional Commercial Paper Notes.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Depositary
By: ______________________________
Title: ___________________________
cc: CEMEX, S.A. de C.V.
Barclays Bank PLC, New York Branch
as Administrative Agent
Annex F
to the Letter of Credit
FORM OF NOTICE OF ACCELERATION
[Date]
CEMEX, S.A. de C.V.
Ave. Constitucion 444 Pte
Monterey, N.L.
Mexico 64000
U.S. Bank Trust National Association,
as Depositary
100 Wall Street, Suite 1600
New York, NY 10005
Attention: Commercial Paper Department
Re: First Amended and Restated Irrevocable Direct-Pay Letter of
Credit No. SB00197
Ladies and Gentlemen:
We refer to the First Amended and Restated Irrevocable Direct-Pay
Letter of Credit No. SB00197 (the "Letter of Credit") dated August 8, 2003
issued by us in favor of the Depositary pursuant to the First Amended and
Restated Reimbursement and Credit Agreement (as from time to time, amended,
supplemented or otherwise modified, the "Reimbursement Agreement") dated as of
August 8, 2003 among CEMEX, S.A. de C.V., the Issuing Bank, CEMEX Mexico, S.A.
de C.V., as a Guarantor, Empresas Tolteca de Mexico, S.A. de C.V., as a
Guarantor, the Lenders party thereto, us, as Issuing Bank, as Administrative
Agent, and Documentation Agent, Barclays Capital, the Investment Banking
Division of Barclays Bank PLC, as a Joint Arranger and Banc of America
Securities LLC, as a Joint Arranger and Syndication Agent. Capitalized terms
used therein that are not defined herein have the meaning specified in the
Reimbursement Agreement.
This is a Notice of Acceleration as referred to in Section 12.02(b)
of the First Amended and Restated Reimbursement Agreement and in the Letter of
Credit. We herewith direct U.S. Bank Trust National Association, as
Depositary, to make a Drawing under the Letter of Credit in the aggregate Face
Amount of all Commercial Paper Notes Outstanding on the date of this Notice of
Acceleration.
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Administrative Agent
By: ______________________________
Title: ___________________________
cc: Each Dealer
Barclays Bank PLC, New York Branch,
as Issuing Bank
Annex G
to the Letter of Credit
NOTICE OF REDUCTION OF STATED AMOUNT
OF LETTER OF CREDIT
[Date]
U.S. Bank Trust National Association,
as Depositary
100 Wall Street, Suite 1600
New York, NY 10005
Attention: Commercial Paper Department
Re: First Amended and Restated Irrevocable Direct-Pay Letter of
Credit No. SB00197 (the "Letter of Credit")
The undersigned hereby notifies you in accordance with [Section
2.06(d)] [Section 5.01(c)] [Section 5.11] of the First Amended and Restated
Reimbursement Agreement that the Stated Amount of the Letter of Credit (terms
defined therein and not defined herein shall have the meanings given to them
therein) shall be reduced as provided therein by an amount (the "Reduction
Amount") equal to U.S.$_______________.
As of this date, the total amount of the Aggregate Outstandings is
U.S.$_______________,(1)
(2)[which is less than the reduced Stated Amount; therefore, the
reduction takes effect immediately;]
- OR -
(3)[which is greater than the reduced Stated Amount; therefore the
reduction will take effect in part on each (i) maturity date of Commercial
Paper Notes, (ii) expiration date of a Standby L/Cs, (iii) repayment date of
any Loans, or (iv) reimbursement date of any unreimbursed Drawings or Standby
L/C Drawings (as such dates are notified to you by us), as the case may be, in
an amount equal to the Commercial Paper Notes then maturing, or the amount of
the Standby L/Cs than expiring, or the amount of such Loans repaid, or the
amount of such Drawings or Standby L/C Drawings reimbursed (as such amount is
notified to you by us) until the Stated Amount shall have been reduced by the
Reduction Amount;]
- ----------------
1 Insert as appropriate.
2 Choose appropriate language.
3 Choose appropriate language.
provided, however, that the Aggregate Outstandings on the date of each
reduction, after giving effect to such reduction, shall not exceed the Stated
Amount.
After giving effect to such reduction, the Stated Amount shall be
U.S.$______________.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate on the ____ day of ___________, 200__.
Very truly yours,
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Issuing Bank
By: ______________________________
Title: ___________________________
cc: CEMEX, S.A. de C.V.
Barclays Bank PLC, New York Branch
as Administrative Agent
Each Dealer
Annex H
to the Letter of Credit
FORM OF REQUEST FOR TRANSFER
[Date]
Barclays Bank PLC, New York Branch
as Administrative Agent
222 Broadway
New York, New York 10038
Attention: Letter of Credit Department
Barclays Bank PLC, New York Branch
as Issuing Bank
200 Park Avenue
New York, New York 10166
Attention: Thomas Janson
Re: First Amended and Restated Irrevocable Direct-Pay Letter of
Credit No. SB00197 (the "Letter of Credit")
We request transfer, to be effective as of ____________, __, ____,*
of our rights under the Letter of Credit to the following successor
Depositary:
[Name of successor depositary]
______________________________
[Address]_____________________
______________________________
We certify that the above successor depositary is (or will be upon
your acceptance of our transfer request) our successor depositary pursuant to
the Depositary Agreement dated as of ___________, 2003 among CEMEX, S.A. de
C.V., and you, as Issuing Bank, and Administrative Agent.
- --------------
* Fill in date of request or applicable future date not more that one week
from date of request.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
request on the ____ day of ___________, 200__.
Very truly yours,
[Name of transferring depositary]
By: ____________________________
Title: _________________________
Acknowledged:
[Name of successor depositary]
By: _______________________
Title: ____________________
Consented and agreed:
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Administrative Agent
By: _____________________________
Title: __________________________
Accepted:
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Issuing Bank
By: _____________________________
Title: __________________________
CEMEX, S.A. de C.V.,
as Issuer
By: ______________________________
Title: ___________________________
By: ______________________________
Title: ___________________________
EXHIBIT B
FORM OF NOTE
U.S.$________________ Date August 8, 2003
New York, New York,
FOR VALUE RECEIVED, the undersigned, CEMEX, S.A. de C.V., a
sociedad anonima de capital variable organized and existing under the laws of
the United Mexican States and located at Avenida Constitucion 444 Pte.,
Monterrey, Nuevo Leon, 64000, Mexico (the "Issuer"), promises to pay, without
setoff or counterclaim, to the order of ____________ (the "Lender") on the
Maturity Date, as defined in the Reimbursement Agreement (as defined below), at
the office of Barclays Bank PLC, 200 Park Avenue, New York, New York 10166, in
lawful money of the United States of America and in immediately available
funds, the principal amount of ______________ Dollars (U.S.$____________) or,
if less, the aggregate unpaid principal amount of all Loans made by the Lender
to the undersigned pursuant to the Reimbursement Agreement which are then due
and payable to the Lender pursuant thereto. The undersigned further agrees to
pay, without setoff or counterclaim, interest in like money at such office from
the date hereof until paid in full on the unpaid principal amount hereof from
time to time outstanding at the applicable interest rate per annum determined
as provided in, and payable as specified in, the Reimbursement Agreement. The
Lender is authorized to record the date, type and amount of each Loan made by
the Lender pursuant to the Reimbursement Agreement, the date and amount of each
repayment of principal hereof, the date of each interest rate conversion and
each continuation pursuant to Section 3.05 of the Reimbursement Agreement and
the principal amount subject thereto, and, in the case of Eurodollar Loans, the
interest rate with respect thereto on the schedules annexed hereto and made a
part hereof or on any other record customarily maintained by the Lender with
respect to this Note and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided, however,
that the failure of the Lender to make such recordation (or any error is such
recordation) shall not affect the obligations of the Issuer hereunder or under
the Reimbursement Agreement.
This Note is one of the Notes referred to in the First
Amended and Restated Reimbursement and Credit Agreement dated as of August 8
2003, among the Issuer, the Guarantors, the Lender and certain other lenders
party thereto, Barclays Bank PLC, New York Branch, as Issuing Bank,
Administrative Agent and Documentation Agent, Barclays Capital, the Investments
Banking Division of Barclays Bank PLC, as a Joint Arranger and Banc of America
Securities LLC, as Joint Arranger and Syndication Agent (as the same may from
time to time be amended, supplemented or otherwise modified, the "Reimbursement
Agreement"; terms defined therein being used herein as so defined), and is
entitled to the benefits thereof and is subject to optional and mandatory
prepayment in whole or in part as provided therein.
Upon the occurrence of any one or more of the Events of
Default specified in the Reimbursement Agreement, all amounts remaining unpaid
on this Note shall become, or may be declared to be, immediately due and
payable, all as provided therein.
The Issuer agrees to pay all reasonable costs and expenses,
including all reasonable fees and disbursements of counsel (including the
allocated cost of internal counsel), incurred by the Lender in connection with
the enforcement of the Lender's rights and remedies under the Reimbursement
Agreement and this Note.
The Issuer hereby irrevocably and unconditionally submits for
itself and its property in any legal suit, action or proceeding relating to
this Note or for recognition and enforcement of any judgment in respect
thereof, to the jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court located in the
Borough of Manhattan in New York City, to the jurisdiction of any competent
court in the place of its corporate domicile and any appellate courts thereof,
and consents that any such suit, action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the laying
of venue of any such suit, action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same. The Issuer hereby irrevocably agrees that service of
all writs, process and summonses in any such suit, action or proceeding brought
in the State of New York may be made upon CT Corporation System having offices
on the date hereof at 111 Eighth Avenue, New York, New York 10011 (the "Process
Agent"), and the Issuer hereby irrevocably appoints the Process Agent as its
authorized agent to accept such service of any and all such writs, process and
summonses and agrees that the failure of the Process Agent to give any notice
of any such service of process to the Issuer shall not impair or affect the
validity of such service or of any judgment based thereon.
The obligations of the Issuer hereunder to make payments in
Dollars shall not be discharged or satisfied by any tender or recovery pursuant
to any judgment expressed in or converted into any other currency except to the
extent that such tender or recovery results in the effective receipt by the
Lender of the full amount of Dollars payable hereunder and the Issuer shall be
obligated to indemnify the Lender (and the Lender shall have an additional
legal claim) for any difference between such full amount and the amount
effectively received by the Lender pursuant to any such tender or recovery. The
Lender's determination of amounts effectively received by it shall be
presumptively correct in the absence of manifest error.
To the extent that the Issuer has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Issuer hereby irrevocably waives such immunity in respect of its obligations
under this Note and the other Transaction Documents. The foregoing waiver and
consent are intended to be effective to the fullest extent now or hereafter
permitted by applicable law of any jurisdiction in which any suit, action or
proceeding with respect to this Note may be commenced.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
CEMEX, S.A. de C.V.
By:
Title:
Por Aval/Guaranteed:
CEMEX MEXICO, S.A. de C.V.,
in its capacity as Guarantor
Under Article XI of the Reimbursement Agreement
By:
Title:
Por Aval/Guaranteed:
EMPRESAS TOLTECA DE MEXICO,
S.A. de C.V., in its capacity as
Guarantor under Article XI of the Reimbursement Agreement
By:
Title:
Schedule 1 to Note
BASE RATE LOANS
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Amount of Base
Rate Loans Made
or Converted Amount Converted Unpaid Principal
from Eurodollar Amount of to Eurodollar Balance of Base
Date Loans Principal Repaid Loans Rate Loans Notation Made By
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Schedule 2 to Note
EURODOLLAR LOANS
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
Date Amount of Interest Amount of Amount Unpaid Notation Made
Eurodollar
Loans Period and Principal
Made or Interest Rate Converted to Balance of
Converted from with Respect Principal Base Rate Eurodollar
Base Rate Loans Thereto Repaid Loans Loans By
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
- ----------------- ----------------- ---------------- ---------------- -------------- ---------------- ----------------
EXHIBIT C
DEPOSITARY AGREEMENT
Dated as of August 8, 2003
U.S. Bank Trust National Association
as Depositary, Issuing Agent and Paying Agent
100 Wall Street, Suite 1600
New York, NY 10005
Attention: Commercial Paper Department
Re: Issuance of commercial paper by CEMEX, S.A. de C.V.,
a sociedad anonima de capital variable organized under the
laws of the United Mexican States ("Mexico") (the "Issuer")
-----------------------------------------------------------
Ladies and Gentlemen:
The credit agreement dated as of August 26, 2002, among the
Issuer, Cemex Mexico S.A. de C.V., as a guarantor, Empresas Tolteca de Mexico,
S.A. de C.V., as a guarantor, Barclays Bank PLC, New York Branch, as issuing
bank, documentation agent and administrative agent, Barclays Capital, the
Investment Banking Division of Barclays Bank PLC, as a joint arranger, Banc of
America Securities LLC, as a joint arranger and syndication agent, and the
lenders party thereto is being amended and restated in its entirety. Therefore,
we refer to the depositary agreement (the "Prior Depositary Agreement") dated
as of August 26, 2002 between the Issuer, Barclays Bank PLC, New York Branch
and U.S. Bank Trust National Association, and to reflect the Reimbursement
Agreement as defined below, the Issuer wishes to amend and restate the Prior
Depositary Agreement in its entirety as set forth herein below.
This will confirm the arrangement made by the undersigned
Issuer with U.S. Bank Trust National Association (the "Depositary" or "you")
whereby you have agreed to act (a) as depositary for the safekeeping of the
Issuer's commercial paper notes (the "Commercial Paper Notes") and of the
letter of credit issued by Barclays Bank PLC, New York Branch (in such
capacity, the "Issuing Bank"), in substantially the form of Annex C to this
Depositary Agreement (together with any amendments thereto and any substitute
letter of credit delivered to you pursuant to Section 2 hereof, the "Letter of
Credit"), (b) as issuing agent on behalf of the Issuer in connection with the
issuance of the Commercial Paper Notes, which may be issued and sold in the
United States commercial paper market, (c) as paying agent to undertake certain
duties described in and limited to Sections 1 and 2(d) hereof on behalf of the
holders of the Commercial Paper Notes and (d) as depositary to hold certain
funds for the benefit of the Issuing Bank as provided in Section 1 hereof.
The Commercial Paper Notes to be issued, if any, will be
issued on the terms and subject to the conditions set forth herein and in the
First Amended and Restated Reimbursement and Credit Agreement dated as of
August _______, 2003 (as from time to time amended, supplemented or otherwise
modified, the "Reimbursement Agreement") among the Issuer, CEMEX Mexico, S.A.
de C.V., as a Guarantor, Empresas Tolteca de Mexico, S.A. de C.V., as a
Guarantor, the Lenders party thereto, Barclays Bank PLC, New York Branch, as
Issuing Bank and Administrative Agent, Barclays Capital, the Investment Banking
Division of Barclays Bank PLC, as a Joint Arranger and Banc of America
Securities LLC, as a Joint Arranger and Syndication Agent. A fully executed
counterpart of the Reimbursement Agreement, which will become effective
simultaneously herewith, is being delivered to you herewith; provided, however,
that the parties hereto acknowledge that you, in your capacity as Depositary,
are not a party to the Reimbursement Agreement and shall have no responsibility
to determine the contents thereof and that all references herein to the
Reimbursement Agreement are for reference purposes only. In your capacity as
depositary, issuing agent and paying agent hereunder, however, except as
expressly provided herein, you shall have no liability to the Issuer, the
Issuing Bank or the holders of the Commercial Paper Notes for the performance
of any of the terms of the Reimbursement Agreement.
This letter agreement (as from time to time amended,
supplemented or otherwise modified, this "Depositary Agreement") will govern
your rights, powers and duties as depositary, issuing agent and paying agent
for the Commercial Paper Notes, as beneficiary of the Letter of Credit and as
depositary for the Issuing Bank, and no implied covenants and obligations shall
be read into this Depositary Agreement or any other agreement against you.
Nothing contained herein will modify, vary or amend the Issuing Bank's
obligations under the Letter of Credit.
Unless otherwise defined herein, capitalized terms used
herein have the meanings assigned to such terms in the Reimbursement Agreement.
SECTION 1. ESTABLISHMENT OF ACCOUNTS; PROCEEDS OF COMMERCIAL
PAPER NOTES.
(a) Prior to or contemporaneously with the execution and
delivery by the Issuer of this Depositary Agreement, and for the
purposes of this Depositary Agreement and the Reimbursement Agreement,
you shall establish in your corporate trust office a special purpose
non-interest bearing deposit account for the benefit of the Issuing
Bank (said account being referred to herein and in the Reimbursement
Agreement as the "Commercial Paper Account" and being identified in
your books as the CEMEX Commercial Paper Account - U.S. Bank, as
Depositary for the benefit of Barclays Bank PLC, New York Branch over
which the Issuing Bank shall have exclusive dominion and control and
the sole right to issue withdrawal instructions. The Commercial Paper
Account shall be in your name, as Depositary for the benefit of the
Issuing Bank. Except for the Issuing Bank and you, as Depositary
therefor, and as specifically provided in clauses (iii) and (vi) of
paragraph (b) below, no Person (including the Issuer) shall have any
legal or beneficial interest in the Commercial Paper Account.
(b) (i) All proceeds received from the sale of Commercial
Paper Notes issued by you, on behalf of or for the account of the
Issuer, shall initially be deposited by you in the Commercial Paper
Account.
(ii) Unless the Issuer has received notice from you
that a Drawing under the Letter of Credit has not been
honored by the Issuing Bank and without limiting its
obligations under the Reimbursement Agreement, the Issuer
agrees that it will, prior to 1:00 p.m. (New York City time)
(but not before payment is made by the Issuing Bank under the
Letter of Credit) on any date that the Issuing Bank makes a
payment in respect of a Drawing under the Letter of Credit,
deposit or cause to be deposited in the Commercial Paper
Account an aggregate amount (the "Issuer Deposit Amount" for
such date) equal to the amount, if any, by which the amount
of such payment under the Letter of Credit exceeds the sum of
(x) the Aggregate Reported Proceeds of Commercial Paper Notes
issued or to be issued on such date and (y) the aggregate
principal amount of all Loans borrowed by the Issuer on such
date in accordance with the Reimbursement Agreement to
reimburse the Issuing Bank for Drawings under the Letter of
Credit. As used in this Depositary Agreement, "Aggregate
Reported Proceeds" of Commercial Paper Notes issued or to be
issued on any date means the aggregate net sales price of
such Commercial Paper Notes (principal amount less discount
for interest and fees) as specified in the issuance
instructions for such Commercial Paper Notes transmitted to
the Depositary pursuant to Section 4(b) hereof.
(iii) Withdrawals or other applications of funds on
deposit in, or otherwise to the credit of, the Commercial
Paper Account may only be made as set forth below. Promptly
after 1:30 p.m. (New York City time) on the day of any
Drawing under the Letter of Credit, you shall (to the extent
that the funds then on deposit in the Commercial Paper
Account are sufficient to do so), debit the Commercial Paper
Account in an amount equal to the amount of such Drawing and
wire transfer such amount to the Issuing Bank. In addition,
the Issuing Bank may, and at the direction of the
Administrative Agent shall, advise you if (A) Drawings under
the Letter of Credit and interest thereon remain
unreimbursed, (B) any Loans and/or interest thereon remain
unpaid and/or (C) Standby L/C Drawings under any Standby L/C
and interest thereon remain unpaid and/or any other amounts
remain unpaid under the Reimbursement Agreement specifying
the aggregate amount thereof and instruct you to debit the
Commercial Paper Account for such amount. To the extent that
funds then on deposit in the Commercial Paper Account are
sufficient to do so, you shall promptly wire transfer such
amount to the Issuing Bank or, if so directed by the Issuing
Bank, to the Administrative Agent to be applied first to the
payment of accrued and unpaid interest on any unreimbursed
Drawings as provided in Section 2.02 of the Reimbursement
Agreement, second to reimburse the Issuing Bank for all
unreimbursed Drawings as provided in Section 2.02 of the
Reimbursement Agreement, third to the payment of accrued and
unpaid interest on any unreimbursed Standby L/C Drawing as
provided in Section 4.02, fourth to the payment to the
Administrative Agent, for the benefit of the Lenders, of
accrued and unpaid interest on Loans outstanding under the
Reimbursement Agreement as provided in Section 3.07 thereof,
fifth to reimburse the Issuing Bank for all unreimbursed
Standby L/C Drawings as provided in Section 4.02, sixth to
the payment to the Administrative Agent for the benefit of
the Lenders, of the unpaid principal amount of Loans
outstanding under the Reimbursement Agreement, and seventh to
the payment to the Administrative Agent, for the benefit of
the Issuing Bank, the Lenders or the Depositary, of fees and
other amounts under the Reimbursement Agreement or hereunder
that are due and payable to the Issuing Bank and the Lenders
or to the Depositary as of such date. To the extent any funds
remain in the Commercial Paper Account, the Issuing Bank
shall instruct you to transfer such funds to such account as
the Issuer shall direct for use by the Issuer in a manner
consistent with the Reimbursement Agreement.
(iv) Notwithstanding any provision contained herein,
you agree that you will in no event permit funds in the
Commercial Paper Account to be withdrawn or transferred to
the Issuing Bank (A) prior to 1:30 p.m. (New York City time)
on the day of payment of any Drawing under the Letter of
Credit and (B) unless payment of such Drawing has been made.
The Issuing Bank hereby agrees that it will not accept any
reimbursement to which it is not entitled.
(v) You shall have no responsibility for determining
the purpose of, or the intended use of any proceeds of, any
withdrawal from the Commercial Paper Account. You hereby
acknowledge that in your capacity as Depositary you do not
have and shall not at any time in the future have or exercise
any banker's lien or right of set-off with respect to (i) any
proceeds from the issuance and delivery of Commercial Paper
Notes, the Commercial Paper Account or the funds from time to
time on deposit in the Commercial Paper Account or (ii) the
Letter of Credit Account or the funds from time to time in
the Letter of Credit Account. You agree to give the Issuer,
the Issuing Bank and the Administrative Agent (with a copy to
each Dealer (as defined below)) notice as soon as practicable
if the Commercial Paper Account or any funds on deposit in
the Commercial Paper Account shall become subject to any
writ, judgment, warrant of attachment, execution or similar
process or to any stay or other similar legal restraint of
which you become aware.
(vi) It is understood that, as a matter of
bookkeeping convenience, the Depositary may credit the
Commercial Paper Account with the proceeds received from the
sale of the Commercial Paper Notes prior to its actual
receipt of final payment therefor and that such bookkeeping
credits may be reflected on the Depositary's books, and
otherwise, as "immediately available funds" or "same day
funds" or by some other similar characterization.
Notwithstanding any such credit or characterization, all such
credits shall be conditional upon the Depositary's receipt of
final payment and may be reversed by the Depositary to the
extent that such final payment is not received. The Issuer
agrees to indemnify and hold the Depositary harmless from any
loss which the Depositary may suffer and any expense which
the Depositary may incur as a result of the failure of any
purchaser to remit payment in full for any Commercial Paper
Notes, and, without limiting the generality of the foregoing,
the Issuer agrees that, immediately upon notification from
the Depositary of any such failure, the Issuer shall
reimburse the Depositary in immediately available funds any
amount credited and paid to the Issuer in anticipation of
receipt of such payment plus any applicable overdraft fees
and interest thereon for each day such proceeds remain
unreimbursed. The overdraft charges and rate of interest
payable by the Issuer to the Depositary shall be that
provided for either (A) under arrangements with respect to
overdraft advances in effect at the time between the Issuer
and the Depositary or (B) if no such arrangements are then in
effect, in the Depositary's standard fee schedule for
overdrafts.
(c) Contemporaneously with the execution and delivery by you
of this Depositary Agreement, you shall establish in your corporate
trust office in New York, New York a special purpose non-interest
bearing trust account (said account being referred to herein and in
the Reimbursement Agreement as the "Letter of Credit Account" and
being identified as the "CEMEX Letter of Credit Account"). The Letter
of Credit Account shall be in your name, as paying agent for the
holders of the Commercial Paper Notes issued by or on behalf of the
Issuer, and under your exclusive dominion and control as agent for
such holders. Except for the holders of the Commercial Paper Notes
issued by or on behalf of the Issuer and you, as paying agent
therefor, no Person shall have any legal or beneficial interest or
claim in the Letter of Credit Account.
(d) (i) The funds in the Letter of Credit Account shall be
subject to withdrawal solely by you, as paying agent for the holders
of the Commercial Paper Notes, and solely for the purpose of paying
matured Commercial Paper Notes in respect of which you have presented
a draft demanding payment under the Letter of Credit. All sums held by
you in the Letter of Credit Account will be held uninvested for the
payment of the Face Amount of the Commercial Paper Notes to the
Persons entitled thereto until such sums shall be paid to such Persons
or the Administrative Agent pursuant to Section 2(e) hereof or
otherwise disposed of in accordance with applicable law. All payments
by the Issuing Bank under the Letter of Credit in respect of a Drawing
shall be credited directly to the Letter of Credit Account, and no
funds in the Letter of Credit Account shall be commingled with monies
from any other source.
(ii) Prior to 4:00 p.m. (New York City time) on the
Business Day preceding each day on which Commercial Paper
Notes mature, you shall present a draft in the form of Annex
A to the Letter of Credit accompanied by a certificate in the
form set forth in Annex B to the Letter of Credit in an
amount equal to the aggregate Face Amount of such maturing
Commercial Paper Notes. Upon receipt from the Administrative
Agent of a Notice of Acceleration in the form of Annex F to
the Letter of Credit directing you to make a Drawing under
the Letter of Credit in the aggregate amount required to pay
in full the Face Amount of all Outstanding Commercial Paper
Notes, you shall make such Drawing as promptly as possible by
presenting a certificate in the form set forth in Annex C to
the Letter of Credit, together with a draft in the amount of
the Drawing in the form of Annex A to the Letter of Credit.
Upon receipt of the proceeds of the Drawing made pursuant to
the preceding sentence, you will promptly surrender the
Letter of Credit (and any amendments thereto) to the Issuing
Bank for cancellation. If any draft is presented to the
Issuing Bank by means of facsimile, you will promptly confirm
receipt by the Issuing Bank by telephone; provided, however,
that nothing in this paragraph (d) shall impair the
obligation of the Issuing Bank to honor such Drawing in
accordance with the terms and conditions of the Letter of
Credit.
(e) The Issuing Bank has agreed to honor any draft in the
form of Annex A to the Letter of Credit and otherwise conforming to
the requirements of the Letter of Credit prior to 11:00 a.m. (New York
City time) on the Business Day next following the Business Day such
draft is presented to the Issuing Bank (provided such draft is
presented by 4:00 p.m. (New York City time) on such day), otherwise
not later than 1:00 p.m. (New York City time) on the next following
Business Day by making a wire transfer to the Depositary for deposit
in the Letter of Credit Account of an amount in immediately available
funds equal to the amount so demanded. You shall record the date and
time of receipt of each wire transfer by the Issuing Bank that is
deposited in the Letter of Credit Account and keep accurate records of
each disbursement therefrom. All action taken by you relative to the
Letter of Credit Account and the making of payments with respect to
Commercial Paper Notes shall be taken by you, as paying agent, on
behalf and for the benefit of the holders of the Commercial Paper
Notes issued by the Issuer.
(f) If by 10:00 a.m. (New York City time) on the Business Day
following the date any Drawing is made under the Letter of Credit, a
Designated Officer (as defined in Section 3(d) below) should receive
notice from an Issuing Bank Officer (as defined in Section 3(c) below)
that an attempted Drawing does not materially conform to the
requirements of the Letter of Credit, you shall make a new Drawing in
accordance with the terms of the Letter of Credit in respect of the
Commercial Paper Notes referred to in such attempted Drawing. You
shall give the Issuer prompt notice of any failure of the Issuing Bank
to honor any Drawing made under the Letter of Credit.
SECTION 2. The Letter Of Credit.
(a) Concurrently with the execution of this Depositary
Agreement, the Issuing Bank shall deliver to you the Letter of Credit.
You shall make Drawings under the Letter of Credit on behalf of the
holders of Commercial Paper Notes pursuant to Section 1 hereof. All
such Drawings shall be made in accordance with the terms hereof and of
the Letter of Credit.
(b) The Stated Amount of the Letter of Credit shall be
reduced by the amount of each Drawing thereunder and shall be
reinstated in accordance with the terms of the Letter of Credit.
(c) The Stated Amount of the Letter of Credit may also be
reduced and the Letter of Credit may be cancelled in full in
accordance with the terms thereof; provided, however, that the
Aggregate Outstandings (as such amount has been notified to you by the
Administrative Agent pursuant to Section 4(k) hereof) on the effective
date of such reduction shall not exceed such reduced amount. Upon any
such reduction in the amount of the Letter of Credit or other change
in the terms of the Letter of Credit, the Issuing Bank shall deliver
to you either a new Letter of Credit in exchange for the Letter of
Credit in effect prior to such change or an amendment to the Letter of
Credit. Upon the expiration of the Letter of Credit, you will promptly
deliver the expired Letter of Credit (and any amendments thereto) to
the Issuing Bank.
(d) It is understood and agreed by the parties hereto that
the provisions of this Depositary Agreement relating to the Letter of
Credit are intended to provide for payment of the Commercial Paper
Notes at their maturity. Accordingly, the parties hereto specifically
acknowledge that in actions taken by you as beneficiary of the Letter
of Credit you shall not be acting as an agent of the Issuer but shall
be acting on behalf of the holders of the Commercial Paper Notes. You
have no obligation to the holders of the Commercial Paper Notes other
than to hold the Letter of Credit for the benefit of such holders, to
make Drawings under the Letter of Credit as required hereunder, to
receive and hold uninvested funds payable under the Letter of Credit
for the benefit of such holders and to pay the holders of the
Commercial Paper Notes pursuant to the terms hereof and thereof.
(e) If any Commercial Paper Note shall not be presented to
you for payment on the maturity date thereof and sufficient collected
funds are then on deposit in the Letter of Credit Account for payment
thereof, you shall hold such funds until the earlier of (i)
presentation of such Commercial Paper Note and (ii) 3:00 p.m. (New
York City time) on the second Business Day after the maturity date
thereof (the "Presentment Deadline"). If a Commercial Paper Note shall
not have been presented for payment on at or prior to the Presentment
Deadline with respect thereto, an amount equal to the funds paid by
the Issuing Bank under the Letter of Credit for the payment thereof
shall be transferred from the Letter of Credit Account to the
Administrative Agent for the account of the Issuing Bank or the
Lenders, as the case may be, free and clear of any liens. If the
Issuing Bank has been reimbursed in full by the Issuer for the payment
of such Commercial Paper Note, if all Standby L/C Drawings have been
reimbursed in full by the issuer, if all Loans and all interest
thereon and all other sums due and payable by the Issuer under the
Transaction Documents have been paid in full and if no Default or
Event of Default under the Reimbursement Agreement has occurred and is
continuing, the Administrative Agent shall pay the Issuer an amount
equal to the amount so transferred to the Administrative Agent as soon
thereafter as possible; provided, however, that during the continuance
of a Default or Event of Default such amount shall be deposited in the
Commercial Paper Account or, if so directed by the Administrative
Agent acting on the instructions of the Required Lenders, in an
account pursuant to Section 12.02(c) of the Reimbursement Agreement.
After such transfer the Depositary shall be released from any further
responsibility or liability with respect to the payment of such
Commercial Paper Note and the holder thereof shall look solely to the
Issuer for such payment.
SECTION 3. DTC Book-Entry System; Commercial Paper Notes
Delivered For Safekeeping; Authorized Agents
And Officers.
(a) The Commercial Paper Notes shall not be issued in
physical form, but their aggregate Face Amount shall be represented by
a master note (the "Master Note") substantially in the form of Annex A
to this Depositary Agreement, executed by the Issuer pursuant to the
book-entry commercial paper program of The Depositary Trust Company
("DTC"). You shall maintain the Master Note in safekeeping, in
accordance with your customary practices, on behalf of Cede & Co., the
registered owner thereof and nominee of DTC. As long as Cede & Co. is
the registered owner of the Master Note, the beneficial ownership
interest therein shall be shown on, and the transfer of ownership
thereof shall be effected through, entries on the books maintained by
DTC and the books of its direct and indirect participants. The Master
Note and the Commercial Paper Notes shall be subject to DTC's rules
and procedures, as amended from time to time. You shall not be liable
or responsible for sending transaction statements of any kind to DTC's
participants or the beneficial owners of the Commercial Paper Notes,
or for maintaining, supervising or reviewing the records of DTC or its
participants with respect to such Commercial Paper Notes. In
connection with DTC's program, the Issuer understands that as one of
the conditions of its participation therein, it shall be necessary for
the Issuer and you to enter into a Letter of Representations (the
"Letter of Representations") substantially in the form of Annex B to
this Depositary Agreement and a certificate agreement made between DTC
and the Depositary in which the procedures to be followed by you in
connection with the issuance and custody of the Commercial Paper Notes
in book-entry form shall be detailed (the "Certificate Agreement" and,
together with the Master Note and the Letter of Representations, the
"DTC Documents"), and for DTC to receive and accept such Letter of
Representations. In accordance with DTC's program, you shall obtain
from the CUSIP Service Bureau a written list of CUSIP numbers for the
Issuer's Commercial Paper Notes, and you shall deliver such list to
DTC. The CUSIP Service Bureau shall bill the Issuer directly for the
fee or fees payable for the list of CUSIP numbers for the Issuer's
Commercial Paper Notes. Notwithstanding the foregoing, if for any
reason DTC shall cease to operate a book-entry commercial paper
program through which ownership interest in the Commercial Paper Notes
may be uncertificated and transferred, or shall cease to perform in a
timely fashion the functions customarily performed by DTC in
connection with such book-entry commercial paper program, the
Depositary and the Issuer will make appropriate arrangements to either
(i) appoint a successor entity to DTC to perform the functions
customarily performed by DTC in respect of the Commercial Paper Notes
or (ii) provide for the Commercial Paper Notes to be issued in
physical form.
(b) With the delivery of this Depositary Agreement, the
Issuer is furnishing to you, and from time to time thereafter may
furnish to you, and shall furnish to you upon your request,
certificates ("Incumbency Certificates") of an authorized officer of
the Issuer, certifying the incumbency and specimen signatures of
officers and attorneys-in-fact of the Issuer ("Representatives")
authorized to execute Commercial Paper Notes on behalf of the Issuer
and/or to give instructions and notices on behalf of the Issuer
hereunder, such Incumbency Certificates shall also specify the names
of the employees (each, a "Dealer Representative" and, collectively,
the "Dealer Representatives") of Barclays Capital Inc., Banc of
America Securities LLC and any other dealer or placement agent of the
Commercial Paper Notes approved by the Issuer and approved by the
Arrangers and the Issuing Bank (each, a "Dealer" and, collectively,
the "Dealers") who are authorized to give notices and/or issuance
instructions to the Depositary pursuant to Section 4 hereof. Until you
receive subsequent Incumbency Certificates, or unless an officer of
your Global Finance Unit (Global Change) shall have received written
notice from an authorized officer of the Issuer of the lack of
authority of any individual, you shall be entitled to rely on the last
Incumbency Certificates delivered to you for purposes of determining
the authorized signers of Commercial Paper Notes and authorized
Representatives and Dealer Representatives.
(c) For purposes of this Depositary Agreement, any
specifically designated officer of the Issuing Bank (an "Issuing Bank
Officer") or the Administrative Agent (an "Agency Officer") shall be
authorized to act, and to give instructions and notices on behalf of
the Issuing Bank or the Administrative Agent hereunder, and you shall
be entitled conclusively to rely on any writing, paper or notice
purporting to be signed, sent or given by any Issuing Bank Officer or
Agency Officer, unless an officer of your Commercial Paper Department
shall have received written notice from an authorized officer of the
Issuing Bank or the Administrative Agent that a particular writing,
paper or notice was not signed, sent or given by such Issuing Bank
Officer or Agency Officer.
(d) Upon your receipt of this Depositary Agreement, and from
time to time thereafter as you choose, you shall deliver a certificate
(a "Certificate of Designation") certifying the incumbency and
specimen signatures of your designated signatories ("Designated
Officers") who are authorized to acknowledge receipt of and
authenticate the Master Note. Until the Issuer shall receive a
subsequent Certificate of Designation, or unless a Representative
shall have received written notice of the lack of authority of any
individual, the Issuer may rely on the last such Certificate of
Designation delivered to it.
SECTION 4. Issuance Of Commercial Paper Notes.
(a) From time to time during the term of this Depositary
Agreement and subject to the terms and conditions hereof, and upon
your timely receipt of written or telecopy instructions specifying the
information required by Section 4(b) hereof transmitted to you by
means of the electronic time-sharing facility known as U.S. Bank Trust
National Association New York CP System (the "CP System") or in such
other manner as you then employ as your normal business practice, not
later than 1:00 p.m. (New York City time) on a Business Day, from a
Representative or a Dealer Representative, on the date of issuance of
any Commercial Paper Notes (in the case of instructions from a
Representative, a copy of such instructions shall be sent by said
Representative to the Dealer through which such Commercial Paper Notes
are being sold), you shall cause the issuance of such Commercial Paper
Notes in accordance with the instructions so received and in the
manner set forth in, and take such other actions as are required by,
the Letter of Representations and the Certificate Agreement against
payment of the net sales price set forth in the issuance instructions
as provided in Section 5 hereof. Instructions given via the CP System
shall be entered as prescribed in the user documentation provided by
you and all instructions, whether via the CP System, by telephone or
in writing, must be entered into the CP System or received by you as
the case may be, not later than 12:30 p.m. (New York City time) for,
same-day delivery.
(b) Issuance instructions with respect to any Commercial
Paper Note transmitted to you by a Representative or a Dealer
Representative must specify:
(i) the date of issuance thereof (which shall be a
Business Day);
(ii) the maturity date thereof; provided that the
Issuer will cause the Representative or Dealer Representative
transmitting such instructions to ensure, and you will
ensure, that such date is a Business Day which shall not be
later than the earlier to occur of (A) the 360th day next
succeeding the date of issuance thereof and (B) the Stated
Termination Date;
(iii) the Face Amount thereof; provided that the
Issuer will cause the Representative or Dealer Representative
to ensure, and you will ensure, that such Face Amount is
U.S.$100,000 or an integral multiple of U.S.$1,000 in excess
thereof;
(iv) the net sales price thereof; and
(v) a delivery order to debit the relevant Dealer's
account with DTC for such net sales price against credit of
such amount to your account with DTC in trust for the benefit
of the beneficiaries of the Commercial Paper Account.
(c) You shall send a report (by facsimile or other means
permitted hereunder) to the Issuer, the Issuing Bank and the
Administrative Agent on a monthly basis of your issuance of Commercial
Paper Notes under this Section 4, including the series, maturity date
and Face Amount of each Commercial Paper Note issued.
(d) The Issuer shall not permit any Representative or Dealer
Representative to request you to (and you will not) issue or deliver
any Commercial Paper Note for the account of the Issuer if the Face
Amount of such Commercial Paper Note, when added to the aggregate Face
Amount of all other Commercial Paper Notes then Outstanding having the
same stated maturity date, would exceed the product of (i) 50% and
(ii) the Stated Amount (the "Settlement Limits"). Notwithstanding the
foregoing settlement limits, in connection with an extension of the
Stated Termination Date or a renewal of the Letter of Credit Facility,
the aggregate Face Amount of all Commercial Paper Notes then
Outstanding may mature on one Business Day that is on or prior to the
Stated Termination Date. These Settlement Limits are for the benefit
of the Issuing Bank, which may in its sole discretion waive these
requirements in writing without the prior consent of any party to any
Transaction Document. All Commercial Paper Notes will be issued on a
discount basis.
(e) The Issuing Bank shall deliver to you on the date hereof,
a notice substantially in the form of Annex F (an "Issuance Limit
Notice") setting forth the Issuance Limit (as such term is defined
below) and you shall permit (until such notice is amended or
terminated by the Issuing Bank), the issuance and delivery of any
Commercial Paper Note if the Face Amount of such Commercial Paper
Note, when added to the aggregate Face Amount of all other Commercial
Paper Notes then Outstanding, would not exceed the Issuance Limit (the
"Issuance Limit," being (i) initially, the amount that is the
difference between the Stated Amount and the Standby L/C Sublimit as
notified to you in the Issuance Limit Notice, or (ii) any such other
amount as you may be notified of pursuant to a Revised Issuance Limit
Notice (as such term is defined herein) in accordance with the terms
of this Section 4(e)). During the term, the Issuer may request that
the Issuing Bank provide you with notice that the Issuance Limit has
been increased, provided, however, that after such increase, the
Aggregate Outstandings may not exceed the aggregate amount of
Commitments then in effect. Upon such request, the Issuing Bank shall
send you a notice, substantially in the form of Annex G (a "Revised
Issuance Limit Notice"), increasing the Issuance Limit, and upon
receipt thereof, you shall permit the issuance and delivery of any
Commercial Paper Note if the Face Amount of such Commercial Paper
Note, when added to the aggregate Face Amount of all other Commercial
Paper Notes then Outstanding would not exceed the then-applicable
Issuance Limit. A Revised Issuance Limit Notice shall be transmitted
to you not later than 1:00 p.m. (New York City time) on a Business Day
and shall be effective upon receipt. You will be liable to the Issuing
Bank for any action taken or omitted to be taken or any cost, expense,
loss or injury resulting from your actions or your performance or lack
of performance of your duties under or in connection with this Section
4(e) or any Issuance Limit Notice that is due to negligence or willful
misconduct.
(f) You shall be entitled conclusively to assume that the
Stated Termination Date is as set forth in the Letter of Credit.
(g) You shall be entitled to rely and shall be fully and
completely protected in relying on instructions given to you by any
Representative or Dealer Representative unless, as herein provided,
you receive timely contrary instructions from the Issuing Bank or the
Administrative Agent. Each delivery of Commercial Paper Notes shall be
subject to the rules of the New York Clearing House in effect at the
time of delivery.
(h) No Commercial Paper Note shall be issued or delivered by
you unless you shall have received complete instructions from a
Representative or a Dealer Representative as to the matters specified
in paragraph (b) above. Any instructions given to you by a
Representative or a Dealer Representative to issue and deliver any
Commercial Paper Note hereunder shall constitute a representation and
warranty on the part of the Issuer that the issuance of such
Commercial Paper Note will not in any material respect violate or
contravene any Requirement of Law or Contractual Obligation binding
upon the Issuer (including any securities law or any order of any
court or other Governmental Authority) and will be in conformity with
the terms of the Reimbursement Agreement and this Depositary
Agreement. The Issuer acknowledges that the Issuing Bank is relying on
the representations and warranties on the part of the Issuer contained
in the preceding sentence.
(i) Notwithstanding any instructions received by you from a
Representative or a Dealer Representative, if you shall receive a
Notice of Termination or a Notice of Default from the Issuing Bank or
a Notice of Acceleration from the Administrative Agent, or
instructions from the Issuer, the Issuing Bank or the Administrative
Agent in accordance with Section 2.07 or Section 12.02(e) of the
Reimbursement Agreement not to issue or deliver any additional
Commercial Paper Notes, unless such notice or instructions are revoked
in writing or superseded by further instructions from the party who
sent such notice or instructions in accordance with the Reimbursement
Agreement, you shall not issue or deliver any additional Commercial
Paper Notes.
(j) Upon receipt from the Issuing Bank of a Notice of
Default, you shall promptly deliver to the Issuing Bank a Notice of
Default Reduction in the form of Annex E-2 to the Letter of Credit (A)
specifying the aggregate Face Amount of Commercial Paper Notes then
Outstanding (B) acknowledging the amount by which the Stated Amount
shall be reduced, (C) specifying the date which is the latest maturity
date of any Commercial Paper Note then Outstanding, (D) confirming the
latest expiration date of any outstanding Standby L/C and (E)
acknowledging the date on which the Letter of Credit shall terminate.
If you receive a Notice of Termination from the Issuing Bank and there
are Commercial Paper Notes then Outstanding, you will immediately
advise the Issuing Bank thereof as specified in the Notice of
Termination.
(k) Notwithstanding any instructions received by you from a
Representative or a Dealer Representative, you shall not issue or
deliver any Commercial Paper Note for the account of the Issuer on any
date unless:
(i) you have received from the Issuer the Issuer
Deposit Amount to be deposited for such date with the
Depositary;
(ii) immediately after giving effect to such
issuance, the Aggregate Outstandings, shall not be greater
than the Stated Amount (as defined in and determined in
accordance with the Letter of Credit);
(iii) immediately after giving effect to such
issuance, the Total Outstandings of each Lender shall not be
greater than the Commitment of such Lender;
(iv) the Administrative Agent, the Issuing Bank or
the Issuer shall not have given a notice to you pursuant to
paragraph (i) of this Section 4 which has not been revoked in
writing or superseded by further written instructions from
the Administrative Agent, the Issuing Bank or the Issuer, as
the case may be; and
(v) the Commercial Paper Notes shall at the time of
issuance thereof be rated at least P-2 or its then equivalent
by Moody's and at least A-2 or its then equivalent by S&P;
provided, however, that you shall not be required to make a determination with
respect to clauses (ii) and (iii) above unless the Administrative Agent has
provided you with the information described below in sufficient time to allow
you to analyze the information and issue such Commercial Paper Notes and,
provided, further, that you shall be entitled to assume that there has been no
change in the rating of the Commercial Paper Notes unless so advised by the
Administrative Agent. The Issuing Bank shall (A) promptly advise you in writing
of the issuance of any Standby L/Cs, (B) advise you in writing from time to
time upon your request in writing of the amount of Aggregate Outstandings and
(C) advise you from time to time upon your request in writing of the amount of
and of each change in the Commitments of the Lenders, the current outstanding
principal amount of each Lender's Loans, its Participation Percentage of the
aggregate outstanding Letter of Credit Exposure and its Participation
Percentage of the aggregate Standby L/C Exposure, which notice shall be in
substantially the form of Annex D to this Depositary Agreement. For purposes of
the foregoing calculations, you may rely upon the written notices given or
delivered to you by the Administrative Agent pursuant to the preceding
sentence, and you shall have no obligation to make any other or further
investigation. You shall be entitled to assume that the amounts specified in
any notice given to you pursuant to the second preceding sentence shall
continue unchanged until you have received subsequent notice.
SECTION 5. Delivery And Payment Of Commercial Paper Notes.
(a) No Commercial Paper Note shall be issued or delivered by
you except against payment therefor in accordance with current
industry practice. A Commercial Paper Note shall be deemed issued and
delivered against payment for purposes of this Section 5 if, at the
time you deliver such Commercial Paper Note to a Dealer (or its
designated consignee), you receive its receipt for the delivery in
current industry practice form, or if the net sales price of such
Commercial Paper Note is received by you in immediately available
collected funds in consideration of your delivery of such Commercial
Paper Note to such Dealer (or to its designated consignee). The Issuer
acknowledges that although you have been instructed to deliver
Commercial Paper Notes against payment, delivery of Commercial Paper
Notes will, in accordance with market practice prevailing in the
commercial paper market, be made before receipt of payment in
immediately available funds. Therefore, once you have delivered a
Commercial Paper Note or Commercial Paper Notes to a Dealer (or its
consignee) as provided herein, the Issuer shall bear the risk if such
Dealer (or its consignee) fails to remit payment for the Commercial
Paper Note or Commercial Paper Notes to you. You shall have no
responsibility or liability for credit risks involved in or arising
from your issuance of Commercial Paper Notes in accordance with the
provisions of this Depositary Agreement, for delay by or the failure
of any Dealer to effectuate payment therefor in whole or in part, for
delay by or the failure of any DTC participant purchasing a Commercial
Paper Note in settling its balance with DTC or for failure by DTC to
perform in any respect as herein contemplated. Nothing in this
Depositary Agreement shall require you to purchase any Commercial
Paper Note or expend your own funds for the purchase price of a
Commercial Paper Note or Commercial Paper Notes.
(b) It is understood that you are not under any obligation to
assess or review the financial condition or creditworthiness of any
Person to or for whose account you deliver a Commercial Paper Note
pursuant to instructions from a Representative or Dealer
Representative or to advise the Issuer, the Issuing Bank or the
Administrative Agent as to the results of any such appraisal or
investigation you may have conducted on your own or of any adverse
information concerning any such Person that may in any way have come
to your attention.
(c) Each Commercial Paper Note presented to you for payment
at, on or prior to 3:00 p.m. (New York City time) on any Business Day
at or after the maturity date of such Commercial Paper Note shall be
paid by you on the date of such presentation; provided, however, that
you shall not be required to make such payment prior to 1:00 p.m. (or
if presented after 3:00 p.m. (New York City time) on any such Business
Day, then on the next succeeding Business Day) in immediately
available funds from funds on deposit in the Letter of Credit Account
by your debiting the Letter of Credit Account in the amount of such
payment. After payment of any matured Commercial Paper Note, you shall
annotate your records to reflect the Face Amount of Commercial Paper
Notes Outstanding in accordance with the DTC Documents.
(d) At the close of business in New York on any Business Day,
the Issuing Bank may determine the aggregate Face Amount of Commercial
Paper Notes issued, including the maturity date and Face Amount of
each Commercial Paper Note, by requesting such information or by
accessing such information through its computer link with you, upon
which information the Issuing Bank shall be entitled to rely absent
manifest error in determining the Face Amount of Commercial Paper
Notes Outstanding.
(e) Except as otherwise provided in Section 5.05 of the
Reimbursement Agreement, a copy of which has been acknowledged and
received by the Depositary, all payments in respect of the Commercial
Paper Notes shall be made without set-off, counterclaim, fees,
liabilities or other similar deductions, and free and clear of, and
without deduction for or on account of, any present or future income,
stamp, sales or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, imposed, levied, collected, withheld or
assessed by any Governmental Authority of Mexico or any other
jurisdiction from which payment is made or is deemed to be made, other
than with respect to Excluded Taxes, if any, with respect to the
holders of the Commercial Paper Notes (such taxes other than Excluded
Taxes, the "Taxes"). If the Issuer or any agent thereof is required by
law or regulation to make any deduction or withholding for or on
account of Taxes, the Issuer shall pay such additional amounts as
shall be necessary in order that the net amounts received by the
holder of the Commercial Paper Notes after such deduction or
withholding shall equal the amount which would have been receivable in
the absence of any such deduction or withholding. As used in this
paragraph (e), "Excluded Taxes" shall mean (i) such taxes (including
income taxes or franchise taxes) as are (A) imposed on or measured by
the net income of a holder of Commercial Paper Notes by the
jurisdiction (or any political subdivision thereof) of its principal
office or residence or under the laws of which such holder of
Commercial Paper Notes is organized or in which such holder of
Commercial Paper Notes maintains the office through which the loans
evidenced by such Commercial Paper Notes are made or maintained or (B)
imposed on a holder of Commercial Paper Notes as a result of a present
or former connection between such holder and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision
or taxing authority thereof or therein (other than any such connection
arising solely from such holder having received a payment under, or
enforced, the Commercial Paper Notes), (ii) any taxes, levies,
imposts, deductions, charges or withholdings imposed by the failure of
any such holder of Commercial Paper Notes to (x) register as a Foreign
Financial Institution with the Ministry of Finance and (y) be a
resident (or have a principal office which is a resident, if such
holder of Commercial Paper Notes lends through a branch or agency) for
tax purposes of a jurisdiction with which Mexico has in effect a
treaty for the avoidance of double taxation (but only in respect of
those taxes payable in excess of taxes that would have been payable
had such holder of Commercial Paper Notes complied with those
conditions) and (iii) United States backup withholding taxes imposed
because of payee underreporting.
(f) The Issuer agrees to furnish you with a certified copy by
a Responsible Officer of the Issuer of a stamped filed receipt showing
payment thereof or other documentary evidence of payment of, all Taxes
withheld by it in respect of any payment remitted to the holders of
the Commercial Paper Notes. Such receipts shall be furnished to you
within 45 days of the due date for remitting such Taxes to the
appropriate Mexican tax authorities accompanied by a letter in the
form of Annex E to this Depositary Agreement together with the
accompanying Schedule thereto.
(g) You will furnish the stamped filed receipts or other
documentary evidence delivered by the Issuer pursuant to clause (f)
above, together with a copy of the letter sent to you pursuant to
clause (f) above, in the name of and at the expense of the Issuer to
any holder of Commercial Paper Notes requesting such receipts or other
documentary evidence as evidence of the amount of Taxes paid in
respect of all Commercial Paper Notes issued on the same date and
maturing on the same date.
SECTION 6. Inspection Of Documents By Holders Of
Commercial Paper Notes.
You shall keep a fully executed or conformed copy of the
Reimbursement Agreement and this Depositary Agreement (together with all
amendments, modifications, supplements, waivers, and consents made or given
with respect thereto and hereto) on file at your office specified in the
Commercial Paper Notes issued by you pursuant hereto, and you shall permit,
during normal business hours, reasonable inspection (and limited copying) to be
made of such documents by the holder of any Commercial Paper Note or by any
officer, employee or agent of such holder, provided the Person purporting to be
such holder establishes to your satisfaction that he such Person is in fact
such holder of such Commercial Paper Note and, in cases where inspection is
sought to be made by a Person purporting to be an officer, employee or agent of
such holder, that such Person submits evidence satisfactory to you of his such
Person's authority to make an inspection on behalf of the holder of such
Commercial Paper Note. The Issuer shall make payment to you of all of your
expenses associated with any such inspection. The Administrative Agent shall
promptly advise you of any amendment, modification, waiver or consent to the
Reimbursement Agreement made after the effectiveness thereof and shall furnish
you and each Dealer with a fully executed or conformed copy of such amendment,
modification, waiver or consent; provided, however, that no such amendment,
modification, waiver or consent which adversely affects your rights and
obligations under this Depositary Agreement shall be effective against you
without your written consent.
SECTION 7. Indemnity.
(a) The Issuer hereby agrees to indemnify and hold you, your
employees and any of your directors, officers and agents harmless,
from and against, and you shall not be liable for, any and all losses,
liabilities (including liabilities for penalties), actions, suits,
judgments, demands, damages, costs and expenses of any nature
(excluding income taxes, but including reasonable attorneys' fees and
expenses, including the allocated cost of in-house legal services and
including the costs and expenses of enforcing this right to
indemnification) which may be imposed on, incurred by or asserted
against you or them in connection with any investigative,
administrative or judicial proceeding (whether or not you or they are
designated as a party thereto) brought or threatened against you
arising out of or resulting from the acceptance of your appointment,
the exercise of your rights and/or the performance of your duties (or
those of your agents and employees) hereunder; provided, however, that
the Issuer shall not be liable to indemnify or pay you or any of them
with respect to any loss, liability, action, suit, judgment, demand,
damage, cost or expense that results from or is attributable to your
negligence or willful misconduct or that of your directors, officers,
agents or employees. The foregoing indemnity includes any action taken
or omitted to be taken by you or them upon telephonic, facsimile, or
other electronically transmitted instructions (authorized herein)
received by you from, or believed by you in good faith to have been
given by, the proper Person or Persons. The provisions of this Section
7 shall survive (i) your resignation or removal as Depositary
hereunder and (ii) the termination of this Depositary Agreement.
(b) The duties and obligations of you, your directors,
officers, employees and agents shall be determined by the express
provisions of this Depositary Agreement and you and they shall not be
liable except for the performance of such duties and obligations as
are specifically set forth herein and no implied covenants shall be
read into this Depositary Agreement against you or them.
(c) Except as provided herein, neither you nor your
directors, officers, employees or agents shall be required to
ascertain whether any issuance or sale of Commercial Paper Notes (or
any amendment or termination of this Depositary Agreement) has been
duly authorized or is in compliance with any other agreement to which
the Issuer is a party (whether or not you are also a party to such
other agreement) other than the DTC Documents. You shall incur no
liability to the Issuer in acting hereunder upon telephonic or other
instructions contemplated hereby which the recipient thereof
reasonably believed in good faith to have been given by a
Representative, a Dealer Representative, an Issuing Bank Officer or an
Agency Officer, as the case may be. All telephonic instructions may be
recorded by you, and the Issuer, the Issuing Bank and the
Administrative Agent hereby consent to such recording. In the event a
discrepancy exists, the telephonic or other instructions as recorded
and understood by you will be deemed the controlling and proper
instructions.
(d) In no event shall you be liable to the Issuer for
consequential, indirect or special damages, even if you have been
advised of the possibility of such damages (except in the case of
Section 4(e) hereof). You shall also not be liable to the Issuer for
any action taken, or any failure to take any action in connection with
this Depositary Agreement or the services provided hereunder or
otherwise to fulfill your obligations in connection with this
Depositary Agreement, in the event and to the extent that the taking
of such action or such failure arises out of or is caused by
mechanical breakdown, computer or system failure or other failure of
equipment, failure or malfunctioning of any communications media for
whatever reason, or any other cause outside of your control, provided
you undertake to use reasonable efforts to cure and prevent any such
failure or breakdown of your equipment.
SECTION 8. Representations, Warranties And Covenants Of
The Issuing Bank.
The Issuing Bank hereby represents and warrants to you as
follows:
(a) The Issuing Bank's entry into this Depositary Agreement
has been duly authorized by all necessary corporate action on the part
of the Issuing Bank and will not violate, breach or contravene any
Requirement of Law or Contractual Obligation binding upon the Issuing
Bank and will not violate, breach or contravene the charter or by-laws
of the Issuing Bank.
(b) The Letter of Credit is issued pursuant to the
Reimbursement Agreement, and the Letter of Credit has been duly
authorized, executed and delivered by the Issuing Bank, and is
enforceable against the Issuing Bank in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency
(including all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
SECTION 9. Representations And Warranties Of The Issuer.
The Issuer hereby warrants and represents to you, the
Administrative Agent and the Issuing Bank, and, each request to issue
Commercial Paper Notes shall constitute the Issuer's warranty and
representation, as follows:
(a) This Depositary Agreement is, and all Commercial Paper
Notes delivered to you as Depositary pursuant to this Depositary
Agreement will be, duly authorized, executed and delivered by the
Issuer.
(b) The issuance and delivery of the Commercial Paper Notes
will not violate any United States state or Federal law or Mexican
law, and the Commercial Paper Notes are exempt from registration under
the United States Securities Act of 1933, as amended.
(c) This Depositary Agreement constitutes and the Commercial
Paper Notes, when issued pursuant to the DTC Documents, will
constitute, the Issuer's legal, valid and binding obligations
enforceable against the Issuer in accordance with their terms, except
as such enforceability may be limited by corporate debt restructuring
(concurso mercantil) procedures, bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws
affecting the creditors' rights of creditors generally and by general
principles of equity (regardless of whether considered in a proceeding
in equity or at law).
(d) The Issuer is a sociedad anonima de capital variable duly
organized and validly existing under the laws of Mexico, and no
liquidation, dissolution, corporate debt restructuring (concurso
mercantil) procedures, bankruptcy, winding-up or similar proceedings
have been instituted with respect to the Issuer.
(e) The Issuer has, and at all relevant times during the term
of this Depositary Agreement will have, all necessary corporate power
and authority (i) to execute, deliver and perform this Depositary
Agreement, (ii) to issue the Commercial Paper Notes and (iii) to
receive credit as contemplated in the Reimbursement Agreement.
(f) All action on the part of the Issuer which is required
(i) for the authorization of the issuance of the Commercial Paper
Notes, (ii) for the authorization, execution, delivery and performance
of this Depositary Agreement and (iii) to receive credit as
contemplated in the Reimbursement Agreement has been taken and such
issuance, authorization, execution, delivery and performance do not
require the approval or consent of any holder or trustee of any
indebtedness or obligations of the Issuer.
(g) The execution, delivery and performance of the
Reimbursement Agreement and the issuance of Commercial Paper Notes by
the Issuer in accordance with the Reimbursement Agreement and this
Depositary Agreement (i) do not and will not contravene any provision
of any provision of the estatutos sociales (or any equivalent
organizational documents) of the Issuer effective as of the date
hereof or any Requirement of Law applicable to the Issuer and (ii) do
not and will not conflict with, breach or contravene the provisions of
any Contractual Obligation binding upon the Issuer.
SECTION 10. Termination.
(a) The term of this Depositary Agreement (except for the
provisions of Sections 7, 15, 16, 17 and 21, which shall survive
indefinitely) shall extend from the date hereof and shall end at 5:00
p.m. (New York City time) on the Stated Termination Date, as it may be
extended pursuant to the terms of the Reimbursement Agreement.
(b) You may resign or terminate this Depositary Agreement
upon 60 days' prior notice to the Issuer, the Administrative Agent and
the Issuing Bank, and the Issuer may remove the Depositary at any time
upon 60 days' prior notice to the Depositary, the Issuing Bank and the
Administrative Agent; provided, however, that no such resignation,
termination or removal shall be effective until the appointment of a
successor Depositary satisfactory to, and the execution of a successor
Depositary Agreement with the successor Depositary by, the Issuer, the
Issuing Bank and the Administrative Agent. Except as provided in
Sections 7 and 21 hereof, upon the termination of this Depositary
Agreement (or your resignation or removal), the respective rights and
duties of the Issuer, the Issuing Bank, the Administrative Agent and
you shall cease; provided, however, that any Commercial Paper Notes
issued and sold in accordance with the terms of this Depositary
Agreement and Outstanding on the date of termination of this
Depositary Agreement shall nevertheless remain valid obligations of
the Issuer, and each of such Commercial Paper Notes and you shall be
entitled to the benefits of the Letter of Credit to the extent
provided therein and the benefits of the arrangements provided for in
this Depositary Agreement and the provisions of this Depositary
Agreement shall continue to be applicable with respect to such
Commercial Paper Notes and any funds then held in the Letter of Credit
Account to the same extent as if this Depositary Agreement had not
terminated. In the event this Depositary Agreement is terminated
pursuant to this Section 10, all fees paid but not accrued pursuant to
Section 21 of this Depositary Agreement, after deduction of the
expenses associated with the termination of the obligations of the
resigning Depositary, shall be transferred to such successor
Depositary.
(c) On the Business Day following the later of (i) the date
of termination of this Depositary Agreement or (ii) the date no
Commercial Paper Notes are Outstanding, you shall return the Master
Note to the Issuer and deliver the Letter of Credit (and any
amendments thereto) then held by you hereunder for safekeeping to the
Issuing Bank and shall transfer to the Issuing Bank for subsequent
transfer to the Issuer, to the extent it is entitled thereto, all
funds, if any, then on deposit in the Commercial Paper Account. You
shall promptly notify the Issuer, the Issuing Bank and the
Administrative Agent of the destruction of the Master Note.
(d) If the Depositary shall resign or be removed, or a
vacancy in the office of Depositary shall occur for any cause, the
Issuer, the Administrative Agent and the Issuing Bank shall promptly
agree upon and jointly appoint a successor Depositary; provided,
however, that the provisions contained in the proviso to paragraph (b)
of this Section 10 shall apply to any Commercial Paper Notes issued
and Outstanding prior to the date of resignation or removal of the
Depositary. Each successor Depositary appointed hereunder shall be a
banking corporation organized under the laws of the United States, any
State thereof or the District of Columbia authorized under such laws
to accept deposits, shall be a member bank of the Federal Reserve
System, shall have its principal office in the Borough of Manhattan,
City and State of New York, and shall have a combined capital and
surplus, as shown by its most recent Report of Condition published
pursuant to the requirement of the Board of Governors of the Federal
Reserve System, of at least U.S.$400,000,000.
(e) It is understood that if a successor Depositary is not
appointed, or has not accepted such appointment, by the date indicated
in the notice given by the Depositary referred to in Section 10(b)
hereof, then the resigning Depositary may petition a court of
competent jurisdiction for the appointment of a successor Depositary,
and such court may thereupon appoint a successor Depositary.
SECTION 11. Amendments And Modifications.
(a) No amendment, modification or waiver of any provision of
this Depositary Agreement, nor any consent to any departure by any
party from any provision hereof binding upon such party, other than
the delivery of a Revised Issuance Limit Notice pursuant to Section
4(e), shall be effective unless the same shall be in writing and
signed by all the parties hereto, including by the Administrative
Agent acting at the direction of, or the consent of, the Required
Lenders. No such amendment, modification, waiver or consent shall
adversely affect the rights of the holder of any Commercial Paper Note
issued in accordance with the terms of the Reimbursement Agreement and
this Depositary Agreement and Outstanding at the time of such
amendment, modification, waiver or consent.
(b) In addition, no amendment, waiver or consent to or under
this Depositary Agreement which could reasonably be expected to affect
adversely the rights of the holders of Commercial Paper Notes will
become effective unless Moody's and S&P have confirmed in writing that
such amendment, waiver or consent will not cause their rating of the
Commercial Paper Notes to be lowered or withdrawn. In no event shall
the Depositary agree to any replacement of the Letter of Credit with a
new letter of credit having an issuing bank other than the Issuing
Bank at a time when any Commercial Paper Notes issued in reliance on
the Letter of Credit are Outstanding.
SECTION 12. Notices, Etc.
(a) Except when telephone communications are expressly
authorized in this Depositary Agreement, all notices, requests,
demands or other communications pursuant to this Depositary Agreement
shall be in English and in writing (including facsimile transmission
or other electronic communication transmitted directly to the relevant
computers) and shall be sent by overnight courier service or by
facsimile or other electronic communication (and, if in the form of
facsimile or other electronic communication, other than Commercial
Paper Note issuance instructions given by a Representative or Dealer
Representative, shall be confirmed by return facsimile) or delivered
to:
If to the Depositary:
U.S. Bank Trust National Association, as
Depositary 100 Wall Street, Suite 1600 New
York, NY 10005 Attention: Ignazio
Tamburello Telephone: (212) 361-2535
Facsimile: (212) 509-3384
If to the Issuer:
CEMEX, S.A. de C.V.
Ave. Constitucion 444 Pte
Monterey, N.L.
Mexico 64000
Attention: Hector Vela
Telephone: (528) 328-3000
Facsimile: (528) 328-3886
If to the Administrative Agent:
Barclay Bank PLC, New York Branch
as Administrative Agent
222 Broadway, 11th Floor
New York, New York 10038
Attention: Client Services Unit
Telephone (212) 412-3708
Facsimile: (212) 412-5306/5307
If to the Issuing Bank:
Barclays Bank PLC, New York Branch
200 Park Avenue
New York , New York 10166
Attention: Thomas Janson
Telephone: (212) 412-6888
Facsimile: (212) 412-1615
or to such other address as the party to which the communication is addressed
shall have previously communicated to the other parties hereto. Communications
shall be given on behalf of (i) the Issuer by a Representative, (ii) the
Depositary by a Designated Officer, (iii) a Dealer by a Dealer Representative,
(iv) the Issuing Bank by an Issuing Bank Officer or (v) the Administrative
Agent by an Agency Officer. Communications shall be effective when received at
the proper address.
(b) In any case where it is provided in this Depositary
Agreement that a copy of any instruction, demand or other notice is to
be delivered to a Dealer, such copy shall be delivered to such Dealer
at the address set forth below by the same means as the original
thereof shall have been delivered, provided that the failure of such
copy to be given to such Dealer shall not invalidate or adversely
affect the original thereof:
If to Barclays Capital Inc.:
Barclays Capital Inc.
200 Park Avenue
New York, NY 10066
Attention: Commercial Paper Trading
Telephone: (212) 412-2112
Facsimile: (212) 412-1615
If to Banc of America Securities LLC:
Banc of America Securities LLC
CA5-701-13-03
1455 Market Street, 13th Floor
San Francisco, CA 94103
Attention: Money Market Finance
Telephone: (415) 953-1433
Facsimile: (415) 622-6332
If to Banc One Capital Markets, Inc.:
Banc One Capital Markets, Inc.
1 Bank One Plaza, Mail Code IL1-0595
Chicago, IL 60670
Attention: IGS Execution & Structuring
Telephone: (312) 732-1690
Facsimile: (312) 732-4773
SECTION 13. Binding Effect; Assignment.
This Depositary Agreement shall be binding upon and inure to
the benefit of the parties hereto, their respective successors, including
successors by merger, and assigns and the holders of Commercial Paper Notes
issued hereunder; provided, however, that no party hereto may assign any of its
rights or obligations hereunder except with the prior written consent of all
the other parties hereto.
SECTION 14. GOVERNING LAW.
THIS DEPOSITARY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. Submission To Jurisdiction.
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and
of the New York Supreme Court, New York County, and of any New York
State court located in the Borough of Manhattan in New York City, and,
with respect to the Issuer, to the jurisdiction of any competent court
in the place of its corporate domicile, and any appellate court of any
thereof for purposes of any legal suit, action or proceeding arising
out of or relating to this Depositary Agreement and each of the
parties hereto hereby irrevocably agrees that all claims in respect of
such suit, action or proceeding may be heard and determined in such
courts.
(b) Each of the parties hereto irrevocably waives the right
to object, with respect to such claim, suit, action or proceeding
brought in any such court, that such court does not have jurisdiction
over it.
(c) The Issuer and each of the other parties hereto hereby
irrevocably waives, to the fullest extent it may effectively do so,
any objection it may now or hereafter have to the laying of venue of
any such suit, action or proceeding in any such court described in
paragraph (a) above and the defense of an inconvenient forum to the
maintenance of any such suit, action or proceeding.
(d) The Issuer and each of the other parties hereto agrees,
to the fullest extent it may effectively do so under applicable law,
that a final judgment in any suit, action or proceeding of the nature
referred to in paragraph (a) above brought in any such court shall be
conclusive and binding upon such party and may be enforced in other
jurisdictions by suit on the judgment or in any manner provided by
law.
(e) EACH OF THE PARTIES HERETO HEREBY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS DEPOSITARY AGREEMENT.
SECTION 16. Appointment Of Agent For Service Of Process.
(a) The Issuer hereby irrevocably designates, appoints and
empowers CT Corporation System with offices currently located at 111
Eighth Avenue, New York, New York 10011 (the "Process Agent"), as its
agent to receive on behalf of itself and its property, service of
copies of the summons and complaint and any other process which may be
served in any such action or proceeding brought any New York State or
federal court sitting in New York County. Such service may be made by
mailing or delivering a copy of such process to the Issuer in care of
the Process Agent at its address specified above, and the Issuer
hereby authorizes and directs the Process Agent to accept such service
on its behalf. The appointment of the Process Agent shall be
irrevocable until the appointment of a successor Process Agent. The
Issuer further agrees to promptly appoint a successor Process Agent in
New York City (which shall accept such appointment in form and
substance satisfactory to the Administrative Agent) prior to the
termination for any reason of the appointment of the initial Process
Agent.
(b) Nothing in Section 15 hereof or in this Section 16 shall
affect the right of any party hereto to serve process in any manner
permitted by law, or limit any right that any party hereto may have to
bring proceedings against any other party hereto in the courts of any
jurisdiction or to enforce in any lawful manner a judgment obtained in
one jurisdiction in any other jurisdiction.
SECTION 17. Waiver Of Sovereign Immunity.
To the extent that the Issuer has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, or otherwise) with respect to itself or its property or assets, the
Issuer hereby irrevocably waives such immunity in respect of its obligations
hereunder to the fullest extent permitted by applicable law and without
limiting the generality of the foregoing, agrees that the waivers set forth in
this Section 17 shall have the fullest extent permitted under the Foreign
Sovereign Immunities Act of 1976 of the United States of America and are
intended to be irrevocable for purposes of such Act.
SECTION 18. Judgment Currency.
All payments made under this Depositary Agreement shall be
made in Dollars. If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due from the Issuer in Dollars into another
currency, the parties hereto agree to the fullest extent that they may legally
and effectively do so that the rate of exchange used shall be that at which in
accordance with normal banking procedures (based on quotations from four major
dealers in the relevant market) the Administrative Agent could purchase Dollars
with such currency at or about 11:00 a.m. (New York City time) on the Business
Day preceding that on which final judgment is given. The obligations in respect
of any sum due hereunder shall, to the extent permitted by applicable law,
notwithstanding any judgment expressed in a currency other than Dollars, be
discharged only to the extent that on the Business Day following receipt of any
sum adjudged to be so due in such other currency the Administrative Agent may
in accordance with normal banking procedures purchase Dollars with such other
currency. If the amount of Dollars so purchased is less than the sum originally
due hereunder, the Issuer agrees, as a separate obligation and notwithstanding
any such judgment, to indemnify the Depositary against such resulting loss.
SECTION 19. Execution In Counterparts.
This Depositary Agreement may be executed in any number of
counterparts; each counterpart, when so executed and delivered, shall be deemed
to be an original; and all of which such counterparts, taken together, shall
constitute one and the same agreement.
SECTION 20. Headings.
Section headings used in this Depositary Agreement are for
convenience of reference only and shall not affect the construction or
interpretation of this Depositary Agreement.
SECTION 21. Compensation And Expenses.
The Issuer shall pay you promptly from time to time following
the execution of this Depositary Agreement reasonable fees, compensation for
all services rendered by you hereunder as agreed between you and the Issuer.
The Issuer shall reimburse you upon your request for all reasonable expenses,
disbursements and advances incurred or made to you in accordance with any
provision of this Depositary Agreement (including the reasonable compensation
and the expenses and disbursements of your agents and counsel and the allocated
cost of in-house counsel) and all fees and charges assessed by DTC against the
Depositary except any expense or disbursement attributable to your gross
negligence or willful misconduct. The provisions of this Section 21 shall
survive (a) your resignation or removal as Depositary hereunder and (b) the
termination of this Depositary Agreement.
SECTION 22. Miscellaneous.
(a) No provision of this Depositary Agreement shall require
you to risk or expend your own funds or otherwise incur any financial
liability in the performance of any of your duties hereunder or in the
exercise of any of your rights and powers hereunder.
(b) You may consult with counsel of your selection (which may
be counsel to the Issuer), and any advice or written opinion of such
counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by you,
in the absence of bad faith, gross negligence or willful misconduct on
your part, in reliance on such advice or opinion.
(c) Except as set forth in paragraph (e) below, you make no
representation as to, and shall have no responsibility for, the
correctness of any statement contained in, or the validity or
sufficiency of, this Depositary Agreement or any documents or
instruments referred to in this Depositary Agreement or as to or for
the validity or collectibility of any obligation contemplated by this
Depositary Agreement.
(d) You may rely and shall be protected in acting upon any
document or writing presented to you hereunder and reasonably believed
by you to be genuine and to have been signed and presented by an
authorized Person or Persons.
(e) You undertake to perform such duties and only such duties
as are specifically set forth in this Depositary Agreement and no
implied covenants or obligations shall be read into this Depositary
Agreement against you except that you represent and warrant to the
other parties hereto that this Depositary Agreement constitutes your
legal, valid and binding agreement and that the execution, performance
and delivery of this Depositary Agreement by you do not violate,
breach or contravene any law, rule, regulation, order, contract or
agreement binding upon you.
(f) Except as otherwise provided herein, you may execute any
of the powers hereunder or perform any duties hereunder either
directly or by or through your affiliates, agents, attorneys and
independent contractors, provided that you shall not be responsible
for the actions of such affiliates, agents, attorneys and independent
contractors selected by you with due care and with the prior approval
of the Issuer, which approval shall not be unreasonably withheld.
(g) Any bank association or banking corporation into which
you may be merged, converted or with which you may be consolidated, or
any corporation resulting from any merger, conversion or consolidation
to which you shall be a party, shall succeed to all your rights,
obligations and immunities hereunder without the execution or filing
of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
(h) Your countersignature of the Master Note shall be for
authentication purposes only. You shall have no liability on any
Commercial Paper Note. You shall not be liable for the authorization,
validity or legality of any Commercial Paper Notes issued by you in
accordance with such issuance instructions.
(i) In no event shall you be liable for any action taken or
omitted to be taken or any loss or injury resulting from your actions
or your performance or lack of performance of your duties hereunder in
the absence of negligence or willful misconduct on your part.
(j) This Depositary Agreement shall become effective on the
Effective Date as providers in Section 5.01 of the Reimbursement
Agreement.
If the foregoing is acceptable to you, please indicate your
agreement therewith by signing one or more counterparts of this Depositary
Agreement in the space provided below, and returning such signed counterpart(s)
to each of the other parties hereto, whereupon this letter will become a
binding agreement among us.
Very truly yours,
CEMEX, S.A. de C.V.,
as Issuer
By:_______________________
Title:____________________
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Issuing Bank
By:_______________________
Title:____________________
By:_______________________
Title:____________________
BARCLAYS BANK PLC, NEW YORK BRANCH,
as Administrative Agent
By:_______________________
Title:____________________
Agreed:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Depositary, Issuing Agent and Paying Agent
By:_______________________
Title:____________________
Annex A
[Master Note]
Annex B
[Letter of Representations]
Annex C
[Letter of Credit]
Annex D
FORM OF ADMINISTRATIVE INFORMATION
Pursuant to Section 4 of the Depositary Agreement dated as of
_________, 2003 among U.S. Bank, as Depositary, CEMEX, S.A. de C.V., as Issuer,
Barclays Bank PLC, New York Branch, as Issuing Bank and Administrative Agent
(the "Administrative Agent"), the Administrative Agent hereby advises you that
the information provided in the following table is true as of the date hereof
until you shall have received a subsequent notice from the Administrative Agent
of any changes therein.
Amount of Share of Amount of Amount of undivided
Participation Letter of Credit Loans interest in Standby
Lender Commitment Percentage Exposure Outstanding L/Cs Outstanding
(List Lenders and provide information for each Lender in columns to the right of Lender name)
- ---------------- ------------------- --------------------- --------------------------- --------------------- --------------------
Total
Dated: BARCLAYS BANK PLC, NEW YORK BRANCH,
as Administrative Agent
By:__________________________________________
Title:________________________________________
Annex E
FORM OF
TAX PAYMENT CERTIFICATE
[Letterhead of CEMEX, S.A. de C.V.]
[Date]
U.S. Bank Trust National Association, as Depositary
100 Wall Street, Suite 1600
New York, N.Y. 10005
Attention:
Re: First Amended and Restated Irrevocable
Letter of Credit No. SB00197
Ladies and Gentlemen:
We refer to Section 5(f) of the Depositary Agreement dated as
of ___________, 2003 among you as Depositary, Barclays Bank, PLC, New York
Branch as Issuing Bank, and us, as Issuer (the "Depositary Agreement").
Capitalized terms used herein not defined herein shall have the meanings
assigned to such terms in the Depositary Agreement.
We enclose herewith (stamped filed receipts certified as true
and correct by our chief financial officer] [documentary evidence] with respect
to our payment of Taxes in respect of discount paid with respect to Commercial
Paper Notes issued by us, accompanied by a Schedule setting forth the amount of
Taxes allocable to Commercial Paper Notes issued on the same date and maturing
on the same date.
Very truly yours,
Cemex, S.A. de C.V.
By:_______________________
Title:____________________
By:_______________________
Title:____________________
Annex F
[Barclays Bank PLC, New York Branch letterhead]
August ___, 2003
U.S. Bank Trust National Association,
As Depositary
100 Wall Street, Suite 1600
New York, N.Y. 10005
Attention:
Re: ISSUANCE LIMIT NOTICE regarding issuance of commercial
paper by CEMEX, S.A. de C.V.
------------------------------------------------------
Ladies and Gentlemen:
We refer to Section 4(e) of the Depositary Agreement dated as of the
date hereof among you as Depositary, Barclays Bank PLC, New York Branch as
Issuing Bank and CEMEX, S.A. de C.V. as Issuer (the "Depositary Agreement").
Capitalized terms used herein without definition shall have the meanings
assigned to them in the Depositary Agreement.
By this notice (this "Issuance Limit Notice") we instruct you to
permit (and you shall permit until this notice is amended or terminated in
accordance with the terms of the Depositary Agreement), the issuance and
delivery of any Commercial Paper Note if the Face Amount of such Commercial
Paper Note, when added to the aggregate Face Amount of all other Commercial
Paper Notes outstanding, would not exceed US$______(1). As set forth in the
Depositary Agreement, the "Issuance Limit" shall initially be equal to the
amount that is the difference between the Stated Amount and the Standby L/C
Sublimit.
Very truly yours,
Barclays Bank PLC, New York Branch,
as Issuing Bank
By:_____________________
Title:__________________
cc: CEMEX, S.A. de C.V.
- -------------
(1) Insert amount equal to the difference between the Stated Amount minus
the Standby L/C Sublimit of $150,000,000.
Annex G
[Barclays Bank PLC, New York Branch letterhead]
August ___, 2003
U.S. Bank Trust National Association,
As Depositary
100 Wall Street, Suite 1600
New York, N.Y. 10005
Attention:
Re: REVISED ISSUANCE LIMIT NOTICE regarding issuance
of commercial paper by CEMEX, S.A. de C.V.
------------------------------------------------
Ladies and Gentlemen:
We refer to Section 4(e) of the Depositary Agreement dated as of the
date hereof among you as Depositary, Barclays Bank PLC, New York Branch as
Issuing Bank and CEMEX, S.A. de C.V. as Issuer (the "Depositary Agreement").
Capitalized terms used herein without definition shall have the meanings
assigned to them in the Depositary Agreement.
By this notice (this "Revised Issuance Limit Notice") we instruct you
to permit (and you shall permit until this notice is amended or terminated in
accordance with the terms of the Depositary Agreement), the issuance and
delivery of any Commercial Paper Note if the Face Amount of such Commercial
Paper Note, when added to the aggregate Face Amount of all other Commercial
Paper Notes outstanding, would not exceed [US$______2/the Stated Amount.] As
set forth in the Depositary Agreement, the "Issuance Limit Amount" [shall be
equal to ___________].
Very truly yours,
Barclays Bank PLC, New York Branch,
as Issuing Bank
By:_____________________
Title:__________________
cc: CEMEX, S.A. de C.V.
- -----------
(2) Insert the amount from the preceding sentence.
EXHIBIT D
FORM OF NOTICE OF BORROWING
Date:____________________
To: Barclays Bank PLC, New York Branch, as Administrative Agent for the
Lenders (in such capacity, the "Administrative Agent"), and as Issuing
Bank (in such capacity, the "Issuing Bank") party to the First Amended
and Restated Reimbursement and Credit Agreement, dated as of August 8,
2003 (as amended, supplemented or otherwise modified from time to time,
the "Reimbursement Agreement"), among CEMEX, S.A. de C.V., as Issuer,
CEMEX Mexico, S.A. de C.V., as a Guarantor, Empresas Tolteca de Mexico,
S.A. de C.V., as a Guarantor, the Issuing Bank, the Lenders party
thereto, the Administrative Agent, and Barclays Bank PLC, New York Branch
and Chase Securities Inc., as Joint Arrangers and Bank of America
Securities LLC, as Joint Arranger and Syndication Agent.
Ladies and Gentlemen:
The undersigned, CEMEX, S.A. de C.V. (the "Issuer"), refers to the
Reimbursement Agreement, the terms defined therein being used in this Notice
of Borrowing as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 3.02 of the Reimbursement Agreement, of the Borrowing
specified herein:
1. The amount of the Borrowing is U.S.$__________. The undersigned
certifies that such amount does not exceed the amount of the Drawing honored
by the Issuing Bank on __________ and that the purpose of the Borrowing
requested hereunder is to reimburse the amount of such Drawing.
[2. The Loans included in the Borrowing requested hereunder shall
initially be Base Rate Loans]
[2. The Loans included in the Borrowing requested hereunder shall
initially be Base Rate Loans and shall be converted to Eurodollar Loans on
__________ [specify date no sooner than [three]* [four]** Business Days after
date of this Notice of Borrowing]. The duration of the Interest Period
applicable to such Loans upon such conversion shall be month[s]. The last day
of such Interest Period is not later than the last day of the Loan Period
which commenced on ].
- -------------
* if notice is given to the Administrative Agent prior to 11:00 a.m. (New
York City time) on a Business Day.
** if notice is given to the Administrative Agent after 11:00 a.m. (New York
City time) on a Business Day.
3. The undersigned certifies that the following statements are true
on the date hereof, and will be true on the date of the Borrowing requested
hereunder, before and after giving effect thereto and to the application of
the proceeds therefrom:
(a) no Default or Event of Default has occurred and is continuing or
will result from the Borrowing requested hereunder;
(b) the representations and warranties contained in the Reimbursement
Agreement are true in all material respects on and as of the date hereof; and
(c) a Non-Default Disruption Event has occurred and is continuing.
CEMEX, S.A. de C.V.
By:_______________________________
Title:_____________________________
EXHIBIT E
FORM OF NOTICE OF CONTINUATION/CONVERSION
Date:
To: Barclays Bank PLC, New York Branch, as Administrative Agent for the
Lenders (in such capacity, the "Administrative Agent") and as Issuing
Bank (in such capacity, the "Issuing Bank") party to the First Amended
and Restated Reimbursement and Credit Agreement, dated as of August 8,
2003 (as amended, supplemented or otherwise modified from time to time,
the "Reimbursement Agreement"), among CEMEX, S.A. de C.V., as Issuer,
CEMEX Mexico, S.A. de C.V., as a Guarantor, Empresas Tolteca de Mexico,
S.A. de C.V., as a Guarantor, the Issuing Bank, the Lenders party
thereto, the Administrative Agent, Barclays Capital, the Investment
Banking Division of Barclays Bank PLC, as a Joint Arranger and Banc of
America Securities LLC, as a Joint Arranger and Syndication Agent.
Ladies and Gentlemen:
The undersigned, CEMEX, S.A. de C.V. (the "Issuer"), refers to the
Reimbursement Agreement, the terms defined therein being used in this Notice
of Continuation/Conversion as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 3.05(b) of the Reimbursement Agreement, of
the [continuation] [conversion] of the Loans specified herein:
1. The aggregate amount of the Loans to be [continued] [converted]
pursuant to this Notice of Continuation/Conversion is U.S.$____________.
[2. The Eurodollar Loans referred to in this Notice of
Continuation/Conversion are to be continued as Eurodollar Loans for an
Interest Period of _____________ month[s]. The last day of such Interest
Period is not later than the last day of the Loan Period which commenced on
___________.]
[2. The Eurodollar Loans referred to in this Notice of
Continuation/Conversion are to be converted to Base Rate Loans.]
[2. The Base Rate Loans referred to in this Notice of
Continuation/Conversion are to be converted to Eurodollar Loans. The duration
of the Interest Period applicable to such Loans upon such conversion shall be
_____ month[s]. The last day of such Interest Period is not later than the
last day of the Loan Period which commenced on ____________.]
3. The undersigned certifies that the following statements are true
on the date hereof:
(a) no Default or Event of Default has occurred and is continuing or
will result from the [continuation] [conversion] of the Loans requested
hereunder;
(b) the representation and warranties contained in the Reimbursement
Agreement are true in all material respects on and as of the date hereof; and
(c) the Non-Default Disruption Event existing on the Non-Default
Disruption Date is continuing.
CEMEX, S.A. de C.V.,
as Issuer
By:
----------------------
Title:
-------------------
EXHIBIT F
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of ___________, ____
among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), CEMEX, S.A. de
C.V. (the "Issuer"), CEMEX MEXICO, S.A. de C.V. (a "Guarantor"), EMPRESAS
TOLTECA DE MEXICO, S.A. de C.V. (a "Guarantor"), BARCLAYS BANK PLC, NEW YORK
BRANCH, as Issuing Bank (in such capacity, the "Issuing Bank") and as
Administrative Agent (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, this Assignment and Assumption Agreement (this "Agreement")
relates to the First Amended and Restated Reimbursement and Credit Agreement
dated as of August 8, 2003 among the Issuer, the Guarantors, the Assignor and
the other Lenders party thereto, the Issuing Bank, the Administrative Agent,
Barclays Capital, the Investment Banking Division of Barclays Bank PLC, as a
Joint Arranger and Banc of America Securities LLC, as a Joint Arranger and
Syndication Agent (as from time to time further amended, supplemented or
otherwise modified, the "Reimbursement Agreement");
WHEREAS, as provided in the Reimbursement Agreement, the Assignor has
purchased a participation in the Letter of Credit has purchased and/or agreed
to purchase a participation in Standby L/Cs and has a Commitment to make Loans
to the Issuer in an aggregate principal amount at any time outstanding not to
exceed U.S.$_______________ (the "Assignor's Commitment");
[WHEREAS, [the Assignor has purchased participations in unreimbursed
Drawings and/or Standby L/C Drawings in an aggregate principal amount of
U.S.$_______________ outstanding on the date hereof] [Loans made to the Issuer
by the Assignor under the Reimbursement Agreement in the aggregate principal
amount of U.S.$_______________ are outstanding on the date hereof];
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Reimbursement Agreement in respect of [a
portion of] its Commitment thereunder in an amount equal to
U.S.$_______________ (the "Assigned Amount"), together with a corresponding
portion of its participation in the Letter of Credit [and] [of its
participations in unreimbursed Drawings], [of its participation in the Standby
L/Cs [and] [of its participations in unreimbursed Standby L/C Drawings] [and]
[of its outstanding Loans] and the Assignee proposes to accept assignment of
such rights and assume the corresponding obligations from the Assignor on the
terms set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Reimbursement
Agreement.
SECTION 2. Assignment. The Assignor hereby irrevocably assigns and
sells to the Assignee all of the rights of the Assignor under the
Reimbursement Agreement [to the extent of the Assigned Amount], and the
Assignee hereby irrevocably accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Reimbursement
Agreement [to the extent of the Assigned Amount][, including the purchase from
the Assignor of the corresponding portion of the principal amount of the
[participations by the Assignor in unreimbursed Drawings outstanding on the
date hereof] [participations by the Assignor in unreimbursed Standby L/C
Drawings outstanding on the date hereof [and] [principal amount of the Loans
made by the Assignor]. Upon the execution and delivery hereof by the Assignor,
the Assignee, [the Issuer,] the Issuing Bank [and the Administrative Agent]
and the payment of the amounts specified in Section 3 hereof required to be
paid on the date hereof (a) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Lender under
the Reimbursement Agreement with a Commitment in an amount equal to the
Assigned Amount [in addition to its existing Commitment], and (b) the
Commitment of the Assignor shall, as of the date hereof, be reduced by a like
amount and the Assignor released from its obligations under the Reimbursement
Agreement to the extent such obligations have been assumed by the Assignee.
The assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds the amount heretofore agreed between them.*
It is understood that any Participation Fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and including the
date hereof with respect to the Assigned Amount are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if either
party receives any amount under the Reimbursement Agreement which is for the
account of the other party, it shall receive the same for the account of such
other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
- ---------------
* Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the
Assignee. It may be preferable in an appropriate case to specify
these amounts generically or by formula rather than as a fixed sum.
SECTION 4. Consent Of [The Issuer,] The Issuing Bank [And The
Administrative Agent]. This Agreement is conditioned upon the consent of [the
Issuer,] the Issuing Bank [and the Administrative Agent] pursuant to Section
16.06(b) of the Reimbursement Agreement and the payment of a processing fee of
U.S.$3,500 to the Administrative Agent and a fee of U.S.$1,500 to the Issuing
Bank. The execution of this Agreement by [the Issuer,] the Issuing Bank [and
the Administrative Agent] is evidence of this consent. Pursuant to Section
16.06(b) of the Reimbursement Agreement, the Issuer agrees to execute and
deliver a new Note to the Assignee.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
(a) The Assignor (i) represents and warrants that it is legally
authorized to enter into this Agreement; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Reimbursement
Agreement or with respect to the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Reimbursement
Agreement, any other Transaction Document or any other instrument or document
furnished pursuant thereto, other than that the Assignor has not created any
adverse claim upon the interest being assigned by it hereunder and that such
interest is free and clear of any such adverse claim and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Issuer, the Guarantors, any of their Affiliates or
any other obligor or the performance or observance by the Issuer, the
Guarantors, any of their Affiliates or any other obligor of any of their
respective obligations under the Reimbursement Agreement or any other
Transaction Document or any other instrument or document furnished pursuant
hereto or thereto.
(b) The Assignee (i) represents and warrants that it is legally
authorized to enter into this Agreement; (ii) confirms that it has received a
copy of the Reimbursement Agreement, together with copies of the financial
statements delivered pursuant to Section 9.01 thereof and such other documents
and information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Agreement; (iii) agrees that it will,
independently and without reliance upon the Assignor, the Administrative
Agent, the Issuing Bank or any Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Reimbursement
Agreement, the other Transaction Documents or any other instrument or document
furnished pursuant hereto or thereto; (iv) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Reimbursement Agreement, the
other Transaction Documents or any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are incidental thereto; and (v)
agrees that it will be bound by the provisions of the Reimbursement Agreement
and will perform in accordance with its terms all the obligations which by the
terms of the Reimbursement Agreement are required to be performed by it as a
Lender.
SECTION 6. NON-RELIANCE ON ASSIGNOR. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition or
statements of the Issuer and the Guarantors, or the validity and
enforceability of the obligations of the Issuer in respect of the
Reimbursement Agreement, the Letter of Credit, the Standby L/Cs or any Note.
The Assignee acknowledges that it has, independently and without reliance on
the Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Issuer.
SECTION 7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and inure to the benefit of the parties hereto and their respective
successor and assigns.
SECTION 8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
SECTION 9. COUNTERPARTS. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument. Delivery
of an executed counterpart of a signature page of this Assignment by telecopy
shall be effective as delivery of a manually executed counterpart of this
Assignment.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By:
----------------------------
Title:
-------------------------
[ASSIGNEE]
By:
----------------------------
Title:
-------------------------
CEMEX, S.A. de C.V.,
as Issuer
By:
----------------------------
Title:
-------------------------
CEMEX MEXICO, S.A. de C.V.,
as Guarantor
By:
----------------------------
Title:
-------------------------
EMPRESAS TOLTECA DE MEXICO, S.A.
de C.V.,
as Guarantor
By:
----------------------------
Title:
-------------------------
BARCLAYS BANK PLC, NEW YORK
BRANCH,
as Issuing Bank
By:
----------------------------
Title:
-------------------------
By:
----------------------------
Title:
-------------------------
BARCLAYS BANK PLC, NEW YORK
BRANCH,
as Administrative Agent
By:
----------------------------
Title:
-------------------------
EXHIBIT G
FORM OF OPINION OF SPECIAL NEW YORK
COUNSEL TO THE ISSUER AND GUARANTORS
August 8, 2003
To the Administrative Agent, the
Issuing Bank and the persons listed on Schedule I hereto
Re: CEMEX, S.A. de C.V. U.S. $400,000,000 Commercial
Paper Program
Ladies and Gentlemen:
We have acted as special New York counsel to CEMEX, S.A. de C.V.
("CEMEX" or the "Company"), a corporation organized under the laws of the
United Mexican States ("Mexico"), CEMEX Mexico, S.A. de C.V. ("CEMEX Mexico"),
a corporation organized under the laws of Mexico and a subsidiary of CEMEX,
and Empresas Tolteca de Mexico, S.A. de C.V. ("Empresas Tolteca"), a
corporation organized under the laws of Mexico and a subsidiary of CEMEX, in
connection with the preparation, execution and delivery of the First Amended
and Restated Reimbursement and Credit Agreement, dated as of the date hereof
(the "Reimbursement Agreement"), among CEMEX, as Issuer, CEMEX Mexico, as
Guarantor, Empresas Tolteca, as Guarantor, Barclays Bank PLC, New York Branch
(the "Issuing Bank"), as Issuing Bank, Documentation Agent and Administrative
Agent and the several lenders party thereto, and Barclays Capital, The
Investment Banking Division of Barclays Bank PLC, as Joint Arranger and Banc
of America Securities LLC, as Joint Arranger and Syndication Agent, and the
Depositary Agreement, dated as of the date hereof (the "Depositary
Agreement"), among CEMEX, the Issuing Bank and U.S. Bank Trust National
Association, as Depositary, Issuing Agent and Paying Agent, and certain other
agreements, instruments and documents related to the Reimbursement Agreement.
This opinion is furnished to you pursuant to Section 6.01(d) of the
Reimbursement Agreement. For purposes of this opinion, (i) CEMEX Mexico and
Empresas Tolteca are collectively referred to as the "Guarantors" and (ii)
CEMEX, CEMEX Mexico and Empresas Tolteca are collectively referred to herein
as the "Obligors."
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures including endorsements, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as facsimile, electronic,
certified or photostatic copies and the authenticity of the originals of such
copies. As to any facts material to the opinions expressed herein which we did
not independently establish or verify, we have relied upon statements and
representations of CEMEX, the Guarantors and their officers and other
representatives and of public officials, including the facts and conclusions
set forth therein.
In rendering the opinions set forth herein, we have examined and
relied on originals or copies of the following:
(a) the Reimbursement Agreement;
(b) the Dealer Agreements;
(c) the Depositary Agreement;
(d) the forms of the Notes attached as Exhibit B to the Reimbursement
Agreement;
(e) the Commercial Paper Notes;
(f) the certificates of Rodrigo Trevino, Chief Financial Officer of
the Company and principal financial officer of each of the Guarantors,
attached as Annex C hereto and Lic. Ramiro Villarreal, General Counsel of
each of the Obligors, attached as Annex D hereto; and
(g) such other documents as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
We do not express any opinion as to the laws of any jurisdiction
other than the Applicable Laws of the State of New York and the Applicable
Laws of the United States of America. Insofar as the opinions expressed herein
relate to matters governed by laws other than those set forth in the preceding
sentence, we do not express any opinion as to the effect of such laws or as to
the effect thereof on the opinions herein stated. Capitalized terms used and
not otherwise defined herein shall have the same meanings herein ascribed
thereto in the Reimbursement Agreement. "Applicable Laws" shall mean those
laws, rules and regulations which, in our experience, are normally applicable
to transactions of the type contemplated by the Transaction Documents, without
our having made any special investigation as to the applicability of any
specific law, rule or regulation, and which are not the subject of a specific
opinion herein referring expressly to a particular law or laws. "Governmental
Approval" means any consent, approval, license, authorization or validation
of, or filing, recording or registration with, any governmental authority
pursuant to the Applicable Laws of the State of New York. "Applicable Orders"
means those orders or decrees of governmental authorities identified on Annex
A hereto. "Applicable Contracts" mean the agreements or instruments listed on
Annex B hereto.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. The execution and delivery by each Obligor of the Transaction
Documents to which it is a party and the performance by the Obligors of their
respective obligations thereunder, each in accordance with the terms thereof,
do not (i) constitute a violation of, or a default under, any Applicable
Contracts or (ii) cause the creation of any security interest upon any of the
property of the Obligors pursuant to the Applicable Contracts. We do not
express any opinion, however, as to whether the execution, delivery or
performance by the Obligors of the Transaction Documents will constitute a
violation of or a default under any covenants, restrictions or provisions with
respect to financial ratios or tests or any aspect of the financial condition
or results of operations of the respective Obligors. We call to your attention
that certain of the Applicable Contracts are governed by laws other than those
as to which we express our opinion. We do not express any opinion as to the
effect of such other laws on the opinions stated herein.
2. Neither the execution, delivery or performance by each Obligor of
the Transaction Documents to which it is a party nor the compliance by the
Obligors with the terms and provisions thereof will contravene any provision
of Applicable Law of the State of New York or any Applicable Law of the United
States of America.
3. Neither the execution, delivery or performance by each Obligor of
its respective obligations under the Transaction Documents to which it is a
party nor compliance by such Obligor with the terms thereof will contravene
any Applicable Order against the Obligors.
4. No Governmental Approval, which has not been obtained or taken and
is not in full force and effect, is required to authorize, or is required in
connection with, the execution or delivery of any of the Transaction Documents
to which each Obligor is a party by such Obligor or the enforceability of any
Transaction Document to which each Obligor is a party against such Obligor.
5. Each of the Reimbursement Agreement, the Depositary Agreement and
the Dealer Agreement constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms under
the laws of the State of New York.
6. The Reimbursement Agreement constitutes the valid and binding
obligation of the Guarantors, enforceable against the Guarantors in accordance
with its terms under the laws of the State of New York.
7. The Notes, when duly executed, issued and delivered pursuant to
the terms of the Reimbursement Agreement, will constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms under the laws of the State of New York.
8. The Commercial Paper Notes, assuming the due authentication
thereof by the Depositary, when duly executed, issued and delivered pursuant
to the terms of the Reimbursement Agreement and the Depositary Agreement, will
constitute valid and binding obligations of the Company enforceable against
the Company in accordance with their terms under the laws of the State of New
York.
Our opinions are subject to the following assumptions and
qualifications:
(i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or at law);
(ii) we have assumed that each of the Transaction Documents
constitutes the valid and binding obligation of each party to such Transaction
Document (other than the Obligors) enforceable against such other party in
accordance with its terms;
(iii) we do not express any opinion as to the effect on the
opinions expressed herein of (x) the compliance or non-compliance of any party
(other than the Obligors) to the Transaction Documents with any state, federal
or other laws or regulations applicable to it or (y) the legal or regulatory
status or the nature of the business of any party (other than the Obligors);
(iv) our opinion is subject to possible judicial action giving
effect to governmental actions or foreign laws affecting creditors' rights;
(v) we do not express any opinion as to the enforceability of
any rights to indemnification or contribution under each of the Transaction
Documents which are violative of the public policy underlying any law, rule or
regulation (including any federal or state securities law, rule or
regulation);
(vi) we do not express any opinion with respect to any
provision of the Reimbursement Agreement to the extent it authorizes or
permits any purchaser of a participation interest to set-off or apply any
deposit, property or indebtedness with respect to any participation interest;
(vii) we do not express any opinion on the enforceability of
any provision in a Transaction Document purporting to prohibit, restrict or
condition the assignment of rights under such Transaction Document to the
extent such restriction on assignability is governed by the Uniform Commercial
Code;
(viii) in the case of the guarantee contained in Article XI of
the Reimbursement Agreement (the "Guarantee"), certain of the remedial
provisions, including waivers, with respect to the Guarantee are or may be
unenforceable in whole or in part, but the inclusion of such provisions does
not affect the validity of the Guarantee, taken as a whole;
(ix) we do not express any opinion with respect to any
provision of the Reimbursement Agreement to the extent it excuses the issuer
of a letter of credit from liability to the extent such provision is
unenforceable pursuant to Section 5-103 of the Uniform Commercial Code;
(x) we do not express any opinion as to the applicability or
effect of any fraudulent transfer or similar law on any of the Transaction
Documents or any transactions contemplated thereby;
(xi) we do not express any opinion as to the enforceability of
the provisions of each of the Transaction Documents providing for indemnity by
any party thereto against any loss in obtaining the currency due to such party
under each of the Transaction Documents from a court judgment in another
currency; and
(xii) our opinion with respect to the enforceability of the
choice of New York law and choice of New York forum provisions of the
Transaction Documents is rendered in reliance upon the Act of July 19, 1984,
ch. 421, 1984 McKinney's Sess. Laws of N.Y. 1406 (codified at N.Y. Gen. Oblig.
Law ss.ss. 5-1401, 5-1402 (McKinney 2001) and N.Y. CPLR 327(b) (McKinney
2001)) and is subject to the qualifications that such enforceability may be
limited by public policy considerations of any jurisdiction, other than the
courts of the State of New York, in which enforcement of such provisions, or
of a judgment upon an agreement containing such provisions, is sought.
In rendering the foregoing opinions, we have assumed, with your
consent, that:
(i) each Obligor is validly existing and in good standing under
the laws of Mexico;
(ii) each Obligor has the power and authority to execute,
deliver and perform all of its obligations under Transaction Documents to
which it is a party; that execution and delivery of such Transaction Documents
and the consummation by each Obligor of the transactions contemplated thereby
have been duly authorized by all requisite action on the part of such Obligor;
each of the Transaction Documents to which an Obligor is a party has been duly
authorized, executed and delivered by such Obligor;
(iii) the execution, delivery and performance by each Obligor
of any of its obligations under the Transaction Documents to which it is a
party does not and will not conflict with, contravene, violate or constitute a
default under (a) the organizational documents of such Obligor, (b) any lease,
indenture, instrument or other agreement to which such Obligor or its property
is subject (other than the Applicable Contracts as to which we express our
opinion in paragraph 1 herein), (c) any rule, law or regulation to which such
Obligor is subject (other than Applicable Laws of the State of New York as to
which we express our opinion in paragraph 2 herein) or (d) any judicial or
administrative order or decree of any governmental authority (other than
Applicable Orders as to which we express our opinion in paragraph 3 herein);
and
(iv) no authorization, consent or other approval of, notice to
or filing with any court, governmental authority or regulatory body (other
than Governmental Approvals as to which we express our opinion in paragraph 4
herein) is required to authorize or is required in connection with the
execution, delivery or performance by each Obligor of any Transaction Document
to which it is a party or the transactions contemplated thereby.
We understand that you are separately receiving an opinion with
respect to the foregoing assumptions from Lic. Ramiro G. Villarreal and we are
advised that such opinion contains qualifications. Our opinions herein stated
are based on the assumptions specified above and we do not express any opinion
as to the effect on the opinions herein stated of the qualifications contained
in such other opinion.
This letter is furnished only to you in connection with the closing
under the Reimbursement Agreement and is solely for your benefit. Without our
prior written consent, this letter may not be used or relied upon by any other
person for any purpose (including any other person that seeks to assert your
rights in respect of this letter), except that Lic. Ramiro G. Villarreal may
rely upon this opinion as to matters of the laws of the United States of
America and the State of New York in rendering his opinion in connection with
the Reimbursement Agreement. This letter is not to be circulated, quoted or
otherwise referred to for any other purpose without our prior written consent,
except to the extent that the ability to circulate, quote or refer to this
letter is necessary so that the transactions contemplated by the Transaction
Documents are not treated as a "confidential transaction" within the meaning
of Treasury Regulations section 1.6011-4(b)(3).
Very truly yours,
Schedule I
Cemex, S.A. de C.V., as Issuer
Cemex Mexico, S.A. de C.V., as a Guarantor
Empresas Tolteca de Mexico, S.A. de C.V., as a Guarantor
Barclays Bank PLC, New York Branch, as Issuing Bank,
Administrative Agent and Documentation Agent
Barclays Capital, the Investment Banking Division of
Barclays Bank PLC, as a Joint Arranger
Banc of America Securities LLC, as a Joint Arranger
and Syndication Agent
The following Banks:
ABN Amro Bank, N.V., as a Bank
Banco Bilbao Vizcaya Argentaria S.A., as a Bank
Banco Santander Central, S.A., New York Branch, as a Bank
Bank Boston, N.A., as a Bank
Bank of America, NA, as a Bank
Bank of Novia Scotia, as a Bank
Bank of Tokyo-Mitsubishi, Ltd., New York Branch, as a Bank
Bank One National Association, as a Bank
Barclays Bank PLC, New York Branch, as a Bank
Bayerische Hypo- und Vereinsbank AG, New York Branch, as a Bank
Credit Lyonnais New York Branch, as a Bank
Dresdner Bank AG, New York and Grand Cayman Branches, as a Bank
Landesbank Rheinland-Pfalz - Girozentrale, as a Bank
Mizuho Corporate Bank, Ltd., as a Bank
SANPAOLO IMI S.p.A., as a Bank
Wachovia Bank, National Association, as a Bank
U.S. Bank Trust National Association, as Depositary
Barclays Capital Inc., as a Dealer
Banc of America Securities LLC, as a Dealer
Banc One Capital Markets, Inc., as a Dealer
Moody's Investors Service, Inc., as Rating Agency
Standard & Poor's Ratings Services, a Division of
The McGraw-Hill Companies, Inc., as Rating Agency
Annex A
The anti-dumping order imposed by the United States Department of Commerce on
August 30, 1990, pursuant to which subsidiaries of CEMEX that import cement from
the United Mexican States must make cash deposits with the United States Customs
Service to guarantee the eventual payment of anti-dumping duties, and the
related reviews.
Annex B
Applicable Contracts
1. Indenture, dated as of July 22, 1996, among CEMEX, as issuer, TOLMEX,
S.A. de C.V. ("TOLMEX"), Empresas Tolteca de Mexico, S.A. de C.V.
("Empresas Tolteca de Mexico"), Cemento Portland Nacional, S.A. de
C.V. ("CPN"), Cementos Monterrey, S.A. de C.V. ("Monterrey"),
Cementos Mexicanos, S.A. de C.V. ("Mexicanos"), Grupo Empresarial
Maya, S.A. de C.V. ("GEMSA") and Cementos Maya, S.A. ("Maya"), as
guarantors, and First Trust of New York, National Association, as
trustee, relating to the issuance of U.S. $300 million aggregate
principal amount of 123/4% Notes due July 15, 2006 of CEMEX (the
"123/4 % Notes"), as supplemented by the First Supplemental Indenture
to such Indenture, dated as of December 31, 1998 among CEMEX, as
issuer, TOLMEX and Mexicanos, as continuing guarantors, CPN (as
continuing guarantor and successor to Maya), CEMEX Control, S.A. de
C.V. ("CEMEX Control") (as successor guarantor to GEMSA and
Monterrey), Serto Construcciones, S.A. de C.V. ("Serto") (as
successor guarantor to Empresas Tolteca de Mexico), and U.S. Bank
Trust National Association ("U.S. Bank") (formerly First Trust of New
York, National Association), as trustee (the "123/4% Notes Trustee"),
and as supplemented by the Second Supplemental Indenture to such
Indenture, dated as of April 3, 2002, among CEMEX, as issuer, CEMEX
Mexico, S.A. de C.V. ("CEMEX Mexico") (formerly, Serto and successor
by merger to TOLMEX, Empresas Tolteca de Mexico, CPN, Cementos
Mexicanos and Maya) and Empresas Tolteca de Mexico S.A. de C.V.
("Empresas Tolteca") (formerly CEMEX Control and successor by merger
to Monterrey and GEMSA), as guarantors, and the 123/4% Notes Trustee.
2. Purchase and Guarantee Indenture, dated as of May 14, 1998, among
CEMEX International Capital LLC ("LLC"), as capital securities
issuer, CEMEX, as capital securities purchaser, Compania Valenciana
de Cementos Portland, S.A. ("Valenciana"), as capital securities
guarantor and TOLMEX, Empresas Tolteca de Mexico, CPN, Monterrey,
Mexicanos, GEMSA and Maya, as purchase guarantors, to The Bank of New
York, as capital trustee (the "Capital Trustee"), relating to U.S.
$250 million principal amount of LLC's 9.66% Putable Capital
Securities (the "9.66% Putable Capital Securities") issued by LLC, as
supplemented by the First Supplemental Indenture to such Indenture,
dated as of April 3, 2002, among LLC, as capital securities issuer,
CEMEX, as capital securities purchaser, Valenciana, as capital
securities guarantor and CEMEX Mexico (formerly Serto and successor
by merger to TOLMEX, Empresas Tolteca de Mexico, CPN, Mexicanos and
Maya) and Empresas Tolteca (formerly CEMEX Control and successor by
merger to Monterrey and GEMSA), as purchase guarantors, and the
Capital Trustee.
3. Indenture, dated as of October 1, 1999, among CEMEX, as issuer,
TOLMEX, Serto, CPN, Cemex Control and Mexicanos, as guarantors, and
U.S. Bank Trust National Association, as trustee (the "9.625% Notes
Trustee"), relating to the issuance of U.S. $200 million aggregate
principal amount of 9.625% Notes due October 1, 2009 of CEMEX (the
"9.625% Notes"), as supplemented by the First Supplemental Indenture
to such Indenture, dated April 17, 2002, among CEMEX, as issuer,
CEMEX Mexico (formerly Serto, and successor by merger to TOLMEX, CPN
and Mexicanos) and Empresas Tolteca (formerly CEMEX Control), as
guarantors, and the 9.625% Notes Trustee.
4. Credit Agreement, dated as of June 11, 2001, by and among, CEMEX, as
borrower, Bank of America, N.A., as administrative agent, J.P. Morgan
Securities Inc., as documentation agent, Bank of America Securities
LLC and J.P. Morgan Securities Inc., as co-syndication agents, joint
lead arrangers and joint bookrunners, and the several banks and other
financial institutions named therein, as lenders, for an aggregate
principal amount of U.S.$600,000,000.
The guarantee referred to in Item 1 is governed by Mexican law and the purchase
guarantee referred to in Item 2 is governed by Mexican law.
Annex C
CEMEX, S.A. DE C.V.
Officer's Certificate
August 8, 2003
I, Rodrigo Trevino, am the duly elected, qualified and acting Chief
Financial Officer of CEMEX, S.A. de C.V. ("CEMEX"), a corporation organized
under the laws of the United Mexican States ("Mexico"), and the principal
financial officer (referred to herein as the "Chief Financial Officer") of its
subsidiaries CEMEX Mexico, S.A. de C.V. ("CEMEX Mexico"), a corporation
organized under the laws of Mexico, and Empresas Tolteca de Mexico, S.A. de
C.V. ("Empresas Tolteca"), a corporation organized under the laws of Mexico. I
understand that pursuant to Section 6.01(d) of the First Amended and Restated
Reimbursement and Credit Agreement (the "Reimbursement Agreement"), dated as
of the date hereof, among CEMEX, as Issuer, CEMEX Mexico, as Guarantor,
Empresas Tolteca, as Guarantor, Barclays Bank PLC, New York Branch, as Issuing
Bank, Documentation Agent and Administrative Agent and the several lenders
party thereto, and Barclays Capital, The Investment Banking Division of
Barclays Bank PLC, as Joint Arranger and Banc of America Securities LLC as
Joint Arranger and Syndication Agent, Skadden, Arps, Slate, Meagher & Flom LLP
("SASM&F") is rendering an opinion (the "Opinion") to the Administrative
Agent, the Issuing Bank and the persons listed on Schedule I to the Opinion.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings assigned to those terms in the Opinion. I further
understand that SASM&F is relying on this officer's certificate and the
statements made herein in rendering such Opinion.
With regard to the foregoing, on behalf of the Obligors, I hereby
certify that:
1. I am familiar with the business of the Obligors and their
subsidiaries and due inquiry has been made of all persons deemed necessary or
appropriate to verify or confirm the statements contained herein.
2. SASM&F may rely on the respective representations and warranties
that the Obligors have made in the Reimbursement Agreement, each of the other
Transaction Documents and each of the certificates delivered pursuant thereto.
I have made a careful review of each of such representations and warranties
and hereby confirm, to the best of my knowledge and belief, that such
representations and warranties are true, correct and complete on and as of the
date of this certificate.
3. The execution and delivery by each Obligor of the Transaction
Documents to which it is a party and the performance by the Obligors of their
respective obligations thereunder, each in accordance with its terms, do not
(i) constitute a violation of, or a default under, any agreement or instrument
to which any of the Obligors is a party or by which any of the Obligors is
bound or (ii) cause the creation of any security interest upon any of the
property of the Obligors pursuant to any agreement or instrument to which any
of the Obligors is a party or by which any of the Obligors is bound.
4. Less than twenty-five percent (25%) of the assets of each Obligor
and its subsidiaries on a consolidated basis and on an unconsolidated basis
consist of Margin Stock.
5. Each Obligor is primarily engaged directly, or indirectly through
Majority-Owned Subsidiaries, in the business of producing, distributing,
marketing and selling cement, ready-mix concrete and clinker; and each Obligor
(i) is not and does not hold itself out as being engaged primarily, nor does
it propose to engage primarily, in the business of investing, reinvesting or
trading in Securities, (ii) has not and is not engaged in, and does not
propose to engage in, the business of issuing Face-Amount Certificates of the
Installment Type and has no such certificate outstanding and (iii) does not
own or propose to acquire Investment Securities having a Value exceeding forty
percent (40%) of the Value of the total assets of each Obligor (exclusive of
Government Securities and cash items) on an unconsolidated basis.
6. Each Obligor does not own or operate facilities used for the
generation, transmission, or distribution of electric energy for sale
("Electric Utility Facilities").
7. Each Obligor does not own or operate facilities used for the
distribution of natural or manufactured gas for heat, light, or power ("Gas
Utility Facilities").
8. None of the Obligors or any of their subsidiaries, directly or
indirectly, or through one or more intermediary Companies, owns, controls, or
holds with power to vote (a) ten percent (10%) or more of the outstanding
Voting Securities of any Company that owns or operates any Electric Utility
Facilities or Gas Utility Facilities, or (b) any other interest, directly or
indirectly, or through one or more intermediary entities, in (i) any Company
that owns or operates any Electric Utility Facilities or Gas Utility
Facilities, or (ii) any of the foregoing types of entities that have received
notice of the sort described in paragraph 9 below.
9. None of the Obligors or any of their subsidiaries has received
notice that the Securities and Exchange Commission has determined, or may
determine, that any Obligor or any of its subsidiaries exercises a controlling
influence over the management or direction of the policies of a gas utility
company or an electric utility company as to make it subject to the
obligations, duties and liabilities imposed on holding companies by the Public
Utility Holding Company Act of 1935, as amended ("PUHCA").
10. To the best of my knowledge, no Company that has registered with
the Securities and Exchange Commission as a public utility holding company
under PUHCA owns, directly or indirectly, through one or more intermediary
entities, ten percent (10%) or more of the outstanding Voting Securities (as
defined below) of any Obligor.
11. As used in paragraph 4 of this certificate, the following term
shall have the following meaning:
"Margin Stock" means: (i) any equity security registered or having
unlisted trading privileges on a national securities exchange; (ii) any OTC
security designated as qualified for trading in the National Market System
under a designation plan approved by the Securities and Exchange Commission;
(iii) any debt security convertible into a margin stock or carrying a warrant
or right to subscribe to or purchase a margin stock; (iv) any warrant or right
to subscribe to or purchase a margin stock; or (v) any security issued by an
investment company registered under Section 8 of the Investment Company Act of
1940.
12. As used in paragraphs 5 and 12 of this certificate, the following
terms shall have the following meanings:
"Exempt Fund" means a company that is excluded from treatment as an
investment company solely by section 3(c)(1) or 3(c)(7) of the Investment
Company Act of 1940 (applicable to certain privately offered investment
funds).
"Face-Amount Certificate of the Installment Type" means any
certificate, investment contract, or other Security that represents an
obligation on the part of its issuer to pay a stated or determinable sum or
sums at a fixed or determinable date or dates more than 24 months after the
date of issuance, in consideration of the payment of periodic installments of
a stated or determinable amount.
"Government Securities" means all Securities issued or guaranteed as
to principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.
"Investment Securities" includes all Securities except (A) Government
Securities, (B) Securities issued by companies the only shareholders in which
are employees and former employees of a company and its subsidiaries, members
of the families of such persons and the company and its subsidiaries and (C)
Securities issued by Majority-Owned Subsidiaries of the Borrower which are not
engaged and do not propose to be engaged in activities within the scope of
clause (i), (ii) or (iii) of paragraph 6 of this Certificate or which are
exempted or excepted from treatment as an investment company by statute, rule
or governmental order (other than Exempt Funds).
"Majority-Owned Subsidiary" of a person means a company fifty percent
(50%) or more of the outstanding Voting Securities of which are owned by such
person, or by a company which, within the meaning of this paragraph, is a
Majority-Owned Subsidiary of such person.
"Security" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest
therein or based on the value thereof), or any put, call, straddle, option, or
privilege entered into on a national securities exchange relating to foreign
currency, or, in general, any interest or instrument commonly known as a
"security," or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to or purchase, any of the foregoing.
"Value" means (i) with respect to Securities owned at the end of the
last preceding fiscal quarter for which market quotations are readily
available, the market value at the end of such quarter; (ii) with respect to
other Securities and assets owned at the end of the last preceding fiscal
quarter, fair value at the end of such quarter, as determined in good faith by
or under the direction of the board of directors; and (iii) with respect to
securities and other assets acquired after the end of the last preceding
fiscal quarter, the cost thereof.
"Voting Security" means any security presently entitling the owner or
holder thereof to vote for the election of directors of a company (or its
equivalent, e.g., general partner or manager of a limited liability company).
13. As used in paragraphs 8, 10 and 13 of this certificate, the
following terms shall have the following meanings:
"Company" means a corporation, limited liability company,
partnership, association, joint-stock company, joint venture, trust, or any
receiver, trustee, or other liquidating agent of any of the foregoing in its
capacity as such.
"Security" or "Securities" means any note, draft, stock, treasury
stock, bond, debenture, limited liability company interest, certificate of
interest or participation in any profit-sharing agreement or in any oil, gas,
other mineral royalty or lease, any collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
receiver's or trustee's certificate, or, in general, any instrument commonly
known as a "security"; or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guaranty of, assumption of
liability on, or warrant or right to subscribe to or purchase, any of the
foregoing.
"Voting Security" or "Voting Securities" means any Security presently
entitling the owner or holder thereof to vote in the direction or management
of the affairs of a Company, or any Security issued under or pursuant to any
trust, agreement, or arrangement whereby a trustee or trustees or agent or
agents for the owner or holder of such Security are presently entitled to vote
in the direction or management of the affairs of a Company; and a specified
per centum of the outstanding Voting Securities of a Company means such amount
of the outstanding Voting Securities of such Company as entitles the holder or
holders thereof to cast said specified per centum of the aggregate votes which
the holders of all the outstanding Voting Securities of such Company are
entitled to cast in the direction or management of the affairs of such
Company.
14. No Obligor is organized and existing under the laws of the United
States of America.
IN WITNESS THEREOF, I have executed this certificate on the date
first mentioned above.
----------------------------
Name: Rodrigo Trevino
Title: Chief Financial Officer
Annex D
CEMEX, S.A. DE C.V.
Officer's Certificate
August 8, 2003
I, Ramiro Villarreal, am the duly elected, qualified and acting
General Counsel of CEMEX, S.A. de C.V. ("CEMEX" or the "Company"), a
corporation organized under the laws of the United Mexican States a
corporation organized under the laws of the United Mexican States ("Mexico"),
and its subsidiaries CEMEX Mexico, S.A. de C.V. ("CEMEX Mexico"), a
corporation organized under the laws of Mexico, and Empresas Tolteca de
Mexico, S.A. de C.V. ("Empresas Tolteca"), a corporation organized under the
laws of Mexico. I understand that pursuant to Section 6.01(d) of the First
Amended and Restated Reimbursement and Credit Agreement (the "Reimbursement
Agreement"), dated as of the date hereof, among CEMEX, as Issuer, CEMEX
Mexico, as Guarantor, Empresas Tolteca, as Guarantor, Barclays Bank PLC, New
York Branch, as Issuing Bank, Documentation Agent and Administrative Agent and
the several lenders party thereto, and Barclays Capital, The Investment
Banking Division of Barclays Bank PLC, as Joint Arranger and Banc of America
Securities LLC as Joint Arranger and Syndication Agent, Skadden, Arps, Slate,
Meagher & Flom LLP ("SASM&F") is rendering an opinion (the "Opinion") to the
Administrative Agent, the Issuing Bank and the persons listed on Schedule I to
the Opinion. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings assigned to those terms in the Opinion. I
further understand that SASM&F is relying on this officer's certificate and
the statements made herein in rendering such Opinion.
With regard to the foregoing, on behalf of the Obligors, I hereby
certify that the following is a complete and accurate list of those orders and
decrees of any governmental authority of the State of New York and the United
States of America by which the Obligors are bound that are material to the
business or financial condition of the Obligors, taken as a whole:
The anti-dumping order imposed by the United States Department
of Commerce on August 30, 1990, pursuant to which subsidiaries of CEMEX
that import cement from the United Mexican States must make cash deposits
with the United States Customs Service to guarantee the eventual payment
of anti-dumping duties, and the related reviews.
IN WITNESS THEREOF, I have executed this certificate on the date
first mentioned above.
----------------------------
Name: Ramiro Villarreal
Title: General Counsel
EXHIBIT H
FORM OF OPINION OF MEXICAN COUNSEL
TO THE ISSUER AND THE GUARANTORS
August 8, 2003
To the persons listed to Schedule I hereto
Re: CEMEX, S.A. de C.V. - US$400,000,000
Commercial Paper Program
Ladies and Gentlemen:
I am general counsel for CEMEX, S.A. de C.V. (the "Issuer") and have
responsibility for the legal affairs of the Issuer in connection with the
First Amended and Restated Reimbursement and Credit Agreement (the
"Reimbursement Agreement") dated as of the date hereof among the Issuer,
Barclays Bank PLC, New York Branch, as Issuing Bank, Documentation Agent and
Administrative Agent, the Lenders listed on the signature pages thereof,
Barclays Capital, The Investment Banking Division of Barclays Bank PLC, as
Joint Arranger, Banc of America Securities LLC, as Joint Arranger and
Syndication Agent, and CEMEX Mexico, S.A. de C.V. ("CEMEX Mexico") and
Empresas Tolteca de Mexico, S.A. de C.V. ("Empresas Tolteca") as Guarantors,
and the Depositary Agreement dated as of the date hereof among the Issuer, the
Issuing Bank, U.S. Bank Trust National Association, as Depositary, and the
Administrative Agent (the "Depositary Agreement"). Capitalized terms used and
not otherwise defined herein shall have the respective meanings ascribed
thereto in the Reimbursement Agreement. This opinion is being rendered to you
pursuant to Section 6.01(d) of the Reimbursement Agreement. For purposes of
this opinion, CEMEX Mexico and Empresas Tolteca are collectively referred to
as the "Guarantors."
In rendering the opinions set forth herein, I have examined and
relied on originals or copies of the following:
(a) the Reimbursement Agreement;
(b) the Dealer Agreements;
(c) the Depositary Agreement;
(d) the forms of the Notes attached as Exhibit B to the Reimbursement
Agreement; and
(e) the Commercial Paper Notes.
In addition, I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as I have deemed necessary or advisable
for purposes of this opinion.
The opinions set forth below relate only to the laws of the United
Mexican States ("Mexico") as in force as of the date hereof. Insofar as the
opinions expressed below relate to matters that are governed by laws other
than the laws of Mexico, I have assumed the correctness of, and have not made
independent examination of matters covered by, and my opinion is in all
respect subject to, the opinions of Skadden, Arps, Slate, Meagher & Flom LLP,
special U.S. counsel to the Issuer and the Guarantors, and my opinions are
subject to the assumptions, qualifications and limitations set forth therein.
Upon the basis of, and subject to, the foregoing qualifications and
the limitations set forth herein, I am of the opinion that:
1. The Issuer and the Guarantors are corporations,
sociedades anonimas de capital variable, duly organized and validly
existing under the laws of Mexico; the Issuer and the Guarantors have
all powers and all material governmental licenses, authorizations,
consents and approvals required to conduct their respective business
as now conducted; the Issuer and the Guarantors have full power,
authority and legal right to execute and deliver the Transaction
Documents to which each of them is a party, and to perform and
observe the terms and provisions thereof; and the Reimbursement
Agreement, the Depositary Agreement and the Dealer Agreements have
been duly executed and delivered by the Issuer and the Guarantors, as
applicable, and constitute, and the Notes, when completed, executed
and delivered pursuant to the Reimbursement Agreement, and the
Commercial Paper Notes, when completed, executed and delivered
pursuant to the Reimbursement Agreement and each Dealer Agreement,
will constitute, valid and binding obligations of the Issuer and of
the Guarantors, as applicable, enforceable in accordance with their
respective terms, except to the extent that enforcement may be
limited by (i) concurso mercantil, bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
2. The execution, delivery and performance by the Issuer and
the Guarantors of the Transaction Documents to which each of them is
a party have been duly authorized by all necessary action for the
Issuer and for the Guarantors, as applicable, and do not and will not
violate the provisions of any applicable law, decree or regulation of
Mexico (or of any political subdivision thereof) or any order of any
court, regulatory body or arbitral tribunal or of their respective
estatutos sociales or other governing documents of the Issuer and of
the Guarantors and do not and will not result in the breach of, or
constitute a default under, or require any consent under, or result
in or require the imposition of any Lien on any of their respective
present or future revenues or properties under, any agreement,
instrument or other document to which the Issuer and each Guarantor
is a party or by which the Issuer and the Guarantors or any of their
respective assets may be bound or affected, except for any breach or
default the occurrence of which, or any consent the failure of which
to be obtained, or any Lien the imposition of which, would not have a
Material Adverse Effect.
3. Except for the authorization for the registration of the
Commercial Paper Notes with the Special Section of the Registro
Nacional de Valores of the Comision Nacional Bancaria y de Valores
which has been obtained, no consents, approvals, licenses or
authorizations of, or filings or registrations with, any governmental
body or regulatory or supervisory authority or agency (including
without limitation any foreign exchange approvals or licenses
relating to the repayment, purchase, sales or transfer out of Mexico
of United States dollars immediately available at the place of
payment) are required under applicable law, decree or regulations for
the execution, delivery or performance by the Issuer and the
Guarantors of the Transaction Documents to which the Issuer and each
Guarantor is a party (including without limitation payment of the
Notes upon acceleration of the due date thereof).
4. The Transaction Documents to which the Issuer and each
Guarantor is a party are in proper legal form under the laws of
Mexico for the enforcement thereof against the Issuer and each
Guarantor, as applicable, in Mexico, and there are no fees that
should be paid, and no registration, notarization or other
formalities required to be accomplished, for the validity and
enforceability of such Transaction Documents, provided that, in the
event any legal proceedings are brought in any court of Mexico, a
Spanish translation of any of such Transaction Documents prepared by
a court-approved translator would have to be approved by such court
after the defendant has been given an opportunity for a hearing as to
the accuracy of the translation, and proceedings thereafter would be
based upon such translation. The Notes in the form provided for in
the Reimbursement Agreement would be construed as a "credit
instrument" in Mexico and executory action (summary proceedings)
would be available for the enforcement thereof except to the extent
that enforcement may be limited by (i) concurso mercantil,
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity).
5. Any suit, action or proceeding with respect to any of the
Transaction Documents to which the Issuer and/or each Guarantor is a
party may be brought against, the Issuer and/or each Guarantor, as
applicable, in any court of Mexico specified in such documents.
6. The Issuer and each Guarantor is subject to commercial
law with respect to their respective obligations under the
Transaction Documents to which each of them is a party, and the
execution, delivery and performance by the Issuer and the Guarantors
of such Transaction Documents constitute private and commercial acts
rather than public or governmental acts; and neither the Issuer nor
the Guarantors nor any of their respective properties is entitled to
any right of immunity from suit, court jurisdiction, judgment,
attachment (whether before or after judgment), set-off or execution
with respect to the Issuer's and the Guarantors' respective
obligations under any of such Transaction Documents.
7. The Issuer's and the Guarantors' submission to the
jurisdiction of the United States District Court for the Southern
District of New York and any New York State court located in the
Borough of Manhattan in New York City (collectively, the "New York
Courts") provided for in Section 16.11 of the Reimbursement Agreement
is valid and enforceable under the laws of Mexico.
8. The appointment of the Process Agent as the Issuer's and
the Guarantors' agent for service of process in New York has been
duly authorized, executed and delivered, and acceptance by the
Process Agent pursuant thereto would constitute personal service upon
the Issuer and the Guarantors under Mexican law.
9. The Issuer is permitted to make all payments of
principal, interest and fees under the Reimbursement Agreement and
under the Notes free and clear of and without deduction or
withholding for or on account of any taxes, except that under current
Mexican laws and regulations, payments of interest and fees in
respect of the Reimbursement Agreement and the Notes are subject to
withholding of Mexican tax at a rate of 4.9%; the Reimbursement
Agreement and the Notes are not subject to any stamp or documentary
tax or other similar charge imposed by any governmental agency having
jurisdiction over the Issuer, including but not limited to any
registration or stamp tax of Mexico or any political subdivision or
taxing authority thereof or therein, in connection with the execution
issuance, delivery, performance, enforcement or introduction into
evidence in a court of Mexico of the Transaction Documents.
10. The choice of New York law to govern the Transaction
Documents (except in connection with any legal action or proceeding
(other than an action to enforce a judgment obtained in another
jurisdiction) brought by any holder of a Note in the Courts in the
Federal District of Mexico or Monterrey, Nuevo Leon, in which event
the Notes would be governed by the laws of Mexico) is, under the laws
of Mexico, a valid and effective choice of law. The Notes when
executed and delivered pursuant to the Reimbursement Agreement, and
the Commercial Paper Notes, when executed and delivered pursuant to
the Reimbursement Agreement and each Dealer Agreement, will
constitute valid and binding obligations of the Issuer, under Mexican
law, and none of the terms thereof violates Mexican law or public
policy or international treaties binding in Mexico.
11. To the best of my knowledge, except for those matters
previously disclosed to you in the Material Litigation Schedule to
the Reimbursement Agreement, there is no action, suit or proceeding
at law, or in equity or by or before any court, governmental agency
or authority or arbitral tribunal now pending or threatened against
or affecting the Issuer or any assets of the Issuer, which, if
adversely determined, would materially and adversely affect the
business, consolidated results of operations or consolidated
financial condition of the Issuer, or would impair its ability to
perform, or affect the validity or enforceability of, its respective
obligations under the Transaction Documents to which it is a party.
12. The Obligations of the Issuer and each Guarantor under
the Transaction Documents to which each of them is a party do rank
and, under current law, will rank at least pari passu in priority of
payment and in all other respects with all other unsecured and
unsubordinated Debt of the Issuer and of the Guarantors,
respectively.
13. It is not necessary under the laws of Mexico: (i) to
enable any of the Administrative Agent, the Depositary, the Joint
Arrangers, the Joint Book-runners, the Issuing Bank or any Lender, or
the Dealers to enforce its respective rights or (ii) by reason of
their enforcement, that any of them should be licensed, qualified or
entitled to carry on business in Mexico. None of the Administrative
Agent, the Depositary, the Joint Arrangers, the Joint Book-runners,
the Issuing Bank or any Lender or the Dealers will be deemed
resident, domiciled, carrying on a business or subject to taxation in
Mexico solely by reason of its respective enforcement of the
Reimbursement Agreement or any other Transaction Document.
14. Each of the Issuer's corporate Subsidiaries is a
corporation validly existing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
15. A final judgment obtained against the Issuer and/or each
Guarantor, as applicable and their respective assets situated in
Mexico in a New York Court would be recognized and enforced by the
courts of Mexico, and execution against such assets to satisfy a
judgment could be obtained in Mexico, without re-examination of the
issues pursuant to Articles 569 and 571 of the Mexican Federal Code
of Civil Procedure and Article 1347A of the Mexican Commerce Code,
which provide, inter alia, that any judgment rendered outside of
Mexico may be enforced by Mexican Courts, provided that:
(i) such judgment is obtained in compliance with (a) all
legal requirements of the jurisdiction of the court
rendering such judgment, (b) all legal requirements of
each of the Transaction Documents, as the case may be,
and (c) formalities established pursuant to applicable
international treaties;
(ii) such judgment is final, non-appealable and authenticated
by the appropriate governmental authorities, and is
strictly for the payment of a certain sum of money,
provided that, under Mexican Monetary Law, payments that
should be made in Mexico in foreign currency, whether by
agreement or upon a judgment of a Mexican Court, may be
discharged in Mexican currency at a rate of exchange for
such currency prevailing at the time of payment;
(iii) the court rendering such judgment is competent to render
such judgment in accordance with applicable rules under
international law, and such rules are compatible with
the rules adopted under the Mexican Code of Commerce;
(iv) service of process was made personally on the Issuer, or
on each Guarantor, as applicable, or on an appropriate
process agent of the Issuer or of the Guarantors, as
applicable;
(v) such judgment does not contravene Mexican public policy
or laws;
(vi) the applicable procedure under the laws of Mexico with
respect to the enforcement for foreign judgments
(including the issuance of a letter rogatory by the
competent authority of such jurisdiction requesting
enforcement of such judgment and the certification of
such judgment as authentic by the corresponding
authorities of such jurisdiction in accordance with the
laws thereof) is complied with;
(vii) the courts of such jurisdiction recognize the principles
of reciprocity in connection with the enforcement of
Mexican judgments in such jurisdiction; and
(viii) the cause of action in connection with which such
judgment is rendered is not the same cause of action
that is pending before a Mexican court in a proceeding
in which (a) process has been duly served in accordance
with Mexican law or (b) a letter rogatory has been
delivered to the competent authorities in accordance
with Mexican law.
I express no opinion in connection with Section 16.14 (Judgment
Currency) of the Reimbursement Agreement. It should be noted that a judgment
rendered by the courts of Mexico may be expressed and enforced in a foreign
currency; however, payment obligations of the Issuer arising out of an action
to enforce such a judgment may be discharged in Mexico in Mexican pesos at a
rate of exchange in effect at the date and place where payment is made.
The opinions set forth herein as regards the binding nature and
enforceability of the obligations of the Issuer and of the Guarantors, as
applicable, under the Transaction Documents are subject to all limitations
arising from concurso mercantil, bankruptcy, insolvency, liquidation,
reorganization, moratorium or similar laws affecting the rights of creditors
generally. I express no opinion as to any provision in the Transaction
Documents which would result in modifications that would aggravate the terms
and conditions of the obligations of the Issuer and of the Guarantors in the
event of the filing of a petition or suit for bankruptcy (concurso mercantil),
or in the event of declaration thereof, as provided by article 87 of the
Mexican bankruptcy law (Ley Federal De Concursos Mercantiles).
This letter is furnished only to you in connection with the closing
under the Reimbursement Agreement and is solely for your benefit. Without my
prior written consent, this letter may not be used or relied upon by, or
assigned to, any other person for any purpose, except that Skadden, Arps,
Slate, Meagher & Flom LLP may rely upon this opinion as to matters of the laws
of Mexico in rendering their opinion in connection with the Reimbursement
Agreement. This letter is not to be circulated, quoted or otherwise referred
to for any other purpose without my prior written consent, except to the
extent that the ability to circulate, quote or refer to this letter is
necessary so that the transactions contemplated by the Transaction Documents
are not treated as a "confidential transaction" within the meaning of Treasury
Regulations section 1.6011-4(b)(3)d.
Very truly yours,
Ramiro Villarreal
EXHIBIT I-1
FORM OF STAND-BY LETTER OF CREDIT
[THIS IRREVOCABLE STANDBY LETTER OF CREDIT NO. _________ IS ONE OF THE STANDBY
LETTERS OF CREDIT REFERRED TO IN THE TERMS OF THE FIRST AMENDED AND RESTATED
REIMBURSEMENT AND CREDIT AGREEMENT, DATED August 8, 2003 AMONG CEMEX, S.A. DE
C.V., CEMEX MEXICO S.A. DE C.V., EMPRESAS TOLTECA DE MEXICO, S.A. DE C.V.,
BARCLAYS BANK PLC NEW YORK BRANCH, BARCLAYS CAPITAL, THE INVESTMENT BANKING
DIVISION OF BARCLAYS BANK PLC, BANC OF AMERICA SECURITIES LLC, AND THE SEVERAL
LENDERS PARTY THERETO.]*
Date: [_______________]
To:
[name and address of Beneficiary] (the "Beneficiary")
Attn.________________
[Telex No./ Swift No./ Facsimile No.]
Ladies and Gentlemen:
We hereby establish our irrevocable standby letter of credit No.
_________ by order of our client CEMEX, S.A. de C.V. (the "Company") in your
favor for an aggregate amount not in excess of U.S.$[________________]** (as
reduced from time to time in accordance with the terms of this letter of
credit, the "Stated Amount") expiring on [________________]***(the "Letter of
Credit").
Drawings under this Letter of Credit are unconditionally available to
you against presentation of the certificate in the form attached hereto as
Annex I (each, a "Drawing Certificate") appropriately completed and purportedly
signed by you. Each Drawing Certificate presented hereunder shall be dated the
date of presentation and may be presented to us either in writing delivered to
us at [address (in New York)] or in writing transmitted to us by facsimile
telecopy at [fax number (in New York)] accompanied by the Beneficiary's letter
containing (i) instructions relative to the remitting of funds to their
account, and a name and (ii) a phone number of a call back party, such party
being someone other than the sender of such facsimile, for verification
purposes only, and (iii) a statement that the original of such Drawing
Certificate and the instructions referred in (i) above are to subsequently
follow by overnight delivery service to us in the address indicated herein (the
"Drawing Documents").
- --------
* Optional
** must have a minimum stated amount equal to U.S.$3,000,000.
*** must expire on the earlier of 360 days after the date of issuance or
[insert date that is five business days prior to stated termination date].
We hereby agree with you that if any Drawing Documents are presented
under this Letter of Credit at or prior to 11:00 am (New York time), on a
business day, and provided that such documents presented conform with the terms
and conditions of this Letter of Credit, payment shall be effected by us in
immediately available funds by the close of business on such business day. If
any Drawing Documents are presented under this Letter of Credit after 11:00 am
(New York time), on a business day, and provided that such documents conform
with the terms and conditions of this Letter of Credit, payment shall be
effected by us in immediately available funds on the following business day.
The Beneficiary must notify such presentation of documents to the Issuing Bank
upon dispatch, by calling the telephone number [________] or [________]. As
used in this Letter of Credit, "Business Day" shall mean any day other than a
Saturday or Sunday or any other day on which commercial banks in New York, New
York are authorized or required by law to close.
Partial and multiple drawings are permitted, provided however that the
Stated Amount available under this Letter of Credit shall be reduced
immediately following our payment of any drawing hereunder in the amount equal
to the amount to such drawing. No payment hereunder shall exceed the Stated
Amount.
Upon the payment to you or to your account of the amount in respect of
a drawing hereunder, we shall be fully discharged of our obligation under this
Letter of Credit with respect to such drawing, and we shall not thereafter be
obligated to make any further payments under this Letter of Credit in respect
of such drawing to you or any other person. By paying to you an amount demanded
in accordance herewith, we make no representation as to the correctness of the
amount demanded, and we shall not be liable to you or to any other person for
or in respect of any amount so paid or disbursed for any reason whatsoever,
including any non-application or misapplication by you of the proceeds of such
payment or disbursement.
This letter of credit may not be assigned, except that you may by
written letter of assignment to us in the form of Annex II, assign all of your
rights and obligations under this Letter of Credit to any assignee identified
in such certification. [This letter of credit may be transferred.]/[This Letter
of Credit may not be transferred]*
All bank charges and commissions incurred by the issuer of this Letter
of Credit in connection with the issuance or administration of this Letter of
Credit (including any drawing hereunder) shall be for the account of the
Company.
All payments under this Letter of Credit shall be in United States
dollars, regardless of the currency in which the obligations to the Beneficiary
referred to in the Drawing Certificate are denominated, in the account
indicated by the Beneficiary in the Drawing Documents.
This Letter of Credit is subject to the international standby
practice, International Chamber of Commerce (ICC) publication No. 590 ("ISP98")
and as to matters not addressed by the ISP98 shall be governed by and construed
in accordance with the laws of the state of New York (including without
limitation, Article 5 of the Uniform Commercial Code of the State of New York).
All communication regarding this Letter of Credit should be addressed
to: [Issuing bank address], attention_________, department___________. The
number and the date of this letter of credit and the name of our bank must be
quoted in all communications.
Very truly yours,
[Full name of L/C Issuing Bank]
By: [authorized signatory)
Name:
Title:
________________________________
* Insert Appropriate Language
Annex I
ATTACHMENT TO FORM OF STAND-BY LETTER OF CREDIT
ISSUED BY (NAME OF ISSUING BANK)
FORM OF DRAWING CERTIFICATE
Date: _______________
Ref._________________
To:
[Name of L/C Issuing Bank]
[address]
Attn.________________
[Telex No./ Swift No./ Facsimile No.]
Ladies and Gentlemen:
Reference is made to irrevocable standby letter of credit No. _______________
dated _____________ (the "Letter of Credit") issued by order and for account of
________________ (the "Company")
The undersigned, a duly authorized representative of ________________ (the
"Beneficiary"), hereby certifies that:
1. The Beneficiary is the Beneficiary of the Letter of Credit.
2. We are hereby drawing in the amount of __________ because __________
has failed to fulfill its payment obligations to ____________ in
accordance with the terms of the ______________agreement between
___________ and ____________ dated as of __________. The amount being
drawn does not exceed that amount which the Beneficiary is entitled to
draw under the Letter of Credit.
In witness whereof, the undersigned has executed this certificate on
_____________.
Very truly yours,
[Full name of the Beneficiary]
By: [authorized signatory)
Name:
Title:
Annex II
LETTER OF ASSIGNMENT
Date: _______________
Ref. [The Letter of Credit]
To:
[Name of L/C Issuing Bank]
[address]
Attn.________________
[Telex No./ Swift No./ Facsimile No.]
Letter of Credit No. _______________ (the "Letter of Credit")
Issued by:
With reference to the Letter of Credit which you have issued to us, "out of the
proceeds due under the Letter of Credit (or from any payment of proceeds you at
any time may make under or in relation to the Letter of Credit), we hereby
irrevocably authorize and direct you to pay the sum of:
Words____________________________________________ Figures____________________
To: Name:_______________________________________________________________
Address:____________________________________________________________
pursuant to an assignment agreement which we have entered into with them.
In the event of part payments becoming due, please give effect to these
instructions by paying the Assignees named above:
o The full amount of all drawings until the sum mentioned above has been
fully discharged.
o Per cent of any drawing (but all payments when added together must not
exceed the amount of this assignment).
** Please delete and initial the instruction which does not apply.
You are hereby authorized also to communicate such information to the Assignee
relating to the Letter of Credit or our performance of the conditions thereof
as you may in your absolute discretion determine.
Please send to the Assignee a copy of this Notice of Assignment which is given
pursuant to International chamber of Commerce (ICC) Publication No. 590
("ISP98"), to which the above Credit is subject.
For and on behalf of
- ------------------------
Authorized Signature
==============================================================================
To be completed by Beneficiary's bankers:
We hereby confirm the authenticity of who is/are authorized to commit the
Company to this Assignment.
(Bankers)
EXHIBIT I-2
FORM OF STAND-BY LETTER OF CREDIT
[THIS IRREVOCABLE STANDBY LETTER OF CREDIT NO. _________ IS ONE OF THE STANDBY
LETTERS OF CREDIT REFERRED TO IN THE FIRST AMENDED AND RESTATED REIMBURSEMENT
AND CREDIT AGREEMENT, DATED AUGUST 8, 2003 AMONG CEMEX, S.A. DE C.V., CEMEX
MEXICO S.A. DE C.V., EMPRESAS TOLTECA DE MEXICO, S.A. DE C.V., BARCLAYS BANK
PLC NEW YORK BRANCH, BARCLAYS CAPITAL, THE INVESTMENT BANKING DIVISION OF
BARCLAYS BANK PLC, BANC OF AMERICA SECURITIES LLC, AND THE SEVERAL LENDERS
PARTY THERETO.]*
Date: [_______________]
To:
[name and address of Beneficiary]
Attn.________________
[Telex No./ Swift No./ Facsimile No.]
Ladies and Gentlemen:
We hereby establish our irrevocable standby letter of credit No.
_________ [in support of obligations of ______________]** by order of our
client CEMEX, S.A. de C.V. (the "Company") in favor of you, [name of
beneficiary] (the "Beneficiary") for an aggregate amount not in excess of
U.S.$[ ________________]*** (as reduced from time to time in accordance with
the terms of this letter of credit, the "Stated Amount") expiring on
[________________]**** (the "The Letter of Credit").
Drawings under this Letter of Credit are unconditionally available to
the Beneficiary against presentation of the certificate in the form attached
hereto as Annex I (each, a "Drawing Certificate") appropriately completed and
purportedly signed by the Beneficiary. Each Drawing Certificate presented
hereunder shall be dated the date of presentation and may be presented to us
either in writing delivered to us at [address (in New York)] or in writing
transmitted to us by facsimile telecopy at [fax number (in New York)].
We hereby agree with you that if any Drawing Certificate is presented
under this Letter of Credit at or prior to 11:00 am (New York time), on a
Business Day, and provided that such Drawing Certificate presented conforms
with the terms and conditions of this Letter of Credit, payment shall be
effected by us in same day funds by the close of business on such Business
Day. If any Drawing Certificate is presented under this Letter of Credit after
11:00 am (New York time), on a Business Day, and provided that such documents
conform with the terms and conditions of this Letter of Credit, payment shall
be effected by us in immediately available funds on the following Business
Day. The Beneficiary must notify the Issuing Bank of the presentation of the
Drawing Certificate by calling the telephone number [________] or [________].
As used in this Letter of Credit, "Business Day" shall mean any day other than
a Saturday or Sunday or a day on which banking institutions in the State of
New York are authorized or required by law to close.
- ------------
* Optional.
** Optional.
*** must have a minimum stated amount equal to U.S.$3,000,000.
**** must expire on the earlier of 360 days after the date of issuance or
[insert date that is five business days prior to stated termination date].
Partial and multiple drawings are permitted, provided however that
the Stated Amount available under this Letter of Credit shall be reduced
immediately following our payment of any drawing hereunder in the amount equal
to the amount to such drawing. No payment hereunder shall exceed the Stated
Amount.
Upon the payment to you or to your account of the amount in respect
of a drawing hereunder, we shall be fully discharged of our obligation under
this Letter of Credit with respect to the amount of such drawing, and we shall
not thereafter be obligated to make any further payments under this Letter of
Credit in respect of such drawing to you or any other person. By paying to you
the amount demanded in accordance herewith, we make no representation as to
the correctness of the amount demanded, and we shall not be liable to you or
to any other person for, or in respect of any amount so paid or disbursed for
any reason whatsoever, including any non-application or misapplication by you
of the proceeds of such payment or disbursement.
This Letter of Credit may not be assigned, except that you may by
written assignment of proceeds to us in the form of Annex II, assign your
rights and obligations under this Letter of Credit to any assignee identified
in such certification. [This Letter of Credit may be transferred]/ [This
Letter of Credit may not be transferred]*
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any other document, instrument or agreement, except only the
Drawing Certificate; and any such reference shall not be deemed to incorporate
herein by reference any document, instrument or agreement.
All bank charges and commissions incurred by the issuer of this
Letter of Credit in connection with the issuance or administration of this
Letter of Credit (including any drawing hereunder) shall be the responsibility
of the Company.
All payments under this Letter of Credit shall be in United States
dollars, regardless of the currency in which the obligations to the
Beneficiary referred to in the Drawing Certificate are denominated, in the
account indicated by the Beneficiary in the Drawing Certificate.
This Letter of Credit is subject to the international standby
practice, International Chamber of Commerce (ICC) publication No. 590
("ISP98") and as to matters not addressed by the ISP98 shall be governed by
and construed in accordance with the laws of the state of New York (including
without limitation, Article 5 of the Uniform Commercial Code of the State of
New York).
All communication regarding this Letter of Credit should be addressed
to: [Issuing bank address], attention_________, department___________. The
number and the date of this Letter of Credit and the name of our bank must be
quoted in all communications.
Very truly yours,
[Full name of L/C Issuing Bank]
By: [authorized signatory]
Name:
Title:
- -------------
* Insert Appropriate Language
Annex I
ATTACHMENT TO FORM OF STAND-BY LETTER OF CREDIT
ISSUED BY (NAME OF ISSUING BANK)
FORM OF DRAWING CERTIFICATE
Date: _______________
Ref. ________________
To:
[Name of L/C Issuing Bank]
[address]
Attn.________________
[Swift No./ Facsimile No.]
Ladies and Gentlemen:
Reference is made to irrevocable standby letter of credit No. _______________
dated _____________ (the "Letter of Credit") issued by order and for account
of ________________ (the "Company")
The undersigned, a duly authorized representative of ________________ (the
"Beneficiary"), hereby certifies that:
1. The Beneficiary is the Beneficiary of the Letter of Credit.
2. We are hereby drawing in the amount of _________ because
__________has failed to fulfill its [payment obligations] /
[obligations]* to _____________ in accordance with the terms of the
____________ agreement between _____________ and ____________ dated
as of ____________. The amount being drawn does not exceed that
amount which the Beneficiary is entitled to draw under the Letter of
Credit.
3. The amount noted in paragraph 2 above should be remitted to the
following location in accordance with the Letter of Credit:
Name of Beneficiary: [____________]
Department: [_____________]
Address: [______________]
Attention: [____________]
Telephone: [______________]
Facsimile: [_____________]
Wiring Instructions: [____________]
- ----------------
* Insert Appropriate Language
4. If this Drawing Certificate shall be sent by facsimile, the original
copy of this Drawing Certificate shall be sent immediately to the
Issuing Bank via overnight mail to the following address: [address in
New York]
5. For verification purposes, the Issuing Bank may contact: [contact
person of Beneficiary, such person being someone other than the
sender of this Drawing Certificate via facsimile or via overnight
mail].
In witness whereof, the undersigned has executed this certificate on
_____________.
Very truly yours,
[Full name of the Beneficiary]
By: [authorized signatory]
Name:
Title:
Annex II
ATTACHMENT TO FORM OF STAND-BY LETTER OF CREDIT
ISSUED BY (NAME OF ISSUING BANK)
FORM OF ASSIGNMENT OF PROCEEDS
Date: _______________
Ref. _________________
To:
[Name of L/C Issuing Bank]
[address]
Attn.________________
[Telex No./ Swift No./ Facsimile No.]
Letter of Credit No.____________ (the "Letter of Credit")
Issued by:
With reference to the Letter of Credit which you have issued to us, out of the
proceeds due under the Letter of Credit (or from any payment of proceeds you
at any time may make under or in relation to the Letter of Credit), we hereby
irrevocably authorize and direct you to pay the sum of:
Words___________________________________Figures________________________
To: Name:__________________________________________________________
Address:________________________________________________________
Pursuant to an assignment agreement which we have entered into with them.
In the event of part payments becoming due, please give effect to these
instructions by paying the Assignees named above:
o The full amount of all drawings until the sum mentioned above has been
fully discharged.
o Per cent of any drawing (but all payments when added together must not
exceed the amount of this assignment).
** Please delete and initial the instruction which does not apply.
You are hereby authorized also to communicate such information to the Assignee
relating to the Letter of Credit or our performance of the conditions thereof
as you may in your absolute discretion determine.
Please send to the Assignee a copy of this Notice of Assignment which is give
pursuant to International Chamber of Commerce (ICC) Publication No. 590
("ISP98"), to which the above Letter of Credit is subject.
For and on behalf of
_______________________
Authorized Signature
- -------------------------------------------------------------------------------
To be completed by Beneficiary's bankers:
We hereby confirm the authenticity of ______________________ who is/are
authorized to commit the Company to this Assignment.
________________________ (Bankers)
Exhibit 4.13
EXECUTION COPY
===============================================================================
U.S. $1,150,000,000
TERM LOAN AGREEMENT
among
NEW SUNWARD HOLDING B.V.,
as Borrower,
CEMEX, S.A. DE C.V.,
CEMEX MEXICO, S.A. DE C.V., and
EMPRESAS TOLTECA DE MEXICO, S.A. DE C.V.,
as Guarantors
The Several Lenders from Time to Time Party Hereto,
CITIBANK, N.A.,
as Administrative Agent,
ABN AMRO BANK N.V., BNP PARIBAS, CITIGROUP GLOBAL MARKETS INC., CREDIT
AGRICOLE INDOSUEZ/CREDIT LYONNAIS, J.P. MORGAN SECURITIES INC.,
and SANTANDER CENTRAL HISPANO,
as Mandated Lead Arrangers,
ING BANK N.V., MIZUHO CORPORATE BANK, LTD., and
THE ROYAL BANK OF SCOTLAND PLC.,
as Arrangers,
BANK OF AMERICA, N.A., THE BANK OF TOKYO-MITSUBISHI, LTD.,
BBVA BANCOMER S.A., and SCOTIABANK,
as Co-Arrangers,
CREDIT AGRICOLE INDOSUEZ/CREDIT LYONNAIS,
as Syndication Agent,
and
CITIGROUP GLOBAL MARKETS INC., and
J.P. MORGAN SECURITIES INC.,
as Joint Bookrunners
Dated as of October 15, 2003
===============================================================================
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS
1.1. Defined Terms..................................................................1
1.2. Other Definitional Provisions.................................................17
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1. Commitments...................................................................18
2.2. Procedure for Borrowing.......................................................19
2.3. Fees..........................................................................19
2.4. Optional Prepayments..........................................................20
2.5. Extension of Maturity Dates...................................................20
2.7. Interest Rates and Payment Dates..............................................21
2.8. Computation of Interest and Fees..............................................22
2.9. Inability to Determine Interest Rate..........................................22
2.10. Pro Rata Treatment and Payments...............................................23
2.11. Requirements of Law...........................................................24
2.12. Taxes.........................................................................25
2.13. Indemnity.....................................................................26
2.14. Change of Lending Office......................................................27
2.15. Replacement of Lenders........................................................27
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1. Financial Condition...........................................................28
3.2. No Change.....................................................................28
3.3. Existence; Compliance with Law................................................28
3.4. Power; Authorization; Enforceable Obligations.................................28
3.5. Governmental Approvals........................................................29
3.6. Compliance with Law and Other Instruments.....................................29
3.7. Litigation....................................................................29
3.8. No Default....................................................................29
3.9. Ownership of Property; Liens..................................................29
3.10. Intellectual Property.........................................................29
3.11. Taxes.........................................................................30
3.12. Federal Reserve Regulations...................................................30
3.13. Labor Matters.................................................................30
3.14. Investment Company Act; Other Regulations.....................................31
3.15. Use of Proceeds...............................................................31
3.16. Subsidiaries; Capital Stock...................................................31
3.17. Environmental Matters.........................................................31
3.18. Accuracy of Information, etc..................................................32
3.19. No Immunity...................................................................32
3.20. Direct Obligations; Pari Passu................................................33
3.21. No Recordation Necessary......................................................33
3.22. Choice of Law; Submission to Jurisdiction and Waiver of Immunity..............33
3.23. Clauses Restricting Subsidiary Distributions..................................33
3.24. Solvency......................................................................34
SECTION 4. CONDITIONS PRECEDENT
4.1. Loan Documents................................................................34
4.2. Financial Statements..........................................................34
4.3. Governmental Approvals........................................................34
4.4. Organizational Documents of the Loan Parties..................................34
4.5. Fees..........................................................................35
4.6. Legal Opinions................................................................35
4.7. No Material Adverse Change....................................................35
4.8. Financial Markets.............................................................36
4.9. Agent for Service of Process..................................................36
4.10. Representations and Warranties................................................36
4.11. No Default....................................................................36
4.12. Notice of Borrowing...........................................................36
4.13. Notice of Prepayment of Revolving Credit Facility.............................36
4.14. Other Documents...............................................................36
SECTION 5. AFFIRMATIVE COVENANTS
5.1. Financial Statements..........................................................37
5.2. Certificates; Other Information...............................................38
5.3. Compliance with Laws and Contractual Obligations, Etc.........................38
5.4. Payment of Obligations........................................................39
5.5. Maintenance of Insurance......................................................39
5.6. Conduct of Business and Preservation of Corporate Existence...................39
5.7. Inspection of Property........................................................39
5.8. Books and Records.............................................................40
5.9. Maintenance of Properties, Etc................................................40
5.10. Notices.......................................................................40
5.11. Environmental Laws............................................................41
5.12. Maintenance of Governmental Approvals.........................................41
5.13. Use of Proceeds...............................................................41
5.14. Pari Passu Ranking............................................................41
5.15. Further Assurances............................................................41
SECTION 6. NEGATIVE COVENANTS
6.1. Financial Condition Covenants.................................................42
6.2. Liens.........................................................................42
6.3. Consolidations and Mergers....................................................44
6.4. Sales of Assets, Etc..........................................................45
6.5. Restricted Payments...........................................................45
6.6. Transactions with Affiliates..................................................45
6.7. Accounting Changes............................................................45
6.8. Clauses Restricting Subsidiary Distributions..................................46
6.9. Change in Nature of Business..................................................46
6.10. Margin Regulations............................................................46
6.11. Ownership of Cemex Espana.....................................................46
6.12. Ownership of the Borrower.....................................................46
6.13. Ownership of Trademark Companies..............................................46
6.14. Incurrence of Debt by Trademark Companies.....................................47
SECTION 7. EVENTS OF DEFAULT
SECTION 8. THE AGENTS
8.1. Appointment...................................................................50
8.2. Delegation of Duties..........................................................50
8.3. Exculpatory Provisions........................................................50
8.4. Reliance by Agents............................................................51
8.5. Notice of Default.............................................................51
8.6. Non-Reliance on Agents and Other Lenders......................................51
8.7. Indemnification...............................................................52
8.8. Agent in Its Individual Capacity..............................................52
8.9. Successor Administrative Agent................................................53
SECTION 9. GUARANTEES
9.1. The Guarantees................................................................53
9.2. Nature of Liability...........................................................53
9.3. Unconditional Obligations.....................................................54
9.4. Independent Obligation........................................................54
9.5. Waiver of Notices.............................................................55
9.6. Waiver of Defenses............................................................55
9.7. Bankruptcy and Related Matters................................................56
9.8. No Subrogation................................................................57
9.9. Right of Contribution.........................................................57
9.10. General Limitation on Guarantees..............................................57
SECTION 10. MISCELLANEOUS
10.1. Amendments and Waivers........................................................58
10.2. Notices.......................................................................59
10.3. No Waiver; Cumulative Remedies................................................60
10.4. Survival of Representations and Warranties....................................60
10.5. Payment of Expenses and Taxes.................................................61
10.6. Successors and Assigns; Participations and Assignments........................62
10.7. Adjustments; Set-off..........................................................64
10.8. Counterparts..................................................................65
10.9. Severability..................................................................65
10.10. Integration...................................................................65
10.12. Submission To Jurisdiction; Waivers...........................................65
10.13. Appointment of Agent for Service of Process...................................66
10.14. Waiver of Sovereign Immunity..................................................66
10.15. Judgment Currency.............................................................67
10.16. Acknowledgements of Loan Parties..............................................67
10.17. Professional Market Party Status of Lenders...................................67
10.18. Confidentiality...............................................................68
10.20. Use of English Language.......................................................68
10.21. Conflict With Notes...........................................................68
SCHEDULES
1.1 Commitments
3.7 Material Litigation
3.16 Subsidiaries
3.23 Restrictions on Distributions
6.2 Liens
EXHIBITS:
A-1 Form of Tranche A Note
A-2 Form of Tranche B Note
A-3 Form of Tranche C Note
B Form of Compliance Certificate
C Form of Assignment and Acceptance
D Form of Notice of Borrowing
E-1 Form of Legal Opinion of Mayer, Brown, Rowe & Maw LLP
E-2 Form of Legal Opinion of Warendorf
E-3 Form of Legal Opinion of Lic. Ramiro G. Villareal Morales
F Form of Process Agent Acceptance
G Form of Non-Extension Notice
H Form of Termination Notice
TERM LOAN AGREEMENT (this "Agreement"), dated as of October 15, 2003,
among NEW SUNWARD HOLDING B.V., a besloten vennootschap met beperkte
aansprakelijkheid organized and existing under the laws of The Netherlands
(the "Borrower"), CEMEX, S.A. DE C.V., CEMEX MEXICO, S.A. DE C.V. and EMPRESAS
TOLTECA DE MEXICO, S.A. DE C.V., each a sociedad anonima de capital variable
organized and existing under the laws of the United Mexican States (each a
"Guarantor," and collectively, the "Guarantors"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
as lenders (the "Lenders"), CITIBANK, N.A., as administrative agent (in such
capacity, the "Administrative Agent"), ABN AMRO BANK N.V., BNP PARIBAS,
CITIGROUP GLOBAL MARKETS INC., CREDIT AGRICOLE INDOSUEZ/CREDIT LYONNAIS, J.P.
MORGAN SECURITIES INC. and SANTANDER CENTRAL HISPANO as mandated lead
arrangers (in such capacities, the "Lead Arrangers"), ING BANK N.V., MIZUHO
CORPORATE BANK, LTD., and THE ROYAL BANK OF SCOTLAND PLC., as Arrangers, BANK
OF AMERICA, N.A., THE BANK OF TOKYO-MITSUBISHI, LTD., BBVA BANCOMER S.A.,
Institucion de Banca Multiple, Grupo Financiero BBVA Bancomer, and SCOTIABANK,
as Co-Arrangers, CREDIT AGRICOLE INDOSUEZ/ CREDIT LYONNAIS, as Syndication
Agent, and CITIGROUP GLOBAL MARKETS INC. and J.P. MORGAN SECURITIES INC., as
joint bookrunners (in such capacities, the "Joint Bookrunners").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Acquired Subsidiary": any Subsidiary acquired by any Loan Party or
by any Subsidiary of any Loan Party after the date hereof in an Acquisition,
and any Subsidiaries of such Acquired Subsidiary on the date of such
Acquisition.
"Acquiring Subsidiary": any Subsidiary formed by any Loan Party or by
a Subsidiary of any Loan Party solely for the purpose of participating as the
acquiring party in any Acquisition, and any Subsidiaries of such Acquiring
Subsidiary acquired in such Acquisition.
"Acquisition": any merger, consolidation, acquisition or lease of
assets, acquisition of securities or business combination or acquisition, or
any two or more of such transactions, if upon the completion of such
transaction or transactions, any Loan Party or any Subsidiary thereof has
acquired an interest in any Person who is deemed to be a Subsidiary under this
Agreement and was not a Subsidiary prior thereto.
"Adjusted Consolidated Net Tangible Assets": with respect to any
Person, the total assets of such Person and its Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), including any
write-ups or restatements required under Applicable GAAP (other than with
respect to items referred to in clause (ii) below), minus (i) all current
liabilities of such Person and its Subsidiaries (excluding the current portion
of long-term debt) and (ii) all goodwill, trade names, trademarks, licenses,
concessions, patents, un-amortized debt discount and expense and other
intangibles, all as determined on a consolidated basis in accordance with
Applicable GAAP.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent": any of the Administrative Agent, the Lead Arrangers and the
Joint Bookrunners; collectively, the "Agents."
"Agent Rate": for any date, with respect to amounts (i) in U.S.
Dollars, the Federal Funds Effective Rate, (ii) in Euro or Yen, an interest
rate calculated by the Administrative Agent to reflect its cost of funds.
"Agent-Related Persons": the Agents and any successor agent to an
Agent, pursuant to Section 8.9, together with their respective Affiliates, and
the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Agent's Dollar Payment Office": the office of the Administrative
Agent specified as such in Section 10.2, or such other office as may be
specified from time to time by the Administrative Agent by written notice to
the Borrower, the Guarantors and the Lenders.
"Agent's Euro Payment Office": the office of the Administrative Agent
specified as such in Section 10.2, or such other office as may be specified
from time to time by the Administrative Agent by written notice to the
Borrower, the Guarantors and the Lenders.
"Agent's Yen Payment Office": the office of the Administrative Agent
specified as such in Section 10.2, or such other office as may be specified
from time to time by the Administrative Agent by written notice to the
Borrower, the Guarantors and the Lenders.
"Aggregate Exposure": with respect to any Lender under any Tranche at
any time, an amount equal to (a) until the Closing Date, the aggregate amount
of such Lender's Commitments at such time with respect to such Tranche and (b)
thereafter, the aggregate unpaid principal amount of such Lender's Loans then
outstanding under such Tranche.
"Aggregate Exposure Percentage": with respect to any Lender under any
Tranche at any time, the ratio (expressed as a percentage) of such Lender's
Aggregate Exposure with respect to such Tranche at such time to the Aggregate
Exposure of all Lenders with respect to such Tranche at such time.
"Agreement": as defined in the preamble hereto.
"Agreement Currency": as defined in Section 10.15(b).
"Alternate Rate Loans": as defined in Section 2.9.
"Applicable GAAP": with respect to any Person, Mexican GAAP or other
generally accepted accounting principles required to be applied to such Person
in the jurisdiction of its incorporation or organization and used in preparing
such Person's financial statements.
"Applicable Margin": for Loans under each Tranche, the rate per annum
for Loans under such Tranche set forth below:
Tranche Applicable Margin
Tranche A.................... 0.625%
Tranche B.................... 0.925%
Tranche C.................... 0.862%
"Assignee": as defined in Section 10.6(c).
"Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit C.
"Assignor": as defined in Section 10.6(c).
"Benefitted Lender": as defined in Section 10.7(a).
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Business": as defined in Section 3.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law or
other governmental action to close; provided that when such term is used in
connection with a Loan of any Tranche, such term shall also exclude any day on
which banks are not open for dealings in the currency of such Tranche in the
London interbank market; provided further that when such term is used in
connection with a Yen Loan, such term shall also exclude any day on which
banks are not open for dealings in Yen in the Tokyo interbank market.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
Applicable GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with Applicable GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cemex": Cemex, S.A. de C.V., a sociedad anonima de capital variable,
organized and existing under the laws of the United Mexican States.
"Cemex Espana": Cemex Espana, S.A., a Spanish corporation, organized
and existing under the laws of the Kingdom of Spain.
"Closing Date": the date on which each of the conditions precedent
set forth in Section 4 shall have been satisfied by or on behalf of the
Borrower and each Guarantor or waived by the Lenders, but in no event later
than the 5th Business Day after the date hereof.
"Commitment": as to any Lender, the sum of its Tranche A, Tranche B
and Tranche C Commitments; collectively, as to all the Lenders, the
"Commitments."
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential Information
Memorandum relating to the Borrower, dated September 2003, and furnished to
the Lead Arrangers in connection with this Agreement.
"Consolidated EBITDA": for any period, the sum for Cemex and its
Subsidiaries, determined on a consolidated basis of (a) operating income
(utilidad de operacion), (b) cash interest income and (c) depreciation and
amortization expense (to the extent deducted from operating income), in each
case determined in accordance with Mexican GAAP consistently applied for such
period. For the purposes of calculating Consolidated EBITDA for any period of
four consecutive fiscal quarters (each, a "Reference Period") in connection
with any determination of Consolidated Leverage Ratio (but not Consolidated
Fixed Charge Coverage Ratio), (i) if at any time during such Reference Period
Cemex or any of its Subsidiaries shall have made any Material Disposition,
Consolidated EBITDA for such Reference Period shall be reduced by an amount
equal to the Consolidated EBITDA (if positive) attributable to the property
that is the subject of such Material Disposition for such Reference Period and
(ii) if at any time during such Reference Period Cemex or any of its
Subsidiaries shall have made any Material Acquisition, Consolidated EBITDA for
such Reference Period shall be calculated after giving pro forma effect
thereto (including the incurrence or assumption of any Debt) as if such
Material Acquisition had occurred on the first day of such Reference Period.
Additionally, if since the beginning of such Reference Period any Person that
subsequently became a Subsidiary of Cemex or was merged or consolidated with
Cemex or any of its Subsidiaries as a result of a Material Acquisition
occurring during such Reference Period shall have made any Disposition or
Acquisition of property that would have required an adjustment pursuant to
clause (i) or (ii) above if made by Cemex or any of its Subsidiaries during
such Reference Period, Consolidated EBITDA for such period shall be calculated
after giving pro forma effect thereto as if such Disposition or Acquisition
had occurred on the first day of such Reference Period.
"Consolidated Fixed Charge Coverage Ratio": for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed Charges
for such period.
"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b)
mandatory dividend payments during such period in respect of preferred Capital
Stock of Cemex or any of its Subsidiaries, and (c) to the extent not included
in (a) above, payments during such period in respect of the financing costs of
financial derivatives in the form of equity swaps.
"Consolidated Interest Expense": for any period, the total gross
interest expense of Cemex and its consolidated Subsidiaries allocable to such
period in accordance with Mexican GAAP.
"Consolidated Leverage Ratio": at any time during any fiscal quarter,
the ratio of (a) Consolidated Net Debt at such time to (b) Consolidated EBITDA
for the four consecutive fiscal quarters immediately preceding such fiscal
quarter.
"Consolidated Net Debt": at any date, the sum (without duplication)
of (a) the aggregate amount of all Debt of Cemex and its Subsidiaries at such
date, plus (b) to the extent not included in Debt, the aggregate amount of all
derivative financing in the form of equity swaps outstanding at such date,
plus (c) to the extent not included in Debt, all payment obligations of Cemex
or any of its Subsidiaries under the 9.66% Puttable Capital Securities issued
by CEMEX International Capital LLC on May 14, 1998 or under any similar
instrument, minus (d) all Temporary Investments of Cemex and its Subsidiaries
at such date.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which such Person is a
party or by which it or any of its property is bound.
"CTW": Cemex Trademarks Worldwide, Ltd., a commercial company
organized and existing under the laws of Switzerland.
"Debt": as to any Person at any time, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person for the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all Capital Lease Obligations of such Person, (v) all
Debt of others secured by a Lien on any asset or property of such Person, up
to the value of such asset, as recorded in such Person's most recent balance
sheet, (vi) all obligations of such Person with respect to product invoices
incurred in connection with export financing, (vii) all obligations of such
Person under repurchase agreements for stock issued by such Person or another
Person and (viii) all obligations, contingent or otherwise, of such Person
directly or indirectly guaranteeing obligations of any other Person of the
kind referred to in clauses (i) through (vii).
"Default": any condition, event or circumstance, which with the
giving of notice or lapse of time or both, would become an Event of Default.
"Derivatives Obligations": as to any Person, all obligations of such
Person in respect of any financial derivatives, including without limitation
any rate swap transaction, basis swap, forward rate transaction, equity or
equity index swap, equity or equity index option, equity or equity index
forward purchase transaction, equity option, bond option, interest rate
option, foreign exchange transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of the foregoing
transactions) or any combination of the foregoing transactions, and all
obligations, contingent or otherwise, of such Person directly or indirectly
guaranteeing obligations of any other Person of the kind referred to above.
"Disposition": with respect to any property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof.
The terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollar Amount": at any date with respect to any, Commitments or
Loans (i) denominated in Dollars, the amount of such Commitment or the
outstanding principal amount of such Loans, as the case may be on such date
and (ii) denominated in Euro or Yen, the amount of Dollars that would be
required to purchase Euro or Yen in the amount of such Commitment or the then
outstanding principal amount of such Euro Loans or Yen Loans, as the case may
be, at an exchange rate equal to the relevant Exchange Rate.
"Dollar Borrowing": a borrowing of Dollar Loans hereunder.
"Dollar Loan": a Loan denominated in Dollars.
"Dollars", "U.S.$" and "$": the lawful currency of the United States.
"Dutch Banking Act": the Dutch Act of the Supervision of Credit
System of 1992 (Wet toezicht kredietwezen 1992), as amended from time to time.
"Dutch Central Bank": the central bank of The Netherlands (De
Nederlandsche Bank).
"Dutch Exemption Regulation": the Exemption Regulation of the Dutch
Minister of Finance of June 26, 2002 (Vrijstellingsregeling Wtk 1992), as
amended from time to time.
"Dutch Policy Guidelines": the Dutch Central Bank's policy guidelines
of July 10, 2002 issued in relation to the Dutch Exemption Regulation
(beleidsregel kernbegrippen markttoetreding en handhaving Wtk 1992), as
amended from time to time.
"Environmental Laws" any and all foreign, federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, technical
standards (norma tecnica), codes, decrees, requirements of any Governmental
Authority or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any time
hereafter be in effect.
"Euro" and "(euro)": the lawful currency of the participating member
states of the European Monetary Union.
"Euro Borrowing": a borrowing of Euro Loans hereunder.
"Eurocurrency Base Rate": with respect to each day during each
Interest Period pertaining to the Loans under any Tranche, the rate per annum
(rounded upwards, if necessary, to the next 1/100th of 1%) determined on the
basis of the London inter-bank offered rate for deposits in the currency in
which such Loans are denominated for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on page 3750 of
the Telerate screen as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does not
appear on the Telerate screen, the "Eurocurrency Base Rate" shall be
determined by reference to such other comparable publicly available service
for displaying eurocurrency rates as may be selected by the Administrative
Agent in consultation with the Borrower or, in the absence of such
availability, by reference to the rate (rounded upwards, if necessary, to the
next 1/100th of 1%) at which deposits in the relevant currency for a period
equal to or closest to (but greater than) such Interest Period are offered by
the principal London office of the Administrative Agent in the relevant
interbank market at or about 11:00 A.M., London time, two Business Days prior
to the beginning of such Interest Period.
"Eurocurrency Rate": with respect to each day during each Interest
Period pertaining to the Loans under any Tranche, a rate per annum determined
for such day in accordance with the following formula (rounded upwards, if
necessary, to the nearest 1/100th of 1%):
Eurocurrency Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurocurrency Reserve Requirements": for any day as applied to the
Loans under any Tranche, the aggregate (without duplication) of the maximum
rates (expressed as a decimal fraction) of reserve requirements in effect on
such day (including basic, supplemental, marginal and emergency reserves)
under any regulations of the Board or other Governmental Authority having
jurisdiction over any Lender dealing with reserve requirements prescribed for
funding in eurodollars, Euro or Yen, as the case may be (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Board).
"Euro Loan": a Loan denominated in Euro.
"Event of Default": any of the events specified in Section 7;
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Exchange Act": the U.S. Securities Exchange Act of 1934, as amended.
"Exchange Rate": (a) with respect to Euro, $/(euro) 0.85455 and (b)
with respect to Yen, $/(Y) 108.9600.
"FAS 140": Financial Accounting Standards Board Statement No. 140 or
any Statement replacing the same, in each case as amended, modified or
supplemented from time to time.
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by Citibank, N.A.,
from three federal funds brokers of recognized standing selected by it.
"Governmental Authority": any foreign or domestic branch of power or
government or any state, department or other political subdivision thereof, or
any foreign or domestic governmental body, agency, authority (including any
central bank or taxing authority), any entity or instrumentality (including
any court or tribunal) exercising, or asserting jurisdiction to exercise,
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group Members": the collective reference to the Borrower, each
Guarantor and all of their respective Subsidiaries.
"Guarantee": the guarantee of the Borrower's Obligations by each
Guarantor hereunder.
"Guarantors": as defined in the preamble hereto.
"Hedge Agreements": all interest rate swaps, caps or collar
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations (including any
option with respect to any of the foregoing transactions), either generally or
under specific contingencies.
"Indemnitee" and "Indemnified Liabilities": as defined in Section
10.5.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under Mexican, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks,
trademark licenses, technology, know-how and processes, trade secrets, any
applications associated with the foregoing, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right
to receive all proceeds and damages therefrom.
"Interest Payment Date": the last day of any Interest Period.
"Interest Period": as to the Loans of any Tranche, (a) initially, the
period commencing on the Closing Date and ending (i) in the case of Tranche C
Loans, six months thereafter and (ii) in the case of Tranche A or Tranche B
Loans, one, three or six months thereafter, as selected by the Borrower in its
Notice of Borrowing given with respect thereto; and (b) thereafter, each
period commencing on the last day of the immediately preceding Interest Period
applicable to the Loans of such Tranche and ending one, three or six months
thereafter, as determined pursuant to Section 2.6; provided that all of the
foregoing provisions relating to Interest Periods are subject to the
following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless such extension would carry such
Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period shall be selected with respect to any
Tranche that would extend beyond any Maturity Date with respect to such
Tranche; and
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Joint Bookrunners": as defined in the preamble hereto.
"Judgment Currency": as defined in Section 10.15(b).
"Lead Arrangers": as defined in the preamble hereto.
"Lender Affiliate": (a) any Affiliate of any Lender, (b) any Person
that is administered or managed by any Lender and that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business and (c) with
respect to any Lender which is a fund that invests in commercial loans and
similar extensions of credit, any other fund that invests in commercial loans
and similar extensions of credit and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such Lender or
investment advisor.
"Lenders": as defined in the preamble hereto.
"Lien": with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement of any kind whatsoever that has the practical effect
of creating a Lien, in respect of such asset. Any Group Member shall be deemed
to own, subject to a Lien, any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement and each of the Notes.
"Loan Party": the Borrower and each Guarantor, collectively, the
"Loan Parties."
"Majority Lenders": with respect to any Tranche at any time, the
holders at such time of more than 50% of the aggregate unpaid principal amount
of the Loans outstanding under such Tranche at such time.
"Material Acquisition": any (a) acquisition of property or series of
related acquisitions of property that constitutes assets comprising all or
substantially all of an operating unit, division or line of business or (b)
acquisition of or other investment in the Capital Stock of any Subsidiary of
Cemex or any Person which becomes a Subsidiary of Cemex or is merged or
consolidated with any Group Member, in each case which involves the payment of
aggregate consideration by any one or more Group Members in excess of
U.S.$25,000,000 (or the equivalent thereof in other currencies).
"Material Adverse Effect": a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries taken as a whole,
or of any Guarantor and its Subsidiaries taken as a whole, (b) the rights and
remedies of the Administrative Agent or any Lender under this Agreement or any
other Loan Document or (c) the ability of the Borrower or any other Loan Party
to perform its obligations under this Agreement or any other Loan Document.
"Material Disposition": any Disposition of property or series of
related Dispositions of property that yields aggregate gross proceeds to any
one or more Group Members in excess of U.S.$25,000,000 (or the equivalent
thereof in other currencies).
"Material Subsidiary": at any date, (a) Cemex Espana, each Trademark
Company and each Loan Party that is a Subsidiary of Cemex and (b) each other
Subsidiary of any Loan Party (if any) (i) the assets of which, together with
those of its Subsidiaries, on a consolidated basis, without duplication,
constitute 5% or more of the consolidated assets of Cemex and its Subsidiaries
as of the end of the then most recently ended fiscal quarter or (ii) the
operating profit of which, together with that of its Subsidiaries, on a
consolidated basis, without duplication, constitutes 5% or more of the
consolidated operating profit of Cemex and its Subsidiaries for the then most
recently ended fiscal quarter.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"Maturity Date": with respect to any Loan, any date on which the
outstanding principal amount of such Loan is payable by the Borrower pursuant
to the provisions of Section 2.1(d), (e) or (f).
"Mexican Bank": any bank incorporated under the laws of Mexico and
duly authorized by the Ministry of Finance and Public Credit (Secretaria de
Hacienda y Credito Publico) to carry out the business of banking in Mexico
under the Credit Institutions Law (Ley de Instituciones de Credito).
"Mexican GAAP": generally accepted accounting principles in Mexico as
in effect from time to time, except that for purposes of Section 6.1, Mexican
GAAP shall be determined on the basis of such principles in effect as of the
date of, and applied in the preparation of, the audited financial statements
of Cemex and its consolidated Subsidiaries as of and for the year ended
December 31, 2002. In the event that any change in Mexican GAAP shall occur
and such change results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrower and the
Administrative Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such change in Mexican
GAAP with the desired result that the criteria for evaluating the financial
condition of Cemex and its consolidated Subsidiaries shall be the same after
such change as if such change had not been made. Until such time as such an
amendment shall have been executed and delivered by the Borrower, the
Administrative Agent and the Required Lenders, all financial covenants,
standards and terms in this Agreement shall continue to be calculated or
construed as if such change in Mexican GAAP had not occurred.
"Mexico": the United Mexican States.
"Non-Excluded Taxes": as defined in Section 2.12(a).
"Non-Extension Notice": as defined in Section 2.5(a).
"Notes": the collective reference to each Tranche A Note, each
Tranche B Note and each Tranche C Note.
"Notice of Borrowing": as defined in Section 2.2(a).
"Obligations": (a) as to the Borrower, all of the Debt, obligations
and liabilities of the Borrower to the Lenders and the Agents now or in the
future existing under or in connection with the Loan Documents, whether direct
or indirect, absolute or contingent, due or to become due and (b) as to each
Guarantor, all the Debt, obligations and liabilities of such Guarantor to the
Lenders and the Agents now or in the future existing under or in connection
with this Agreement, whether direct or indirect, absolute or contingent, due
or to become due.
"Off-Balance-Sheet Transactions": any financing transaction of any
Person not reflected as Debt on the balance sheet of such Person, but being
structured in a way that may result in payment obligations by such Person.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 10.6 (b).
"Permitted Liens": as defined in Section 6.2.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, or other business entity, or Governmental
Authority, whether or not having a separate legal personality.
"Process Agent": as defined in Section 10.13.
"Professional Market Party": a professional market party
(professionele marktpartij) as defined from time to time under the Dutch
Exemption Regulation. As of the date hereof, only the following are
Professional Market Parties: (a) banks, insurance companies, securities firms,
investment institutions and pension funds that are (i) supervised or licensed
under Dutch law or (ii) established and acting under supervision in a European
Union member state (other than The Netherlands), Hungary, Monaco, Poland,
Puerto Rico, Saudi Arabia, Slovakia, Czech Republic, Turkey, South Korea, the
United States, Japan, Australia, Canada, Mexico, New Zealand or Switzerland;
(b) investment institutions that offer their participation rights exclusively
to professional market parties and are not required to be supervised or
licensed under Dutch law; (c) the State of The Netherlands, the Dutch Central
Bank, a foreign central government body, a foreign central bank, Dutch
regional and local governments and comparable foreign de-centralized
government bodies, international treaty organizations and supranational
organizations; (d) enterprises or entities with total assets of at least
(euro)500,000,000 (or the equivalent thereof in other currencies) as per the
balance sheet of such entity as of the year-end preceding the date of the
making of, or acceptance of an assignment of (as the case may be), any Loan
hereunder; (e) enterprises, entities or individuals with net assets (eigen
vermogen) within the meaning of the Dutch Exemption Regulation of at least
(euro)10,000,000 (or the equivalent thereof in other currencies) as of the
year-end preceding the date of the making of, or acceptance of an assignment
of (as the case may be), any Loan hereunder and who or which have been active
in the financial markets on average twice a month over a period of at least
two consecutive years preceding such date; (f) subsidiaries of the entities
referred to under (a) above, provided such subsidiaries are subject to
supervision; and (g) an enterprise or institution that has a rating from or
that issues securities having a rating from a rating agency recognized for
such purposes by the Dutch Central Bank.
"Properties": as defined in Section 3.17(a).
"Qualified Receivables Transaction": any transaction or series of
transactions that may be entered into by any Group Member pursuant to which
such Group Member may sell, convey or otherwise transfer to a Special Purpose
Vehicle (in the case of a transfer by Cemex or any other Seller) and any other
Person (in the case of a transfer by a Special Purpose Vehicle), or may grant
a security interest in, any Receivables Program Assets (whether now existing
or arising in the future); provided that:
(a) no portion of the Debt or any other obligations
(contingent or otherwise) of a Special Purpose Vehicle (i) is
guaranteed by Cemex or any other Seller or (ii) is recourse to or
obligates Cemex or any other Group Member in any way such that the
requirements for off balance sheet treatment under FAS 140 are not
satisfied; and
(b) Cemex and the other Sellers do not have any obligation to
maintain or preserve the financial condition of a Special Purpose
Vehicle or cause such entity to achieve certain levels of operating
results.
"Receivables": all rights of Cemex or any other Seller to payments
(whether constituting accounts, chattel paper, instruments, general
intangibles or otherwise, and including the right to payment of any interest
or finance charges), which rights are identified in the accounting records of
Cemex or such Seller as accounts receivable.
"Receivables Documents": (a) a receivables purchase agreement,
pooling and servicing agreement, credit agreement, agreement to acquire
undivided interests in or other agreement to transfer, or create a security
interest in, Receivables Program Assets, in each case as amended, modified,
supplemented or restated and in effect from time to time entered into by
Cemex, another Seller and/or a Special Purpose Vehicle, and (b) each other
instrument, agreement and other document entered into by Cemex, any other
Seller or a Special Purpose Vehicle relating to the transactions contemplated
by the items referred to in clause (a) above, in each case as amended,
modified, supplemented or restated and in effect from time to time.
"Receivables Program Assets": (a) all Receivables which are described
as being transferred by Cemex, another Seller or a Special Purpose Vehicle
pursuant to the Receivables Documents, (b) all Receivables Related Assets in
respect of such Receivables, and (c) all collections (including recoveries)
and other proceeds of the assets described in the foregoing clauses.
"Receivables Program Obligations": (a) notes, trust certificates,
undivided interests, partnership interests or other interests representing the
right to be paid a specified principal amount from the Receivables Program
Assets and (b) related obligations of Cemex, a Subsidiary of Cemex or a
Special Purpose Vehicle (including, without limitation, rights in respect of
interest or yield hedging obligations, breach of warranty or covenant claims
and expense reimbursement and indemnity provisions).
"Receivables Related Assets": with respect to any "Receivables" (i)
any rights arising under the documentation governing or relating to such
Receivables (including rights in respect of Liens securing such Receivables),
(ii) any proceeds of such Receivables and (iii) other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Register": as defined in Section 10.6(d).
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Required Lenders": at any time, the holders of more than 50% of (a)
until the Closing Date, the aggregate Dollar Amount of the Commitments then in
effect and (b) thereafter, the aggregate unpaid principal Dollar Amount of the
Loans then outstanding.
"Requirement of Law": as to any Person, the charter, statuten, and
estatutos sociales or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Responsible Officer": of any Person means the Chief Financial
Officer, the Corporate Planning and Finance Director, the Finance Director or
the Comptroller (or, if there is no officer with such title, an officer
equivalent to any of the foregoing) of such Person; provided, that for
purposes of delivery of any Compliance Certificate pursuant to Section 5.2(b)
hereof, the Chief Financial Officer of Cemex may be the Responsible Officer
executing such Compliance Certificate with respect to any Person.
"Restricted Payments": as defined in Section 6.5.
"Restricted Subsidiary": at any time, any of (a) Cemex Mexico, S.A.
de C.V., (b) Empresas Tolteca de Mexico, S.A. de C.V., (c) any Trademark
Company, (d) any Material Subsidiary of Cemex that, as of the date hereof, (i)
is incorporated or organized in Mexico, (ii) has its principal place of
business in Mexico or (iii) conducts a majority of its business or holds a
majority of its assets in Mexico and (e) any Subsidiary of Cemex that at such
time owns or operates any portion, beyond a de minimis amount, of the assets
owned or operated as of the date hereof by the Persons described in clauses
(a) through (d).
"SEC": the U.S. Securities and Exchange Commission, any successor
thereto and any analogous Governmental Authority.
"Seller": Cemex or any Subsidiary of Cemex or other Affiliate of
Cemex (other than a Subsidiary of Cemex or Affiliate that is a Special Purpose
Vehicle) which is a party to a Receivables Document.
"S&P": Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc. and any successor thereto.
"Special Purpose Vehicle": a trust, partnership or other special
purpose Person established by any Group Member to implement a Qualified
Receivables Transaction.
"Subsidiary": with respect to any Person, any corporation,
partnership, joint venture, limited liability company, trust, estate or other
entity of which (or in which) more than 50% of (a) in the case of a
corporation, the issued and outstanding capital stock having voting power to
elect a majority of the board of directors of such corporation (irrespective
of whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency not in the control of such Person), (b) in the case of a limited
liability company, partnership or joint venture, the interest in the capital
or profits of such limited liability company, partnership or joint venture or
(c) in the case of a trust or estate, the beneficial interest in such trust or
estate, is at the time directly or indirectly owned or controlled by (i) such
Person, (ii) such Person and one or more of its other Subsidiaries or (iii)
one or more of such Person's other Subsidiaries. For purposes of this
definition, "control" by a Person means the power directly or indirectly to
direct (x) the exercise of voting power of, or (y) the disposition of, any
interest of the kind set forth in clauses (a) through (c) above. For purposes
of determining whether a trust formed in connection with a Qualified
Receivables Transactions is a Subsidiary, notes, trust certificates, undivided
interests, partnership interests or other interests of the type described in
clause (a) of the definition of Receivables Program Obligations shall be
counted as beneficial interests in such trust.
"Successor": as defined Section 6.3(a).
"Taxes": as defined in Section 2.12.
"Temporary Investments": at any date, all amounts that would, in
conformity with Mexican GAAP consistently applied, be set forth opposite the
captions "cash and cash equivalents" ("efectivo y equivalentes de efectivo")
and/or "temporary investments" ("inversiones temporales") on a consolidated
balance sheet of Cemex at such date.
"Termination Amount": at any date and with respect to any Derivatives
Obligation, the aggregate of all settlement and other amounts (without giving
effect to any set-off, counterclaim or other reduction) which in the good
faith determination of the Required Lenders would be payable if any default,
event of default, termination event, illegality, or other event giving rise to
an early termination or liquidation of the relevant derivative transaction
were to occur in respect of such Derivatives Obligation on such date.
"Termination Notice": as defined in Section 4.13.
"Total Borrowings": without duplication, in respect of any Person,
the amount of all Debt of such Person plus the aggregate amount of all payment
obligations, contingent or otherwise, of such Person in respect of
Off-Balance-Sheet Transactions entered into by such Person.
"Total Net Worth of Cemex Espana": at any date, the shareholders'
equity of Cemex Espana and its Subsidiaries (including minority interests) at
such date, in accordance with Spanish GAAP.
"Trademark Companies": collectively, CTW and any other Person at any
time conducting business or serving a purpose similar to the business and
purposes of CTW as of the date hereof, with respect to Intellectual Property
owned or held under license by CTW as of the date hereof, and any of their
Successors or transferees in the event of a merger or consolidation of any
such Person or the transfer, conveyance, sale, lease or other disposition of
all or substantially all of its properties or assets in accordance with
Section 6.3.
"Tranche": when used with respect to Loans or Commitments, refers to
whether such Loans or Commitments are Tranche A Loans, Tranche B Loans or
Tranche C Loans, or Tranche A Commitments, Tranche B Commitments or Tranche C
Commitments, as applicable.
"Tranche A Commitment": as to any Lender, the obligation of such
Lender, if any, to make Loans in an aggregate principal amount not to exceed
the amount set forth under the heading "Tranche A Commitment" opposite such
Lender's name on Schedule 1.1.
"Tranche A Lender": a Lender making a Tranche A Loan.
"Tranche A Loan": a Loan made pursuant to Section 2.1(a).
"Tranche A Maturity Date": the second anniversary of the Closing
Date; provided that if such day is not a Business Day, the Tranche A Maturity
Date shall be the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case the Tranche
A Maturity Date shall be the immediately preceding Business Day.
"Tranche A Note": a promissory note of the Borrower substantially in
the form of Exhibit A-1.
"Tranche B Commitment": as to any Lender, the obligation of such
Lender, if any, to make Loans in an aggregate principal amount not to exceed
the amount set forth under the heading "Tranche B Commitment" opposite such
Lender's name on Schedule 1.1.
"Tranche B Extended Maturity Date": the date that is 180 days after
the Tranche B Maturity Date; provided that if such day is not a Business Day,
the Tranche B Extended Maturity Date shall be the next succeeding Business
Day, unless such next succeeding Business Day would fall in the next calendar
month, in which case the Tranche B Extended Maturity Date shall be the
immediately preceding Business Day.
"Tranche B Lender": a Lender making a Tranche B Loan.
"Tranche B Loan": a loan made pursuant to Section 2.1(b).
"Tranche B Maturity Date": the third anniversary of the Closing Date;
provided that if such day is a Business Day, the Tranche B Maturity Date shall
be the next succeeding Business Day unless such next succeeding day would fall
in the next calendar month, in which case the Tranche B Maturity Date shall be
the immediately preceding Business Day.
"Tranche B Note": a promissory note of the Borrower substantially in
the form of Exhibit A-2.
"Tranche C Commitment": as to any Lender, the obligation of such
Lender, if any, to make Loans in an aggregate principal amount not to exceed
the amount set forth under the heading "Tranche C Commitment" opposite such
Lender's name on Schedule 1.1.
"Tranche C Extended Maturity Date": the date that is 180 days after
the Tranche C Maturity Date; provided that if such day is not a Business Day,
the Tranche C Extended Maturity Date shall be the next succeeding Business
Day, unless such next succeeding Business Day would fall in the next calendar
month, in which case the Tranche C Extended Maturity Date shall be the
immediately preceding Business Day.
"Tranche C Lender": a Lender making a Tranche C Loan.
"Tranche C Loan": a Loan made pursuant to Section 2.1(c).
"Tranche C Maturity Date": the third anniversary of the Closing Date;
provided that if such day is not a Business Day, the Tranche C Maturity Date
shall be the next succeeding Business Day, unless such next succeeding day
would fall in the next calendar month, in which case the Tranche C Maturity
Date shall be the immediately preceding Business Day.
"Tranche C Note": a promissory note of the Borrower substantially in
the form of Exhibit A-3.
"Transferee": any Assignee or Participant.
"U.S." or "United States": the United States of America.
"Verifiable Professional Market Party": a Professional Market Party
whose status as such may be determined on the basis of (a) its entry in a
public register (including on-line-registers available on the internet) of the
Dutch Central Bank, (b) its rating as provided by a rating agency recognized
for such purposes by the Dutch Central Bank and as it appears from any public
register and/or written statement of such rating agency, (c) its balance
sheet, as confirmed by an auditor's statement showing a value of its assets as
per the last day of the preceding calendar year of at least (euro)500,000,000
(or such other amount and/or at such other time as may be required pursuant to
the Dutch Exemption Regulation), or (d) its entry in a public register
published by a regulator (other than the Dutch Central Bank) of a country as
referred to in Section 1(e)(11) of the Dutch Exemption Regulation, exercising
supervision over the Professional Market Party.
"Yen" and "(Y)": the lawful currency of Japan.
"Yen Borrowing": a borrowing of Yen Loans hereunder.
"Yen Loan": a Loan denominated in Yen.
1.2. Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document
made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
(i) accounting terms relating to any Group Member not defined in Section 1.1
and accounting terms partly defined in Section 1.1, to the extent not defined,
shall have the respective meanings given to them under Applicable GAAP, (ii)
the words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation", (iii) the word "incur" shall be construed
to mean incur, create, issue, assume or otherwise become liable in respect of
(and the words "incurred" and "incurrence" shall have correlative meanings),
(iv) the words "asset" and "property" shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, Capital Stock, securities, revenues, accounts,
leasehold interests and contract rights, and (v) references to agreements or
other Contractual Obligations shall, unless otherwise specified, be deemed to
refer to such agreements or Contractual Obligations as amended, supplemented,
restated or otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section, Schedule
and Exhibit references are to this Agreement unless otherwise specified.
(d) In this Agreement, whenever pro forma effect is to be given to
any Material Acquisition or Material Disposition by any Group Member for
purposes of including or excluding (as the case may be) the amount of income
or earnings or other amounts relating thereto in any calculation under the
definition of Consolidated EBITDA, the pro forma calculations will be
determined in good faith by a responsible financial or accounting officer of
Cemex; provided that such pro forma calculations shall not include any pro
forma expense or cost reductions except to the extent calculated on a basis
consistent with Regulation S-X under the U.S. Securities Act of 1933, as
amended.
(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1. Commitments. (a) Subject to the terms and conditions hereof,
each Tranche A Lender severally agrees to make a Tranche A Loan denominated in
Euro to the Borrower on the Closing Date, in a principal amount not to exceed
the amount of such Lender's Tranche A Commitment. The maximum aggregate
principal amount of all Tranche A Loans shall not exceed (euro)256,365,000.
(b) Subject to the terms and conditions hereof, each Tranche B Lender
severally agrees to make a Tranche B Loan denominated in Dollars to the
Borrower on the Closing Date, in a principal amount not to exceed the amount
of such Lender's Tranche B Commitment. The maximum aggregate principal amount
of all Tranche B Loans shall not exceed U.S.$550,000,000.
(c) Subject to the terms and conditions hereof, each Tranche C Lender
severally agrees to make a Tranche C Loan denominated in Yen to the Borrower
on the Closing Date, in a principal amount not to exceed the amount of such
Lender's Tranche C Commitment. The maximum aggregate principal amount of all
Tranche C Loans shall not exceed (Y)32,688,000,000.
(d) The Borrower shall repay to the Administrative Agent on the
Tranche A Maturity Date for the ratable account of the Tranche A Lenders the
aggregate principal amount outstanding under the Tranche A Loans.
(e) The Borrower shall repay to the Administrative Agent (i) on the
Tranche B Maturity Date, for the ratable account of the Tranche B Lenders
holding Tranche B Loans the Maturity Date of which was not extended pursuant
to Section 2.5, the aggregate principal amount outstanding under such Tranche
B Loans and (ii) on the Tranche B Extended Maturity Date, for the ratable
account of the Tranche B Lenders holding Tranche B Loans the Maturity Date of
which was extended pursuant to Section 2.5, the aggregate principal amount
outstanding under such Tranche B Loans.
(f) The Borrower shall repay to the Administrative Agent (i) on the
Tranche C Maturity Date, for the ratable account of the Tranche C Lenders
holding Tranche C Loans the Maturity Date of which was not extended pursuant
to Section 2.5, the aggregate principal amount outstanding under such Tranche
C Loans and (ii) on the Tranche C Extended Maturity Date, for the ratable
account of the Tranche C Lenders holding Tranche C Loans the Maturity Date of
which was extended pursuant to Section 2.5, the aggregate principal amount
outstanding under such Tranche C Loans.
(g) Each Loan made by each Lender shall be evidenced by a Tranche A
Note, Tranche B Note or Tranche C Note, as the case may be, executed by the
Borrower and each Guarantor, as "avalista," and representing the obligation of
the Borrower to pay to such Lender the unpaid principal amount of such Loan,
plus interest thereon as provided in Section 2.7. Each Note shall qualify as a
pagare under Mexican law. No Lender shall, in connection with the enforcement
of any Note, be required to introduce into evidence or prove the existence of
this Agreement or the other Loan Documents (other than such Note) or the
making of Loans. In addition, the Borrower and each Guarantor shall, from time
to time at its expense, execute and/or deliver to each Lender such amendments
to the Notes, or replacement Notes, that may, in the judgment of such Lender,
be necessary and desirable in order to ensure that the Notes duly reflect the
terms of this Agreement. In addition, and without limiting the foregoing, in
the event that (i) any Interest Period of a different duration from the prior
Interest Period shall be selected with respect to any Tranche pursuant to
Section 2.6 or (ii) the Maturity Date of any Tranche shall be extended for any
reason, the Borrower and each Guarantor shall, at its expense, execute and
deliver to each Lender under such Tranche a replacement Note, which shall be
subscribed in the same manner and on the same terms and conditions as the Note
theretofore held by such Lender, and shall be delivered to each such Lender no
later than date on which any such change shall become effective.
2.2. Procedure for Borrowing. (a) The Borrower shall deliver to the
Administrative Agent irrevocable written notice, in the form of Exhibit D (the
"Notice of Borrowing") (which notice must be received by the Administrative
Agent prior to 11:00 A.M., New York City time, at least three Business Days
prior to the requested Closing Date) requesting that the Lenders make the
Loans on the Closing Date and specifying (i) the aggregate principal amount of
the Loans to be made in respect of each Tranche on the Closing Date, which
shall not exceed the maximum principal amounts with respect to each Tranche as
set forth in Section 2.1 and which shall (x) in the case of Tranche A, be a
whole multiple of (euro)5,000, (y) in the case of Tranche B, be a whole
multiple of U.S.$1,000,000 and (z) in the case of Tranche C, be a whole
multiple of (Y)1,000,000, and (ii) the initial Interest Period with respect to
each of Tranche A and Tranche B. Upon receipt of such notice, the
Administrative Agent shall promptly notify each Lender thereof. Not later than
12:00 Noon, New York City time, on the Closing Date, each Lender shall make
available to the Administrative Agent (i) at the Agent's Dollar Payment Office
an amount in immediately available funds equal to its pro rata share of each
Dollar Borrowing (if any), (ii) at the Agent's Euro Payment Office an amount
in immediately available funds equal to its pro rata share of each Euro
Borrowing (if any), and (iii) at the Agent's Yen Payment Office an amount in
immediately available funds equal to its pro rata share of each Yen Borrowing
(if any). The Administrative Agent shall pay to the Borrower in accordance
with the payment instructions set forth in the Notice of Borrowing the
aggregate of the amounts made available to the Administrative Agent by the
Lenders on the Closing Date in immediately available funds.
(b) Each Lender at its option may make any Euro Loan or Yen Loan by
causing any domestic or foreign branch or Lender Affiliate of such Lender to
make such Loan in accordance with Section 2.2(a); provided that any exercise
of such option shall not result in any Loan being made by a Person that is not
a Professional Market Party and shall not affect the obligation of the
Borrower to repay such Loan in accordance with this Agreement.
2.3. Fees. On the Closing Date, the Borrower shall pay:
(a) to the Administrative Agent for the account of each Lender, the
participation fees previously agreed in writing by the Borrower and each
Lender;
(b) to the Administrative Agent, the fees in the amounts previously
agreed to in writing by the Borrower and the Administrative Agent;
(c) to each Joint Bookrunner, the fees in the amounts previously
agreed in writing by the Borrower and the Joint Bookrunners; and
(d) to each Lead Arranger, the fees in the amounts previously agreed
by the Borrower and the Lead Arrangers.
2.4. Optional Prepayments. The Borrower may at any time and from time
to time prepay the Loans of any Tranche, in whole or ratably in part, without
premium or penalty, upon irrevocable written notice delivered to the
Administrative Agent at least four Business Days prior thereto, which notice
shall specify the date and amount of prepayment; provided that if a Loan is
prepaid in whole or ratably in part on any day other than the last day of the
Interest Period applicable thereto, the Borrower shall also pay any amounts
owing pursuant to Section 2.13. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each relevant Lender thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to such
date on the amount prepaid. Each partial prepayment of Loans shall be (x) in
the case of Dollar Loans, in an aggregate principal amount equal to at least
$5,000,000 or a whole multiple of $1,000,000 in excess thereof, (y) in the
case of Euro Loans, in an aggregate principal amount equal to at least
(euro)5,000,000 or a whole multiple of (euro)1,000,000 in excess thereof or
(z) in the case of Yen Loans, in an aggregate principal amount equal to at
least (Y)500,000,000 or a whole multiple of (Y)100,000,000 in excess thereof.
2.5. Extension of Maturity Dates. (a) On the Tranche B Maturity Date,
the principal amount then outstanding under each Tranche B Loan that would
otherwise be due and payable on such Maturity Date shall become due and
payable as of the Tranche B Extended Maturity Date automatically and without
further notice, unless (i) the Lender with respect to such Loan shall, at its
sole discretion, have provided written notice substantially in the form of
Exhibit G (each such notice, a "Non-Extension Notice") to the Borrower and the
Administrative Agent, not less than 90 days prior to the Tranche B Maturity
Date, that such Lender will not extend the maturity of such Loan to the
Tranche B Extended Maturity Date or (ii) Lenders representing more than fifty
percent of the total aggregate principal Dollar Amount of the Loans
outstanding under Tranche B and Tranche C shall have provided Non-Extension
Notices to the Borrower and the Administrative Agent not less than 90 days
prior to the Tranche B Maturity Date. In the case of (i) above, the principal
amount outstanding under each such Tranche B Loan shall be due and payable on
the Tranche B Maturity Date. In the case of (ii) above, the principal amount
outstanding under all Tranche B Loans shall be due and payable on the Tranche
B Maturity Date. The Administrative Agent shall provide to each Tranche B
Lender, not later than 30 days prior to the Tranche B Maturity Date, a notice
specifying the Maturity Date applicable to the Tranche B Loans of such Lender.
(b) On the Tranche C Maturity Date, the principal amount then
outstanding under each Tranche C Loan that would otherwise be due and payable
on such Maturity Date shall become due and payable as of the Tranche C
Extended Maturity Date automatically and without further notice unless (i) the
Lender with respect to such Loan shall, at its sole discretion, have provided
a Non-Extension Notice to the Borrower and the Administrative Agent, not less
than 90 days prior to the Tranche C Maturity Date, that such Lender will not
extend the maturity of such Loan to the Tranche C Extended Maturity Date or
(ii) Lenders representing more than fifty percent of the total aggregate
principal Dollar Amount of the Loans outstanding under Tranche B and Tranche C
shall have provided Non-Extension Notices to the Borrower and the
Administrative Agent not less than 90 days prior to the Tranche C Maturity
Date. In the case of (i) above, the principal amount then outstanding under
each such Tranche C Loan shall be due and payable on the Tranche C Maturity
Date. In the case of (ii) above, the principal amount outstanding under all
Tranche C Loans shall be due and payable on the Tranche C Maturity Date. The
Administrative Agent shall provide to each Tranche C Lender, not later than 30
days prior to the Tranche C Maturity Date, a notice specifying the Maturity
Date applicable to the Tranche C Loans of such Lender.
2.6. Interest Periods. (a) Upon the expiration of the then current
Interest Period with respect to any Tranche, if no Default or Event of Default
shall have occurred and be continuing, (i) in the case of Tranche A or Tranche
B Loans, the Borrower shall select a new Interest Period, by irrevocable
written notice to the Administrative Agent given not later than 11:00 am New
York City time on the third Business Day prior to the last day of the then
current Interest Period with respect thereto and (ii) in the case of Tranche C
Loans, a new six month Interest Period shall begin. Upon receipt of any such
notice, the Administrative Agent shall promptly notify each relevant Lender
thereof.
(b) If, upon the expiration of any Interest Period, the Borrower
shall have failed to select, or is not permitted to select, a new Interest
Period as provided in clause (a) above, or if a Default or Event of Default
shall have occurred and be continuing, the Administrative Agent shall select a
new Interest Period in accordance with the criteria set forth in the
definition of "Interest Period;" provided that such Interest Period may, at
the discretion of the Administrative Agent, have a duration of one day or one
week with respect to any overdue amounts bearing interest as determined
pursuant to Section 2.7(b) hereof.
2.7. Interest Rates and Payment Dates. (a) Loans under each Tranche
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurocurrency Rate with respect to
such Tranche determined for such day, plus the Applicable Margin.
(b) Any principal amount and (to the extent permitted by applicable
law) any interest or other amount not paid when due under this Agreement shall
bear interest for each day until paid in full, at a rate equal to the
Applicable Margin plus the Eurocurrency Rate that would otherwise be
applicable to the relevant Tranche, plus, in the case of principal and
interest, 2% per annum.
(c) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to paragraph (b) of this
Section shall be payable from time to time on demand.
2.8. Computation of Interest and Fees. (a) Interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Lenders under each Tranche of each determination
of a Eurocurrency Rate for such Tranche. Any change in the interest rate on a
Loan under any Tranche resulting from a change in the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day
on which such change becomes effective. The Administrative Agent shall as soon
as practicable notify the Borrower and the Lenders under each Tranche of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent
in determining any interest rate pursuant to Section 2.7.
2.9. Inability to Determine Interest Rate. If prior to the first day
of any Interest Period with respect to any Tranche:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate means do not
exist for ascertaining the Eurocurrency Rate with respect to such Tranche for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Lenders with respect to such Tranche (excluding for such purposes any
Mexican Bank that has not received the approval of Banco de Mexico as provided
below) that the Eurocurrency Rate determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (as certified by such
Lenders, which certification shall be conclusive absent manifest error) of
making or maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telephonic or facsimile notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given, all Loans outstanding under such Tranche shall be converted, on
the last day of the then-current Interest Period, to Loans ("Alternate Rate
Loans") bearing interest according to an interest rate convention determined in
good faith by the Administrative Agent, after consultation with the relevant
Lenders, to compensate the relevant Lenders for their cost of obtaining, as of
the commencement of the then current Interest Period, funds for such Interest
Period, plus the Applicable Margin. Until such notice has been withdrawn by the
Administrative Agent, such Loans shall be continued as Alternate Rate Loans. The
parties hereto hereby agree that the provisions of this Section 2.9 shall not
apply to any Loan held by any Lender that is a Mexican Bank, unless such Lender
has received the approval of Banco de Mexico.
2.10. Pro Rata Treatment and Payments. (a) Each borrowing of Loans
under any Tranche hereunder, each payment by the Borrower on account of any
commitment fee and any reduction of the Commitments of the Lenders under any
Tranche shall be made pro rata according to the respective Aggregate Exposure
Percentages of such Lenders with respect to such Tranche.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Loans under any Tranche shall be
made pro rata according to the respective outstanding principal amounts of the
Loans then held by the Lenders of such Tranche. Amounts prepaid on account of
the Loans may not be reborrowed.
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without set-off or counterclaim and shall be made prior to 11:00 A.M.,
New York City time, on the due date thereof to the Administrative Agent, for
the account of the Lenders, at the Agent's Dollar Payment Office, in Dollars
and in immediately available funds; provided that (i) all payments of
principal and interest on the Euro Loans shall be made in Euro at the Agent's
Euro Payment Office prior to 10:00 A.M., London time, on such date and (ii)
all payments of principal and interest on the Yen Loans shall be made in Yen
at the Agent's Yen Payment Office prior to 10:00 A.M., Tokyo time, on such
date. The Administrative Agent shall distribute such payments to the relevant
Lenders promptly upon receipt in like funds as received. If any payment on a
Loan becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the
result of such extension would be to extend such payment into another calendar
month, in which event such payment shall be due and payable on the immediately
preceding Business Day. In the case of any extension of any payment of
principal pursuant to the preceding sentence, interest thereon shall be
payable at the then applicable rate during such extension.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to the Closing Date that such Lender will not make
the amount that would constitute its share of the Loans under any Tranche
available to the Administrative Agent, the Administrative Agent may assume
that such Lender is making such amount available to the Administrative Agent
and, in reliance upon such assumption, the Administrative Agent may (but shall
not be required to) make available to the Borrower a corresponding amount. If
such amount is not made available to the Administrative Agent by the required
time on the Closing Date, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Agent Rate with respect to such Tranche for the period until such
Lender makes such amount immediately available to the Administrative Agent. A
certificate of the Administrative Agent submitted to any Lender with respect
to any amounts owing under this paragraph shall be conclusive in the absence
of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business
Days after the Closing Date, the Administrative Agent shall also be entitled
to recover such amount with interest thereon at the rate per annum otherwise
applicable to such Loans, on demand, from the Borrower.
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be
required to, in reliance upon such assumption, make available to the Lenders
their respective pro rata shares of a corresponding amount. If such payment is
not made to the Administrative Agent by the Borrower within three Business
Days after such due date, the Administrative Agent shall be entitled to
recover, on demand, from each Lender to which any amount which was made
available pursuant to the preceding sentence, such amount with interest
thereon at the rate per annum equal to the daily average Agent Rate. Nothing
herein shall be deemed to limit the rights of the Administrative Agent or any
Lender against the Borrower or any Guarantor.
2.11. Requirements of Law. (a) If any Lender shall have determined
that the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject such Lender to any tax of any kind
whatsoever with respect to this Agreement or any Loan made by it, or
change the basis of taxation of payments to such Lender in respect
thereof (except for Taxes in respect of which additional amounts are
payable pursuant to Section 2.12, or would be so payable but for an
exception set forth in Section 2.12, and changes in the rate of tax
on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of any Eurocurrency Rate
applicable to such Lender's Loans; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Loans, or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this paragraph, it
shall promptly notify the Borrower (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or
such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Borrower (with a copy to the Administrative Agent) of a
written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such
corporation for such reduction.
(c) A certificate as to any additional amounts payable pursuant to
this Section 2.11 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error.
The obligations of the Borrower pursuant to this Section 2.11 shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(d) If any Requirement of Law or any change therein or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Loans as contemplated by this Agreement, (a) the obligation
of such Lender hereunder to make Loans shall forthwith be cancelled to the
extent required by law and (b) all outstanding Loans, if any, shall (i) if so
required by law be repaid or (ii) if so permitted by law, at the option of the
Borrower either (A) be repaid or (B) be converted to Alternate Rate Loans, in
each case, on the last day of the Interest Period therefor. If any such
repayment or conversion is made on a day which is not the last day of the
Interest Period therefor, the Borrower shall pay to such Lender such amounts,
if any, as may be required pursuant to Section 2.13.
2.12. Taxes. (a) All payments made and to be made by the Borrower or
any Guarantor under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority ("Taxes"), excluding net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on the Administrative
Agent or any Lender by the jurisdiction under the laws of which the
Administrative Agent or such Lender is organized or in which its principal
place of business or applicable lending office is located or any political
subdivision or taxing authority thereof or therein. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or Other Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the
amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement; provided that the Borrower shall not be required
to increase any such amounts payable to any Lender with respect to any
Non-Excluded Taxes (that are not Other Taxes) that are in excess of those that
would have been payable had such Lender complied with the requirements of
paragraph (e) of this Section.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable
hereunder, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt,
a duplicate original or a duly certified or authenticated copy showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest,
additions, fines or penalties that may become payable by the Administrative
Agent or any Lender as a result of any such failure.
(d) The Borrower shall indemnify each Lender and the Administrative
Agent for and hold it harmless against the full amount of Non-Excluded Taxes
and Other Taxes imposed on or paid by such Lender or the Administrative Agent
(as the case may be), together with interest thereon from and including the
date on which such Lender or Administrative Agent (as the case may be)
provides notice to the Borrower that indemnification is due pursuant to this
Section 2.12(d) to but excluding the date of reimbursement at a rate per annum
equal to the interest rate from time to time applicable to the Loans to which
such amounts relate, and any other liability arising therefrom or with respect
thereto.
(e) A Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or under any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), upon the Borrower's reasonable request,
such properly completed and executed documentation as will permit such
payments to be made without withholding or at a reduced withholding tax rate;
provided that such Lender is legally entitled to complete, execute and deliver
such documentation and in such Lender's judgment such completion, execution or
submission would not cause such Lender or its lending office(s) to suffer any
economic, legal or regulatory disadvantage.
(f) The agreements in this Section 2.12 shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.13. Indemnity. The Borrower agrees to indemnify each Lender within
15 days after demand for, and to hold each Lender harmless from, any loss or
expense that such Lender may sustain or incur as a consequence of (a) default
by the Borrower in making a borrowing of Loans after the Borrower has given a
notice to the Administrative Agent requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of Loans after the Borrower has given a notice thereof to the
Administrative Agent in accordance with the provisions of this Agreement or
(c) the making of a prepayment of Loans on a day that is not the last day of
an Interest Period with respect thereto. Such indemnification shall include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so prepaid, or not so borrowed, for the period from
the date of such prepayment or of such failure to borrow to the last day of
such Interest Period (or, in the case of a failure to borrow, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein) over (ii) the amount of
interest (as determined in good faith by such Lender) that would have accrued
to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurocurrency market. A
certificate as to any amounts payable pursuant to this Section 2.13 submitted
to the Borrower by any Lender shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
2.14. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.11 or
2.12(a) with respect to such Lender, it will, if requested by the Borrower,
use reasonable efforts (subject to overall policy considerations of such
Lender) to designate another lending office for any Loans affected by such
event if such designation would avoid the consequences of such event; provided
that such designation (i) is made on terms that, in the judgment of such
Lender, cause such Lender and its lending office(s) to suffer no economic,
legal or regulatory disadvantage and (ii) does not (if at such time it is a
requirement of Dutch law that each Lender be a Professional Market Party)
result in any Loan being made by a Person that is not a Professional Market
Party), and provided further that nothing in this Section 2.14 shall affect or
postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to Section 2.11 or 2.12(a).
2.15. Replacement of Lenders. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant
to Section 2.11 or 2.12(a), other than withholding taxes generally payable on
the date hereof, or (b) defaults in its obligation to make Loans hereunder,
with a replacement financial institution; provided that (i) such replacement
does not conflict with any Requirement of Law, (ii) no Default or Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement such Lender shall have taken no action
under Section 2.14 so as to eliminate the continued need for payment of
amounts owing pursuant to Section 2.11 or 2.12(a), (iv) the replacement
financial institution shall purchase, at par, all Loans and other amounts
owing to such replaced Lender on or prior to the date of replacement, (v) the
Borrower shall be liable to such replaced Lender under Section 2.13 if any
Loan owing to such replaced Lender shall be purchased other than on the last
day of the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be a Professional Market Party (if
at such time it is a requirement of Dutch law that each Lender be a
Professional Market Party) and shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make
such replacement in accordance with the provisions of Section 10.6 (provided
that the Borrower shall be obligated to pay the registration and processing
fee referred to therein), (viii) until such time as such replacement shall be
consummated, the Borrower shall pay all additional amounts (if any) required
pursuant to Section 2.11 or 2.12(a), as the case may be, and (ix) any such
replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, each of the Loan Parties, except as otherwise
indicated, hereby represents and warrants to the Administrative Agent and each
Lender, as of the date hereof and as of the Closing Date that:
3.1. Financial Condition. (a) The financial statements delivered
pursuant to Section 4.2 are complete and correct in all material respects and
present fairly (i) the consolidated financial condition of each of Cemex and
its Subsidiaries and Cemex Espana and its Subsidiaries as at the dates
thereof, and the consolidated results of its operations and its consolidated
cash flows for the periods then ended (subject, in the case of quarterly
financial statements, to normal year-end audit adjustments) and (ii) the
financial condition of the Borrower and each of the Guarantors other than
Cemex as at the dates thereof, and the results of each of their operations and
cash flows for the periods then ended, subject, in the case of quarterly
financial statements, to normal year-end audit adjustments. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with Applicable GAAP applied consistently throughout
the periods involved.
(b) No Group Member has any guarantee obligations, contingent
liabilities, liabilities for taxes, or any long-term leases or unusual forward
or long-term commitments, including without limitation any interest rate or
foreign currency swap or exchange transaction or other obligation in respect
of Derivatives Obligations, which is material and is not reflected in the most
recent financial statements referred to in clause (a) above.
3.2. No Change. Since December 31, 2002, (a) there has been no
development or event that has had or would reasonably be expected to have a
Material Adverse Effect and (b) there has been no Disposition by any Group
Member which has had or would reasonably be expected to have a Material
Adverse Effect.
3.3. Existence; Compliance with Law. (a) Each Group Member (i) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has the power and authority and the
legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently
engaged, (iii) is duly qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification and (iv)
is in compliance with all Requirements of Law, except, in the case of clauses
(ii), (iii) and (iv) only, as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower is in full compliance with the applicable provisions
of the Dutch Banking Act and any implementing regulations, including, but not
limited to, the Dutch Exemption Regulation and the Dutch Policy Guidelines.
The Borrower has verified the status of each Lender and each such Lender is
either (i) a Professional Market Party or (ii) exempted from the requirement
to be a Professional Market Party because it forms a closed circle (besloten
kring), within the meaning of the Dutch Exemption Regulation, with the
Borrower.
3.4. Power; Authorization; Enforceable Obligations. Each Loan Party
has the power and authority, and the legal right, to make, deliver and perform
each of the Loan Documents to which it is a party and, in the case of the
Borrower, to obtain extensions of credit hereunder. Each Loan Party has taken
all necessary corporate or other organizational action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party and, in the case of the Borrower, to authorize the extensions of credit
on the terms and conditions of this Agreement. This Agreement has been and as
of the Closing Date each Loan Document to which any Loan Party is a party will
have been duly executed and delivered on behalf of such Loan Party. This
Agreement constitutes, and each Loan Document upon execution by such Loan
Party will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable concurso mercantil,
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law).
3.5. Governmental Approvals. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority
or any other Person is required in connection with the extensions of credit
hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents.
3.6. Compliance with Law and Other Instruments. The execution,
delivery and performance of this Agreement and each of the other Loan
Documents to which each Loan Party is a party and the consummation of the
transactions herein or therein contemplated, and compliance with the terms and
provisions hereof and thereof, do not and will not (a) conflict with, or
result in a breach or violation of, or constitute a default under, or result
in the creation or imposition of any Lien upon the assets of any Group Member
pursuant to, any material Contractual Obligation (including, for the avoidance
of doubt and without limitation, any Contractual Obligation involving payment
obligations in excess of U.S.$5,000,000) or (b) result in any violation of the
statuten, estatutos sociales or other organizational or governing documents of
any Group Member or any provision of any Requirement of Law applicable to any
such Group Member.
3.7. Litigation. No action, suit, investigation, litigation or
proceeding before any arbitrator or Governmental Authority is pending or, to
the knowledge of any Group Member, threatened by or against any Group Member
or against any Group Member's properties or revenues that (a) if adversely
determined would be reasonably likely to have a Material Adverse Effect or (b)
purports to affect the legality, validity or enforceability of any Loan
Document or the consummation of any transaction contemplated thereby, except,
in the case of clause (a), as described in Schedule 3.7. There has been no
material adverse change in the status, or financial effect on any Group
Member, of any litigation described in Schedule 3.7.
3.8. No Default. No Group Member is in default under or with respect
to any of its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
3.9. Ownership of Property; Liens. Each Group Member has title in fee
simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its other property, with such
exceptions as could not reasonably be expected to have a Material Adverse
Effect, and none of its material property is subject to any Lien except as
permitted by Section 6.2.
3.10. Intellectual Property. Each Group Member owns, or is licensed
to use, all Intellectual Property necessary for the conduct of its business as
currently conducted free and clear of Liens, conditions, adverse claims or
other restrictions. No material claim has been asserted and is pending by any
Person challenging or questioning the use of any Intellectual Property or the
validity, enforceability or effectiveness of any Intellectual Property owned
by any Group Member, nor does any Loan Party know of any valid basis for any
such claim. The use of Intellectual Property by each Group Member does not
infringe on the rights of any Person in any material respect.
3.11. Taxes. (a) Each Group Member has filed or caused to be filed
all material tax returns that are required to be filed and has paid all taxes
due and payable pursuant to such returns or pursuant to any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority except
where the same may be contested in good faith by appropriate proceedings and
with respect to which reserves to the extent required by law or pursuant to
Applicable GAAP have been provided on the books of such Group Member. No
material tax Lien has been filed, and, to the knowledge of any Loan Party, no
material claim is being asserted, with respect to any such tax, fee or other
charge.
(b) There is no tax (other than taxes on, or measured by, income or
profits), levy, impost, deduction, charge or withholding imposed, levied,
charged, assessed or made by or in the jurisdiction in which such Loan Party
is domiciled or any political subdivision or taxing authority thereof or
therein either (i) on or by virtue of the execution, delivery, performance,
enforcement, or admissibility into evidence of this Agreement or any of the
other Loan Documents or (ii) on any payment to be made by such Loan Party
pursuant to this Agreement or any of the other Loan Documents, other than,
with respect to each Guarantor, withholding taxes imposed pursuant to the
Mexican Income Tax Law (Ley del Impuesto sobre la Renta) on payments of
interest, fees and other amounts deemed to constitute interest to any Lender
that is not a resident of Mexico for tax purposes. Each Loan Party is
permitted to pay any amounts payable pursuant to Section 2.12.
3.12. Federal Reserve Regulations. No part of the proceeds of any
Loans, and no other extensions of credit hereunder, will be used for "buying"
or "carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in
effect or for any purpose that violates the provisions of the regulations of
the Board or any Governmental Authority.
3.13. Labor Matters. There are no strikes pending or threatened
against any Group Member, and the hours worked and payments made to employees
of each Group Member have not been in violation of any applicable Requirement
of Law where any of the foregoing would reasonably be expected to have a
Material Adverse Effect. All material payments due from any Group Member, or
for which any claim may be made against any Group Member, on account of wages
and employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of each Group Member. The execution,
delivery and performance of the Loan Documents by any of the Loan Parties will
not give rise to a right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which any Group
Member (or any predecessor) is a party or by which any Group Member (or any
predecessor) is bound.
3.14. Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the U.S. Investment Company Act of 1940, as amended. No
Loan Party is subject to, or has not fully complied with, any Requirement of
Law that limits its ability to enter into this Agreement and incur any Debt or
make any Guarantee hereunder.
3.15. Use of Proceeds. The net proceeds of the Loans will be used (i)
first, to repay all amounts outstanding under, and terminate, the Amended and
Restated Facility Agreement for up to U.S.$1,200,000,000 credit facilities
provided to Rey Holding (Jersey) Limited dated February 15, 2002 and the
U.S.$600,000,000 Cemex Syndicated Credit Facility dated June 11, 2001 (the
"Revolving Credit Facility") (or, to the extent the foregoing facilities are
repaid in full and terminated, any other Debt incurred to repay such
facilities) and (ii) second, to repay any other senior Debt of any Loan Party.
All amounts outstanding under the Revolving Credit Facility shall be repaid in
full no later than the Closing Date, no further amounts shall be borrowed
thereunder and all commitments thereunder shall be terminated not later than
six Business Days after the Closing Date.
3.16. Subsidiaries; Capital Stock. Part A of Schedule 3.16 sets forth
the name and jurisdiction of incorporation of each Material Subsidiary and
each Restricted Subsidiary as of the date hereof and the Closing Date and, as
to each such Subsidiary, the percentage of each class of Capital Stock owned
by any Loan Party as of the date hereof and the Closing Date. Part B of
Schedule 3.16 sets forth the name and jurisdiction of incorporation of each
Subsidiary of Cemex as of the Closing Date other than those referred to in the
preceding sentence. All of the outstanding Capital Stock of Cemex and each
Material Subsidiary has been validly issued and is fully paid and
non-assessable.
3.17. Environmental Matters. Except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by any
Group Member (the "Properties") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances that constitute or constituted a violation of, or could
give rise to liability under, any Environmental Law;
(b) no Group Member has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the business operated by any Group Member
(the "Business"), nor does any Loan Party have knowledge or reason to believe
that any such notice will be received or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location that could give rise to liability under, any Environmental Law, nor
have any Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that could give rise to liability under, any applicable Environmental
Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of any Loan Party, threatened, under any
Environmental Law to which any Group Member is or will be named as a party
with respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of any Group Member in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or in
a manner that could give rise to liability under Environmental Laws;
(f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with respect to the
Properties or the Business; and
(g) no Group Member has assumed any liability of any other Person
under Environmental Laws.
3.18. Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or in any other document, certificate or statement
furnished by or on behalf of any Loan Party to the Administrative Agent or the
Lenders, or any of them, for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents contained, as of
the date such statement, information, document or certificate was so furnished
(or, in the case of this Agreement (including all schedules and exhibits
hereto) and the Confidential Information Memorandum, as of the date of this
Agreement and as of the Closing Date) any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements contained
herein or therein not misleading. The projections contained in the materials
referenced above are based upon good faith estimates and assumptions believed
by management of the Borrower and the Guarantors to be reasonable at the time
made, it being recognized by the Lenders that such financial information as it
relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents, in the Confidential Information Memorandum or in any
other document, certificate or statement furnished by or on behalf of any Loan
Party to the Administrative Agent and the Lenders pursuant to the Loan
Documents.
3.19. No Immunity. Each Loan Party is subject to civil and commercial
law with respect to its obligations under each Loan Document to which it is a
party, and the execution, delivery and performance of the Loan Documents by
each Loan Party constitute private and commercial acts rather than public or
governmental acts. Under the laws of Mexico and The Netherlands none of the
Loan Parties nor any of their respective properties has any immunity from
jurisdiction of any court or any legal process (whether through service or
notice, attachment prior to judgment or attachment in aid of execution).
3.20. Direct Obligations; Pari Passu. (a) The Borrower's and each
Guarantor's obligations under this Agreement and under the Notes constitute
direct, unconditional, senior, unsubordinated and unsecured obligations of the
Borrower or such Guarantor, as the case may be.
(b) The Borrower's and each Guarantor's obligations under this
Agreement and under the Notes rank and will at all times rank at least pari
passu in all respects with all other present and future senior unsecured and
unsubordinated Debt of the Borrower or such Guarantor, as the case may be.
3.21. No Recordation Necessary. (a) This Agreement and each of the
other Loan Documents are in proper legal form under the law of Mexico and of
The Netherlands for the enforcement thereof against the Loan Parties under
such law. To ensure the legality, validity, enforceability or admissibility in
evidence of this Agreement and the other Loan Documents in Mexico or The
Netherlands, it is not necessary that this Agreement or any other Loan
Document be filed or recorded with any Governmental Authority in Mexico or The
Netherlands or that any stamp or similar tax be paid on or in respect of this
Agreement or any other document to be furnished under this Agreement; provided
that in the event any legal proceedings with respect to any Loan Document are
brought in the courts of Mexico, a Spanish translation of the documents
required in such proceedings, including such Loan Document, would have to be
approved by the court after the defendant is given an opportunity to be heard
with respect to the accuracy of the translation, and proceedings would
thereafter be based upon the translated documents.
(b) It is not necessary (i) in order for any Agent or any Lender to
enforce any rights or remedies under any of the Loan Documents or (ii) solely
by reason of the execution, delivery or performance of this Agreement by any
Agent or any Lender, that such Agent or such Lender be licensed or qualified
with any Mexican or Dutch Governmental Authority or be entitled to carry on
business in Mexico or The Netherlands.
3.22. Choice of Law; Submission to Jurisdiction and Waiver of
Immunity. In any action or proceeding involving any Loan Party arising out of
or relating to any Loan Document in any Mexican or Dutch court or tribunal,
the Lenders and each Agent would be entitled to the recognition and
effectiveness of the choice of law, submission to jurisdiction and waiver of
sovereign immunity provisions of Sections 10.11, 10.12 and 10.14.
3.23. Clauses Restricting Subsidiary Distributions. There is no
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
make Restricted Payments in respect of any Capital Stock of such Restricted
Subsidiary held by, or pay any Debt owed to, any Loan Party or any other such
Restricted Subsidiary, (b) make loans or advances to, or other investments in,
any Loan Party or any other such Restricted Subsidiary or (c) transfer any of
its assets to any Loan Party or any other such Restricted Subsidiary, other
than, in the case of any such Restricted Subsidiary that is not a Trademark
Company, such encumbrances or restrictions existing as of the date hereof and
described in Schedule 3.23 hereof.
3.24. Solvency. As of the date hereof and as of the Closing Date,
after giving effect to the application of the proceeds of the Loans and the
making of the Guarantees hereunder, (a) the fair value of the assets of each
Loan Party will exceed its Debts and all other liabilities, whether
subordinated, contingent or otherwise, and (b) each Loan Party will be able to
pay its Debts and all other liabilities, whether subordinated, contingent or
otherwise, as such Debts and liabilities become due and payable.
SECTION 4. CONDITIONS PRECEDENT
The agreement of each Lender to make the Loans requested to be made
by it is subject to the satisfaction, prior to or concurrently with the making
of such Loans on the Closing Date, of the following conditions precedent:
4.1. Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by each of the Agents, the Borrower,
the Guarantors and each Person listed on Schedule 1.1, and (ii) the Notes
evidencing the Loans made on the Closing Date, executed and delivered by the
Borrower and each Guarantor, in favor of each Lender.
4.2. Financial Statements. The Lenders shall have received true and
current copies of (i) audited consolidated financial statements of each of
Cemex and its Subsidiaries and Cemex Espana and its Subsidiaries for the 2002
fiscal year; (ii) audited unconsolidated financial statements of the Borrower
and each Guarantor other than Cemex for the 2002 fiscal year; (iii) unaudited
interim consolidated financial statements of each of Cemex and its
Subsidiaries and Cemex Espana and its Subsidiaries for the quarter ended June
30, 2003 or, if available, for the quarter ended September 30, 2003, and such
financial statements shall not, in the judgment of the Lenders, reflect any
material adverse change in the consolidated financial condition of Cemex and
its Subsidiaries or Cemex Espana and its Subsidiaries, in each case taken as a
whole, from that reflected in the financial statements delivered pursuant to
clause (i) of this paragraph; and (iv) unaudited unconsolidated interim
financial statements of the Borrower and each Guarantor other than Cemex for
the quarter ended June 30, 2003 or, if available, for the quarter ended
September 30, 2003, and such financial statements shall not, in the judgment
of the Lenders, reflect any material adverse change in the financial condition
of the Borrower or such Guarantor, as the case may be, from that reflected in
the financial statements delivered pursuant to clause (ii) of this paragraph.
4.3. Governmental Approvals. The Administrative Agent shall have
received certified copies of all necessary approvals, authorizations,
certifications, licenses, or consents of, or notices to, or registrations
with, any Governmental Authority required for each of the Loan Parties to
enter into, or perform their respective obligations under, the Loan Documents
or, if no such approvals, authorizations, consents, notices or registrations
are required, a certificate of a Responsible Officer of each such Loan Party
so stating.
4.4. Organizational Documents of the Loan Parties. The Administrative
Agent shall have received certified copies of (a) the akte van oprichting and
statuten of the Borrower and a copy of the extract from the trade register of
Chamber of Commerce of Amsterdam, in each case as in effect as of the Closing
Date, (b) the acta constitutiva and estatutos sociales in effect on the
Closing Date of each Guarantor, (c) the notarized power-of-attorney of each
Person executing any Loan Document on behalf of any Loan Party, together with
specimen signatures of such Person and (d) all documents evidencing other
necessary corporate action by any Loan Party, if any, with respect to the
authorization for the execution, delivery and performance of each such Loan
Document and the transactions contemplated hereby and thereby. All
certificates shall state that the resolutions and other information referred
to in such certificates have not been amended, modified, revoked or rescinded
as of the Closing Date.
4.5. Fees. The Lenders and the Agents shall have received all fees
required to be paid, and all expenses for which invoices have been presented
before the Closing Date to the Borrower (including the reasonable fees and
expenses of legal counsel). Except to the extent previously paid by the
Borrower, all such amounts shall be paid with the proceeds of the Loans on the
Closing Date and shall be reflected in the funding instructions given by the
Borrower to the Administrative Agent on or before the Closing Date.
4.6. Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions, each in form and substance satisfactory to
the Administrative Agent and the Lenders and dated as of the Closing Date:
(i) the legal opinion of Mayer, Brown, Rowe & Maw LLP,
special New York counsel to the Borrower and each of the Guarantors,
substantially in the form of Exhibit E-1;
(ii) the legal opinion of Warendorf, Dutch counsel to the
Borrower, substantially in the form of Exhibit E-2;
(iii) the legal opinion of Lic. Ramiro G. Villareal Morales,
internal Mexican counsel to the Borrower and each of the Guarantors,
substantially in the form of Exhibit E-3;
(iv) the legal opinion of Cleary, Gottlieb, Steen &
Hamilton, special New York counsel to the Lenders and the
Administrative Agent, in form and substance satisfactory to them;
(v) the legal opinion of Ritch, Heather y Mueller, S.C.,
special Mexican counsel to the Lenders and the Administrative Agent,
in form and substance satisfactory to them; and
(vi) the legal opinion of Cleary, Gottlieb, Steen &
Hamilton, special Dutch counsel to the Lenders and the Administrative
Agent, in form and substance satisfactory to them.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
4.7. No Material Adverse Change. As of the Closing Date, since
December 31, 2002, no change, occurrence, circumstance or development shall
have occurred that, in the opinion of the Administrative Agent, has had or
could reasonably be expected to have, a Material Adverse Effect.
4.8. Financial Markets. As of the Closing Date, no disruption or
adverse change in the financial, banking, loan syndication or capital markets
generally or in the market for loans to or debt securities issued by companies
in Mexico or The Netherlands shall have occurred since August 8, 2003, which
disruption or adverse change is deemed material, in the judgment of the
Administrative Agent or the Required Lenders, in connection with the
syndication of the Loans.
4.9. Agent for Service of Process. The Administrative Agent shall
have received powers of attorney, notarized under Mexican law, in the case of
each Guarantor and under Dutch law, in the case of the Borrower, granted by
each Loan Party to the Process Agent in respect of the Loan Documents
appointing such Process Agent as agent for service of process thereunder,
together with a letter from each Loan Party appointing such Process Agent and
a letter from the Process Agent to each Loan Party, in each case substantially
in the form of Exhibit F, evidencing that the Process Agent has accepted its
appointments pursuant to Section 10.13 hereof.
4.10. Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents shall
be true and correct on and as of the date made and on and as of the Closing
Date as if made on and as of such date, and the Borrower and each Guarantor
shall have provided to the Administrative Agent (a) a certificate from a
Responsible Officer of each such Loan Party to such effect and (b) all related
schedules which shall be accurate and complete in all material respects.
4.11. No Default. No Default or Event of Default shall have occurred
and be continuing as of the Closing Date or after giving effect to the Loans
requested to be made on such date and each Loan Party shall have provided a
certificate from a Responsible Officer of such Loan Party to such effect to
the Administrative Agent.
4.12. Notice of Borrowing. The Administrative Agent shall have
received a duly executed Notice of Borrowing, substantially in the form of
Exhibit D, in accordance with the terms of Section 2.2.
4.13. Notice of Prepayment of Revolving Credit Facility. Cemex shall
have timely delivered to the administrative agent under the Revolving Credit
Facility a duly executed notice pursuant to Section 2.7 of the Revolving
Credit Facility, irrevocably providing for the payment on the Closing Date of
all amounts due to the lenders under the Revolving Credit Facility, and the
Administrative Agent shall have received a copy thereof.
4.14. Other Documents. The Administrative Agent shall have received
such other certificates, powers of attorney, approvals, opinions or documents
as any Lender through the Administrative Agent shall reasonably request.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower and the Guarantors hereby jointly and severally agree
that, so long as the Commitments remain in effect or any Loan or other amount
is owing to any Lender or the Administrative Agent hereunder, the Borrower and
the Guarantors shall, and shall cause each of their Subsidiaries to:
5.1. Financial Statements. In the case of each Loan Party, furnish or
cause to be furnished to the Administrative Agent and each Lender:
(a) as soon as available, but in any event (i) within 120 days after
the end of each fiscal year of Cemex, a copy of the audited consolidated
balance sheet of Cemex and its consolidated Subsidiaries as at the end of such
year and the related audited consolidated statements of income and of cash
flows for such year, setting forth in each case in comparative form the
figures for the previous year and accompanied by an opinion acceptable to the
Required Lenders by KPMG Cardenas Dosal, S.C., or other independent certified
public accountants of internationally recognized standing and (ii) within 183
days after the end of each fiscal year of the Borrower and Cemex Espana, a
copy of the audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries and Cemex Espana and its consolidated Subsidiaries
as at the end of such year and the related audited consolidated statements of
income and, to the extent prepared, of cash flows for such year, setting forth
in each case in comparative form the figures for the previous year and
accompanied by an opinion acceptable to the Required Lenders by KPMG Auditores
S.L., or other independent certified public accountants of internationally
recognized standing;
(b) as soon as available, but in any event (i) not later than 60 days
after the end of each of the first three quarterly periods of each fiscal year
of Cemex, the unaudited consolidated balance sheet of Cemex and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments) and (ii) not later
than 90 days after the end of each of the first three quarterly periods of
each fiscal year of the Borrower and Cemex Espana, the unaudited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries and of Cemex
Espana and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income and, to the extent
prepared, of cash flows for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative
form the figures for the previous year, certified in each case by a
Responsible Officer as being fairly stated in all material respects (subject
to normal year-end audit adjustments), and
(c) at the request of any Lender, as soon as available and to the
extent prepared, a copy of the audited unconsolidated balance sheet of any
Guarantor (other than Cemex) as at the end of the most recently completed
fiscal year of such Guarantor and the related audited unconsolidated
statements of income and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year and accompanied by
an opinion acceptable to the Required Lenders by KPMG Cardenas Dosal, S.C., or
other independent certified public accountants of internationally recognized
standing.
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with
Applicable GAAP applied consistently throughout the periods reflected therein
and with prior periods (except as approved by such accountants or officer, as
the case may be, and disclosed therein); provided that in the event of any
change in the Applicable GAAP used in the preparation of such financial
statements, the Borrower and the Guarantors shall also provide, for purposes of
determining compliance with Section 6.1, a statement of reconciliation
conforming such financial statements to such Applicable GAAP as in effect on the
date hereof and consistent with those applied in the preparation of the
financial statements referred to in Section 4.2.
5.2. Certificates; Other Information. In the case of each Loan Party,
furnish or cause to be furnished to the Administrative Agent:
(a) concurrently with the delivery of the financial statements
referred to in Section 5.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in the
course of the regular audit of the business of the Person to whom such
financial statements relate and its Subsidiaries, which audit was conducted by
such accounting firm in accordance with Applicable GAAP, such accounting firm
has obtained no knowledge that a Default or Event of Default has occurred and
is continuing, or if, in the opinion of such accounting firm a Default or
Event of Default has occurred and is continuing a statement as to the nature
thereof;
(b) concurrently with the delivery of any financial statements
pursuant to Section 5.1, (i) a Compliance Certificate of a Responsible Officer
with respect to each Person to whom such financial statements relate stating
that, to the best of each such Responsible Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition contained in this Agreement
and the other Loan Documents to which it is a party to be observed, performed
or satisfied by it; and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
Compliance Certificate and (ii) a certificate containing all information and
calculations necessary for determining compliance by each Loan Party with the
provisions of this Agreement as of the last day of the most recently ended
fiscal quarter to which such financial statements relate (including without
limitation calculations setting forth in reasonable detail any pro forma
adjustments as may have been made to Consolidated EBITDA) and, in the case of
the Borrower, setting forth a calculation of the ratio of Total Borrowings of
the Borrower to Total Net Worth of Cemex Espana as of the last day of the
period covered by such Compliance Certificate;
(c) within five days after the same are sent, copies of all financial
statements and reports that any Loan Party sends to the holders of any class
of its debt securities or public equity securities and, within five days after
the same are filed, copies of all financial statements and reports that any
Loan Party may make to, or file with, the SEC or any other securities exchange
or securities regulator; and
(d) promptly, such additional financial and other information as any
Lender may from time to time reasonably request through the Administrative
Agent.
5.3. Compliance with Laws and Contractual Obligations, Etc.
(a) Comply with all applicable Requirements of Law (including with
respect to the licenses, approvals, certificates, permits, franchises,
notices, registrations and other governmental authorizations necessary to the
ownership of its respective properties or to the conduct of its respective
business, antitrust laws or Environmental Laws and laws with respect to social
security and pension funds obligations) and all Contractual Obligations,
except where the failure to so comply would not reasonably be expected to
result in a Material Adverse Effect.
(b) In the case of the Borrower, comply with any applicable
provisions of the Dutch Banking Act and any implementing regulations,
including, without limitation, the Dutch Exemption Regulation and the Dutch
Policy Guidelines.
(c) In the case of the Borrower, for so long as it is a requirement
of Dutch law that each Lender hereunder be a Professional Market Party at the
time such Lender enters into this Agreement, the Borrower shall represent and
warrant to each Lender, as of each date that any Assignee becomes a Lender
hereunder, that the Borrower has verified that on such date such Assignee is
either (i) a Professional Market Party or (ii) exempted from the requirement
to be a Professional Market Party because it forms a closed circle (besloten
kring), within the meaning of the Dutch Exemption Regulation, with the
Borrower.
5.4. Payment of Obligations. Pay and discharge, before the same shall
become delinquent, (a) all taxes, assessments and governmental charges or
levies assessed, charged or imposed upon it or upon its property and (b) all
lawful claims that, if unpaid, might by law become a Lien upon its property,
except where the failure to make such payments or effect such discharges would
not reasonably be expected to have a Material Adverse Effect; provided that no
Group Member shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim that is being contested
in good faith and by proper proceedings and as to which appropriate reserves
are being maintained, unless and until any Lien resulting therefrom attaches
to its property and becomes enforceable against its other creditors.
5.5. Maintenance of Insurance. Maintain insurance with reputable
insurance companies or associations in such amounts and covering such risks as
is customary for companies of established reputation engaged in similar
businesses and owning similar properties in the same general areas in which
such Group Member operates.
5.6. Conduct of Business and Preservation of Corporate Existence.
Continue to engage in business of the same general type as now conducted by
the Group Members, and preserve and maintain its corporate existence, rights
(charter and statutory), licenses, consents, permits, notices or approvals and
franchises deemed material to its business; provided that no Group Member
shall be required to maintain its corporate existence in connection with a
merger or consolidation permitted by Section 6.3, and provided further that no
Subsidiary of Cemex, other than any Loan Party, shall be required to preserve
any right or franchise if the Loan Parties shall determine in good faith that
the preservation thereof is no longer in the best interests of the Borrower or
the Guarantors and the loss thereof could not reasonably be expected to have a
Material Adverse Effect.
5.7. Inspection of Property. At any reasonable time during normal
business hours and from time to time with at least ten Business Days prior
notice, or at any time if a Default or Event of Default shall have occurred
and be continuing, permit the Administrative Agent or any of the Lenders or
any agents or representatives thereof to examine and make abstracts from the
records and books of account of, and visit the properties of, such Group
Member, and to discuss the affairs, finances and accounts of such Group Member
with any of its officers or directors and with its independent certified
public accountants. All expenses associated with such inspection shall be
borne by the inspecting Lenders; provided that if a Default or an Event of
Default shall have occurred and be continuing, any expenses associated with
such inspection shall be borne by the Borrower.
5.8. Books and Records. Keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of such Group Member in accordance with Applicable
GAAP, consistently applied.
5.9. Maintenance of Properties, Etc. Maintain and preserve all of its
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted, and maintain,
preserve and protect all Intellectual Property and all necessary governmental
and third party approvals, franchises, licenses and permits; provided that
none of the foregoing shall prevent any Group Member from discontinuing the
operation and maintenance of any of its properties or allowing to lapse
certain approvals, licenses or permits the discontinuance of which is
desirable in the conduct of its business and which discontinuance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.10. Notices. Give notice to the Administrative Agent and each
Lender as soon as practicable (but in any event, in the case of any event
described in clause (a), no later than five Business Days) after the
occurrence of:
(a) any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or proceeding
that may exist at any time between any Group Member and any Governmental
Authority, that in either case, if not cured or if adversely determined, as
the case may be, could reasonably be expected to have a Material Adverse
Effect;
(c) any litigation or proceeding affecting any Group Member (i)
which, if adversely determined, would reasonably be expected to have a
Material Adverse Effect, or (ii) which relates to any Loan Document;
(d) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect;
(e) any increase of the ratio of Total Borrowings of the Borrower to
Total Net Worth of Cemex Espana above 0.35 to 1.00, or any event or change
resulting in any senior unsecured long-term foreign currency denominated Debt
of Cemex Espana being rated less than BBB- by S&P or not being rated by S&P.
Each notice pursuant to this Section 5.10 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the relevant Group Member proposes to take with
respect thereto.
5.11. Environmental Laws. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants,
if any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and
subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required
by applicable Environmental Laws, except to the extent the failure to do so
would not reasonably be expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws, except to the extent the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
5.12. Maintenance of Governmental Approvals. Maintain in full force
and effect at all times all approvals of and filings with any Governmental
Authority required under applicable law for (a) the conduct of its business
(including, without limitation, antitrust laws or Environmental Laws), except
where failure to maintain any such approvals or filings would not reasonably
be expected to have a Material Adverse Effect and (b) the execution, delivery
and performance by each Loan Party of its obligations hereunder and under the
other Loan Documents and for the validity or enforceability hereof and
thereof.
5.13. Use of Proceeds. (a) Use the net proceeds of the Loans (i)
first, to repay all the amounts outstanding under, and terminate, the existing
Amended and Restated Facility Agreement for up to U.S.$1,200,000,000 credit
facilities provided to Rey Holding (Jersey) Limited dated February 15, 2002
and the Revolving Credit Facility (or, to the extent the foregoing facilities
are repaid in full and terminated, any other Debt incurred to repay such
facilities) and (ii) second, to repay any other senior Debt of any Loan Party.
All amounts outstanding under the Revolving Credit Facility shall be repaid in
full no later than the Closing Date.
(b) (i) Deliver to the administrative agent under the Revolving
Credit Facility, not later than one Business Day after the Closing Date, a
duly executed notice pursuant to Section 2.6 of the Revolving Credit Facility,
in the form of Exhibit H hereto (the "Termination Notice"), irrevocably
providing for the termination of all commitments by the lenders under the
Revolving Credit Facility effective as of a date no later than six Business
Days after the Closing Date, (ii) neither borrow nor attempt to borrow any
further amounts under the Revolving Credit Facility at any time on or after
the Closing Date and (iii) cause all commitments under the Revolving Credit
Facility to be terminated no later than six Business Days after the Closing
Date.
5.14. Pari Passu Ranking. Take all actions to ensure that at all
times the Obligations of each Loan Party under the Loan Documents constitute
unconditional general obligations of such Loan Party ranking at least pari
passu in all respects with all other present and future senior unsecured,
unsubordinated Debt of such Loan Party.
5.15. Further Assurances. From time to time, do and perform any and
all acts and execute any and all documents as may be necessary or as
reasonably requested by any Lender in order to effect the purposes of this
Agreement or to protect the rights or interests of the Lenders in any of the
Notes or under any of the Loan Documents.
SECTION 6. NEGATIVE COVENANTS
The Borrower and the Guarantors hereby jointly and severally agree
that, so long as the Commitments remain in effect or any Loan or other amount
is owing to any Lender or the Administrative Agent hereunder, the Borrower and
the Guarantors shall not, and shall not permit any of their Subsidiaries to,
directly or indirectly:
6.1. Financial Condition Covenants.
(a) Permit the Consolidated Leverage Ratio of Cemex at any time to
exceed 3.5 to 1.
(b) Permit the Consolidated Fixed Charge Coverage Ratio of Cemex for
any period of four consecutive fiscal quarters of Cemex to be less than 2.5 to
1.
(c) Incur any Debt or other obligation constituting a portion of
Total Borrowings of the Borrower, if at the time of such incurrence, and after
giving effect thereto, (i) the ratio of Total Borrowings of the Borrower to
Total Net Worth of Cemex Espana exceeds 0.35 to 1.0 or (ii) any senior
unsecured long-term foreign currency denominated Debt of Cemex Espana is rated
less than BBB- by S&P or is not rated by S&P.
6.2. Liens. Create, incur, assume or permit to exist any Lien on or
with respect to any property or asset of any Group Member, whether now owned
or held or hereafter acquired, other than the following ("Permitted Liens"):
(a) Liens existing on the date of this Agreement described in
Schedule 6.2; provided that no such Lien is extended to cover any additional
property after the date hereof, and that the amount of Debt secured thereby is
not increased;
(b) Liens for taxes, assessments and other governmental charges the
payment of which is being contested in good faith by appropriate proceedings
diligently conducted and for which such reserves or other appropriate
provision, if any, as shall be required by law or by Applicable GAAP shall
have been made;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business for sums
not yet due or the payment of which is being contested in good faith by
appropriate proceedings diligently conducted and for which such reserves or
other appropriate provision, if any, as shall be required by Applicable GAAP
shall have been made;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security;
(e) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay;
(f) (i) any Lien on property acquired by the Borrower or any
Guarantor or any of their Subsidiaries after the date hereof that was existing
on the date of acquisition of such property; provided that such Lien was not
incurred in anticipation of such acquisition, and (ii) any Lien created to
secure all or any part of the purchase price, or to secure Debt incurred or
assumed to pay all or any part of the purchase price, of property acquired by
the Borrower or any Guarantor or any of their Subsidiaries after the date
hereof, provided that (x) any such Lien permitted pursuant to this paragraph
(f) shall be confined solely to the item or items of property so acquired
(including, in the case of any Acquisition of a corporation through the
acquisition of 51% or more of the voting stock of such corporation, the stock
and assets of any Acquired Subsidiary or Acquiring Subsidiary) and, if
required by the terms of the instrument originally creating such Lien, other
property that is an improvement to, or is acquired for specific use with, such
acquired property and (y) if applicable, any such Lien shall be created within
nine months after, in the case of property, its acquisition, or, in the case
of improvements, their completion;
(g) any Lien renewing, extending or refunding any Lien permitted by
paragraph (f) above; provided that the principal amount of Debt secured by
such Lien immediately prior thereto is not increased or the maturity thereof
reduced, and such Lien is not extended to other property;
(h) any Liens created on shares of capital stock of Cemex or any of
its Subsidiaries solely as a result of the deposit or transfer of such shares
into a trust or a special purpose vehicle (including any entity with legal
personality) of which such shares constitute the sole assets; provided that
(i) any shares of Subsidiary stock held in such trust or special purpose
vehicle could be sold by Cemex in compliance with the provisions of this
Agreement; and (ii) proceeds from the deposit or transfer of such shares into
such trust or special purpose vehicle and from any transfer of or
distributions in respect of the Group Member's interest in such trust or
special purpose vehicle are applied as provided under Section 6.4; and
provided further, that such Liens may not secure Debt of Cemex or any of its
Subsidiaries (unless permitted under another clause of this Section 6.2);
(i) any Liens on securities securing repurchase obligations in
respect of such securities;
(j) any Liens in respect of any Receivables Program Assets which are
or may be sold or transferred pursuant to a Qualified Receivables Transaction,
arising as a result of such Qualified Receivables Transaction and in
connection therewith; and
(k) in addition to the Liens permitted by the foregoing paragraphs
(b) through (j), Liens (including any existing Liens described under clause
(a) above) securing Debt of Cemex and its Subsidiaries (taken as a whole) not
exceeding at any time an amount equal to 5% of the Adjusted Consolidated Net
Tangible Assets of Cemex as of the date of the most recent consolidated
balance sheet of Cemex as of the date of determination;
unless, in each case, the Borrower and the Guarantors have made or caused to be
made effective provision whereby the Obligations hereunder are secured equally
and ratably with, or prior to, the Debt secured by such Liens (other than
Permitted Liens) for so long as such Debt is so secured.
6.3. Consolidations and Mergers. In one or more related transactions,
(i) consolidate with or merge into any other Person or permit any other Person
to merge into it, or (ii) directly or indirectly, transfer, convey, sell,
lease or otherwise dispose of all or substantially all of its properties or
assets to any Person unless, with respect to any such transaction:
(a) immediately after giving effect to such transaction, the Person
formed by or surviving any such consolidation or merger, if it was not a Group
Member prior to such consolidation or merger, or the Person that acquires by
transfer, conveyance, sale, lease or other disposition all or substantially
all of the properties or assets of such Loan Party or such Subsidiary (any
such Person, a "Successor") shall be a company organized and validly existing
under the laws of its place of incorporation or organization, which in the
case of a Successor to the Borrower or any Guarantor, shall be any of Mexico,
the United States, Canada, Denmark, France, Belgium, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, Switzerland or the United
Kingdom or any political subdivision thereof, and shall expressly assume,
pursuant to a written agreement in form and substance satisfactory to the
Required Lenders, all of the obligations of the Borrower, such Guarantor or
such Subsidiary, as the case may be, under each of the Loan Documents to which
it is a party;
(b) in the case of any such transaction involving the Borrower or any
Guarantor, the Borrower or such Guarantor, or the Successor of any thereof, as
the case may be, shall expressly agree to indemnify each Lender and the
Administrative Agent against any tax, levy, assessment or governmental charge
payable by withholding, deduction or otherwise thereafter imposed on such
Lender or the Administrative Agent solely as a consequence of such transaction
with respect to any payments to such Lender or the Administrative Agent under
the Loan Documents;
(c) immediately after giving effect to such transaction, including
for purposes of this clause (c), the substitution of any Successor to any Loan
Party for such Loan Party or the substitution of any Successor to a Subsidiary
for such Subsidiary (treating any Debt or Lien incurred by any Loan Party or
any Successor to such Loan Party, or by a Subsidiary of any Loan Party or any
Successor to such Subsidiary, as a result of such transactions as having been
incurred at the time of such transaction), no Default or Event of Default
shall have occurred and be continuing;
(d) in the case of any such transaction involving the Borrower or any
Guarantor, no Requirement of Law (whether applicable prior to, in connection
with or upon giving effect to such transaction) shall be reasonably likely to
have a Material Adverse Effect; and
(e) in the case of any such transaction involving the Borrower or any
Guarantor, the Borrower and, in the case of a Guarantor, such Guarantor, shall
have delivered to the Administrative Agent a certificate of a Responsible
Officer and an opinion of reputable counsel acceptable to the Administrative
Agent and the Required Lenders, each in form and substance satisfactory to the
Administrative Agent and the Required Lenders and stating that such
consolidation, merger, conveyance, transfer or lease and such written
agreement comply with the relevant provisions of this Agreement, and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with.
6.4. Sales of Assets, Etc. Sell, lease or otherwise Dispose of any
assets (including the Capital Stock of any Subsidiary), other than (a)
inventory, trade receivables and assets surplus to the needs of the business
of any Group Member sold in the ordinary course of business and (b) assets not
used, usable or held for use in connection with cement operations and related
operations, unless the proceeds of the sale of such assets or property are
retained by such Loan Party or such Subsidiary, as the case may be, and, as
promptly as practicable after such sale (but in any event within 180 days of
such sale), the proceeds are applied to (i) expenditures for property, plant
and equipment usable in the cement industry or related industries; (ii) the
repayment of senior Debt of such Loan Party or any of its Subsidiaries,
whether secured or unsecured or (iii) investments in companies engaged in the
cement industry or related industries.
6.5. Restricted Payments. In the case of Cemex only, declare or pay
any dividend (other than dividends payable solely in common stock of Cemex)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any Capital Stock of Cemex (other than any cash payment
in respect of pre-existing scheduled obligations under repurchase agreements
for stock of Cemex entered into by Cemex with third-party financial
institutions) whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in
cash or property or obligations of any Person (collectively, "Restricted
Payments") (i) while any Event of Default described in clause (a) or (b) of
Section 7 or any Default or Event of Default described in clause (d) of
Section 7 (but only with respect to Section 6.1) shall have occurred and be
continuing or (ii) if any Default or Event of Default would exist after giving
effect to such Restricted Payment.
6.6. Transactions with Affiliates. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with
any Affiliate (other than the Borrower or any Guarantor) unless such
transaction is (a) not prohibited by this Agreement, and (b) upon commercially
fair and reasonable terms no less favorable to the relevant Group Member than
it would obtain in a comparable arm's length transaction with a Person that is
not an Affiliate.
6.7. Accounting Changes. (a) Make or permit any change in accounting
policies or reporting practices, except as required or permitted by Applicable
GAAP, or (b) permit the fiscal year of any Loan Party to end on a day other
than December 31 or change any Loan Party's method of determining fiscal
quarters, unless, in the case of clause (b), the Borrower shall have entered
into negotiations with the Administrative Agent in order to amend the relevant
provisions of this Agreement so as to equitably reflect such change in the
Borrower's fiscal year end or method of calculating fiscal quarters with the
desired result that the criteria for evaluating the Borrower's financial
condition shall be the same after such change as if such change had not been
made (and until such time as such an amendment shall have been executed and
delivered by the Borrower, the Administrative Agent and the Required Lenders,
all financial covenants, standards and terms in this Agreement shall continue
to be calculated or construed as if such change had not occurred).
6.8. Clauses Restricting Subsidiary Distributions. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Restricted Subsidiary held by, or pay any
Debt owed to, any Loan Party or any other such Restricted Subsidiary, (b) make
loans or advances to, or other investments in, any Loan Party or any other
such Restricted Subsidiary or (c) transfer any of its assets to any Loan Party
or any other such Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of any restrictions with respect to a
Restricted Subsidiary imposed pursuant to an agreement that has been entered
into in connection with the Disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary.
6.9. Change in Nature of Business. With respect to the Borrower, any
Guarantor and any Material Subsidiary of Cemex, make any material change in
the nature of its business as carried on at the date hereof.
6.10. Margin Regulations. Use any part of the proceeds of the Loans
for any purpose which would result in any violation (whether by the Borrower,
any Guarantor, the Administrative Agent or the Lenders) of Regulation T, U or
X of the Federal Reserve Board or to extend credit to others for any such
purpose, or engage in, or maintain as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (as defined in such regulations).
6.11. Ownership of Cemex Espana. Permit the Borrower at any time to
own less than an 80% direct voting and equity ownership interest in Cemex
Espana, or its successors or transferees in the event of the merger or
consolidation of Cemex Espana or the transfer, conveyance, sale, lease or
other disposition of all or substantially all its properties and assets in
accordance with Section 6.3.
6.12. Ownership of the Borrower. Permit Cemex at any time to cease to
control, or to own less than a 90.0% direct or indirect equity ownership
interest in, the Borrower, or its Successors or transferees in the event of
the merger or consolidation of the Borrower or the transfer, conveyance, sale,
lease or other disposition of all or substantially all its properties and
assets in accordance with Section 6.3
6.13. Ownership of Trademark Companies. (a) Permit the Borrower, at
any time after December 31, 2003, to own less than a 99.9% direct voting and
equity ownership interest in CTW and each other Trademark Company, provided
that such interest may be indirect in the case of any Trademark Company in
which CTW owns a 99.9% direct voting and equity ownership interest.
(b) Permit Cemex at any time to own less than a 99.9% direct or
indirect voting and equity ownership interest in each Trademark Company.
6.14. Incurrence of Debt by Trademark Companies. Permit any Trademark
Company at any time to assume, incur or suffer to exist any Debt or other
monetary liability of any kind to any Person other than any Group Member,
except, in the case of any monetary liability not constituting Debt, in the
ordinary course pursuant to its day to day business activities.
SECTION 7. EVENTS OF DEFAULT
If any of the following specified events (each, an "Event of
Default") shall occur:
(a) any principal of any Loan is not paid when due in accordance with
the terms hereof; or
(b) any interest on any Loan, or any fee or other amount payable
hereunder or under any other Loan Document, is not paid within three Business
Days after any such interest or other amount becomes due in accordance with
the terms hereof; or
(c) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan
Document shall prove to have been materially incorrect on or as of the date
made or deemed made and, if remediable, such failure shall remain unremedied
for five days after the earlier of the date on which (i) a Responsible Officer
of any Loan Party becomes aware of such incorrectness and (ii) written notice
thereof shall have been given to the Borrower or any other Loan Party by the
Administrative Agent; or
(d) any Loan Party shall default in the observance or performance of
any agreement contained in Section 5.1, Section 5.6 (with respect to the
Borrower's or any Guarantor's existence only), Section 5.7, Section 5.10(a),
Section 5.13, Section 5.14 or Section 6 of this Agreement; or
(e) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (d) of this Section), and
such default shall continue unremedied for a period of 30 days after the
earlier of (i) notice to the Borrower or any other Loan Party from the
Administrative Agent or the Required Lenders and (ii) a Responsible Officer of
any Loan Party becoming aware of such failure; or
(f) (i) one or more Group Members shall fail to pay any principal
amount of Debt (excluding the Loans) and/or shall fail to meet any payment or
collateralization obligation in respect of any Derivatives Obligations that,
in one or more related or unrelated transactions is outstanding in a principal
amount and/or (in the case of Derivatives Obligations) has a then-current
Termination Amount, exceeding in the aggregate U.S.$50,000,000 (or the
equivalent thereof in other currencies), in each case when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and which failure, in the case of
Derivatives Obligations, continues for a period of five Business Days; or (ii)
any default, event of default or other event or condition shall occur under
any indenture, agreement or other instrument relating to any Debt and/or
Derivative Obligations that, in one or more related or unrelated transactions
is outstanding in a principal amount and/or (in the case of Derivatives
Obligations) has a then-current Termination Amount, exceeding in the aggregate
U.S.$50,000,000 (or the equivalent thereof in other currencies), and the
effect of such event or condition is to cause (automatically or by action of
any Person, provided that such action shall have been taken) any principal
amount of such Debt to become due and payable prior to the date on which it
would otherwise become due and payable and/or any Termination Amount in
respect of any such Derivatives Obligations to become due and payable; or
(g) the Borrower, any Guarantor or any Material Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization, concurso mercantil or other relief with respect to itself or
its debts under any bankruptcy, insolvency, reorganization or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to
the appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay, or
shall be unable to pay, or shall admit in writing its inability to pay its
debts as they become due, or shall take any corporate action indicating its
consent to, approval of, or acquiescence in any of the foregoing or the
equivalent thereof under Mexican law (including the Ley de Concursos
Mercantiles) or Dutch law; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower, any Guarantor or any Material Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency, concurso mercantil or other similar law now
or hereafter in effect (including but not limited to the Ley de Concursos
Mercantiles) or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 consecutive days; or an order for
relief shall be entered against any Group Member under any bankruptcy,
insolvency, concurso mercantil or other similar law as now or hereafter in
effect or shall take any corporate action indicating its consent to, approval
of or acquiescence in any of the foregoing or the equivalent thereof under
Mexican law (including the Ley de Concursos Mercantiles) or Dutch law; or
(i) a final judgment or judgments or order or orders not subject to
further appeal shall be rendered against one or more Group Members for the
payment of money in excess of U.S.$50,000,000 (or the equivalent thereof in
other currencies or currency units) in the aggregate and either (i)
enforcement proceedings shall have been commenced by any creditor upon any
such judgment or order or (ii) there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment or order shall not be
in effect; or
(j) any non-monetary judgment or order shall be rendered against any
Group Member that could be reasonably expected to have a Material Adverse
Effect, and there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order shall not be in effect; or
(k) the obligations of the Borrower or of any Guarantor under this
Agreement or any other Loan Document, shall for any reason fail to rank at
least pari passu in all respects with all other senior unsecured,
unsubordinated Debt of the Borrower or such Guarantor, as the case may be; or
(l) any Loan Document shall at any time be suspended or revoked or
terminated or for any reason cease to be valid and binding or in full force
and effect (other than upon expiration in accordance with the terms thereof)
or performance of any obligation thereunder shall become unlawful or the
validity or enforceability thereof shall be contested by any Loan Party; or
(m) any governmental or other consent, license, approval, permit or
authorization which is now or may in the future be necessary or appropriate
under any applicable Requirement of Law for the execution, delivery, or
performance by, any Loan Party of any Loan Document to which it is a party or
to make such Loan Document legal, valid, enforceable and admissible in
evidence shall not be obtained or shall be withdrawn, revoked or modified or
shall cease to be in full force and effect or shall be modified in any manner
that would have an adverse effect on the rights or remedies of the
Administrative Agent or the Lenders; or
(n) any Governmental Authority shall (i) condemn, nationalize, seize
or otherwise expropriate all or any substantial portion of the property of, or
Capital Stock issued or owned by, any Loan Party or (ii) take any action that
would adversely affect the ability of any Loan Party to perform its
obligations under the Loan Documents; or
(o) a moratorium shall be agreed or declared in respect of any Debt
of any Loan Party or any restriction or requirement not in effect on the date
hereof shall be imposed, whether by legislative enactment, decree, regulation,
order or otherwise, which limits the availability or the transfer of foreign
exchange by any Loan Party for the purpose of performing any payment
obligation under any Loan Document to which it is a party; or
(p) there shall occur any circumstance, event or condition of a
financial or other nature which the Required Lenders determine in good faith
is reasonably likely to have a material adverse effect on the ability of any
Loan Party to perform its obligations under this Agreement or any of the other
Loan Documents; or
(q) the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more in voting power of the
outstanding voting stock of any Guarantor shall be acquired by any Person or
group (within the meaning of Section 13(d) or 14(d) of the Exchange Act);
provided that the acquisition of beneficial ownership of capital stock (i) of
Cemex by Marcelo Zambrano, Lorenzo H. Zambrano or any of their parents,
spouses, progeny (including adopted children) or siblings, or any progeny
(including adopted children) of any of their siblings, or (ii) of any
Guarantor other than Cemex by any Group Member (provided that beneficial
ownership by Cemex of such Guarantor shall not change as a result of any such
acquisition) shall not constitute an Event of Default;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (d) (but only with respect to a failure to comply with Section 5.13(b)
hereof), (h) or (i) above with respect to the Borrower or any Guarantor,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents shall immediately become due and payable, and (B) if
such event is any other Event of Default, either of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 8. THE AGENTS
8.1. Appointment. Each Lender hereby irrevocably designates and
appoints each Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes each Agent,
in such capacity, to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to such Agent by the terms of
this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
Without limiting the foregoing, the use of the term "agent" with respect to
any Agent is used as a matter of market custom and is intended to create or
reflect only an administrative relationship between independent contracting
parties.
8.2. Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be
responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
8.3. Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by the
Borrower or any other Loan Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agents
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document or for any failure of the
Borrower or any other Loan Party to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of the Borrower
or any other Loan Party.
8.4. Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, facsimile, email, telex or
teletype message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower or any other Loan
Party), independent accountants and other experts selected by such Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. Each
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the relevant Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and
the other Loan Documents in accordance with a request of the relevant Lenders
entitled to so act, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders
of the Loans.
8.5. Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder (except,
in the case of the Administrative Agent, with respect to defaults in the
payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders) unless such Agent has
received notice from a Lender or the Borrower or any Guarantor referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Administrative
Agent receives such a notice, the Administrative Agent promptly shall give
notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Lenders entitled to so act, provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders (except to the
extent that this Agreement expressly requires that such actions be taken or
not be taken only with the consent or upon the authorization of the Required
Lenders or all Lenders if so required hereunder).
8.6. Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither any Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by such Agent or any such
other Person hereinafter taken, including any review of the affairs of the
Borrower or any other Loan Party, shall be deemed to constitute any
representation or warranty by such Agent or any such other Person to any
Lender. Each Lender represents to the Agents that it has, independently and
without reliance upon any Agent-Related Person or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and the
other Loan Parties and made its own decision to make its extensions of credit
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the
other Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Loan Parties.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by an Agent hereunder, no Agent shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower or any other Loan
Party which may come into the possession of such Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
8.7. Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders agree to indemnify each Agent-Related
Person (to the extent not reimbursed by any Loan Party and without limiting
the obligation of any Loan Party to do so), ratably according to their
respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against such Agent-Related
Person in any way relating to or arising out of the Commitments, this
Agreement, any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent-Related Person under or
in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting from the relevant Agent-Related Person's
gross negligence or willful misconduct. The agreements in this subsection
shall survive the payment of the Loans and all other amounts payable
hereunder.
8.8. Agent in Its Individual Capacity. Each Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower and the other Loan Parties as though such Agent
were not an Agent hereunder or under any Loan Document and without notice to
or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, each Agent and its Affiliates may receive information regarding
the Borrower or the other Loan Parties or their respective Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Borrower or the other Loan Parties or their respective
Affiliates) and acknowledge that no Agent nor any of their respective
Affiliates shall be under an obligation to provide such information to them.
With respect to the Loans made by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender"
and "Lenders" shall include each Agent in its individual capacity.
8.9. Successor Administrative Agent. The Administrative Agent may or,
at the request of the Required Lenders, shall resign as Administrative Agent
upon ten days' notice to the Lenders. If the Administrative Agent shall resign
as Administrative Agent under this Agreement and the other Loan Documents,
then the Required Lenders, with the consent of the Borrower, not to be
unreasonably withheld, so long as no Default or Event of Default has occurred
and is continuing, shall appoint from among the Lenders a successor agent for
the Lenders, which successor agent shall succeed to the rights, powers and
duties of the Administrative Agent hereunder. If no successor agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and the Borrower, a successor agent from among the Lenders. Effective upon
such appointment by the Required Lenders and, if applicable, the Borrower or
by the Administrative Agent, the term "Administrative Agent" shall mean such
successor agent, and the former Administrative Agent's rights, powers and
duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 8 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement and
the other Loan Documents. If no successor agent has accepted appointment as
Administrative Agent by the date which is ten days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.
SECTION 9. GUARANTEES
9.1. The Guarantees. Each of the Guarantors hereby jointly and
severally unconditionally and irrevocably guarantees (as a primary obligor and
not merely as surety) payment in full as provided herein of all Obligations
payable by the Borrower to each Lender, the Administrative Agent, the Joint
Bookrunners and the Lead Arrangers under this Agreement and the other Loan
Documents, as and when such amounts become payable (whether at stated
maturity, by acceleration or otherwise) and at the place and in the manner
specified in this Agreement and the Notes, including with respect to Taxes or
Other Taxes, and other matters as described in Section 2.12 hereof, which
shall apply to each Guarantor fully as though it were the "Borrower" in making
payments hereunder. Each of the Guarantors represents and acknowledges that,
based on its business, corporate, legal and financial relations with the
Borrower, it is in its best interests (i) to enter into this Agreement as
joint and several Guarantor of the Borrower's Obligations and (ii) to
subscribe as avalista each Note issued hereunder.
9.2. Nature of Liability. The obligations of the Guarantors hereunder
are guarantees of payment and shall remain in full force and effect until all
Obligations of the Borrower have been validly, finally and irrevocably paid in
full, and shall not be affected in any way by the absence of any action to
obtain such amounts from the Borrower or by any variation, extension, waiver,
compromise or release of any or all Obligations from time to time therefor.
Each Guarantor waives all requirements as to promptness, diligence,
presentment, demand for payment, protest and notice of any kind with respect
to this Agreement and the other Loan Documents.
9.3. Unconditional Obligations. Notwithstanding any contrary
principles under the laws of any jurisdiction, the obligations of each of the
Guarantors hereunder shall be unconditional, irrevocable and absolute and,
without limiting the generality of the foregoing, shall not be impaired,
terminated, released, discharged or otherwise affected by the following:
(a) the existence of any claim, set-off or other right which any
Guarantor may have at any time against the Borrower, the Administrative Agent,
any Lenders or any other Person, whether in connection with this transaction
or with any unrelated transaction;
(b) any invalidity or unenforceability of any provision of this
Agreement or of any other Loan Document relating to or against the Borrower or
any Guarantor for any reason;
(c) any provision of applicable law or regulation purporting to
prohibit the payment by the Borrower of any amount payable by the Borrower
under this Agreement or any of the other Loan Documents or the payment,
observance, fulfillment or performance of any other Obligation;
(d) any change in the name, purposes, business, capital stock
(including the ownership thereof) or constitution of the Borrower or any
Guarantor;
(e) any extension, renewal, settlement, compromise, waiver or release
in respect of any Obligation of the Borrower or any other Guarantor under any
Loan Document, whether by operation of law or otherwise;
(f) any modification of or amendment of or supplement to this
Agreement or any other Loan Document (except to the extent expressly
modifying, amending or supplementing the obligations of such Guarantor under
this Section 9); or
(g) any other act or omission to act or delay of any kind by the
Borrower, any Guarantor, the Administrative Agent, the Lenders or any other
Person or any other circumstance whatsoever which might otherwise constitute a
legal or equitable discharge of or defense to any Guarantor's obligations
hereunder.
9.4. Independent Obligation. The obligations of each of the
Guarantors hereunder are independent of the Borrower's obligations under the
Loan Documents and of any guarantee or security that may be obtained for the
Obligations. The Administrative Agent and the Lenders may neglect or forbear
to enforce payment hereunder, under any Loan Document or under any guarantee
or security, without in any way affecting or impairing the liability of each
Guarantor hereunder. Neither the Administrative Agent nor any Lender shall be
obligated to exhaust recourse or take any other action against the Borrower
hereunder or under any agreement to purchase or security which the
Administrative Agent or the Lenders may hold before being entitled to payment
from the Guarantors of the obligations hereunder or proceed against or have
resort to any balance of any deposit account or credit on the books of the
Administrative Agent or the Lenders in favor of the Borrower or any Guarantor.
Without limiting the generality of the foregoing, the Administrative Agent and
the Lenders shall have the right to bring suit directly against any of the
Guarantors, either prior or subsequent to or concurrently with any lawsuit
against, or without bringing suit against, the Borrower and/or any other
Guarantor.
9.5. Waiver of Notices. Each of the Guarantors hereby waives notice
of acceptance of this Section 9 and notice of any liability to which it may
apply, and waives presentment, demand for payment, protest, notice of dishonor
or nonpayment of any such liability, suit or the taking of other action by the
Administrative Agent or the Lenders against, and any other notice, to the
Guarantors.
9.6. Waiver of Defenses. Each of the Guarantors hereby waives any and
all defenses to which it may be entitled, whether at common law, in equity or
by statute which limits the liability of, or exonerates, guarantors or which
may conflict with the terms of this Section 9, including failure of
consideration, breach of warranty, statute of frauds, merger or consolidation
of the Borrower, statute of limitations, accord and satisfaction and usury.
Without limiting the generality of the foregoing, each of the Guarantors
consents that, without notice to such Guarantor and without the necessity for
any additional endorsement or consent by such Guarantor, and without impairing
or affecting in any way the liability of such Guarantor hereunder, the
Administrative Agent and the Lenders may at any time and from time to time,
upon or without any terms or conditions and in whole or in part, (a) change
the manner, place or terms of payment of, and/or change or extend the time or
payment of, renew or alter, any of the Obligations, any security therefor, or
any liability incurred directly or indirectly in respect thereof, and this
Section 9 shall apply to the Obligations as so changed, extended, renewed or
altered; (b) exercise or refrain from exercising any right against the
Borrower or others (including the Guarantors) or otherwise act or refrain from
acting, (c) settle or compromise any of the Obligations, any security therefor
or any liability (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any such liability (whether due or
not) of the Borrower to creditors of the Borrower other than the
Administrative Agent, the Lenders and the Guarantors, (d) apply any sums by
whomsoever paid or howsoever realized, other than payments of the Guarantors
of the Obligations, to any liability or liabilities of the Borrower under the
Loan Documents or any instruments or agreements referred to herein or therein,
to the Administrative Agent and the Lenders regardless of which of such
liability or liabilities of the Borrower under the Loan Documents or any
instruments or agreements referred to herein or therein remain unpaid; (e)
consent to or waive any breach of, or any act, omission or default under the
Obligations or any of the instruments or agreements referred to in this
Agreement and the other Loan Documents, or otherwise amend, modify or
supplement the Obligations or any of such instruments or agreements, including
the Loan Documents; and/or (f) request or accept other support of the
Obligations or take and hold any security for the payment of the Obligations
or the obligations of the Guarantors under this Section 9, or allow the
release, impairment, surrender, exchange, substitution, compromise,
settlement, rescission or subordination thereof. Furthermore, each of the
Guarantors hereby waives to the extent permitted by law any right to which it
may be entitled to under Articles 2830, 2836, 2842, 2845, 2846, 2848 and 2849
of the Mexican Federal Civil Code and related Articles contained in the Civil
Codes of the States of Mexico. The Guarantors further expressly waive the
benefits of order, excusion y division contained in Articles 2814, 2815, 2817,
2818, 2820, 2821, 2822, 2823, 2837, 2838, 2840, 2841 and other related
Articles of the Mexican Federal Civil Code and related Articles contained in
other Civil Codes of the States of Mexico.
9.7. Bankruptcy and Related Matters.
(a) So long as any of the Obligations remain outstanding, no
Guarantor shall, without the prior written consent of the Administrative
Agent, commence or join with any other Person in commencing any bankruptcy,
liquidation, reorganization, concurso mercantil or insolvency proceedings of,
or against, the Borrower.
(b) If acceleration of the time for payment of any amount payable by
the Borrower under this Agreement or the Notes is stayed upon the insolvency,
bankruptcy, reorganization, concurso mercantil or any similar event of the
Borrower or any Guarantor or otherwise, all such amounts otherwise subject to
acceleration under the terms of this Agreement shall nonetheless be payable by
the Guarantors hereunder forthwith on demand by the Administrative Agent made
at the request of the Lenders.
(c) The obligations of each of the Guarantors under this Section 9
shall not be reduced, limited, impaired, discharged, deferred, suspended or
terminated by any proceeding or action, voluntary or involuntary, involving
the bankruptcy, insolvency, concurso mercantil, receivership, reorganization,
marshalling of assets, assignment for the benefit of creditors, readjustment,
liquidation or arrangement of the Borrower or any Guarantor or similar
proceedings or actions or by any defense which the Borrower or any Guarantor
may have by reason of the order, decree or decision of any court or
administrative body resulting from any such proceeding or action. Without
limiting the generality of the foregoing, the Guarantors' liability shall
extend to all amounts and obligations that constitute the Obligations and
would be owed by the Borrower or any other Guarantor but for the fact that
they are unenforceable or not allowable due to the existence of any such
proceeding or action.
(d) Each of the Guarantors acknowledges and agrees that any interest
on any portion of the Obligations which accrues after the commencement of any
proceeding or action referred to above in paragraph (c) above (or, if interest
on any portion of the Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding or action, such interest as
would have accrued on such portion of the Obligations if said proceedings or
actions had not been commenced) shall be included in the Obligations, it being
the intention of the Guarantors, the Administrative Agent and the Lenders that
the Obligations which are to be paid by the Guarantors pursuant to this
Section 9 shall be determined without regard to any rule of law or order which
may relieve the Borrower of any portion of such Obligations. The Guarantors
will take no action to prevent any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person from
paying the Administrative Agent, or allowing the claim of the Administrative
Agent, for the benefit of the Administrative Agent and the Lenders, in respect
of any such interest accruing after the date of which such proceeding is
commenced, except to the extent any such interest shall already have been paid
by the Guarantors.
(e) Notwithstanding anything to the contrary contained herein, if all
or any portion of the Obligations are paid by or on behalf of the Borrower,
the obligations of the Guarantors hereunder shall continue and remain in full
force and effect or be reinstated, as the case may be, in the event that all
or any part of such payment(s) are rescinded or recovered, directly or
indirectly, from the Administrative Agent and/or the Lenders as a preference,
preferential transfer, fraudulent conveyance or otherwise, and any such
payments which are so rescinded or recovered shall constitute Obligations for
all purposes under this Section 9, to the extent permitted by applicable law.
9.8. No Subrogation. Notwithstanding any payment or payments made by
any of the Guarantors hereunder or any set-off or application of funds of any
of the Guarantors by the Administrative Agent or any Lender, no Guarantor
shall be entitled to be subrogated to any of the rights of the Administrative
Agent or any Lender against the Borrower or any other Guarantor or any
collateral security or guarantee or right of offset held by the Administrative
Agent or any Lender for the payment of the Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from
the Borrower or any other Guarantor in respect of payments made by such
Guarantor hereunder, until all amounts owing to the Administrative Agent and
the Lenders by the Borrower on account of the Obligations shall have been
indefeasibly paid in full in cash. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been indefeasibly paid in full in cash, such amount
shall be held by such Guarantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Administrative Agent may
determine.
9.9. Right of Contribution. Subject to Section 9.8, each Guarantor
hereby agrees that to the extent that a Guarantor shall have paid more than
its proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder who has not paid its proportionate share of such payment. The
provisions of this Section 9.9 shall in no respect limit the obligations and
liabilities of any Guarantor to the Administrative Agent, the Lead Arrangers
and the Lenders, and each Guarantor shall remain liable to the Administrative
Agent, the Lead Arrangers and the Lenders for the full amount guaranteed by
such Guarantor hereunder.
9.10. General Limitation on Guarantees. In any action or proceeding
involving any applicable corporate law, or any applicable bankruptcy,
insolvency, reorganization, concurso mercantil or other law affecting the
rights of creditors generally, if the obligations of any Guarantor under this
Section 9.1 would otherwise, taking into account the provisions of Section
9.9, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 9.1, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability (without prejudice to the
obligation of any other Guarantor hereunder) shall, without any further action
by such Guarantor, any Lender, the Administrative Agent or any other Person,
be automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
SECTION 10. MISCELLANEOUS
10.1. Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and the Borrower may, or, with the prior written consent of
the Required Lenders, the Administrative Agent and the Borrower may, from time
to time, (a) enter into written amendments, supplements or modifications
hereto and to the other Loan Documents for the purpose of adding any
provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders
or the Administrative Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided
that no such waiver and no such amendment, supplement or modification shall
(i) forgive any payment Obligation, reduce the principal amount or extend the
final scheduled date of maturity of any Loan, reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof, in each case without the written consent of each Lender directly
affected thereby; (ii) increase or decrease the amount of any Lender's
Commitment (except for a ratable decrease in the commitment of all Lenders),
subject any Lender to any additional obligation, or eliminate or reduce the
voting rights of any Lender under this Section 10.1, in each case without the
written consent of such Lender; (iii) reduce any percentage specified in the
definition of Required Lenders, consent to the assignment or transfer by the
Borrower or any Guarantor of any of its rights and obligations under any Loan
Document, release any Loan Party from all of its obligations under the Loan
Documents, or release any Guarantor from its guarantee obligations under the
Guarantee in Section 9 hereof, or modify such obligations under Section 9 in a
manner materially adverse to the Lenders, in each case without the written
consent of all Lenders; (iv) amend, modify or waive any condition precedent to
the Loans set forth in Section 4 without the written consent of the Majority
Lenders with respect to each Tranche; (v) amend, modify or waive any provision
of Section 2.10 without the written consent of all Lenders in respect of each
Tranche adversely affected thereby; (vi) reduce the percentage specified in
the definition of Majority Lenders with respect to any Tranche without the
written consent of all Lenders under such Tranche; (vii) amend or modify
Section 9 hereof in a manner materially adverse to any Guarantor, without the
written consent of such Guarantor; (viii) amend or modify any direct right or
covenant of any Guarantor under Section 5, Section 6 or Section 10 hereof
(excluding, for the avoidance of doubt, any amendment or modification
thereunder of the rights or obligations of the Borrower) in a manner
materially adverse to any such rights or obligations of such Guarantor
thereunder, without the written consent of such Guarantor or (ix) amend,
modify or waive any provision of Section 8 without the written consent of the
Administrative Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Administrative Agent and all future
holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or Event
of Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
10.2. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered, or three Business Days after
being sent via a major international courier service, or, in the case of
facsimile notice, when received, addressed as follows in the case of the
Borrower, the Guarantors and the Administrative Agent, and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the case
of the Lenders, or to such other address as may be hereafter notified by the
respective parties hereto:
Borrower: Amsteldijk 166, 1079
LH Amsterdam, The Netherlands
Tel.: (31) 20 642-2048
Fax: (31) 20 644-4095
Attn: Managing Director(s)
With a copy to: Mayer, Brown, Rowe & Maw LLP
1675 Broadway
New York, N.Y. 10019-5820
Tel.: (212) 506-2500
Fax: (212) 262-1910
Attn: Peter V. Darrow
Guarantors: Ave. Ricardo Margain Zozaya # 325
Col. Valle del Campestre
San Pedro Garza Garcia, N.L.
Mexico, 66265
Tel.: (52 81) 8888-4115
Fax: (52 81) 8888-4415
Attn: Humberto Lozano
With a copy to: Mayer, Brown, Rowe & Maw LLP
1675 Broadway
New York, N.Y. 10019-5820
Tel.: (212) 506-2500
Fax: (212) 262-1910
Attn: Peter V. Darrow
Administrative Agent: Citibank, N.A.
2 Penn's Way
Suite 100
New Castle, DE 19720
Tel.: (302) 894-6054
Fax: (212) 994-0961
Attn: Cristian Garcia
With a copy to: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, N.Y. 10006
Tel.: (212) 225-2829
Fax: (212) 225-3999
Attn: Andres de la Cruz
Agent's Dollar Payment Office: Citibank, N.A.
ABA No.: 021000089
A/C: Medium Term Finance
A/C #: 36852248
Ref.: CEMEX
Attn: Loan Administration Department
Agent's Euro Payment Office: Citibank, N.A.
London, England
SWIFT Code: CITIGB2L
A/C: Citi NA New York Loans Agency
A/C #: 8840261
Ref.: CEMEX
Attn: Loan Administration Department
Agent's Yen Payment Office: Citibank, N.A.
Tokyo, Japan
A/C: CIG Western Hemisphere Agency
A/C #: 0221659414
Ref.: CEMEX
Attn: Loan Administration Department
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
10.3. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4. Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
making of the Loans.
10.5. Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Administrative Agent, the Joint Bookrunners and the Lead
Arrangers for all their reasonable and duly documented out-of-pocket costs and
expenses incurred in connection with the development, preparation, execution,
delivery, negotiation, and syndication of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation
and administration of the transactions contemplated hereby and thereby,
including the reasonable and duly documented fees and disbursements of New
York, Mexican and Dutch counsel to the Administrative Agent, the Joint
Bookrunners and the Lead Arrangers (provided that such counsel fees for the
preparation and execution of this Agreement through the Closing Date shall not
exceed U.S.$115,000) and filing and recording fees and expenses, with
statements with respect to the foregoing to be submitted to the Borrower prior
to the Closing Date (in case of amounts to be paid on such date) and from time
to time thereafter on a quarterly basis or such other periodic basis as the
Administrative Agent shall deem appropriate, (b) to pay or reimburse each
Lender and the Administrative Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including
the fees and disbursements of counsel (including the allocated fees and
expenses of in-house counsel) to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying
stamp, excise and other taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect
of, this Agreement, the other Loan Documents and any such other documents, and
(d) to pay, indemnify, and hold each Lender and the Administrative Agent and
their respective officers, directors, employees, affiliates, agents and
controlling persons (each, an "Indemnitee") harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, punitive, indirect and
consequential damages) with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing, relating to the use
of proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of any Group Member
or any of the Properties and the reasonable fees and expenses of legal counsel
in connection with claims, actions or proceedings by any Indemnitee against
any Loan Party under any Loan Document (all the foregoing in this clause (d),
collectively, the "Indemnified Liabilities"), provided that the Borrower shall
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are found by a final
and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnitee.
Without limiting the foregoing, and to the extent permitted by applicable law,
the Borrower agrees not to assert and to cause its Subsidiaries not to assert,
and hereby waives and agrees to cause its Subsidiaries to waive, all rights
for contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, under or related to Environmental Laws,
that any of them might have by statute or otherwise against any Indemnitee.
All amounts due under this Section 10.5 shall be payable not later than 10
days after written demand therefor. Statements payable by the Borrower
pursuant to this Section 10.5 shall be submitted to Fernando Herrera, at the
address of Cemex set forth in Section 10.2, or to such other Person or address
as may be hereafter designated by the Borrower in a written notice to the
Administrative Agent. The agreements in this Section 10.5 shall survive
repayment of the Loans and all other amounts payable hereunder.
10.6. Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Guarantors, the Lenders, the Administrative Agent, all future holders of
the Loans and their respective successors and assigns, except that neither the
Borrower nor any Guarantor may assign or transfer any of its rights or
obligations under any Loan Document without the prior written consent of each
Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a "Participant") participating
interests in any Loan owing to such Lender, any Commitment of such Lender or
any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall
remain the holder of the entire amount of any such Loan for all purposes under
this Agreement except as specified in the following three sentences and the
other Loan Documents, and the Borrower, the Guarantors and the Administrative
Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. In no event shall any Participant under any such
participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the amount of, or postpone the payment of, the principal of, or
interest on, the Loans or any fees payable hereunder, or postpone the date of
the final maturity of the Loans, in each case to the extent subject to such
participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of set-off in respect of its participating interest
in amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this
Agreement; provided that in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.11, 2.12 and 2.13 with respect to its
participation in the Commitments and the Loans outstanding from time to time
as if it was a Lender; provided that in the case of Section 2.12, such
Participant shall have complied with the requirements of said Section and
provided further that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred
by such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable law
and subject to the provisions of Section 10.6(d), at any time and from time to
time assign to any Lender or any Lender Affiliate or, with the consent of the
Administrative Agent and (so long as no Default or Event of Default shall have
occurred and be continuing) the Borrower (which, in each case, shall not be
unreasonably withheld or delayed, and which, in the case of the Borrower,
shall be deemed to have been given if the Borrower fails to respond to a
written request within 5 Business Days of delivery of such request), to an
additional bank, financial institution or other entity (an "Assignee") all or
any part of its rights and obligations under this Agreement and the other Loan
Documents pursuant to an Assignment and Acceptance, executed by such Assignee,
such Assignor and any other Person whose consent is required pursuant to this
paragraph, and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that unless otherwise agreed by the
Borrower (to the extent the Borrower's consent to such Assignment is then
required) and the Administrative Agent, each such assignment to an Assignee
(other than any Lender or any Lender Affiliate) shall be in an aggregate
principal amount (i) in the case of Dollar Loans, equal to at least $5,000,000
or a whole multiple of $1,000,000 in excess thereof, (ii) in the case of Euro
Loans, equal to at least (euro)5,000,000 or a whole multiple of
(euro)1,000,000 in excess thereof or (iii) in the case of Yen Loans, equal to
at least (Y)500,000,000 or a whole multiple of (Y)100,000,000 in excess
thereof, in each case except in the case of an assignment of all of a Lender's
interests under any Tranche. For purposes of the proviso contained in the
preceding sentence, the amount described therein shall be aggregated in
respect of each Lender and its Lender Affiliates, if any. Any such assignment
need not be ratable as between the Tranches. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder with Loans
as set forth therein, and (y) the Assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all of an Assignor's rights and obligations under this Agreement,
such Assignor shall cease to be a party hereto) but shall retain such rights
to indemnification and expense reimbursement to which it was entitled at such
time.
(d) Notwithstanding any provision of Section 10.6(c) to the contrary,
for so long as it is a requirement of Dutch law that each Lender be a
Professional Market Party, (i) any Assignor shall, at least 5 Business Days
prior to the date of any proposed assignment, provide to the Borrower and the
Administrative Agent information in respect of the prospective Assignee
sufficient to enable the Borrower to verify the Professional Market Party
status of such Assignee and (ii) no such assignment shall be permitted unless
the Assignee is a Verifiable Professional Market Party or unless the Borrower
determines that such Assignee qualifies as a Professional Market Party;
provided that the Borrower shall be deemed to have made such determination if,
on or prior to the fifth Business Day after the Assignor has provided the
information described in clause (i) above, the Borrower has not made a good
faith determination, based on an opinion of reputable Dutch counsel, and
notified the Administrative Agent and the Assignor thereof (together with a
copy of such opinion of counsel) in writing, that (x) the Assignee does not
qualify as a Professional Market Party or (y) the Borrower is unable to
determine whether the Assignee qualifies as a Professional Market Party.
(e) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of
each Lender, as well as the interest rate, the currency and the principal
amount of the Loans owing to each Lender, in each case, from time to time,
giving effect to any reductions of Commitments and any prepayments of Loans
made in accordance with the terms hereof. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, each other
Loan Party, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Register as the owner of the Loans and the Notes
evidencing the Loans recorded therein for all purposes of this Agreement. Any
assignment of any Loan shall be effective only upon appropriate entries with
respect thereto being made in the Register. Any assignment or transfer of all
or part of a Loan shall be registered on the Register only upon surrender for
registration of assignment or transfer, by way of an endorsement (endoso) and
delivery of the Note evidencing such Loan, accompanied by a duly executed
Assignment and Acceptance, and thereupon one or more new Notes shall be issued
to the designated Assignee.
(f) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by
Section 10.6(c), together with payment to the Administrative Agent of a
registration and processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) record the information
contained therein in the Register on the effective date determined pursuant
thereto.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 10.6 concerning assignments relate only to
absolute assignments and that such provisions do not prohibit assignments
creating security interests, including any pledge or assignment by a Lender to
any Federal Reserve Bank in accordance with applicable law.
(h) The Borrower and each Guarantor agrees, upon receipt of written
notice from the relevant Lender and return of any Notes to be replaced, to
execute and deliver Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.
10.7. Adjustments; Set-off. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular
Lender, if any Lender (a "Benefitted Lender") shall receive any payment of all
or part of the Obligation owing to it in respect of its Loans under any
Tranche, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7(g) or (h), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender under such
Tranche, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders under
such Tranche a participating interest in such portion of the Obligations owing
to each such other Lender, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such collateral
ratably with each of the Lenders under such Tranche; provided that if all or
any portion of such excess payment or benefits is thereafter recovered from
such Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower or
any Guarantor, any such notice being expressly waived by the Borrower and each
Guarantor to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any other credits, Debt or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch
or agency thereof to or for the credit or the account of the Borrower or any
Guarantor. Each Lender agrees promptly to notify the Borrower, the relevant
Guarantor and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
10.8. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower, each Guarantor and the
Administrative Agent.
10.9. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10.10. Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Guarantors, the
Administrative Agent and the Lenders with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the other
Loan Documents.
10.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12. Submission To Jurisdiction; Waivers. Each of the parties
hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive jurisdiction of the courts of the United States
for the Southern District of New York and any appellate court with respect
thereto; in the event that the courts of the United States for the Southern
District of New York and any appellate court with respect thereto are not
available, then the parties submit to the courts of the State of New York
located in the Borough of Manhattan, City of New York, and any appellate court
with respect thereto;
(b) consents that any such action or proceeding may be brought in
such courts and waives to the fullest extent permitted by law any objection
that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same and further
waives any rights to which it may be entitled, on account of place of
residence or domicile; and
(c) waives, to the fullest extent permitted by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages (other than
any such damages as to which a Party is entitled to indemnification by any
other Party pursuant to Section 10.5).
10.13. Appointment of Agent for Service of Process. (a) The Borrower
and each Guarantor hereby irrevocably appoints CT Corporation System, with an
office on the date hereof at 111 Eighth Avenue, 13th Floor, New York, New York
10011, as its agent (the "Process Agent") to receive on behalf of itself and
its property, service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding brought in any
New York State or federal court sitting in New York City. Such service may be
made by delivering a copy of such process to the Borrower or any Guarantor, as
the case may be, in care of the Process Agent at its address specified above
(or any future address of the Process Agent), and the Borrower and each
Guarantor hereby authorizes and directs the Process Agent to accept such
service on its behalf. The appointment of the Process Agent shall be
irrevocable until the appointment of a successor Process Agent. The Borrower
and each Guarantor further agrees to promptly appoint a successor Process
Agent in New York City prior to the termination for any reason of the
appointment of the initial Process Agent.
(b) Nothing in Section 10.12 or in this Section 10.13 shall affect
the right of any party hereto to serve process in any manner permitted by law
or limit any right that any party hereto may have to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other jurisdiction.
10.14. Waiver of Sovereign Immunity. To the extent that the Borrower
or any Guarantor has or hereafter may acquire any immunity from jurisdiction
of any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, or otherwise)
with respect to itself or its property, the Borrower and each Guarantor hereby
irrevocably waives such immunity in respect of its obligations hereunder to
the extent permitted by applicable law. Without limiting the generality of the
foregoing, the Borrower and each Guarantor agrees that the waivers set forth
in this Section 10.14 shall have force and effect to the fullest extent
permitted under the Foreign Sovereign Immunities Act of 1976 of the United
States and are intended to be irrevocable for purposes of such Act.
10.15. Judgment Currency. (a) All payments made under this Agreement
and the other Loan Documents shall be made in Dollars, except that payments of
principal of or interest on Euro Loans and Yen Loans shall be made in Euro or
Yen, as applicable. If for the purposes of obtaining judgment in any court it
is necessary to convert a sum due from the Borrower or any Guarantor in one
currency into another currency, the parties hereto agree to the fullest extent
that they may legally and effectively do so that the rate of exchange used
shall be that at which in accordance with normal banking procedures (based on
quotations from four major dealers in the relevant market) the Administrative
Agent or each Lender, as the case may be, could purchase the first currency
with such other currency at or about 11:00 am. (New York City time) on the
Business Day preceding that on which final judgment is given.
(b) The obligations in respect of any sum due to any Lender or any
Agent hereunder or under any other Loan Document shall, to the extent
permitted by applicable law notwithstanding any judgment expressed in a
currency (the "Judgment Currency") other than that in which the sum is
denominated in accordance with the terms of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day
following receipt by such Lender or Agent of any sum adjudged to be so due in
the Judgment Currency such Lender or Agent may in accordance with normal
banking procedures purchase the Agreement Currency with the Judgment Currency.
If the amount of the Agreement Currency so purchased is less than the sum
originally due to such Lender or Agent in the Agreement Currency, the Borrower
and each Guarantor agrees, to the fullest extent it may legally do so, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Lender or Agent against such resulting loss.
10.16. Acknowledgements of Loan Parties. The Borrower and each
Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) no Agent nor any Lender has any fiduciary relationship with or
duty to the Borrower or any Guarantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship
between the Agents and Lenders, on one hand, and the Borrower and each
Guarantor, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby between
or among any of the Lenders or between or among the Borrower and the
Guarantors and any of the Lenders.
10.17. Professional Market Party Status of Lenders. Each initial
Lender hereunder hereby confirms that, as of the date hereof, it is either (i)
a Professional Market Party or (ii) exempted from the requirement to be a
Professional Market Party because it forms a closed circle (besloten kring),
within the meaning of the Dutch Exemption Regulation, with the Borrower.
10.18. Confidentiality. Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it
by any Loan Party pursuant to this Agreement that is designated by such Loan
Party as confidential; provided that nothing herein shall prevent the
Administrative Agent or any Lender from disclosing any such information (a) to
the Administrative Agent, any other Lender or any Lender Affiliate, (b)
subject to an agreement to comply with the provisions of this Section, to any
actual or prospective Transferee or any direct or indirect counterparty to any
Hedge Agreement (or any professional advisor to such counterparty), (c) to its
employees, directors, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates on a need-to know basis, (d) upon
the request or demand of any Governmental Authority, (e) in response to any
order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (f) if requested or required to
do so in connection with any litigation or similar proceeding, (g) that has
been publicly disclosed, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender, or
(i) in connection with the exercise of any remedy hereunder or under any other
Loan Document; and provided further that the Administrative Agent and each
Lender (and each employee, representative, or other agent of the
Administrative Agent or any Lender) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and tax structure of the
transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to such Person relating to such tax treatment and
tax structure.
10.19. WAIVERS OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.20. Use of English Language. All certificates, reports, notices
and other documents and communications given or delivered pursuant to this
Agreement shall be in the English language (other than the documents required
to be provided pursuant to Sections 4.4(i), (ii) and (iii), which shall be in
the English, Dutch or Spanish language accompanied by an English translation
or summary). Except in the case of the laws or official communications of
Mexico or The Netherlands, the English language version of any such document
shall control the meaning of the matters set forth therein.
10.21. Conflict With Notes. In the case of any conflict between the
terms of this Agreement and the terms of any Note, the terms of this Agreement
shall govern in all respects (including, without limitation, with respect to
the principal amount payable in respect of outstanding Loans and the currency
in which such Loans are payable), except that if any action or proceeding in
connection with any Note is brought by the holder thereof in any court in
Mexico (any such proceeding, a "Mexican Proceeding"), the terms of such Note
shall govern to the extent required by Mexican law. Notwithstanding the
foregoing, no Lender shall claim in a Mexican Proceeding any amount in excess
of the aggregate amounts to which it is entitled under this Agreement, and if
any Lender shall recover as a result of any Mexican Proceeding amounts under
any Note in excess of the aggregate amounts to which such Lender is entitled
under this Agreement, such Lender agrees, as a separate obligation and
notwithstanding any such judgment, to remit such excess to the Loan Party by
whom such excess amount was paid to such Lender.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
[Signature Pages Follow]
NEW SUNWARD HOLDING B.V.
Address: as Borrower
Rivierstaete Building,
Amsteldijk 166
1079 LH Amsterdam,
The Nctherlands
Attention:
Hans S, Leijdesdorff
Juan M. Portal
By:/s/ H.S. Leijdesdorff /s/ J.M. Portal Celhay
--------------------- ----------------------
Telephone: (31-20) 642 4288 Name: Name:
Facsimile: (31 20) 643 0053 Title: Title:
H.S. Leijdesdorff J.M. Portal Celhay
managing directtor managing director
CEMEX, S.A.D DE C.V.
Ave Ricardo Margain Zozaya #325 as Guarantor
Col. Valle del Campestre
San Pedro Garza Garcia N.L., Mexico
66250
Attention: Humberto Lozano By:/s/ Humberto Lozano
Telephone: (00 52 81) 888 4115 -------------------------
Facsimile: (00 52 81) 888 4415 Name: Humberto Lozano
Title: Attorney-in-Fact
EMPRESAS TOLTECA DE MEXICO,
Ave Ricardo Margain Zozaya #325 S.A. DE C.V., as Guarantor
Col. Valle del Campestre
San Pedro Garza Garcia N.L., Mexico
66250
Attention: Humberto Lozano By:/s/ Humberto Lozano
Telephone: (00 52 81) 888 4115 -------------------------
Facsimile: (00 52 81) 888 4415 Name: Humberto Lozano
Title: Attorney-in-Fact
CEMEX MEXICO, S.A. DE C.V.
Ave Ricardo Margain Zozaya #325 as Guarantor
Col. Valle del Campestre
San Pedro Garza Garcia N.L., Mexico
66250
Attention: Humberto Lozano By:/s/ Humberto Lozano
Telephone: (00 52 81) 888 4115 -------------------------
Facsimile: (00 52 81) 888 4415 Name: Humberto Lozano
CITIBANK, N.A.
390 Greenwich Street, 1st Floor as Administrative Agent
New York, NY 10013
Mario Espinosa
(212) 723-6731
(212) 723-8543 By:/s/ Mario Espinosa
---------------------
Name: Mario Espinosa
Title: Vice President
ABN AMRO BANK N.V.,
Address: as Lender
Prolongacion Reforma 600-320
Col. Santa Fe Pena Blanca
Mexico D.F. 01210
By: /s/ Ignacio Pineros
----------------------
Name: Ignacio Pineros
Attention: Title: Vice President
Manuel Gomez / Rosalia Noble
Telephone:
(52-55) 52-57-78-21 / (52-55) 52-57-78-42 By: /s/ John Pastore
-------------------------
Name: John Pasture
Facsimile: Title: Vice President
(52 55) 52 57 78 29
ABN AMRO BANK N.V.,
Address: as Lead Arranger
Prolongacion Reforma 600-320
Col. Santa Fe Pena Blanca
Mexico D.F. 01210
By: /s/ Ignacio Pineros
----------------------
Name: Ignacio Pineros
Attention: Title: Vice President
Manuel Gomez / Rosalia Noble
Telephone:
(52-55) 52-57-78-21 / (52-55) 52-57-78-42 By: /s/ John Pastore
-------------------------
Name: John Pasture
Facsimile: Title: Vice President
(52 55) 52 57 78 29
BANK OF AMERICAN, N.A.,
as Lender
Ave. Lazaro Cardenas 329-9
Col. Valle Oriente
San Pedro Garza Garcia, N.L. Mexico By: /s/ Mauricio Rebolledo
C.P. 66220 ------------------------
Attention: Alejandro Xotlanihua
Telephone (011) 52-81-8368-1953 Name: Mauricio Rebolledo
Facsimile (011) 52-81-8319-0481
Title: Managing Director
BANK OF AMERICAN, N.A.,
as Co-Arranger
Ave. Lazaro Cardenas 329-9
Col. Valle Oriente
San Pedro Garza Garcia, N.L. Mexico By: /s/ Mauricio Rebolledo
C.P. 66220 ------------------------
Attention: Alejandro Xotlanihua
Telephone (011) 52-81-8368-1953 Name: Mauricio Rebolledo
Facsimile (011) 52-81-8319-0481
Title: Managing Director
GRAN VIA DE HORTALEZA 3, BANCO ESPANOL DE CREDITO S.A.
28033 MADRID
SPAIN
as LENDER
ATT. ANTONIO SANCHEZ
TEL + 34 91 338 16 48
FAX + 34 31 338 28 88
By: /s/ Jose Antonio Villanueva /s/ Jose Ignacio Aguirre
--------------------------- ------------------------
Name: Jose Antonio Villanueva Jose Ignacio Aguirre
BAYERISCHE LANDESBANK,
560 Lexington Ave as Lender
New York, NY 10022
Attn: Gina Hoey-Sandella
Tel: (212) 310-9990
Fax: (212) 230-9117 By:/s/ Oliver Hildenbrand
--------------------------
Name: Oliver Hildenbrand
Title: Vice President
By: /s/ James H. Boyle
--------------------------
Name: Jame H. Boyle
Title: Vice President
[Address]: BBVA BANCOMER S.A., Institucion de Banca
Vasconcelos 101 Ote. Piso 1 Multiple, Grupo Financiero BBVA
Col. Residencial San Agustin Bancommer, as Co-Arranger
Garza Garcia, N.L. Meixic
[Attention]: Sergio del Rio
[Telephone]: 52-81-8368-6917
[Facsimile]: 52-18-83686980 By: /s/ Carlos Velazquez Thierry
-----------------------------------
Name: Carlos Velazquez Thierry
Title: Managing Director
By: /s/ Sergio Antonio del Rio Herrera
-----------------------------------
Name: Sergio Antonio del Rio Herrera
Title: Director
[Address]: BBVA BANCOMER S.A., Institucion de Banca
Vasconcelos 101 Ote. Piso 1 Multiple, Grupo Financiero BBVA
Col. Residencial San Agustin Bancommer, as Lender
Garza Garcia, N.L. Meixic
[Attention]: Sergio del Rio
[Telephone]: 52-81-8368-6917
[Facsimile]: 52-18-83686980 By: /s/ Carlos Velazquez Thierry
-----------------------------------
Name: Carlos Velazquez Thierry
Title: Managing Director
By: /s/ Sergio Antonio del Rio Herrera
-----------------------------------
Name: Sergio Antonio del Rio Herrera
Title: Director
SIGNATURE PAGE FOR:
BORROWER: "NEW SUNWARD HOLDING B.V." (CEMEX GROUP)
FACILITY: USD 1,15 BILLION MULTICURRENCY SINDICATED TERM LOAN
DATE: 15 OCTOBER, 2003
BNP PARIBAS,
Address: as Lender
BNP Paribas, Sucursal en Espana
c/ Ribera del Loira 28,
28042 Madrid
Spain
For Facility Admin and Operations,
please contact: By:/s/ Jose Gefaell
Alberto Snachez --------------------------------
Elena Garcia Juarez Name: JOSE GEFAELL
DNI: 36045004-W
Title within BNP Paribas Madrid:
Director
Telephone:
34.91.388 81 15
34.91.388 81 19
Facsimile:
34.91 388 80 99 By:/s/ Genoveva Ramon Borja
--------------------------------
Name: GENOVEVA RAMON BORJA
DNI: 21513054-G
Title: within BNP Paribas Madrid:
Director
SIGNATURE PAGE FOR:
BORROWER: "NEW SUNWARD HOLDING B.V." (CEMEX GROUP)
FACILITY: USD 1,15 BILLION MULTICURRENCY SINDICATED TERM LOAN
DATE: 15 OCTOBER, 2003
BNP PARIBAS,
Address: as Lead Arranger
BNP Paribas, Sucursal en Espana
c/ Ribera del Loira 28,
28042 Madrid
Spain
For Facility Admin and Operations,
please contact: By:/s/ Jose Gefaell
Alberto Snachez --------------------------------
Elena Garcia Juarez Name: JOSE GEFAELL
DNI: 36045004-W
Title within BNP Paribas Madrid:
Director
Telephone:
34.91.388 81 15
34.91.388 81 19
Facsimile:
34.91 388 80 99 By:/s/ Genoveva Ramon Borja
--------------------------------
Name: GENOVEVA RAMON BORJA
DNI: 21513054-G
Title: within BNP Paribas Madrid:
Director
CAJA MADRID MIAMI AGENCY
Address: 701 Brickell Av, Suite 2000 as Lender
Miami, FL, 33131'
Attention: Javier Guzman By:
Ricardo Benede
Telephone: 305 371 3833
/s/ Pedro Olabarria
-------------------
Facsimile: 305 371 0402 Name: Pedro Olabarria
Title: Deputy General Manager,
By: /s/ Javier Guzman
---------------------
Name Javier Guzman
Title: Head of Capital Markets
CALIFORNIA COMMERCE BANK,
2029 Century Park East as Lender
Los Angeles, CA 90067
Attention: Jeff Healy
Telephone: 310-203-3431
Facsimile: 310-203-3590 By: /s/ Jeff Healy
-------------------------------
Name: Jeff Healy
Title: Vice President
By: /s/ Jorge A. Figueroa
-------------------------------
Name: Jorge A. Figueroa
Title: Senior Vice President
Citibank Building, 4th Floor CITIBANK N.A. NASSAU, BAHAMAS BRANCH,
110 Thompson Boulevard as Lender
Nassau, Bahamas
Attention: Leslie Munroe
Phone: (242) 302-8651
Facsimile: (242) 302-8655 By: /s/ Leslie Munroe
-----------------------------
Name: Leslie Munroe
Title: Attorney-In-Fact
CITIGROUP GLOBAL MAKRETS INC.,
390 Greenwich Street, 1st Floor as Lead Arranger
New York, NY 10013
Mario Espinosa
(212) 723 6731 By: /s/ Mario Espinosa
(212) 723 8543 --------------------------
Name: Mario Espinosa
Title: Managing Director
CITIGROUP GLOBAL MAKRETS INC.,
390 Greenwich Street, 1st Floor as Joint Bookrunner
New York, NY 10013
Mario Espinosa
(212) 723 6731 By: /s/ Mario Espinosa
(212) 723 8543 --------------------------
Name: Mario Espinosa
Title: Managing Director
CREDIT AGRICOLE INDOSUEZ,
Paseo de la Castellana, 1 Branch in Spain as Lead Arranger,
28046 Madrid (SPAIN) Syndication Agent & Lender
Rafael PARDO
Tel: 00 34 91 432 74 88
Fax: 00 34 91 432 74 13
By: /s/ Carlos Aranguren Gutierrez
---------------------------------
Name: Carlos ARANGUREN GUTIERREZ
Title: Director de Creditos y Asesoria Juridica
By: /s/ Rafael Pardo Bragado
---------------------------------
Name: Rafael PARDO BRAGADO
Title: Director Generael Adjunto
REDIT LYONNAIS, S.A. Branch in Spain
Juan Bravo, 3B as Lead Arranger, Syndication Agent
28.006 Madrid (SPAIN) & Lender
Maria REAL DE ASUA
+ (34) 91 319 19 73
+ (34) 91 34 19 92
By: /s/ Angel Benguigui
-----------------------
Name: Angel BENGUIGUI
Title: General Manager
ING BANK, N.V.
Zeelandia Office Park, Kaya W.F.G. as Arranger and Lender
Mensing 14 P.O. Box 3985, Curacao,
Netherlands Antilles
A.B. Rosaria By: /s/ A.B. Rosaria
--------------------
Name: A.B. Rosaria
Title: Risk Manager
Telephone: -599 9 432 70 00
Facsimile: -599 9 432 7511 / 5 12
Zeelandia Office Park, Kaya W.F.G. ING BANK, N.V.
Mensin 14 P.O. Box 3895, Curacao, as Arranger and Lender
Netherlands Antilles
H.F.J. ten Holt By: /s/ H.F.J. ten Holt
-----------------------------
Name: H.F.J. ten Holt
Title: Director Chief
Financial Officer
Telephone: -599 9 432 70 00
Facsimile: -599 9 432 7511 / 5 12
JPMORGAN CHASE BANK,
277 Park Avenue as Lender
New York, NY (10172)
Nicolas M. Ferro By: /s/ Nicolas M. Ferro
Tel: (212) 622-7484 -----------------------
Fax: (212) 534-0358 Name: Nicolas M. Ferro
Title: Vice-president
J.P. MORGAN SECURITIES INC.,
J.P. Morgan Securities Inc. as Lead Arranger
New York, NY 10017
Tel. 212-834-4377
Fax. 212-834-6618 By: /s/ Therese Rabieh
---------------------------
Name: Therese Rabieh
Title: Managing Director
J.P. MORGAN SECURITIES INC.,
J.P. Morgan Securities Inc. as Joint Bookrunner
New York, NY 10017
Tel. 212-834-4377
Fax. 212-834-6618 By: /s/ Therese Rabieh
---------------------------
Name: Therese Rabieh
Title: Managing Director
MIZUHO CORPORATE BANK, LTD.,
Address: 1251 Ave. of The Americas Arranger
New York, NY 10020
Attention: David Costa
Vice President
Project & International By: s/ Tsukasa Takasawa
Finance Group ----------------------------
Telephone: 212-282-4964 Name: Tsukasa Takasawa
Facsimile: 212-282-4385 Title: Senior Vice President
MIZUHO CORPORATE BANK, LTD.,
Address: 1251 Ave. of The Americas as Lender
New York, NY 10020
Attention: David Costa
Vice President
Project & International By: s/ Tsukasa Takasawa
Finance Group ----------------------------
Telephone: 212-282-4964 Name: Tsukasa Takasawa
Facsimile: 212-282-4385 Title: Senior Vice President
NATEXIS BANQUES POPULAIRES, SUCURSAL
Address: Paseo de Recoletos, 7-9 EN ESPANA
28004 Madrid - SPAIN
Attention: Jose Luis SANCHEZ
Telephone: 34 91 837 47 06
Facsimile: 34 91 837 47 80
By: /s/ Jose Maria Iceta
-----------------------
Name: Jose Maria ICETA
Title: General Manager
By: /s/ Frederic Marechaux
-----------------------
Name: Frederic MARECHAUX
Title: Corporate Banking
SCH OVERSEAS BANK, INC.,
[Address]: SCH Overseas Bank, Inc. as Lender
Ponce do Leon Ave., 221 - 11th floor
Hato Rey
Puerto Rico By: /s/ Jose Luis Munoz Cintron
[Attention]: Awilda Rosado Lugo --------------------------------
[Telephone]: 1-787-274-7200 Name: Jose Luis Munoz Cintron
[Facsimile]: 1-787-250-3394 Title: Vicepresident
By: /s/ Simon Ergas Testa
--------------------------------
Name: Simon Ergas Testa
Title: Director
SCH OVERSEAS BANK, INC.,
[Address]: SCH Overseas Bank, Inc. as Lead Arranger
Ponce do Leon Ave., 221 - 11th floor
Hato Rey
Puerto Rico By: /s/ Jose Luis Munoz Cintron
[Attention]: Awilda Rosado Lugo --------------------------------
[Telephone]: 1-787-274-7200 Name: Jose Luis Munoz Cintron
[Facsimile]: 1-787-250-3394 Title: Vicepresident
By: /s/ Simon Ergas Testa
--------------------------------
Name: Simon Ergas Testa
Title: Director
THE BANK OF TOKYO-MITSUBISHI, LTD.
1251 Avenue of the Americas as Co-Arranger and Lender
New York , NY 10020-1104
Attention: Hiroshi Azuma, VP
Telephone: 212-782-4184
Facsimile: 212-782-6400 By: /s/ Hiroshi Azuma
-------------------------------
Name: Hiroshi Azuma
Title: VP & Head of EMD
Oficina de Representacion en Mexico THE BANK OF NOVA SCOTIA
Blvd. M. Avila Camacho No. 1, P.8 as Co-Arranger
Col. Lamas do Chapultepec
11009 Mexico, D.F.
Tel: (52) (55) 5520 7799 By: /s/ Robert D. Hirsh
Fax: (52) (55) 5395 9050 --------------------------------
(52) (55) 5395 9051 Name: Robet D. Hirsh
Title: Representative
Oficina de Representacion en Mexico THE BANK OF NOVA SCOTIA
Blvd. M. Avila Camacho No. 1, P.8 as Lender
Col. Lamas do Chapultepec
11009 Mexico, D.F.
Tel: (52) (55) 5520 7799 By: /s/ Robert D. Hirsh
Fax: (52) (55) 5395 9050 --------------------------------
(52) (55) 5395 9051 Name: Robet D. Hirsh
Title: Representative
THE ROYAL BANK OF SCOTLAND PLC.,
[Address]: Arranger and Lender
Marques de Cubas 4
Madrid 28014
Spain
[Attention]: Javier Figar By /s/ Juan Carlos Garcia Centeno
----------------------------------
Name: Juan Carlos Garcia Centeno
[Telephone]: 00.34.91.701.51.26 Title: Country Head: Spain and
Portugal
[Facsimile]: 00.34.91.701.53.07
Wachovia Bank, National Association,
[Address]: 191 Peachtree St., NE as Lender
[Attention]: Kay Reedy
[Telephone]: (404)332-5262
[Facsimile]: (404)332-5905 By: /s/ Kathleen Reedy
----------------------
Name: Kathleen Reedy
Title: Director
WESTLB AG, NEW YORK BRANCH
12116th Avenue, 25th Floo as Lender
New York, NY 10036
Attn: Elisabeth Wilds
Tel: 212-852-6322
Fax: 212-852-6148
By: /s/ Salvatore Battinelli
----------------------------
Name: Salvatore Battinelli,
Managing Director
By: /s/ Daniel Hitchcock
----------------------------
Name: Daniel Hitchcock, Director
Schedule 1.1
Commitments
Tranche A Tranche B Tranche C
Lender Commitment ((euro)) Commitment ($) Commitment ((Y))
- ------ ------------------- -------------- ----------------
ABN Amro (euro)29,909,250 $35,000,000 (Y)3,268,800,000
BNP Paribas (euro)29,909,250 $35,000,000 (Y)3,268,800,000
Citibank N.A. Nassau, Bahamas (euro)29,909,250 $5,000,000 (Y)3,268,800,000
Branch
California Commerce Bank - - $30,000,000 - -
Credit Agricole Indosuez/ (euro)29,909,250 $61,000,000 (Y)435,840,000
Credit Lyonnais
JPMorgan (euro)29,909,250 $35,000,000 (Y)3,268,800,000
Santander (euro)29,909,250 $35,000,000 (Y)3,268,800,000
ING Bank (euro)8,545,500 $75,000,000 - -
Mizuho (euro)13,886,438 $26,250,000 (Y)2,451,600,000
Royal Bank of Scotland (euro)13,886,438 $26,250,000 (Y)2,451,600,000
Bank of Tokyo-M. - - - - (Y)5,448,000,000
BBVA (euro)9,827,325 $23,500,000 (Y)1,634,400,000
Bank of America (euro)9,827,325 $23,500,000 (Y)1,634,400,000
ScotiaBank - - $50,000,000 - -
Banesto (euro)7,477,313 $8,750,000 (Y)817,200,000
Bayerische Landesbank - - $15,000,000 - -
Caja Madrid - - $25,000,000 - -
Natexis (euro)7,477,313 $8,750,000 (Y)817,200,000
Wachovia (euro)5,981,850 $7,000,000 (Y)653,760,000
West LB AG, NY Branch - - $25,000,000 - -
- --------------------------------------------------------------------------------------------------------------
TOTAL (euro)256,365,000 $550,000,000 (Y)32,688,000,000
- --------------------------------------------------------------------------------------------------------------
Schedule 3.7
Litigation
1. The anti-dumping order imposed by the United States Department of
Commerce on August 30, 1990, pursuant to which subsidiaries of CEMEX,
S.A. de C.V. that import cement from the United Mexican States must
make cash deposits with the United States Customs Service to
guarantee the eventual payment of anti-dumping duties, and the
related reviews.
2. CEMEX, S.A. de C.V. and some of its subsidiaries in Mexico have been
notified of several tax assessments determined by the tax authorities
in Mexico related to different tax periods, for approximately
4,806,400,000 Mexican Pesos. The tax assessments result primarily
from: (i) recalculation of the inflationary tax deduction, since the
tax authorities claim that "Advance Payments to Suppliers" and
"Guaranty Deposits" are not by their nature credits; (ii) disallowed
restatement of tax loss carryforwards in the same period in which
they occurred; (iii) disallowed determination of tax loss
carryforwards and; (iv) disallowed deduction of business asset taxes
by the controlling entity because the tax authorities maintain that
such deductions should be considered proportional to the equity
interest that the controlling entity has in the controlled entities.
The affected companies are pursuing all available legal actions in
order to resolve these disputed tax assessments in CEMEX's favor.
Schedule 3.16
Subsidiaries
Part A - Material Subsidiaries; Restricted Subsidiaries
Name Jurisdiction of Incorporation Percentage of
common stock owned
directly or indirectly by
CEMEX, S.A. de C.V.
1. Cemex Mexico, S.A. de C.V. MEXICO 100%
2. Empresas Tolteca de Mexico, S.A. de C.V. MEXICO 100%
3. Cemex Concretos, S.A. de C.V. MEXICO 100%
4. Cemex Trademarks Worldwide, Ltd. SWITZERLAND 100%
5. Sunward Acquisitions N.V. NETHRELANDS 100%
6. Cemex Espana, S.A. SPAIN 99.5%
7. Cemex, Inc. LOUISIANA 100%
8. Cemex Cement of Texas, L.P. TEXAS 100%
Part B - All Other Subsidiaries of Cemex
1. AGROPECUARIA ROSARITO, C.A. VENEZUELA
2. ALTAIR (INDIA) PRIVATE LIMITED INDIA
3. ALTERBRAIN N.V. NETHERLANDS
4. AMTEC NET, S. DE R.L. MEXICO
5. ANACORP INC. CAYMAN ISLANDS
6. APO CEMENT CORPORATION PHILIPPINES
7. APO LAND & QUARRY CORPORATION PHILIPPINES
8. ARICEMEX, S.A. SPAIN
9. ARIDOS SILICIOS, S.A. SPAIN
10. ARKIO DE MEXICO, S.A. DE C.V. MEXICO
11. ARKIO DO BRASIL, S.A. BRAZIL
12. ARKIO HOLDINGS N.V. NETHERLANDS
13. ARKIO, INC. TEXAS
14. ARRENDAMIX DE VENEZUELA, S.A. VENEZUELA
15. ARVORE - TECNOLOGIAS DE INFORMACAO, S.A. PORTUGAL
16. ASESORIAS Y GESTIONES LIMITADA COLOMBIA
17. ASSIUT CEMENT COMPANY EGYPT
18. AUTOTRANSPORTES DE HUICHAPAN, S.A. DE C.V. MEXICO
19. AVIACION COMERCIAL DE AMERICA, S.A. DE C.V. MEXICO
20. AYFER TEKSTIL LTD. STI. TURKEY
21. BEDROCK HOLDINGS, INC. PHILIPPINES
22. BRINDES N.V. NETHERLANDS
23. C.A. VENCEMOS VENEZUELA
24. CAL GUADALAJARA, S.A. DE C.V. MEXICO
25. CALES Y MORTEROS PORTER Y PORTER, S.A. DE C.V. MEXICO
26. CALIKO LIMITED CAYMAN ISLANDS
27. CANADIAN MEDUSA CEMENT LIMITED ONTARIO
28. CARBONIFERA DE SAN PATRICIO, S.A. DE C.V. MEXICO
29. CARIBBEAN FUNDING LLC DELAWARE
30. CECAR INC. CAYMAN ISLANDS
31. CEDICE CARIBE, S.A. DE C.V. MEXICO
32. CEMAR INC. CAYMAN ISLANDS
33. CEMCOKE INTERNATIONAL LIMITED CO. TEXAS
34. CEMENT TRANSIT COMPANY DELAWARE
35. CEMENTIFICIO DI MONTALTO SPA ITALY
36. CEMENTILCE SRL ITALY
37. CEMENTO BAYANO, S.A. PANAMA
38. CEMENTOS ANAHUAC, S.A. MEXICO
39. CEMENTOS DE CENTROAMERICA, S.A. GUATEMALA
40. CEMENTOS GUADALAJARA, S.A. DE C.V. MEXICO
41. CEMENTOS MEXICANOS, S.A. DE C.V. MEXICO
42. CEMENTOS MONTERREY, S.A. DE C.V. MEXICO
43. CEMENTOS NACIONALES, S.A. DOMINICAN REPUBLIC
44. CEMENTOS TOLTECA, S.A. DE C.V. MEXICO
45. CEMEX (CAMBODIA) CO. LTD. CAMBODIA
46. CEMEX (COSTA RICA), S.A. COSTA RICA
47. CEMEX (THAILAND) CO. LTD. THAILAND
48. CEMEX ACQUISITION LLC DELAWARE
49. CEMEX ADMINISTRACIONES LTDA. COLOMBIA
50. CEMEX ASIA HOLDINGS LTD. SINGAPORE
51. CEMEX ASIA PACIFIC INVESTMENTS B.V. NETHERLANDS
52. CEMEX ASIA PTE. LTD. SINGAPORE
53. CEMEX ASIA VENTURES INC. PHILIPPINES
54. CEMEX ASIAN INVESTMENTS N.V. NETHERLAND ANTILLES
55. CEMEX BAHAMAS LIMITED BAHAMAS
56. CEMEX BETON, S.A.S. FRANCE
57. CEMEX CALIFORNIA CEMENT LLC DELAWARE
58. CEMEX CAPE VERDIAN INVESTMENTS B.V. NETHERLANDS
59. CEMEX CAPITAL DE COLOMBIA, S.A. COLOMBIA
60. CEMEX CAPITAL, S.A. DE C.V. MEXICO
61. CEMEX CARACAS II INVESTMENTS B.V. NETHERLANDS
62. CEMEX CARACAS INVESTMENTS B.V. NETHERLANDS
63. CEMEX CARIBE II INVESTMENTS B.V. NETHERLANDS
64. CEMEX CEMENT (BANGLADESH) LIMITED BANGLADESH
65. CEMEX CEMENT, INC. DELAWARE
66. CEMEX CENTRAL PLAINS CEMENT LLC DELAWARE
67. CEMEX CENTRAL, S.A. DE C.V. MEXICO
68. CEMEX COLOMBIA, S.A. COLOMBIA
69. CEMEX CONCRETE HOLDINGS, LLC DELAWARE
70. CEMEX CONCRETOS DE COLOMBIA, S.A. COLOMBIA
71. CEMEX CONCRETOS, S.A. PANAMA
72. CEMEX CONSTRUCTION MATERIALS, L.P. TEXAS
73. CEMEX CORP. DELAWARE
74. CEMEX CHILE INVESTMENTS B.V. NETHERLANDS
75. CEMEX DANISH INVESTMENTS B.V. NETHERLANDS
76. CEMEX DENMARK ApS DENMARK
77. CEMEX EGYPT FOR DISTRIBUTION COMPANY EGYPT
78. CEMEX EGYPT FOR SERVICES EGYPT
79. CEMEX EGYPTIAN INVESTMENTS B.V. NETHERLANDS
80. CEMEX EIGHT INVESTMENTS B.V. NETHERLANDS
81. CEMEX EL SALVADOR, S.A. EL SALVADOR
82. CEMEX ELEVEN INVESTMENTS B.V. NETHERLANDS
83. CEMEX ENVIRONMENTAL LLC DELAWARE
84. CEMEX ESPANA FINANCE LLC DELAWARE
85. CEMEX ESPANA INTERNATIONAL CAPITAL LLC DELAWARE
86. CEMEX FINANCE EUROPE B.V. NETHERLANDS
87. CEMEX FINANCE, INC. DELAWARE
88. CEMEX FOUNDATION OHIO
89. CEMEX FOURTEEN INVESTMENTS B.V. NETHERLANDS
90. CEMEX GENERACION Y COMERCIALIZACION DE ENERGIA, S.A. E.S.P. COLOMBIA
91. CEMEX GLOBAL INVESTMENTS B.V. NETHERLANDS
92. CEMEX GRANULATS, SAS FRANCE
93. CEMEX HOLDINGS INC. DELAWARE
94. CEMEX HUNGARY KFT HUNGARY
95. CEMEX INDONESIA INVESTMENTS B.V. NETHERLANDS
96. CEMEX INTERNACIONAL, S.A. DE C.V. MEXICO
97. CEMEX INTERNATIONAL CAPITAL LLC DELAWARE
98. CEMEX INTERNATIONAL FINANCE CO. IRELAND
99. CEMEX INVESTMENTS AKTIENGESELLSCHAFT LIECHTENSTEIN
100. CEMEX INVESTMENTS, INC. DELAWARE
101. CEMEX LAND COMPANY DELAWARE
102. CEMEX LEASING, INC. ARIZONA
103. CEMEX MANAGEMENT, INC. DELAWARE
104. CEMEX MANILA INVESTMENTS B.V. NETHERLANDS
105. CEMEX NETHERLANDS, B.V. NETHERLANDS
106. CEMEX NICARAGUA, S.A. NICARAGUA
107. CEMEX NY CORPORATION DELAWARE
108. CEMEX PACIFIC COAST CEMENT CORPORATION DELAWARE
109. CEMEX PUERTO RICO, INC. PUERTO RICO
110. CEMEX READY MIX LLKHARASANAH EL-JHAZAA EGYPT
111. CEMEX SIERRA INVESTMENTS B.V. NETHERLANDS
112. CEMEX SIX INVESTMENTS B.V. NETHERLANDS
113. CEMEX SMI HOLDINGS LLC DELAWARE
114. CEMEX STRATEGIC PHILIPPINES INC. PHILIPPINES
115. CEMEX TEN INVESTMENTS B.V. NETHERLANDS
116. CEMEX THIRTEEN INVESTMENTS B.V. NETHERLANDS
117. CEMEX TRADEMARKS HOLDING LTD. SWITZERLAND
118. CEMEX TRADING CARIBE LTD. ST. LUCIA
119. CEMEX TRADING EUROPE, S.A. SPAIN
120. CEMEX TRADING, LLC DELAWARE
121. CEMEX TRANSPORTE, S.A. DE C.V. MEXICO
122. CEMEX TRANSPORTES DE COLOMBIA, S.A. COLOMBIA
123. CEMEX TRUCKING, INC. CALIFORNIA
124. CEMEX TWELVE INVESTMENTS B.V. NETHERLANDS
125. CEMEX VENEZUELA, S.A.C.A. VENEZUELA
126. CEMEX VENTURES, INC. DELAWARE
127. CEMEXNET, S.A. DE C.V. MEXICO
128. CEMSAL Ltd. GAHNA
129. CEMTEC DE EUROPA, S.A. SPAIN
130. CENTRAL DE MEZCLAS, S.A. COLOMBIA
131. CENTRO DISTRIBUIDOR DE CEMENTO, S.A. DE C.V. MEXICO
132. CETACEA INVESTMENTS LIMITED TRINIDAD & TOBAGO
133. CETRA INC. CAYMAN ISLANDS
134. CIMENT LA PIERRE, S.A. HAITI
135. COLOMBIA INTERNATIONAL HOLDINGS INC. BVI
136. COMERCIALIZADORA CONSTRURAMA, S.A. DE C.V. MEXICO
137. COMERCIALIZADORA FERREX, C.A. VENEZUELA
138. COMPANIA DE TRANSPORTES DEL MAR DE CORTES, S.A. DE C.V. MEXICO
139. COMPANIA MINERA ATOYAC, S.A. DE C.V. MEXICO
140. CONCRETOS MONTERREY, S.A. DE C.V. MEXICO
141. CONOMITA, S.A. VENEZUELA
142. CONSTRUCCIONES E INVERSIONES DIAMANTE LTDA. COLOMBIA
143. CONSTRUCTION FUNDING CORPORATION IRELAND
144. CONSTRUFORUM B.V. NETHERLANDS
145. CONSTRUMEGA ARGENTINA, S.A. ARGENTINA
146. CONSTRUMEXCLA, S.A. DE C.V. MEXICO
147. CONSTRUMIX.COM, S.A. DE C.V. MEXICO
148. CONSTRUPLAZA DE ARGENTINA, S.A. ARGENTINA
149. CONSTRUPLAZA SERVICIOS INFORMATICOS, S.L. SPAIN
150. CONSTRUTODO, INC. DELAWARE
151. CORBIN INTERNATIONAL INVESTMENTS LTD. BVI
152. CORPORACION GOUDA, S.A. DE C.V. MEXICO
153. CUBIC VENTURES HOLDINGS LTD BVI
154. CX (THAILAND) LIMITED THAILAND
155. CX NETWORKS N.V. NETHERLANDS
156. CHIQUIOJOS, S.A. COSTA RICA
157. DESARROLLOS DIADANILO, C.A. VENEZUELA
158. DESARROLLOS MULTIPLES INSULARES, INC. PUERTO RICO
159. DIAMANTE TRANSPORTES LIMITADA COLOMBIA
160. DISTRIBUIDORA DE CEMENTO, S.A. PANAMA
161. DITEC INVERSIONES, S.L. SPAIN
162. DUNAV INVESTMENTS LTD. BVI
163. EDGEWATER VENTURES CORPORATION PHILIPPINES
164. EL FAHD FOR CEMENT CO. EGYPT
165. ENTREPRISES PASTORELLO TRAVAUX ROUTIERS, SAS FRANCE
166. EQUIPOS INDUSTRIALES DE AGUASCALIENTES, S.A. DE C.V. MEXICO
167. EQUIPOS PARA USO DE GUATEMALA, S.A. GUATEMALA
168. ESCAZU INVESTMENTS CAYMAN ISLANDS
169. ESPARTANA SHIPPING CO. CAYMAN ISLANDS
170. EURO-CARIBBEAN INVESTMENTS B.V. NETHERLAND
171. FABRICACION DE MAQUINARIA PESADA, S.A. DE C.V. MEXICO
172. FLORIDA LIME CORPORATION PUERTO RICO
173. FUJUR, S.A. DE C.V. MEXICO
174. FUNDACION DIAMANTE SAMPER COLOMBIA
175. GANDALF HOLDINGS CORPORATION PHILIPPINES
176. GESTION FRANCAZAL ENTREPRISES, SAS FRANCE
177. GIBRALTAR RE LIMITED ST. LUCIA
178. GLOBAL SOFTWARE FACTORY, S.A. DE C.V. MEXICO
179. GOOD ASSETS LIMITED THAILAND
180. GRANOS Y TERRENOS, S.A. DE C.V. MEXICO
181. GULF COAST PORTLAND CEMENT CO. DELAWARE
182. HISPAGOLD INVESTMENTS B.V NETHERLANDS
183. HORMICEMEX, S.A. SPAIN
184. HORMIGONES AUTOL, S.A. SPAIN
185. HOTELERA DEL ATLANTICO, S.A. DOMINICAN REPUBLIC
186. IKELA INVESTMENTS LTD. BVI
187. IMPRA CAFE, S.A. DE C.V. MEXICO
188. INCALPA, S.A. DE C.V. MEXICO
189. INDEPENDIENTE SHIPPING CO. CAYMAN ISLANDS
190. INDUSTRIAS E INVERSIONES SAMPER, S.A. COLOMBIA
191. INFOGLOBAL, SA DE CV MEXICO
192. INFOSPHERE LOGISTICA, S DE R.L MEXICO
193. INFOSPHERE, SA DE CV MEXICO
194. INMOBILIARIA CEMEX COZUMEL, S.A. DE C.V. MEXICO
195. INMOBILIARIA CEMEX HUATULCO, S.A. DE.C.V. MEXICO
196. INMOBILIARIA RIO LA SILLA, S.A. DE C.V. MEXICO
197. INMOBILIARIA RIO SAN FERNANDO, S.A. DE C.V. MEXICO
198. INMOBILIARIA RIO SAN MARTIN, S.A. DE C.V. MEXICO
199. INMOBILIARIA VALLE DEL CAMPESTRE, S.A. DE C.V. MEXICO
200. INMOBILIARIA VALLE DOS C.A. VENEZUELA
201. INMOBILIARIA Y ARRENDAMIENTO BAYANO, S.A. PANAMA
202. INMOBILIARIA Y SERVICIOS TURCEM, S.A. DE C.V. MEXICO
203. INTERAMERICAN INVESTMENTS, INC. DELAWARE
204. INTERNATIONAL COMPANY FOR SILOS LTD. EGYPT
205. INTERNATIONAL INVESTORS LLC DELAWARE
206. INTERSILOS, S.A. SPAIN
207. INVERSIONES CALLEGARI, C.A. VENEZUELA
208. INVERSIONES VILLAJOYOSA, S.A. SPAIN
209. ISLAND CEMENT COMPANY LIMITED BAHAMAS
210. ISLAND QUARRY AND AGGREGATES CORP. PHILIPPINES
211. JAMES H. DREW CORPORATION INDIANA
212. KOSMOS CEMENT COMPANY KENTUCKY
213. LAI LIMITED CAYMAN ISLANDS
214. LATIN NETWORK HOLDINGS B.V. NETHERLANDS
215. LATIN NETWORK MEXICO, S.A. DE C.V. MEXICO
216. LATINASIAN INVESTMENTS PTE. LTD. SINGAPORE
217. LATINET HOLDINGS B.V. NETHERLANDS
218. LATINET INVESTMENTS, LLC DELAWARE
219. LATINEXUS MEXICO, S.A. DE C.V. MEXICO
220. LATINEXUS N.V. NETHERLANDS
221. LATINPAGO N.V. NETHERLANDS
222. LE CIMENT DU NORD, S.A. HAITI
223. LIMESTONE MATERIALS, INC. PUERTO RICO
224. LINE, S.A. GUATEMALA
225. LOMAS DEL TEMPISQUE, S.R.L. COSTA RICA
226. LOMEZ INTERNATIONAL B.V. NETHERLANDS
227. LOTHLORIEN HOLDINGS CORPORATION PHILIPPINES
228. MACORIS INVESTMENTS CAYMAN ISLANDS
229. MACORP INC. BVI
230. MADERAS Y GRANOS DE LA LAGUNA, S.A. DE C.V. MEXICO
231. MADISA B.V. NETHERLANDS
232. MAQUINDUSTRIAS, S.A. DE C.V. MEXICO
233. MASTER ACCESORIOS INDUSTRIALES, S.A. DE C.V. MEXICO
234. MAYA-BELIZE CEMENT LIMITED BELIZE
235. MERCIS, S.A. DE C.V. MEXICO
236. MEXAM TRADE, INC. DELAWARE
237. MEXCEMENT HOLDINGS, S.A. DE C.V. MEXICO
238. MILTON INTERNATIONAL CORP. CAYMAN ISLANDS
239. MINERAL RESOURCE TECHNOLOGIES, INC. DELAWARE
240. MOJAVE NORTHERN RAILROAD COMPANY CALIFORNIA
241. MONTASSER READY MIX EGYPT
242. NEORIS ARGENTINA, S.A. ARGENTINA
243. NEORIS CHILE, S.A. CHILE
244. NEORIS DE MEXICO, S.A. DE C.V. MEXICO
245. NEORIS DO BRAZIL, S.A. BRAZIL
246. NEORIS ESPANA, S.L. SPAIN
247. NEORIS LOGISTICS, INC. FLORIDA
248. NEORIS N.V. NETHERLANDS
249. NEORIS USA, INC. FLORIDA
250. NEORIS VENEZUELA, C.A. VENEZUELA
251. NEORISPOR - EDICIOS DIGITAIS, S.A. PORTUGAL
252. NEW SUNWARD HOLDING B.V. NETHERLANDS
253. NORTH TRANSPORT, INC. DELAWARE
254. OCCITAN INVESTMENTS B.V. NETHERLANDS
255. PACIFIC ASSETS N.V. NETHERLANDS
256. PANAMA PACIFIC INVESTMENTS B.V. NETHERLANDS
257. PANTAPOIEM - CRIACOES MULTIMEDIA, LTD. PORTUGAL
258. PARMA CEMENTI SPA ITALY
259. PCG HOLDINGS, INC. DELAWARE
260. PETROCEMEX, S.A. DE C.V. MEXICO
261. PETROLEUM COKE GRINDING, INC. DELAWARE
262. POLY BAGS AND PACKAGING, INC. PUERTO RICO
263. PONCE CAPITAL CORPORATION PUERTO RICO
264. PONCE EQUIPMENT AND MAINTENANCE COMPANY PUERTO RICO
265. POWERNET INTERNATIONAL, INC. FLORIDA
266. PRO AMBIENTE, S.A. DE C.V. MEXICO
267. PRODUCTORA DE BOLSAS DE PAPEL, S.A. MEXICO
268. PRODUCTOS CALCAREOS, S.A. DE C.V. MEXICO
269. PROFESIONALES EN LOGISTICA DE MEXICO, S.A. DE C.V. MEXICO
270. PROFESSIONAL SOFTWARE SERVICES, S.A. DE C.V. MEXICO
271. PROVEEDORA DE FIBRAS TEXTILES, S.A. DE C.V. MEXICO
272. PROVEEDORA MEXICANA DE MATERIALES, S.A. DE C.V. MEXICO
273. PT BINTANG POLINA PERKASA INDONESIA
274. PT CEMEX INDONESIA INDONESIA
275. PUERTO RICAN CEMENT COMPANY, INC. PUERTO RICO
276. PUERTO RICO FINANCE LLC DELAWARE
277. PUNTOCOM HOLDINGS LTDA. ARGENTINA ARGENTINA
278. PUNTOCOM HOLDINGS LTDA. BRASIL BRASIL
279. PUNTOCOM HOLDINGS N.V. NETHERLANDS
280. PUNTOCOM HOLDINGS USA, INC. DELAWARE
281. PUNTOCOM HOLDINGS, S.A. DE C.V. MEXICO
282. PUNTOCOM HOSTING N.V. NETHERLANDS
283. PUNTOCOM INVESTMENTS, LLC DELAWARE
284. READY MIX CONCRETE, INC. PUERTO RICO
285. RED ROCK OF MINNESOTA, INC. MINNESOTA
286. RIVENDELL HOLDINGS CORPORATION PHILIPPINES
287. RODNEY H. GREENWAY, INC. GEORGIA
288. SANDSTONE STRATEGIC HOLDINGS, INC. PHILIPPINES
289. SANDWORTH PLAZA HOLDING B.V. NETHERLANDS
290. SAVAR INVESTMENTS CAYMAN ISLANDS
291. SERVICIOS CEMEX CAPITAL, S.A. DE C.V. MEXICO
292. SERVICIOS CEMEX MEXICO, S.A. DE C.V. MEXICO
293. SERVICIOS MUNDIALES DE CONSULTORIA SEMUCOSA, S.A. VENEZUELA
294. SERVICIOS PARA LA AUTOCONSTRUCCION, S.A. DE C.V. MEXICO
295. SERVICRETO LTDA. COLOMBIA
296. SHIRE HOLDINGS CORPORATION PHILIPPINES
297. SIERRA TRADING CAYMAN ISLANDS
298. SINERGIA DEPORTIVA, S.A. DE C.V. MEXICO
299. SOCIETE DES CIMENTS ANTILLAIS FRENCH ANTILLES (GUADALUPE)
300. SOLID CEMENT CORP. PHILIPPINES
301. SOUTHINGTON LIMITED BAHAMAS
302. SUNBELT CEMENT HOLDINGS, INC. DELAWARE
303. SUNBELT INVESTMENTS INC. DELAWARE
304. SUNBELT TRADING, S.A. DOMINICAN REPUBLIC
305. SUNBELT-RE LIMITED BERMUDA
306. SUNBULK SHIPPING N.V. NETHERLAND ANTILLES
307. SUNWARD HOLDINGS B.V. NETHERLANDS
308. SUNWARD INVESTMENTS B.V. NETHERLANDS
309. TECNOLOGIA Y APLICACIONES MEDIOAMBIENTALES DE ALCANAR, S.L. SPAIN
310. TECNOLOGIA Y APLICACIONES MEDIOAMBIENTALES DE YEPES, S.L. SPAIN
311. TECNOLOGIAS Y APLICACIONES MEDIOAMBIENTALES, S.A. SPAIN
312. TELENEXO N.V. NETHERLANDS
313. TENNESSEE GUARDRAIL, INC. TENNESSEE
314. TERMOELECTRICA DEL GOLFO, S. DE R.L. DE C.V. MEXICO
315. TEXMATRIX N.V. NETHERLANDS
316. TOULOUSE MIDI PYRENNEES ENROBES, S.A. FRANCE
317. TRANSENERGY, INC. TEXAS
318. TRANSPORTES DE CEMENTO, S.A. SPAIN
319. TRANSPORTES SAN PEDRO, S.A. DOMINICAN REPUBLIC
320. TRICAP INVESTMENTS I-A, LLC DELAWARE
321. TRICAP OPTION FUND A, LLC DELAWARE
322. TRIPLE DIME HOLDINGS INC. PHILIPPINES
323. TUNWOO CO. LTD TAIWAN
324. UCIM, A.S. TURKEY
325. UNIS INVESTMENTS CAYMAN ISLANDS
326. VALCEM INTERNATIONAL B.V. NETHERLANDS
327. VALENCIANA DENMARK APS DENMARK
328. VENCEMENT INVESTMENTS CAYMAN ISLANDS
329. VENMARCA OCCIDENTE, C.A. VENEZUELA
330. VILMER INVESTMENTS CAYMAN ISLANDS
331. VOGAN INVESTMENTS CAYMAN ISLANDS
332. WESTERN RAIL ROAD COMPANY TEXAS
333. WIND ACQUISITION CORP I DELAWARE
334. WIND ACQUISITION CORP II DELAWARE
335. WIND ACQUISITION CORP III DELAWARE
Schedule 3.23
Restrictions on Distributions
None.
Schedule 6.2
Liens
CONSOLIDATED GROUP
LIEN SCHEDULE
(Figures in millions of US Dollars)
COMPANY LENDER LIEN CONCEPT BALANCE $
CEMEX Construction Materials, L.P. Navistar Financial Equipment related with the Credit 2.25
CEMEX Construction Materials, L.P. GE Capital 7964, 8069 Equipment related with the Credit 1.24
CEMEX Construction Materials, L.P. City of Long Beach Cement Terminal (Capital Lease Obligation) 9.81
CEMEX Construction Materials, L.P. GE Capital 8050 Equipment related with the Credit. 0.00
CEMEX Construction Materials, L.P. Hampton Land related with the Credit 0.34
CEMEX Construction Materials, L.P. Rodgers Land related with the Credit 0.56
CEMEX Construction Materials, L.P. RIO Land related with the Credit 5.17
CEMEX Espana, S.A. La Caixa MAIN OFFICES 0.54
C/ Hernandez de Tejada, 1 - 3
Madrid
CEMEX, Inc. Kaser Note Land related with the Credit 1.42
CEMEX, Inc. Diamond Sand/Greenway Note Land related with the Credit 0.00
Cemex, S.A. De C.V. BNP Cash Collateral 3.70
Cemex, S.A. De C.V. Wachovia Cash Collateral 0.00
Escazu Investments Citibank Cash Collateral 9.30
Centro Distribuidor de Cemento, S.A. De C.V. Goldman Sachs Cash Collateral 10.88
-----
45.21
EXHIBIT A-1
FORM OF TRANCHE A NOTE
PROMISSORY NOTE
(euro)___________
For value received, the undersigned, NEW SUNWARD HOLDING, B.V. (the
"Borrower"), by this Promissory Note unconditionally promises to pay to the
order of ______________________ (the "Lender"), the principal sum of
(euro)__________________ (________________________ EURO __/100) on
____________ ____, 20__, provided that if such day is not a Business Day, the
maturity date shall be the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
the maturity date shall be the immediately preceding Business Day (the
"Maturity Date").
The Borrower further promises to pay to the Lender interest on the principal
amount outstanding hereunder for each day during each Interest Period (as
hereinafter defined) at a rate per annum equal to the Eurocurrency Rate (as
hereinafter defined) for such Interest Period (as hereafter defined) plus
0.625% (zero point six hundred and twenty five percent). Interest shall be
payable in arrears on each Interest Payment Date (as hereinafter defined).
The Borrower also promises to pay, to the fullest extent permitted by
applicable law, default interest on any amount payable hereunder that is not
paid when due under this Promissory Note, payable on demand, at a rate per
annum equal to the Eurocurrency Rate then in effect plus 0.625% (zero point
six hundred and twenty five percent) plus 2.00% (two point zero percent).
All computations of interest hereunder shall be made on the basis of a year of
360 days for the actual number of days elapsed in the period for which any
such interest is payable (including the first day but excluding the last day).
All payments to be made on or in respect of this Promissory Note shall be made
not later than 10:00 a.m., London time, to the account number _________, ABA
number _____________, Ref.: ___________ in __________________, maintained by
the Administrative Agent (as hereinafter defined), in Euros and in immediately
available funds.
All payments made and to be made hereunder shall be made free and clear of,
and without deduction or withholding for or on account of, any present or
future taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (as hereinafter defined) ("Taxes"). If
any Taxes are required to be withheld from any amounts payable hereunder, the
amounts so payable to the holder hereof shall be increased to the extent
necessary to yield to the holder hereof interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Promissory
Note.
The undersigned agree to reimburse upon demand, in like manner and funds, all
losses, costs and reasonable expenses of the holder hereof, if any, incurred
in connection with the enforcement of this Promissory Note (including, without
limitation, all reasonable legal costs and expenses).
For purposes of this Note, the following terms shall have the following
meanings:
"Administrative Agent" means Citibank, N.A.
"Business Day" means a day, other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law or
other governmental action to close, and any day on which banks are not open
for trading Euro in the London interbank market.
"Euro" and "(euro)" means the lawful currency of the participating member
states of the European Monetary Union. "Interest Payment Date" means the last
day of each Interest Period (as hereinafter defined).
"Interest Period" means, the period commencing on the execution date of this
Promissory Note and ending [one] [three] [six] months thereafter and
thereafter, each period commencing on the last day of the immediately
preceding Interest Period and ending [one] [three] [six] months thereafter;
provided that (i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such extension would carry such Interest Period
into another calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day; (ii) no Interest Period shall extend
beyond the Maturity Date; and (iii) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month.
"Eurocurrency Rate" means with respect to each day during each Interest
Period, a rate per annum determined for such day (rounded upwards, if
necessary, to the nearest 1/100th of 1%) equal to the Eurocurrency Base Rate
divided by the result of 1.00 minus the Eurocurrency Reserve Requirements.
"Eurocurrency Base Rate" means, with respect to each day during each Interest
Period, the rate per annum (rounded upwards, if necessary, to the next 1/100
of 1%) determined on the basis of the London inter-bank offered rate for
deposits in Euro for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the beginning
of such Interest Period. In the event that such rate does not appear on the
Telerate screen, the "Eurocurrency Base Rate" shall be determined by reference
to such other comparable publicly available service for displaying
eurocurrency rates as may be selected by the Administrative Agent in
consultation with the Borrower or, in the absence of such availability, by
reference to the rate (rounded upwards, if necessary, to the next 1/100 of 1%)
at which deposits in Euro for a period equal to or closest to (but greater
than) such Interest Period are offered by the principal London office of the
Administrative Agent in the Euro interbank market at or about 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest Period.
"Eurocurrency Reserve Requirements" means for any day, the aggregate (without
duplication) of the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including basic, supplemental, marginal
and emergency reserves) under any regulations of the Board of Governors of the
Federal Reserve System of the United States of America (or any successor, the
"Board") or other Governmental Authority having jurisdiction over the Lender
dealing with reserve requirements prescribed for funding in Euro (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board).
"Governmental Authority" means any foreign or domestic branch of power or
government or any state, department or other political subdivision thereof, or
any foreign or domestic governmental body, agency, authority (including any
central bank or taxing authority), any entity or instrumentality (including
any court or tribunal) exercising, or asserting jurisdiction to exercise,
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
This Promissory Note shall in all respects be governed by, and construed in
accordance with, the laws of the State of New York, United States of America,
provided however, that if any action or proceeding in connection with this
Promissory Note shall be brought in any courts in the United Mexican States,
this Promissory Note shall be governed by the laws of United Mexican States.
Any legal action or proceeding arising out of or relating to this Promissory
Note may be brought, in any court of the United States for the Southern
District of New York or any courts of the State of New York located in the
Borough of Manhattan, City of New York, or in the courts located in the City
of Mexico, Federal District, United Mexican States. The Borrower and the
Guarantors waive the jurisdiction of any other courts that may correspond for
any other reason.
The Borrower and the Guarantors hereby waive diligence, presentment, protest
or notice of total or partial non-payment or dishonor with respect to this
Promissory Note.
This Promissory Note has been executed in both English and Spanish versions,
both of which shall bind the Borrower; provided, however, that the English
version shall be controlling, except in any action, suit or proceeding brought
in the courts of the United Mexican States, in which case the Spanish version
shall be controlling.
This Promissory Note consists of ___ pages, each of which is duly signed.
[PLACE OF EXECUTION] ___________ ___, 2003.
NEW SUNWARD HOLDING, B.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
GUARANTORS
POR AVAL
CEMEX, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
CEMEX MEXICO, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
EMPRESAS TOLTECA DE MEXICO, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
EXHIBIT A-2
PROMISSORY NOTE
US$___________
For value received, the undersigned, NEW SUNWARD HOLDING, B.V. (the
"Borrower"), by this Promissory Note unconditionally promises to pay to the
order of ______________________ (the "Lender"), the principal sum of
US$_________________ (________________________ DOLLARS OF THE UNITED STATES OF
AMERICA __/100) on ____________ ____, 20__, provided that if such day is not a
Business Day, the maturity date shall be the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar
month, in which case the maturity date shall be the immediately preceding
Business Day (the "Maturity Date").
The Borrower further promises to pay to the Lender interest on the principal
amount outstanding hereunder for each day during each Interest Period (as
hereinafter defined) at a rate per annum equal to the Eurocurrency Rate (as
hereinafter defined) for such Interest Period (as hereafter defined) plus
0.925% (zero point nine hundred and twenty five percent). Interest shall be
payable in arrears on each Interest Payment Date (as hereinafter defined).
The Borrower also promises to pay, to the fullest extent permitted by
applicable law, default interest on any amount payable hereunder that is not
paid when due under this Promissory Note, payable on demand, at a rate per
annum equal to the Eurocurrency Rate then in effect plus 0.925% (zero point
nine hundred and twenty five percent) plus 2.00% (two point zero percent).
All computations of interest hereunder shall be made on the basis of a year of
360 days for the actual number of days elapsed in the period for which any
such interest is payable (including the first day but excluding the last day).
All payments to be made on or in respect of this Promissory Note shall be made
not later than 11:00 a.m., New York time, to the account number _________, ABA
number _____________, Ref.: ___________ in __________________, maintained by
the Administrative Agent (as hereinafter defined), in Dollars and in
immediately available funds.
All payments made and to be made hereunder shall be made free and clear of,
and without deduction or withholding for or on account of, any present or
future taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (as hereinafter defined) ("Taxes"). If
any Taxes are required to be withheld from any amounts payable hereunder, the
amounts so payable to the holder hereof shall be increased to the extent
necessary to yield to the holder hereof interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Promissory
Note.
The undersigned agree to reimburse upon demand, in like manner and funds, all
losses, costs and reasonable expenses of the holder hereof, if any, incurred
in connection with the enforcement of this Promissory Note (including, without
limitation, all reasonable legal costs and expenses).
For purposes of this Note, the following terms shall have the following
meanings:
"Administrative Agent" means Citibank, N.A.
"Business Day" means a day, other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law or
other governmental action to close, and any day on which banks are not open
for trading Dollars in the London interbank market.
"Dollars" or "US$" means the lawful currency of the United States of America.
.. "Interest Payment Date" means the last day of each Interest Period (as
hereinafter defined).
"Interest Period" shall mean, the period commencing on the execution date of
this Promissory Note and ending [one] [three] [six] months thereafter and
thereafter, each period commencing on the last day of the immediately
preceding Interest Period and ending [one] [three] [six] months thereafter;
provided that (i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such extension would carry such Interest Period
into another calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day; (ii) no Interest Period shall extend
beyond the Maturity Date; and (iii) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month.
"Eurocurrency Rate" means with respect to each day during each Interest
Period, a rate per annum determined for such day (rounded upwards, if
necessary, to the nearest 1/100th of 1%) equal to the Eurocurrency Base Rate
divided by the result of 1.00 minus the Eurocurrency Reserve Requirements.
"Eurocurrency Base Rate" means, with respect to each day during each Interest
Period, the rate per annum (rounded upwards, if necessary, to the next 1/100
of 1%) determined on the basis of the London inter-bank offered rate for
deposits in U.S. Dollars for a period equal to such Interest Period commencing
on the first day of such Interest Period appearing on page 3750 of the
Telerate screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does not appear
on the Telerate screen, the "Eurocurrency Base Rate" shall be determined by
reference to such other comparable publicly available service for displaying
eurocurrency rates as may be selected by the Administrative Agent in
consultation with the Borrower or, in the absence of such availability, by
reference to the rate (rounded upwards, if necessary, to the next 1/100 of 1%)
at which deposits in U.S. Dollars for a period equal to or closest to (but
greater than) such Interest Period are offered by the principal London office
of the Administrative Agent in the U.S. Dollars interbank market at or about
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period.
"Eurocurrency Reserve Requirements" means for any day, the aggregate (without
duplication) of the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including basic, supplemental, marginal
and emergency reserves) under any regulations of the Board of Governors of the
Federal Reserve System of the United States of America (or any successor, the
"Board") or other Governmental Authority having jurisdiction over the Lender
dealing with reserve requirements prescribed for funding in Eurodollars
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board).
"Governmental Authority" means any foreign or domestic branch of power or
government or any state, department or other political subdivision thereof, or
any foreign or domestic governmental body, agency, authority (including any
central bank or taxing authority), any entity or instrumentality (including
any court or tribunal) exercising, or asserting jurisdiction to exercise,
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
This Promissory Note shall in all respects be governed by, and construed in
accordance with, the laws of the State of New York, United States of America,
provided however, that if any action or proceeding in connection with this
Promissory Note shall be brought in any courts in the United Mexican States,
this Promissory Note shall be governed by the laws of United Mexican States.
Any legal action or proceeding arising out of or relating to this Promissory
Note may be brought, in any court of the United States for the Southern
District of New York or any courts of the State of New York located in the
Borough of Manhattan, City of New York, or in the courts located in the City
of Mexico, Federal District, United Mexican States. The Borrower and the
Guarantors waive the jurisdiction of any other courts that may correspond for
any other reason.
The Borrower and the Guarantors hereby waive diligence, presentment, protest
or notice of total or partial non-payment or dishonor with respect to this
Promissory Note.
This Promissory Note has been executed in both English and Spanish versions,
both of which shall bind the Borrower; provided, however, that the English
version shall be controlling, except in any action, suit or proceeding brought
in the courts of the United Mexican States, in which case the Spanish version
shall be controlling.
This Promissory Note consists of ___ pages, each of which is duly signed.
_______, [PLACE OF EXECUTION]
___________ ___, 2003.
NEW SUNWARD HOLDING, B.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
GUARANTORS
POR AVAL
CEMEX, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
CEMEX MEXICO, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
EMPRESAS TOLTECA DE MEXICO, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
EXHIBIT A-3
PROMISSORY NOTE
(Y)___________
For value received the undersigned, NEW SUNWARD HOLDING, B.V. (the
"Borrower"), by this Promissory Note unconditionally promises to pay to the
order of ______________________ (the "Lender"), the principal sum of
(Y)___________ (________________________ YEN OF JAPAN __/100) on ____________
____, 20__, provided that if such day is not a Business Day, the maturity date
shall be the next succeeding Business Day unless such next succeeding Business
Day would fall in the next calendar month, in which case the maturity date
shall be the immediately preceding Business Day (the "Maturity Date").
The Borrower further promises to pay to the Lender interest on the principal
amount outstanding hereunder for each day during each Interest Period (as
hereinafter defined) at a rate per annum equal to the Eurocurrency Rate (as
hereinafter defined) for such Interest Period (as hereafter defined) plus
0.862% (zero point eight hundred and sixty two percent). Interest shall be
payable in arrears on each Interest Payment Date (as hereinafter defined
below).
The Borrower also promises to pay, to the fullest extent permitted by
applicable law, default interest on any amount payable hereunder that is not
paid when due under this Promissory Note, payable on demand, at a rate per
annum equal to the Eurocurrency Rate then in effect plus 0.862% (zero point
eight hundred and sixty two percent) plus 2.00% (two point zero percent).
All computations of interest hereunder shall be made on the basis of a year of
360 days for the actual number of days elapsed in the period for which any
such interest is payable (including the first day but excluding the last day).
All payments to be made on or in respect of this Promissory Note shall be made
not later than 10:00 a.m., Tokyo time, to the account number _________, ABA
number _____________, Ref.: ___________ in __________________, maintained by
the Administrative Agent (as hereinafter defined), in Yen and in immediately
available funds.
All payments made and to be made hereunder shall be made free and clear of,
and without deduction or withholding for or on account of, any present or
future taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (as hereinafter defined) ("Taxes"). If
any Taxes are required to be withheld from any amounts payable hereunder, the
amounts so payable to the holder hereof shall be increased to the extent
necessary to yield to the holder hereof interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Promissory
Note.
The undersigned agree to reimburse upon demand, in like manner and funds, all
losses, costs and reasonable expenses of the holder hereof, if any, incurred
in connection with the enforcement of this Promissory Note (including, without
limitation, all reasonable legal costs and expenses).
For purposes of this Note, the following terms shall have the following
meanings:
"Administrative Agent" means Citibank, N.A.
"Business Day" means a day, other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law or
other governmental action to close, and any day on which banks are not open
for trading in Yen in the London and Tokyo interbank markets.
"Yen" and "(Y)" means the lawful currency of Japan.
"Interest Payment Date" means the last day of each Interest Period (as
hereinafter defined).
"Interest Period" means, the period commencing on the execution date of this
Promissory Note and ending six months thereafter and thereafter, each period
commencing on the last day of the immediately preceding Interest Period and
ending six months thereafter; provided that (i) if any Interest Period would
otherwise end on a day that is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such extension would
carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day; (ii) no
Interest Period shall extend beyond the Maturity Date; and (iii) any Interest
Period that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of a
calendar month.
"Eurocurrency Rate" means with respect to each day during each Interest
Period, a rate per annum determined for such day (rounded upwards, if
necessary, to the nearest 1/100th of 1%) equal to the Eurocurrency Base Rate
divided by the result of 1.00 minus the Eurocurrency Reserve Requirements.
"Eurocurrency Base Rate" means, with respect to each day during each Interest
Period, the rate per annum (rounded upwards, if necessary, to the next 1/100
of 1%) determined on the basis of the London inter-bank offered rate for
deposits in Yen for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the beginning
of such Interest Period. In the event that such rate does not appear on the
Telerate screen, the "Eurocurrency Base Rate" shall be determined by reference
to such other comparable publicly available service for displaying
eurocurrency rates as may be selected by the Administrative Agent in
consultation with the Borrower or, in the absence of such availability, by
reference to the rate (rounded upwards, if necessary, to the next 1/100 of 1%)
at which deposits in Yen for a period equal to or closest to (but greater
than) such Interest Period are offered by the principal London office of the
Administrative Agent in the Yen interbank market at or about 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest Period.
"Eurocurrency Reserve Requirements" means for any day, the aggregate (without
duplication) of the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including basic, supplemental, marginal
and emergency reserves) under any regulations of the Board of Governors of the
Federal Reserve System of the United States of America (or any successor, the
"Board") or other Governmental Authority having jurisdiction over the Lender
dealing with reserve requirements prescribed for funding in Yen (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board).
"Governmental Authority" means any foreign or domestic branch of power or
government or any state, department or other political subdivision thereof, or
any foreign or domestic governmental body, agency, authority (including any
central bank or taxing authority), any entity or instrumentality (including
any court or tribunal) exercising, or asserting jurisdiction to exercise,
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
This Promissory Note shall in all respects be governed by, and construed in
accordance with, the laws of the State of New York, United States of America,
provided however, that if any action or proceeding in connection with this
Promissory Note shall be brought in any courts in the United Mexican States,
this Promissory Note shall be governed by the laws of United Mexican States.
Any legal action or proceeding arising out of or relating to this Promissory
Note may be brought, in any court of the United States for the Southern
District of New York or any courts of the State of New York located in the
Borough of Manhattan, City of New York, or in the courts located in the City
of Mexico, Federal District, United Mexican States. The Borrower and the
Guarantors waive the jurisdiction of any other courts that may correspond for
any other reason.
The Borrower and the Guarantors hereby waive diligence, presentment, protest
or notice of total or partial non-payment or dishonor with respect to this
Promissory Note.
This Promissory Note has been executed in both English and Spanish versions,
both of which shall bind the Borrower; provided, however, that the English
version shall be controlling, except in any action, suit or proceeding brought
in the courts of the United Mexican States, in which case the Spanish version
shall be controlling.
This Promissory Note consists of ___ pages, each of which is duly signed.
_______, [PLACE OF EXECUTION] ___________
___, 2003.
NEW SUNWARD HOLDING, B.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
GUARANTORS
POR AVAL
CEMEX, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
CEMEX MEXICO, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
EMPRESAS TOLTECA DE MEXICO, S.A. DE C.V.
_________________________________________
By/Por: ______________
Title/Cargo: Attorney-in-Fact / Apoderado
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to Section 5.2(b)
of the Term Loan Agreement, dated as of October 15, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Loan Agreement"),
among NEW SUNWARD HOLDING B.V. (the "Borrower"), CEMEX, S.A. DE C.V.
("Cemex"), CEMEX MEXICO, S.A. DE C.V. and EMPRESAS TOLTECA DE MEXICO, S.A. DE
C.V. (collectively, the "Guarantors"), the Lenders party thereto, CITIBANK,
N.A., as Administrative Agent and the other Persons party thereto. Unless
otherwise defined herein, terms defined in the Loan Agreement and used herein
shall have the meanings given to them in the Loan Agreement.
Each of the undersigned (each, a "Responsible Officer") hereby
certifies that:
1. Such Responsible Officer is the duly elected, qualified and acting
officer, holding the office indicated beneath the signature of such
Responsible Officer on the attached signature page, of the Person specified
opposite the signature of such Responsible Officer (with respect to such
Responsible Officer, the "Company") or, if the Responsible Officer is the
Chief Financial Officer of Cemex, of Cemex.
2. Such Responsible Officer has reviewed and is familiar with the
contents of this Compliance Certificate.
3. Such Responsible Officer has reviewed the terms of the Loan
Agreement and the Loan Documents and has made or caused to be made under such
Responsible Officer's supervision, a detailed review of the transactions and
condition of the Company during the accounting period covered by the financial
statements of the Company attached hereto as Attachment 1 (the "Financial
Statements"), and certifies that such Financial Statements are fairly stated
in all material respects [quarterly statements: (subject to normal year-end
audit adjustments)]. To the best of such Responsible Officer's knowledge, each
Loan Party has observed and performed all of its covenants and other
agreements, and satisfied every condition contained in the Loan Agreement and
the other Loan Documents to which it is a party to be observed, performed or
satisfied by it. Such review did not disclose the existence during or at the
end of the accounting period covered by the Financial Statements, and such
Responsible Officer has obtained no knowledge of the existence, as of the date
of this Compliance Certificate, of a Default or Event of Default [, except as
set forth below].
4. Attached hereto as Attachment 2 is a certificate containing all
information and computations necessary for determining compliance by the Loan
Parties and each of their Subsidiaries with the provisions of the Loan
Documents (including, without limitation, the covenants set forth in Section
6.1 of the Loan Agreement) and setting forth a calculation of the ratio of
Total Borrowings of the Borrower to Total Net Worth of Cemex Espana as of the
last day of the period covered by the Financial Statements, all of which data
and computations are true, complete and correct.
IN WITNESS WHEREOF, I have executed this Compliance Certificate
this_____ day of , 200__.
[________________________ NEW SUNWARD HOLDING B.V.]
Name:
Title:
[________________________ CEMEX, S.A. DE C.V. ]
Name:
Title:
[________________________ CEMEX ESPANA, S.A. DE C.V.]
Name:
Title:
[________________________ CEMEX MEXICO, S.A. DE C.V.]
Name:
Title:
[________________________ EMPRESAS TOLTECA DE MEXICO, S.A. DE C.V.]
Name:
Title:
Attachment 1
to Compliance Certificate
Financial Statements for [Company]
Attachment 2
to Compliance Certificate
[Relevant information and calculations]
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Term Loan Agreement, dated as of October 15,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Loan Agreement"), among NEW SUNWARD HOLDING B.V. (the "Borrower"), CEMEX,
S.A. DE C.V., CEMEX MEXICO, S.A. DE C.V. and EMPRESAS TOLTECA DE MEXICO, S.A.
DE C.V. (collectively, the "Guarantors"), the Lenders party thereto, CITIBANK,
N.A., as administrative agent and the other Persons party thereto. Unless
otherwise defined herein, terms defined in the Loan Agreement and used herein
shall have the meanings given to them in the Loan Agreement.
The Assignor identified on Schedule 1 hereto (the "Assignor") and the
Assignee identified on Schedule 1 hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the
Assignor, as of the Effective Date (as defined below), the interest
described in Schedule I hereto (the "Assigned Interest") in and to
the Assignor's rights and obligations under the Loan Agreement with
respect to each Loan set forth on Schedule 1 hereto, in a principal
amount with respect to each such Loan as set forth on Schedule 1
hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Agreement or
with respect to the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement, any other
Loan Document or any other instrument or document furnished pursuant
thereto, other than that the Assignor has not created any adverse
claim upon the interest being assigned by it hereunder and that such
interest is free and clear of any such adverse claim and (b) makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower, any of its Affiliates or
any other Loan Party or the performance or observance by the
Borrower, any of its Affiliates or any other Loan Party of any of
their respective obligations under the Loan Agreement or any other
Loan Document or any other instrument or document furnished pursuant
thereto.
3. The Assignee as of the date hereof and as of the Effective Date (a)
represents and warrants that it is legally authorized to enter into
this Assignment and Acceptance and the Loan Agreement and to take
assignment of, and hold, the Assigned Loans; (b) represents and
warrants that it is [a Professional Market Party] [not required under
the Dutch Banking Law to be a Professional Market Party because it
forms a closed circle (besloten kring), within the meaning of the
Dutch Exemption Regulation, with the Borrower]; and acknowledges that
each other party to the Agreement has relied upon such representation
and warranty; (c) confirms that it has received a copy of the Loan
Agreement, together with copies of the financial statements delivered
pursuant to Section 3.1 thereof and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance;
and (d) agrees that it will, independently and without reliance upon
the Assignor, the Administrative Agent or any Lender and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under the Loan Agreement, the other Loan Documents or
any other instrument or document furnished pursuant hereto or
thereto. As of the Effective Date, the Assignee (a) appoints and
authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Loan
Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto as are delegated to the
Administrative Agent by the terms thereof, together with such powers
as are incidental thereto; and (b) agrees that it will be bound by
the provisions of the Loan Agreement and will perform in accordance
with its terms all the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Lender.
4. The assignment and acceptance of the Assigned Interests hereunder
shall become effective on the date described in Schedule 1 hereto
(the "Effective Date"). Following the execution of this Assignment
and Acceptance, it shall be delivered to the Administrative Agent for
acceptance by it and recording by the Administrative Agent pursuant
to the Loan Agreement, effective as of the Effective Date (which
shall not, unless otherwise agreed to by the Administrative Agent, be
earlier than five Business Days after the date of such acceptance and
recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have
accrued to the Effective Date and to the Assignee for amounts which
have accrued subsequent to the Effective Date.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Loan Agreement and, to the extent provided in this Assignment
and Acceptance, shall have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by
the provisions thereof and (b) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Loan Agreement except that
it shall retain such rights to indemnification and expense
reimbursement to which it was entitled prior to the Effective Date.
7. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule 1 hereto.
Schedule 1
to Assignment and Acceptance
Name of Assignor: ____________________________________________
Name of Assignee: ____________________________________________
Effective Date of Assignment: _____________
- --------------------- ------------------------------
Tranche Principal Amount
- --------------------- ------------------------------
A (euro) [ ]
- --------------------- ------------------------------
B $ [ ]
- --------------------- ------------------------------
C (Y) [ ]
- --------------------- ------------------------------
Assignor Assignee
By ___________________________ By ___________________________
Name: Name:
Title: Title:
Accepted for Recordation in Register: Consent of
CITIBANK, N.A., as NEW SUNWARD HOLDING B.V.
Administrative Agent (if required)
By ___________________________ By ___________________________
Name: Name:
Title: Title:
EXHIBIT D
FORM OF NOTICE OF BORROWING
Citibank, N.A., as Administrative Agent
[Insert Address]
Attention: [ ]
Ladies and Gentlemen:
This irrevocable notice shall constitute the "Notice of Borrowing"
pursuant to Section 2.2 of the Term Loan Agreement, dated as of October 15,
2003 (as the same may be amended, supplemented or otherwise modified from time
to time, the "Loan Agreement"), among NEW SUNWARD HOLDING B.V., a company
organized and existing under the laws of The Netherlands (the "Borrower"),
CEMEX, S.A. DE C.V., CEMEX MEXICO, S.A. DE C.V. and EMPRESAS TOLTECA DE
MEXICO, S.A. DE C.V. (collectively, the "Guarantors"), the Lenders party
thereto, CITIBANK, N.A., as Administrative Agent and the other Persons party
thereto. Capitalized terms not otherwise defined herein have the meaning
ascribed to them in the Loan Agreement.
1. The date of the borrowing will be October __, 2003 (the "Closing
Date").
2. The principal amount of the Tranche A Loans will be (euro) [ ].
The initial Interest Period for the Tranche A Loans will commence on the
Closing Date and end [one][three][six] month[s] thereafter.
3. The principal amount of the Tranche B Loans will be $ [ ]. The
initial Interest Period for the Tranche B Loans will commence on the Closing
Date and end [one][three][six] month[s] thereafter.
4. The principal amount of the Tranche C Loans will be(Y)[ ].
5. No Default or Event of Default has occurred and is continuing on
the date hereof, or would occur after giving effect to the borrowing requested
to be made on the Closing Date.
6. Each of the representations and warranties made by each Loan Party
in or pursuant to the Loan Documents is true and correct on the date hereof as
if made on and as of such date.
7. The Borrower agrees to indemnify each Lender within 15 days after
demand for, and to hold each Lender harmless from, any loss or expense that
such Lender may sustain or incur as a consequence of default by the Borrower
in making the above-described borrowing of Loans on the Closing Date. Such
indemnification shall include an amount equal to the excess, if any, of (i)
the amount of interest that would have accrued on the amount not so borrowed,
for the period from the date of such failure to borrow to the last day of the
Interest Period that would have commenced on the date of such failure at the
applicable rate of interest for such Loans provided for in the Loan Agreement
(excluding, however, the margin included therein) over (ii) the amount of
interest (as determined in good faith by such Lender) that would have accrued
to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurocurrency market. A
certificate as to any amounts payable pursuant to this Section 7 submitted to
the Borrower by any Lender shall be conclusive in the absence of manifest
error.
8. Schedule A to this Notice of Borrowing sets forth payment
instructions for the Loans to be made on the Closing Date.
NEW SUNWARD HOLDING B.V.
By:
---------------------------------
Name:
Title:
Date: October __, 2003
Schedule A to
Notice of Borrowing
Payment Instructions - Tranche A
Bank:
Address:
ABA #:
Account #:
Ref.:
Payment Instructions - Tranche B
Bank:
Address:
ABA #:
Account #:
Ref.:
Payment Instructions - Tranche C
Bank:
Address:
ABA #:
Account #:
Ref.:
EXHIBIT E-1
FORM OF LEGAL OPINION OF MAYER, BROWN, ROWE & MAW LLP
October [ ], 2003
Citibank, N.A.
2 Penn's Way
Suite 100
New Castle, DE 19720
Attn: Cristian Garcia
And to the Lenders and other Persons
listed on Schedule I hereto
New Sunward Holding B.V.
U.S. $1,150,000,000 Term Loan Agreement
Ladies and Gentlemen:
We have acted as special New York counsel for New Sunward Holding
B.V., a besloten vennootschap met beperkte aansprakelijkheid organized and
existing under the laws of The Netherlands ("New Sunward"), CEMEX, S.A. de
C.V. ("CEMEX"), CEMEX Mexico, S.A. de C.V. ("CEMEX Mexico") and Empresas
Tolteca de Mexico, S.A. de C.V. ("Empresas Tolteca"), each a sociedad anonima
de capital variable organized and existing under the laws of the United
Mexican States, in connection with the preparation, execution and delivery of
the Term Loan Agreement dated as of October 15, 2003 (the "Loan Agreement")
among New Sunward, as Borrower, CEMEX, CEMEX Mexico, and Empresas Tolteca, as
Guarantors, the several banks and other financial institutions or entities
from time to time parties to the Loan Agreement, Citibank, N.A., as
administrative agent, ABN-AMRO Bank N.V., BNP Paribas, Citigroup Global
Markets Inc., Credit Agricole/Credit Lyonnais, ING Bank N.V., J.P. Morgan
Securities Inc., Mizuho Corporate Bank, Ltd., Santander Central Hispano and
the Royal Bank of Scotland Plc. as arrangers, Bank of America, N.A., Bank of
Tokyo-Mitsubishi, BBVA Bancomer S.A., Institucion de Banca Multiple, Grupo
Financeiro BBVA Bancomer, and Scotiabank, as co-arrangers, Credit
Agricole/Credit Lyonais, as syndication agent, and Citigroup Global Markets
Inc. and J.P. Morgan Securities Inc., as joint bookrunners.
This opinion is furnished to you pursuant to Section 4.6(i) of the
Loan Agreement. Terms defined in the Loan Agreement are used herein with their
defined meanings.
In rendering the opinions expressed below, we have examined originals
or copies certified or otherwise identified to our satisfaction of the
following documents:
1. the executed Loan Agreement; and
2. the executed Tranche A, Tranche B and Tranche C Notes; and
3. such other agreements, instruments and other documents, or copies
thereof, identified to our satisfaction, as we have deemed necessary, as a
basis for the opinions hereinafter expressed.
In our examination of such documents and copies, we have assumed the
legal capacity of all natural persons the authenticity and completeness of all
such documents submitted to us as originals, the genuineness of all
signatures, the due authority of the parties executing such documents and the
conformity with the originals of all documents submitted to us as facsimile,
electronic, certified or photostatic copies thereof. As to matters of fact
material to the opinions expressed herein, we have relied on the documents
examined and the accuracy and completeness of the representations and
warranties therein contained.
To the extent that our opinions expressed herein involve conclusions
as to matters governed or controlled by the laws of The Netherlands and Mexico
we have, with your permission, assumed the accuracy of, and relied upon, and
our opinion is subject to the limitations, qualifications and assumptions
contained in, the opinions of Warendorf, Dutch Counsel to the Borrower, and
Lic. Ramiro G. Villareal Morales, Mexican Counsel to the Guarantors,
respectively.
In rendering the opinions expressed below, we have assumed, without
independent investigation, that:
(a) the Borrower is validly existing and in good standing
under the laws of The Netherlands;
(b) each of the Guarantors is validly existing and in good
standing under the laws of the United Mexican States;
(c) each Loan Party has the power and authority to execute,
deliver and perform all of its obligations under the Loan Documents
to which it is a party; that execution and delivery of such Loan
Documents and the consummation by each Loan Party of the transactions
contemplated thereby have been duly authorized by all requisite
action on the part of the Loan Party; each of the Loan Documents has
been duly authorized, executed and delivered by each Loan Party;
(d) no authorization, consent or other approval of, notice
to or filing with any court, governmental authority or regulatory
body is required to authorize or is required in connection with the
execution, delivery or performance by each Loan Party of any Loan
Documents to which it is a party or the transactions contemplated
thereby except that no assumption has been made as to the Loan
Parties regarding matters of the law of the State of New York or
United States federal law;
(e) the Loan Documents are the legal, valid, and binding
obligation of each party thereto (other than Loan Parties under the
law of the State of New York or United States federal law),
enforceable against such parties in accordance with their respective
terms; and
(f) the execution, delivery and performance by each Loan
Party of any of its obligations under the Loan Documents to which it
is a party does not and will not conflict with, contravene, violate
or constitute a default under (a) the organizational documents of
such Loan Party, (b) any lease, indenture, instrument or agreement to
which such Loan Party or its property is subject (other than the
Applicable Contracts as to which we express our opinion in paragraph
1 herein), (c) any rule, law or regulation to which such Loan Party
is subject (other than the law of the State of New York and United
States federal law as to which we express our opinion in paragraph 2
herein) or (d) any judicial or administrative order or decree of any
governmental authority (other than the applicable orders as to which
we express our opinion in paragraph 3 herein).
Based upon the foregoing and subject to the assumptions and
qualifications set forth herein, we are of the opinion that:
1. The execution and delivery by each Loan Party of the Loan
Documents to which it is a party, and the performance by each Loan Party of
its respective obligations under the Loan Documents to which it is a party, do
not and will not (i) contravene, violate or create a default under any of the
terms or provisions of any agreement or document listed on Schedule II hereto
(such agreements and documents, which the Loan Parties have advised us
constitute all agreements and instruments which are governed by the law of the
State of New York and which relate to the issuance of Debt or Derivative
Obligations that are material to Cemex and its Subsidiaries taken as a whole,
the "Applicable Contracts"); or (ii) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of any
Group Member under any Applicable Contract. We do not express an opinion,
however, as to whether the execution, delivery or performance by the Loan
Parties of the Loan Documents will constitute a violation of or default under
any covenants, restrictions or provisions with respect to financial ratios or
tests or any aspect of the financial condition or results of operations of the
respective Loan Parties.
2. Neither the execution, delivery or performance by any Loan Party
of the Loan Documents to which it is a party nor the compliance by any Loan
Party with the terms and provisions thereof will contravene or otherwise
violate the law of the State of New York or United States federal law.
3. Neither the execution, delivery or performance by any Loan Party
of the Loan Documents to which it is a party nor compliance by any Loan Party
with the terms thereof will contravene or otherwise violate any order or
decree of any Governmental Agency of the State of New York or the United
States (each, an "Order") against any of the Loan Parties and listed on
Schedule III hereto, which the Loan Parties have advised us includes all
Orders against any Loan Party.
4. Each Loan Document to which each Loan Party is a party constitutes
the legal, valid and binding obligation of such Loan Party enforceable against
it in accordance with its terms.
5. No approval by or authorization of or filing or registration with
the State of New York or any United States federal governmental commission,
board, agency or other governmental body is necessary in connection with the
execution, delivery and performance by the Borrower or the Guarantors of the
Loan Documents or for the enforceability thereof against any Loan Party or the
consummation of the transactions contemplated thereby.
6. None of the Loan Parties is subject to regulation as in
"investment company" within the meaning of, or is registered or otherwise
required to be registered under, the United States Investment Company Act of
1940, as amended.
7. Neither the execution, delivery or performance by the Loan Parties
of the Loan Documents nor the compliance by the Loan Parties with the terms
and provisions thereof will violate any provision of the United States Public
Utility Holding Company Act of 1935, as amended.
8. The choice of New York law provisions set forth in the Loan
Agreement and the Notes will be recognized as a valid choice of law in the
courts of the State of New York and the United States federal courts sitting
in the State of New York in any action to enforce such documents.
9. Under the laws of the State of New York relating to submission to
jurisdiction, (i) each of the Loan Parties has validly and irrevocably
submitted to the personal jurisdiction of the courts of the State of New York
and the United States of America for the Southern District of New York
(collectively, the "New York Courts") in any action arising out of or related
to the Loan Agreement or the Notes, and (ii) each of the Loan Parties has
validly and irrevocably appointed CT Corporation System as its authorized
agent for the purpose described in Section 10.13 of the Loan Agreement and
service of process effected in the manner set forth in Section 10.13 of the
Loan Agreement will be effective to confer valid personal jurisdiction over
each of the Loan Parties.
10. Neither the execution and delivery by any of the Loan Parties of
the Loan Documents not the performance thereof (including the making of any
payments thereunder or pursuant thereto) are or will be subject to any tax,
duty, fee, withholding or other charge, including any registration or transfer
tax, stamp duty or similar levy imposed by the law of the State of New York or
United States federal law.
Our opinions above are also subject to the following qualifications
and limitations:
(a) Our opinions in paragraph 4 are subject to the following
qualifications:
(i) the effect of applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and of
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law); and
(ii) the effect of foreign laws, judicial determinations or
governmental actions affecting creditors' rights or the Borrowers's
or the Guarantors' ability to perform their obligations under Loan
Documents.
(b) Our opinions expressed above are limited to the law of the State
of New York and United States federal law, and we do not express any opinion
herein concerning any other law.
(c) We express no opinion as to:
(i) the effect of the compliance or non-compliance of any
party (other than the Loan Parties) to the Loan Documents with any
state or federal laws or regulations applicable to such party because
of its legal or regulatory status, the nature of its business, or its
authority to conduct business in any jurisdiction;
(ii) the enforceability of the Loan Agreement to the extent
it provides for interest in violation of the usury laws or for any
waivers with respect to such laws;
(iii) the applicability or effect of any fraudulent transfer
or similar law on any of the Loan Documents or any transactions
contemplated thereby; or
(iv) the enforceability of the provisions of each of the
Loan Documents providing for indemnity by any party thereto against
any loss in obtaining the currency due to such party under each of
the Loan Documents from a court judgment in another currency.
We understand that you are separately receiving an opinion with
respect to the foregoing assumptions from Warendorf, Dutch Counsel to the
Borrower and Lic. Ramiro G. Villareal Morales, Mexican Counsel to the
Guarantors, and we are advised that such opinions contain qualifications. Our
opinions herein stated are based on the assumptions specified above and we do
not express any opinion as to the effect on the opinions herein stated of the
qualifications contained in such other opinions.
This opinion is furnished to you in connection with the closing under
the Loan Agreement and is solely for your benefit. Without our prior written
consent, this letter may not be used or relied upon by, or assigned to, any
other person for any purpose (including any other person that seeks to assert
your rights in respect of this letter), except that Warendorf, Dutch Counsel
to the Borrower and Lic. Ramiro G. Villareal Morales, Mexican Counsel to the
Loan Parties, may rely upon this opinion as to matters of the law of the State
of New York and United States federal law in rendering their opinions in
connection with the Loan Agreement, and any Person becoming a Lender after the
date hereof may rely on this opinion as if addressed to such Person as of the
date hereof.
Very truly yours,
PVD/WAC
Attachments
Schedule I
[Lenders and Agents]
Schedule II
Applicable Contracts
1. Indenture, dated as of July 22, 1996, among CEMEX, as issuer, TOLMEX,
S.A. de C.V. ("TOLMEX"), Empresas Tolteca de Mexico, S.A. do C.V.
("Empresas Tolteca de Mexico"), Cemento Portland National, S.A. de C.V.
("CPN"), Cementos Monterrey, S.A, de C.V. ("Monterrey"), Cementos
Mexicanos, S.A. de C.V. ("Mexicanos"), Grupo Empresarial Maya, S.A. de
C.V. ("GEMSA") and Cementos Maya, S.A. ("Maya"), as guarantors, and First
Trust of New York, National Association, as trustee, relating to the
issuance of U.S. $300 million aggregate principal amount of 12-3/4% Notes
due July 15, 2006 of CEMEX (the "12 3/4 % Notes"), as supplemented by the
First Supplemental Indenture to such Indenture, dated as of December 31,
1998 among CEMEX, as issuer, TOLMEX and Mexicanos, as continuing
guarantors, CPN (as continuing guarantor and successor to Maya), CEMEX
Control, S.A. de C.V. ("CEMEX Control") (as successor guarantor to GEMSA
and Monterrey), Serto Construcciones, S.A. de C.V. ("Serto") (as
successor guarantor to Empresas Tolteca de Mexico), and U.S. Bank Trust
National Association ("U.S. Bank") (formerly First Trust of New York,
National Association), as trustee (the "12 3/4% Notes Trustee"), and as
supplemented by the Second Supplemental Indenture to such Indenture,
dated as of April 3, 2002, among CEMEX, as issuer, CEMEX Mexico, S.A. de
C.V. ("CEMEX Mexico") (formerly, Serto and successor by merger to TOLMEX,
Empresas Tolteca de Mexico, CPN, Cementos Mexicanos and Maya) and
Empresas Tolteca de Mexico S.A. do C.V. ("Empresas Tolteca") (formerly
CEMEX Control and successor by merger to Monterrey and GEMSA), as
guarantors, and the 12 3/4% Notes Trustee.
2. Purchase and Guarantee Indenture, dated as of May 14, 1998, among CEMEX
International Capital LLC ("LLC"), as capital securities issuer, CEMEX,
as capital securities purchaser, Compania Valenciana de Cementos
Portland, S.A. ("Valenciana"), as capital securities guarantor and
TOLMEX, Empresas Tolteca de Mexico, CPN, Monterrey, Mexicanos, GEMSA and
Maya, as purchase guarantors, to The Bank of New York, as capital trustee
(the "Capital Trustee"), relating to U.S. $250 million principal amount
of LLC's 9.66% Putable Capital Securities (the "9.66% Putable Capital
Securities") issued by LLC, as supplemented by the First Supplemental
Indenture to such Indenture, dated as of April 3, 2002, among LLC, as
capital securities issuer, CEMEX, as capital securities purchaser,
Valenciana, as capital securities guarantor and CEMEX Mexico (formerly
Serto and successor by merger to TOLMEX, Empresas Tolteca de Mexico, CPN,
Mexicanos and Maya) and Empresas Tolteca (formerly CEMEX Control and
successor by merger to Monterrey and GEMSA), as purchase guarantors, and
the Capital Trustee.
3. Indenture, dated as of October 1, 1999, among CEMEX, as issuer, TOLMEX,
Serto, CPN, Cemex Control and Mexicanos, as guarantors, and U.S. Bank
Trust National Association, as trustee (the "9.625% Notes Trustee"),
relating to the issuance of U.S. $200 million aggregate principal amount
of 9.625% Notes due October 1, 2009 of CEMEX (the "9.625% Notes"), as
supplemented by the First Supplemental Indenture to such Indenture, dated
April 17, 2002, among CEMEX, as issuer, CEMEX Mexico (formerly Serto, and
successor by merger to TOLMEX, CPN and Mexicanos) and Empresas Tolteca de
Mexico (formerly CEMEX Control), as guarantors, and the 9.625% Notes
Trustee.
4. Credit Agreement, dated as of June 11, 2001, by and among CEMEX, as
borrower, Bank of America, N.A., as administrative agent, J.P. Morgan
Securities Inc., as documentation agent, Bank of America Securities LLC
and J.P. Morgan Securities Inc., as co-syndication agents, joint lead
arrangers and joint bookrunners, and the several banks and other
financial institutions named therein, as lenders, for an aggregate
principal amount of U.S.$600,000,000.
5. Transaction, dated as of March 4, 2003, by and among JPMorgan Chase Bank
and Centro Distribuidor de Cemento, S.A. de C.V., for an interest rate
swap with a notional amount of US$600,000,000.00.
6. First Amended and Restated Reimbursement and Credit Agreement, dated as
of August 8, 2003 among CEMEX, as issuer, CEMEX Mexico and Empresas
Tolteca de Mexico, as guarantors, Barclays Bank PLC, New York Branch, as
issuing bank, documentation agent and administrative agent and the
several lenders party thereto, and Barclays Capital, the Investment
Banking Division of Barclays Bank PLC, as joint arranger and Banc of
America Securities LLC, as Joint Arranger and syndication agent and the
Depositary Agreement, dated as of August 8, 2003 among CEMEX, Barclays
Bank PLC, New York Branch, as issuing bank, and U.S. Bank Trust National
Association, as depositary, issuing agent and paying agent.
7. Note and Guarantee Agreement, dated as of March 15, 2001, among CEMEX,
Inc., as the issuer, Cemex Espana, S.A. (formerly Compania Valencia de
Cementos Portland, S.A.), as parent guarantor, Sandworth Plaza Holding
B.V., Cemex Caracas Investment B.V., Cemex Caribe Investments B.V., Cemex
Manila Investments B.V., and Valcem International B.V., as guarantors and
the purchasers listed therein, relating to the placement of 7.66% Series
A Guaranteed Senior Notes due 2006, 6.89% Series B Guaranteed Senior
Notes due 2006, and 7.91% Series C Guaranteed Senior Notes due 2008.
8. Note Purchase Agreement, dated as of June 23, 2003, among Cemex Espana,
S.A., Cemex Espana Finance LLC, and the purchasers listed therein,
relating 4.77% Senior Notes, Series 2003, Tranche 1, due June 15, 2010,
5.36% Senior Notes, Series 2003, Tranche 2, due June 15, 2013, and 5.51%
Senior Notes, Series 2003, Tranche 3, due June 15, 2015.The guarantee
referred to in Item 1 is governed by Mexican law and the purchase
guarantee referred to in Item 2 is governed by Mexican law.
Schedule III
Orders
The anti-dumping order imposed by the United States Department of Commerce on
August 30, 1990 pursuant to which the subsidiaries of CEMEX S.A. de C.V. that
import cement from the United Mexican States must make cash deposits with the
United States Customs Service to guarantee the eventual payment of anti-dumping
duties, and the related reviews.
EXHIBIT E-2
FORM OF LEGAL OPINION OF WARENDORF
Citibank, N.A.
2 Penn's Way, Suite 100
New Castle, DE 19720
U.S.A.
Attn: Mr. Cristian Garcia
And to the Lenders and other Persons listed on Schedule I hereto
Date [ ] October 2003
Our ref 03A C 101249
Ladies and Gentlemen:
We have acted as special Dutch counsel to New Sunward Holding B.V.
(the "Company") in connection with the US$1,150,000,000 term loan agreement
(the "Loan Agreement") dated 15 October 2003 and made between the Company, as
Borrower, Cemex S.A. de C.V., Cemex Mexico S.A. de C.V. and Empresas Tolteca
de Mexico, S.A. de C.V., as Guarantors, the Several Lenders from time to time
party thereto, Citibank N.A., as Administrative Agent, ABN AMRO Bank N.V., BNP
Paribas, Citigroup Global Markets Inc., Credit Agricole Indosuez/Credit
Lyonnais, J.P. Morgan Securities Inc., and Santander Central Hispano, as
Mandated Lead Arrangers, ING Bank N.V., Mizuho Corporate Bank, Ltd. and the
Royal Bank of Scotland Plc., as Arrangers, Bank of America N.A., Bank of
Tokyo-Mitsubishi, BBVA BANCOMER S.A., Institucion de Banca Multiple, Grupo
Financiero BBVA Bancomer, and ScotiaBank, as Co-Arrangers, Credit Agricole
Indosuez/Credit Lyonnais, as Syndication Agent and Citigroup Global Markets
Inc. and J.P. Morgan Securities Inc., as Joint Bookrunners.
For purposes of this opinion, we have examined and relied on the documents
listed in Schedule II and Schedule III which shall form part of this opinion and
such other documents as we have deemed relevant for the purposes of this
opinion. The documents listed in Schedule II are referred to as the "Documents"
and the documents listed in Schedule III as the "Certificates."
Unless otherwise defined in this opinion or unless the context otherwise
requires, words and expressions defined in the Loan Agreement shall have the
same meanings when used in this opinion. We understand that you require this
opinion from us pursuant to Section 4.6 of the Loan Agreement.
In connection with such examination and in giving this opinion, we have assumed:
a) the genuineness of the signatures to the Documents and the Certificates,
the authenticity and completeness of the Documents and the Certificates
submitted to us as originals, the conformity to the original documents of
the Documents and the Certificates submitted to us as copies and the
authenticity and completeness of these original documents;
b) the legal capacity (handelingsbekwaamheid) of the natural persons acting
on behalf of the parties, the due incorporation and valid existence of,
the power, authority and legal rights of, and the due authorisation and
execution of the Documents by, each of the parties thereto (other than
the Company) under any applicable law (other than Dutch law);
c) the due compliance with all matters of, and the validity, binding effect
and enforceability of the Documents under any applicable law (other than
Dutch law) and in any jurisdiction (other than The Netherlands) in which
any obligation under the Documents falls to be performed;
d) the accuracy, completeness, validity and binding effect of the
Certificates and the matters certified or evidenced thereby at the date
hereof and any other relevant date;
e) that neither the Company nor any third party has filed a petition with
any court for the bankruptcy (faillissement), dissolution (ontbinding en
vereffening), moratorium of payments (surseance van betaling), judicial
review of corporate management (enquete) or other similar proceedings of
the Company and that no receiver, trustee, administrator or similar
officer has been appointed in respect of the Company. We do not opine,
and we have assumed, that the Company has not been declared bankrupt
(failliet) and has not been granted a moratorium of payments (surseance
van betaling) or given similar protection from its creditors in any
jurisdiction, that no court order was made for the dissolution
(ontbinding en vereffening) of the Company, and that no request for any
such orders or judgments was made; inquiries by telephone,however, on the
date hereof, with the offices of the Bankruptcy Registrar
(faillissementsgriffie) of the District Court (rechtbank) of Amsterdam
and the Civil Registrar (civiele griffie) of the District Court
(rechtbank) of Amsterdam have not indicated that the Company has been
declared bankrupt (failliet) or granted a moratorium of payments
(surseance van betaling) in The Netherlands;
f) that the Extract fully and accurately reflects the corporate status and
position of the Company. It is noted, hoever, that the Extract may not
completely and accurately reflect this status and position insofar as
there may be a delay between the taking of corporate action and the
filing of the necessary documentation at the Commercial Register and a
further delay between that filing and an entry appearing on the file of
the relevant party at the Commercial Register;
g) that in each and every respect the terms and conditions of each of the
Documents, the performance by th eparties thereto of their respective
obligations thereunder and the transactions contemplated therein,
including without limitation, all payments thereunder, are at arm's
length; and
h) that foreign law which may apply with respect to the Documents or the
transactions contemplated thereby would not be such as to affect this
opinion.
This opinion is given only with respect to Dutch law as generally interpreted
and applied by the Dutch courts at the date of this opinion. As to matters of
fact we have relied on the Certificates and the representations and warranties
contained in or made pursuant to the Documents. We do not express an opinion on
the completeness or accuracy of the representations or warranties made by the
parties to the Documents, matters of fact, matters of foreign law, international
law, including, without limitation, the law of the European Union, and
anti-trust and competition law, except to the extent that those representations
and warranties and matters of fact and law are explicitly covered by the
opinions below and except to the extent the law of the European Union (other
than anti-trust and competition law) has direct force and effect in The
Netherlands. No opinion is given on commercial, accounting or non-legal matters
or on the ability (except to the extent affected by Dutch law) of the parties to
meet their financial or other obligations under the Documents.
Based on and subject to the foregoing, and subject to the qualifications set out
below and matters of fact, documents or events not disclosed to us, we express
the following opinions:
9. The Company is duly incorporated and is validly existing under Dutch law
as a private company with limited liability (besloten vennootschap met
beperkte aansprakelijkheid) and possesses the capacity to sue and to be
sued in its own name.
10. The Company has, and had at the date of execution of the Loan Agreement,
the corporate power and authority to execute the Documents to which it is
a party, to perform its obligations thereunder and to consummate the
transactions contemplated therein.
11. The execution of the Documents to which the Company is a party, the
performance of its obligations thereunder and the consummation of the
transactions contemplated therein have been duly authorized by all
necessary corporate action.
12. Each of the Documents has been duly executed under applicable law on
behalf of the Company and constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, and
would be so treated in the Dutch courts. Each of the Documents is in
proper form for its enforcement in those courts.
13. It is not necessary in order to ensure the validity, enforceability or
admissibility in evidence of the Documents against the Company in the
Dutch courts, that those Documents or any other document in connection
therewith be notarized, filed, registered or recorded with, or that any
consent, permit or other authorization be issued by, any governmental,
judicial or public bodies or authorities in The Netherlands or that any
transfer, stamp, registration or similar tax or charge be paid on or in
respect thereof, or that any other action be taken in The Netherlands.
14. The execution by the Company of the Documents to which it is a party, the
performance of its obligations thereunder and the consummation of the
transactions contemplated therein (i) do not conflict with or result in a
violation of any provision of the Articles or any existing provision of,
or rule or regulation under, the law of The Netherlands, or any political
subdivision thereof, applicable to companies generally, (ii) do not
result in a breach or violation of, or constitute a default under any
agreement, judgment, injunction, order, decree or other instrument to
which the Company is a party or which is binding on the Company or its
assets, and (iii) do not or will not by their own terms result in the
creation or imposition of any lien, pledge, charge or encumbrance of any
nature upon or with respect to any of the assets or properties of the
Company.
15. The Company is in full compliance with the applicable provisions of the
1992 Act on the Supervision of the Credit System (Wet toezicht
kredietwezen 1992), as amended from time to time, and any implementing
regulations including, but not limited to, the Exemption Regulation of
the Dutch Minister of Finance of June 26, 2002 (Vrijstellingsregeling Wtk
1992), as amended from time to time, and the Dutch Central Bank's (De
Nederlandsche Bank) policy guidelines of July 10, 2002 issued in relation
to the Dutch Exemption Regulation (beleidsregel kernbegrippen
markttoetreding en handhaving Wtk 1992) as amended from time to time.
16. No authorisation, consent, approval, licence or exemption from, or filing
or notification with, any governmental, judicial or public body or
authority in The Netherlands is required for the execution of the
Documents by the parties thereto, the performance of their respective
obligations thereunder and the consummation of the transactions
contemplated therein.
17. The obligations of the Company under the Documents to which it is party
will rank at least pari passu with all the other present or future
unsecured and unsubordinated obligations of the Company, except for those
obligations that are preferred (voorrecht of voorrang) by law.
18. Each of the choice of the law of the State of New York to govern the
Documents to which it is a party and the choice of the law of the United
Mexican States, as the case may be, to govern the Notes is a valid choice
of law and the law so chosen would accordingly be applied by the Dutch
courts if any of the Documents or any claim thereunder comes under their
jurisdiction upon proper proof of the relevant provisions of the law
chosen. The submission by the Company in the Documents to which it is a
party to the non-exclusive jurisdiction of the courts of United States
for the Southern District of New York and the courts of the State of New
York and the irrevocable appointment in those Documents by the Company of
an agent to accept service of process in respect of the jurisdiction of
the courts of the United States of America for the Southern District of
New York and the courts of the State of New York is valid and legally
binding on the Company.
19. In proceedings taken in The Netherlands, neither the Company nor any of
its assets has any immunity from the jurisdiction of any Dutch court or
from any legal action or proceeding (including, without limitation, suit,
attachment prior to judgment, attachment in aid of execution, execution
or other legal process).
20. A final judgement rendered by a Court in the United States of America for
the Southern District of New York or any courts of the State of New York
located in the Borough of Manhattan, City of New York, or, as the case
may be, the courts in the City of Mexico, Federal District, United
Mexican States, would not automatically be enforceable in The
Netherlands. However, a final judgement obtained in any such foreign
court and not rendered by default, which is not subject to appeal or
other means of contestation and is enforceable in New York or, as the
case may be, in Mexico, with respect to the payment obligations of
Company under any of the Documents would generally be upheld and be
regarded by a Dutch court of competent jurisdiction as conclusive
evidence when asked to render a judgement in accordance with that
judgement by said New York or Mexican court, without substantive
re-examination or re-litigation of the subject matter thereof, if that
judgement has been rendered by a court of competent jurisdiction, in
accordance with the principles of due process, its content and
enforcement do not conflict with Dutch public policy and it has not been
rendered in proceedings of a penal or revenue or other public nature.
21. It is not necessary for or by reason of the execution, performance or
enforcement in The Netherlands of the Documents, that the Lenders or any
Agent should be licensed, registered, qualified or otherwise entitled to
carry on business in The Netherlands.
22. There are no exchange control restrictions in The Netherlands, which
would restrict the ability of any of the Lenders or any Agent to exercise
its rights against the Company under the Documents or to remit the
proceeds of enforcement thereof out of The Netherlands. A Dutch resident,
however, must notify the Dutch Central Bank (De Nederlandsche Bank N.V.)
in writing of all payments in excess of EUR 12,500 (or the equivalent
thereof in any other currency or in any currency unit) made by that
resident to non-Dutch residents or by those residents to the resident.
23. A judgment rendered by a Dutch court against the Company with respect to
its payment obligations under the Documents to which it is a party would,
if requested, be expressed and payable in the currency in which such
payment obligations are denominated.
24. There is no tax, levy, impost, deduction, charge or withholding imposed
by The Netherlands or any political subdivision or taxing authority
thereof on or by virtue of the execution and delivery of any of the
Documents or on any payment to be made by the Company under any Document;
25. No Agent or Lender is or will be or deemed to be resident, domiciled,
carrying on business or subject to taxation in The Netherlands by reason
only of the execution, delivery, performance and/or enforcement of the
Documents;
26. The rate of rates of interest provided for in the Documents, including
all late payment charges and interest at the default rate provided for
therein, do not and will not violate or conflict with, or give rise to
any defense to payment of any obligation of the Company or to any claim,
counterclaim, set-off or recoupment under, any usury or other law or
regulation of The Netherlands governing the maximum rate of interest or
amount of other charges that may be charged or incurred in transactions
of the type contemplated under the Documents;
27. No actions, suits, investigations or proceedings, legal or
administrative, are currently pending in The Netherlands, or, so far as
we are aware, threatened, (a) to restrain the execution and delivery of,
the exercise of any of the rights of the Company and/or performance or
enforcement of or compliance with any of its obligations under, any
Document or (b) that are reasonably likely to have a Material Adverse
Effect.
The opinions expressed above are subject to the following qualifications:
(A) Our opinions expressed herein are subject to and limited by applicable
bankruptcy, suspension of payment, insolvency, reorganisation and other
laws relating to or affecting the rights of creditors or secured
creditors generally.
(B) Delivery of documents is not a concept of Dutch law and we have therefore
assumed the due delivery of the Documents by the parties thereto under
any applicable law in which such concept is relevant.
(C) Matters of limitation of rights and obligations created by an agreement
are governed by the statute of limitation of the law applicable to this
agreement.
(D) The enforcement in The Netherlands of the Documents is subject to the
Dutch rules of civil procedure as applied by the Dutch courts.
(E) The availability in the Dutch courts of remedies, such as injunction and
specific performance, is at the discretion of the courts.
(F) The Dutch courts may stay or refer proceedings if concurrent proceedings
are being brought elsewhere.
(G) The Dutch courts may render judgments for a monetary amount in foreign
currencies, but these foreign monetary amounts may be converted into euro
for enforcement purposes. Foreign currency amounts claimed in a Dutch
(provisional) suspension of payment or bankruptcy proceeding will be
converted into euro at the rate prevailing at commencement of that
proceeding.
(H) A power of attorney granted by a Dutch company will automatically, i.e.
by operation of law, terminate upon the bankruptcy of the company or
become ineffective, when this company has been granted a (provisional)
suspension of payment. To the extent that the appointment of a process
agent by the Company constitutes the granting of a power of attorney to
that process agent, the service of process on that agent, after the
Company has been declared bankrupt or it has been granted a (provisional)
suspension of payments, would not be valid and effective, except to the
extent authorised by the public receiver (curator) or administrator
(bewindvoerder), as the case may be.
This opinion, which is strictly limited to the matters stated herein and which
is not to be read as extending by implication to the other matters in connection
with the Documents or otherwise, is given subject to the General Terms of
Warendorf referred to at the bottom of the front page of this opinion letter,
which General Terms include a limitation of liability, and on the basis that it
is governed by and to be construed in accordance with Dutch law and that any
action, arising out of it is to be determined by the competent court in
Amsterdam which shall have exclusive jurisdiction in relation thereto. We do not
assume any obligation to advise you (or any other person entitled to rely on
this opinion) of subsequent changes in, or in the interpretation of, Dutch law.
This opinion is given solely for the benefit of Citibank, N.A. and the other
Persons listed on Schedule I hereto in this particular matter and the context
specified herein. It may not, without our prior written consent, be transmitted
or otherwise disclosed to, or relied upon by, others, referred to in other
matters or context whatsoever, or be quoted or made public in any way; provided
that any Person becoming a Lender after the date hereof may rely on this opinion
as if addressed to such Person as of the date hereof.
Yours faithfully,
Warendorf
SCHEDULE I
[Lenders and Agents]
SCHEDULE II
Documents
a) A copy of the executed Loan Agreement;
b) copies of the executed Notes;
SCHEDULE III
Certificates
a) a copy of the deed of incorporation, incorporating the articles
(statuten) of the Company, dated 1 May 2000;
b) a copy of the deed of amendment of the articles of the Company, dated 15
October 2003 and a copy of the full text of the articles as amended
(together with the deed referred to in paragraph (a), the "Articles")
c) a copy of the register of shareholders of the Company (the "Shareholders
Register");
d) an extract in respect of the Company from the Commercial Register
(Handelsregister) in Amsterdam, dated as of the date hereof (the
"Extract");
e) a copy of the resolutions of the Board of Managing Directors (Bestuur) of
the Company, dated 15 October 2003;
f) a copy of the resolutions of the General Meeting of Shareholders of the
Company dated 15 October 2003;
EXHIBIT E-3
FORM OF LEGAL OPINION OF
LIC. RAMIRO G. VILLAREAL MORALES
October [ ], 2003
Citibank, N.A.
as Administrative Agent under the Loan Agreement, as
hereinafter defined (the "Administrative Agent")
and
The Lenders listed on Schedule 1 hereto which are parties to the Loan
Agreement on the date hereof
Ladies and Gentlemen:
I am General Counsel to CEMEX, S.A. de C.V. ("CEMEX"), Cemex Mexico,
S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de C.V. (collectively, the
"Guarantors") and have acted as Mexican counsel to New Sunward Holding B.V.
(the "Borrower", and, together with the Guarantors, the "Loan Parties") in
connection with the preparation, execution and delivery of (a) the Term Loan
Agreement (the "Loan Agreement") dated as of October 15, 2003 among the Loan
parties, the several lenders from time to time party thereto (the "Lenders"),
Citibank, N.A., as Administrative Agent, ABN AMRO Bank N.V., BNP Paribas,
Citigroup Global Markets, Inc., Credit Agricole/Credit Lyonnais, J.P. Morgan
Securities, Inc., and Santander Central Hispano, as Mandated Lead Arrangers,
ING Bank N.V., Mizuho Corporate Bank, Ltd., and The Royal Bank of Scotland
PLC., as Arrangers, Bank of America, N.A., Bank of Tokyo-Mitsubishi, BBVA
Bancomer, S.A., and Scotiabank, as Co-Arrangers, Credit Agricole/Credit
Lyonnais, as Syndication Agent, and Citigroup Global Markets, Inc. and J.P.
Morgan Securities, Inc. as Joint Bookrunners, and (b) the Notes delivered as
of the date hereof. Unless otherwise defined herein, terms defined in the Loan
Agreement are used herein as therein defined. This opinion is furnished
pursuant to Section 4.6(iii) of the Loan Agreement.
In connection with the opinions expressed below, I have examined and
relied on originals or copies of the following:
(a) the executed Loan Agreement;
(b) the executed Notes; and
(c) all such other agreements and instruments, and such other
corporate and public records and documents as I have deemed relevant or
appropriate for purposes of this opinion.
I have assumed, without any independent investigation or verification
of any kind, (i) the due authorization, execution and delivery of the Loan
Agreement by the Lenders and the Agent; (ii) the validity, binding effect and
enforceability of the Loan Documents under the laws of the State of New York
and the United States of America; (iii) the genuineness and authenticity of
all opinions, documents and papers submitted to me; and (iv) that copies of
all opinions, documents and papers submitted to me are complete and conform to
the originals thereof.
Based upon the foregoing and subject to the further qualifications
set forth below, I am of the opinion that:
(a) Each of the Guarantors is a corporation (sociedad anonima de
capital variable) duly organized and validly existing under the laws of Mexico
and has full corporate power and authority to own or lease its property or
assets, to conduct its business as currently conducted and to enter into,
perform and duly comply with its obligations under the Loan Agreement and each
of the other Loan Documents.
(b) The execution, delivery and performance by each of the Loan
Parties of the Loan Documents and the consummation of the transactions
contemplated thereby, (i) in the case of the Guarantors, are within the
corporate power and authority of each of the Guarantors, have been duly
authorized by all necessary corporate and legal action and do not contravene,
or constitute a default under, any provision of applicable law or regulation
or of the estatutos sociales or other organizational documents of any of the
Guarantors and (ii) in the case of the Loan parties, do not contravene, or
constitute or create a default under, any agreement, judgment, injunction,
order, decree or other instrument binding on CEMEX or any of its Subsidiaries,
or result in the creation or imposition of any Lien on any asset of CEMEX or
any of its Subsidiaries.
(c) No consent, authorization, exemption, license, registration or
approval or other action by, and no notice to or filing with, any Governmental
Authority or regulatory body in Mexico is required for the execution, delivery
and performance by each of the Guarantors of the Loan Documents, including
without limitation any governmental consent, authorization, exemption,
license, registration or approval or other action required by exchange control
regulations to enable each of the Guarantors to punctually pay its obligations
under the Loan Documents.
(d) The Loan Agreement and each of the Notes have been duly executed
and delivered by each Guarantor. The Loan Agreement and the Notes constitute
legal, valid and binding obligations of each of the Guarantors, enforceable
against each of the Guarantors in accordance with their respective terms.
(e) The payment obligations of each Guarantor under the Loan
Documents constitute direct and unconditional obligations of each Guarantor
and will rank at least pari passu in priority of payment and in all other
respects with all other unsecured and unsubordinated obligations of the
Guarantor, except for labor claims, claims of tax authorities for unpaid
taxes, social security quotas, worker's housing fund quotas and retirement
fund quotas ranking senior by operation of law (but not by contract or
agreement). If any Guarantor is unable to meet its obligations under the Loan
Documents, the Administrative Agent and the Lenders shall have full recourse
against such Guarantor in Mexico.
(f) Each of the Guarantors is an entity with legal capacity to sue
and be sued and is subject to civil and commercial law with respect to their
respective obligations under the Loan Documents to which each of them is a
party. Neither the Guarantors nor any of their properties has any immunity
from the jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) under Mexican law in respect of their
obligations under the Loan Documents, as the case may be.
(g) Except as disclosed in the Loan Agreement, there is no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority pending or, to the best of my knowledge after due
inquiry, threatened by or against CEMEX, any of its Subsidiaries or against
any of their properties or revenues (i) with respect to the Loan Documents or
any of the transactions contemplated thereby or (ii) which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
(h) It is not necessary under the laws of Mexico (i) in order to
enable any of the Lenders or the Administrative Agent, to enforce any rights
under the Loan Documents or (ii) solely by reason of the execution, delivery
or performance of the Loan Documents, that any of the Lenders or the
Administrative Agent be licensed or qualified with any Governmental Authority
in Mexico or be entitled to carry on business in Mexico.
(i) Neither any Lender nor the Administrative Agent will be deemed
resident, domiciled, carrying on business or subject to taxation in Mexico
solely by reason of the execution, delivery, performance or enforcement of the
Loan Agreement or any other Loan Document.
(j) There is no tax, levy, stamp duty, impost deduction, charge or
withholding imposed by Mexico or any political subdivision thereof (i) on or
by virtue of the execution, delivery, performance, enforcement or
admissibility into evidence of any of the Loan Documents or (ii) on any
payment made by any of the Guarantors pursuant to any of the Loan Documents,
except that a withholding tax will be imposed by Mexico on payments of
interest made by any Guarantor to a non-resident of Mexico for tax purposes.
The Guarantors are permitted to pay additional amounts payable under Section
2.12 of the Loan Agreement and under the Notes.
(k) Each of the Loan Documents is in proper legal form under the laws
of Mexico for the enforcement thereof against each of the Guarantors under
such laws. To ensure the legality, validity, enforceability or admissibility
in evidence of the Loan Documents in a court in Mexico, it is not necessary
that any of the Loan Documents be filed, registered or recorded with any
Governmental Authority in Mexico, or that any registration charge or stamp or
similar tax be paid on or in respect of any of the Loan Documents.
(l) The submission by each Guarantor to the non-exclusive
jurisdiction of the courts referred to in Section provided for in Section
10.12 of the Loan Agreement, the appointment of the agent for service of
process and the designation of the method of service of process in the Loan
Agreement are valid and effective under the laws of Mexico and are irrevocably
binding on each Guarantor.
(m) The choice of New York law to govern the Loan Agreement and each
of the other Loan Documents is a valid and effective choice of law under the
laws of Mexico.
(n) The Notes qualify as pagares for executory proceedings (accion
ejecutiva mercantil) under Mexican law.
(o) Any final judgment obtained against any of the Guarantors in any
of the courts specified in the Loan Documents, in respect of any sum payable
by any Guarantor under the Loan Documents, would be recognized and enforced by
the courts of Mexico without any retrial or re-examination of the issues,
pursuant to Articles 569 and 571 of the Mexican Federal Code of Civil
Procedure and Article 1347A of the Mexican Commerce Code, which provide, inter
alia, that any judgment rendered outside of Mexico may be enforced by Mexican
courts, provided that:
(i) such judgment is obtained in compliance with the legal
requirements of the jurisdiction of the court rendering such judgment and in
compliance with all legal requirements of the Loan Agreement or any other Loan
Document;
(ii) such judgment is strictly for the payment of a certain sum of
money based on an in personam (as opposed to an in rem) action;
(iii) service of process was made personally on a Guarantor, as the
case may be, or on its process agent appointed pursuant to Section 10.13 of
the Loan Agreement (a court of Mexico would consider the service of process
upon the duly appointed agent, by means of a notarial instrument, to be
personal service of process meeting procedural requirements of Mexico),
provided such service of process is personally made upon the defendant or its
duly appointed process agent;
(iv) such judgment does not contravene Mexican law, public policy of
Mexico, international treaties or agreements binding upon Mexico or generally
accepted principles of international law;
(v) the applicable procedural requirements under the laws of Mexico
with respect to the enforcement of foreign judgments (including the issuance
of a letter rogatory by the competent authority of such jurisdiction
requesting enforcement of such judgment and the certification of such judgment
as authentic by the corresponding authorities of such jurisdiction in
accordance with the laws thereof) are complied with;
(vi) such judgment is final in the jurisdiction where obtained;
(vii) the action in respect of such judgment is rendered is not the
subject matter of a lawsuit among the same parties pending before a Mexican
court; and
(vii) the courts of such jurisdiction recognize the principles of
reciprocity in connection with the enforcement of Mexican judgments in such
jurisdiction.
I have no reason to believe that the enforcement of a non-Mexican
judgment relating to the Loan Documents would be contrary to Mexican law,
Mexican public policy, international treaties or agreements binding on Mexico
or generally accepted principles or international law, provided that Mexican
procedural requirements have been complied with.
This opinion is subject to the following qualifications:
1. Enforcement of the Loan Agreement and the other Loan Documents may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the rights of creditors generally;
2. In the event that proceedings are brought in Mexico seeking
performance of the obligations of the Guarantors in Mexico, pursuant to the
Mexican Monetary Law, such Guarantors may discharge their obligations by
paying any sums due in a currency other than Mexican currency, in Mexican
currency at the rate of exchange prevailing in Mexico on the date when payment
is made;
3. Covenants which purport to bind any of the Guarantors on matters
reserved by law to shareholders, or which purport to bind shareholders to vote
or refrain from voting their shares issued by CEMEX, are not enforceable
through specific performance, but nevertheless are enforceable against such
Guarantors and non-compliance with any such covenants would constitute an
Event of Default entitling the Lenders to demand the acceleration of amounts
payable under the Loan Agreement;
4. In the event that any legal proceedings are brought in the courts
of Mexico, a Spanish translation of the documents required in such proceedings
prepared by a court-approved translator would have to be approved by the court
after the defendant had been given an opportunity to be heard with respect to
the accuracy of the translation, and proceedings would thereafter be based
upon the translated documents;
5. In any bankruptcy proceeding initiated in Mexico pursuant to the
laws of Mexico, labor claims, claims of tax authorities for unpaid taxes,
social security quotas, worker's housing fund quotas and retirement fund
quotas will have priority over claims of the Administrative Agent and the
Lenders; and
6. With respect to the provisions contained in the Loan Agreement in
connection with service of process, it should be noted that service of process
by mail does not constitute personal service of process under Mexican law and,
since such service is considered to be a basic procedural requirement, if for
purposes of proceedings outside Mexico service of process is made by mail, a
final judgment based on such process would not be enforced by the courts of
Mexico.
7. In rendering any opinion in paragraph (b), I have assumed that to
the extent any document referred to in clause (ii) of such paragraph (b) is
governed by the law of a jurisdiction other than those referred to in the
following paragraph, such document would be enforced as written.
I express no opinion as to any laws other than the laws of Mexico.
Insofar as the opinions set forth above are governed by New York or Dutch law,
I have relied, without making any independent investigation with respect
thereto, on the opinions of Mayer, Brown, Rowe & Maw LLP and Warendorf dated
the date hereof, delivered to you pursuant to the Loan Agreement.
This opinion is furnished only to you in connection with the closing
under the Loan Agreement and is solely for your benefit. Without my prior
written consent, this opinion may not be used or relied upon by, or assigned
to, any other person for any purpose, except that Mayer, Brown, Rowe & Maw LLP
and Warendorf may rely upon this opinion as to matters of the laws of Mexico
in rendering their opinions in connection with the Loan Agreement, and any
Person becoming a Lender after the date hereof may rely on this opinion as if
addressed to such Person as of the date hereof. This opinion is not to be
circulated, quoted or otherwise referred to for any other purpose without my
prior written consent, except to the extent that the ability to circulate,
quote or refer to this letter is necessary so that the transactions
contemplated by the Loan Documents are not treated as a "confidential
transaction" within the meaning of Treasury Regulations section
1.6011-4(b)(3)d.
Very truly yours,
Ramiro Villarreal
EXHIBIT F
FORM OF PROCESS AGENT ACCEPTANCE
To Citibank, N.A., as Administrative Agent
[Insert Address]
Attention: [ ]
Ladies and Gentlemen:
Reference is made to the Term Loan Agreement, dated as of October 15,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Loan Agreement"), among NEW SUNWARD HOLDING B.V. (the "Borrower"), CEMEX,
S.A. DE C.V., CEMEX MEXICO, S.A. DE C.V. and EMPRESAS TOLTECA DE MEXICO, S.A.
DE C.V. (collectively, the "Guarantors"), the Lenders party thereto, CITIBANK,
N.A., as administrative agent and the other Persons party thereto and the
Notes referred to therein. Unless otherwise defined herein, terms defined in
the Loan Agreement and used herein shall have the meanings given to them in
the Loan Agreement.
Pursuant to Section 10.13 of the Loan Agreement, the Borrower and
each Guarantor has irrevocably appointed the undersigned (at the undersigned's
office located at 111 Eighth Avenue, 13th Floor, New York, New York 10011) as
its agent in its name, place and stead to accept service of any writ, process
or summons in respect of any legal actions or proceedings in New York arising
out of or in connection with the Loan Agreement or any Note.
The undersigned hereby (a) informs you that it accepts such
appointment by the Borrower and each Guarantor as set forth in Section 10.13
of the Loan Agreement and (b) agrees with you that (i) it will not terminate
such agency relationship prior to the date one year after the final maturity
of the loans made under the Loan Agreement, (ii) it will maintain an office in
New York, New York, U.S.A. at all times to and including said date and will
give you prompt notice of any change of its address during such period and
(iii) it will promptly forward to the Borrower or any Guarantor any summons,
complaint or other legal process that the undersigned receives in connection
with its appointment as such agent and attorney-in-fact of such person.
Very truly yours,
CT CORPORATION SYSTEM
By:
------------------------
Name:
Title:
EXHIBIT G
FORM OF NON-EXTENSION NOTICE
Citibank, N.A., as Administrative Agent
[Insert Address]
Attention: [ ]
New Sunward Holding B.V.
[Insert Address]
Attention: [ ]
Ladies and Gentlemen:
This notice shall constitute a "Non-Extension Notice" pursuant to
Section 2.5 of the Term Loan Agreement, dated as of October 15, 2003 (as the
same may be amended, supplemented or otherwise modified from time to time, the
"Loan Agreement"), among NEW SUNWARD HOLDING B.V., a company organized and
existing under the laws of The Netherlands (the "Borrower"), CEMEX, S.A. DE
C.V., CEMEX MEXICO, S.A. DE C.V. and EMPRESAS TOLTECA DE MEXICO, S.A. DE C.V.
(collectively, the "Guarantors"), the Lenders party thereto, CITIBANK, N.A.,
as Administrative Agent and the other Persons party thereto. Capitalized terms
not otherwise defined herein have the meaning ascribed to them in the Loan
Agreement.
With respect to our Tranche [B][C] Loan, in a principal amount
outstanding of [$][(Y)][______], made in connection with the above-referenced
Loan Agreement, we hereby give notice to you that the Tranche [B][C] Maturity
Date shall not be extended to the Tranche [B][C] Extended Maturity Date.
[NAME OF LENDER]
By:
-----------------------------
Name:
Title:
Date: [ ], 20__
EXHIBIT H
FORM OF TERMINATION NOTICE
UNDER REVOLVING CREDIT FACILITY
Bank of America, N.A., as Administrative Agent
[Insert Address]
Attention: [ ]
Ladies and Gentlemen:
This notice shall constitute an irrevocable notice of termination of
Revolving Commitments pursuant to Section 2.6 of the Credit Agreement, dated
as of June 11, 2001 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Revolving Credit Facility"), among CEMEX,
S.A. DE C.V. (the "Borrower"), the several banks and other financial
institutions or entities from time to time party thereto, BANK OF AMERICA,
N.A., as administrative agent, J.P. MORGAN SECUTIES INC., as documentation
agent, BANC OF AMERICA SECURITIES LLC and J.P. MORGAN SECURITIES INC., as
co-syndication agents, joint lead arrangers and joint bookrunners and the
several Lenders party thereto. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Revolving
Credit Facility.
The Revolving Commitments of the Lenders are hereby terminated in
their entirety, effective as of the date that is five Business Days from the
date hereof.
Notwithstanding any provisions of the Revolving Credit Facility to
the contrary, and without purporting to affect any rights or obligations of
any party thereto other than as specified herein, the Borrower hereby
irrevocably waives and forgoes any and all rights that the Borrower may have
under the Revolving Credit Facility to make any further Borrowing thereunder
and irrevocably releases each Lender from any obligations it may have under
the Revolving Credit Facility to make any further Loans thereunder, in each
case effective as of the date hereof.
CEMEX, S.A. DE C.V.
By:
---------------------------
Name:
Title:
Date: October o, 2003
Exhibit 4.14
Empresas Tolteca de Mexico, S.A. de C.V.
Ave. Constitucion 444 Pte.
Monterrey, N.L. 64000
Mexico
Amendment No. 1 to Confirmation
dated December 13, 2002
between Empresas Tolteca
de Mexico, S.A. de C.V. and
ABN AMRO Special Corporate Services, B.V. (Transaction Reference No. [___])
October 15, 2003
Ladies and Gentlemen:
Reference is hereby made to (i) the ISDA Master Agreement dated as of December
13, 1999 and the Confirmation thereunder dated December 13, 2002 (the
CONFIRMATION), each between you and us, and the Calculation Agency and
Interbank Agreement between you, us, Citibank, N.A. as Calculation Agent and
the other Participants listed therein dated as of December 13, 1999, as amended
by Amendment No. 1 thereto dated as of December 13, 2002 (as amended, the
CALCULATION AGENCY AND INTERBANK AGREEMENT and, together with the Confirmation,
the FORWARD TRANSACTION AGREEMENT), (ii) an Escrow Agreement dated as of
September 26, 2003 (the ESCROW AGREEMENT) between you, Cemex, S.A. de C.V., us,
Citibank, N.A., as Escrow Agent, Citibank, N.A., acting through its Emerging
Markets and Sales Group, as Designated Selling Shareholder, and the other
depositors referred to therein and (iii) a Share Purchase Agreement to be
entered into (the ESPANA SHARE PURCHASE AGREEMENT) between you and us, pursuant
to which you will agree to sell, and we will agree to buy, the Specified Number
of Espana Shares. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Confirmation, or if not defined therein, in
the Calculation Agency and Interbank Agreement. For purposes of the
Confirmation and the Calculation Agency and Interbank Agreement, references
herein to "Espana" shall be deemed to be references to "Valenciana".
Notwithstanding the provisions of Paragraphs 5 and 6 of the First Confirmation,
you and we agree as follows:
1. In the event that, prior to October 30, 2003, (a) Bank enters into one or
more underwriting agreements with Cemex, ABN AMRO Rothschild LLC (the
UNDERWRITER), other underwriters specified therein and the other Participants
providing for the sale of Cemex ADS and/or Ordinary Participation Certificates
and (b) Underwriter and Cemex deliver the Initial Closing Delivery Instructions
(as defined in the Escrow Agreement), the Transaction will terminate with
respect to the Specified Number of Cemex ADS and the Specified Number of Espana
Shares on October 29, 2003 (such date, for purposes hereof, the NET CASH
SETTLEMENT TERMINATION DATE). In the event that less than the Specified Number
of Cemex ADS are sold in connection with the initial closing of the Global
Offering (as defined in the Escrow Agreement) or in connection with the
exercise by the Underwriter of the Over-Allotment Option (as defined in the
Escrow Agreement), we agree to purchase, or cause a third-party to purchase,
the remaining Specified Number of Cemex ADS for settlement on or prior to the
Net Cash Settlement Termination Date.
On the Net Cash Settlement Termination Date, (a) if the Final Payment
Amount is a positive number, Bank shall pay to Counterparty the Final Payment
Amount and (b) if the Final Payment Amount is a negative number, Counterparty
shall pay the absolute value of the Final Payment Amount to Bank.
For purposes of this paragraph 1,
(i) the FINAL PAYMENT AMOUNT shall be an amount equal to (a) the Net Cash
Settlement Amount MINUS (b) the sum of all Advance Payments (as
defined below) made to Counterparty;
(ii) the NET CASH SETTLEMENT AMOUNT shall be an amount equal to (a) the
Cemex ADS Total Purchase Price PLUS (b) the Espana Value on the
Valuation Date immediately preceding the Net Cash Settlement
Termination Date MULTIPLIED BY the Specified Number of Espana Shares
MINUS (c) the Adjusted Forward Payment Amount as of the Net Cash
Settlement Termination Date MINUS (d) the sum of all Transfer Payments
(as defined below) made to Bank in accordance with the Escrow
Agreement;
(iii) the CEMEX ADS TOTAL PURCHASE PRICE shall be an amount determined by
(1) multiplying (A) the number of Cemex ADS sold (or the number of
Cemex ADS representing Ordinary Participation Certificates sold) in
connection with each sale by Bank of a portion of the Specified Number
of Cemex ADS (or the underlying Ordinary Participation Certificates)
by (B) the price at which such Cemex ADS were sold (or, in the case of
a sale of Ordinary Participation Certificates, the price at which
Ordinary Participation Certificates represented by one Cemex ADS were
sold (converted at the exchange rate at which the proceeds from such
sale are converted to USD in accordance with the Escrow Agreement))
and (2) summing the amounts determined pursuant to clause (1); and
(iv) the amounts transferred to Bank in accordance with the Escrow
Agreement (each such transfer, a TRANSFER PAYMENT) in connection with
each sale by Bank of a portion of the Specified Number of Cemex ADS on
and after the initial closing of the Global Offering shall be deemed
to be Advanced Forward Payment Amounts for purposes of determining the
Adjusted Forward Payment Amount, except that the FV2 with respect to
such amounts shall be determined using a Swap Rate based on
USD-LIBOR-BBA for deposits with a maturity closest to the period of
time from the date on which such amount is transferred to Bank to the
Termination Date.
Upon payment of the Final Payment Amount, (i) Bank shall have no obligation
under the Forward Transaction Agreement to deliver the Specified Number of
Cemex ADS and the Specified Number of Espana Shares to Counterparty and
Counterparty shall have no obligation to pay to Bank the Adjusted Forward
Payment Amount and (ii) the Forward Transaction Agreement and any voting
agreement entered into by or on behalf of the Bank with respect to the Cemex
ADS and/or the Espana Shares shall be terminated.
2. In connection with each sale by Bank of Cemex ADS from and including the
initial closing of the Global Offering to but excluding the Net Cash Settlement
Termination Date, Bank agrees to advance to Counterparty (each such advance, an
ADVANCE PAYMENT), as specified in the Escrow Agreement, an amount equal to the
amount by which the aggregate proceeds from such sale and all prior sales of
Cemex ADS exceed the Adjusted Forward Payment Amount on the date of such sale.
3. Counterparty hereby agrees to indemnify Bank, upon demand, for losses or
expenses incurred by Bank in the event that, in connection with a proposed sale
of Cemex ADS, Bank terminates any agreement pursuant to which it has hedged its
position under the Forward Transaction Agreement in the Eurodollar market and
such sale (whether as the result of a Settlement Disruption Event or otherwise)
does not occur.
We are seeking to obtain the same agreements from the other Participants, and
this letter shall not become effective until each other Participant has
delivered a signed letter in substantially the same form as this letter.
This letter shall be construed in accordance with, and this letter and all
matters arising out of or relating in any way whatsoever to this letter
(whether in contract, tort or otherwise) shall be governed by, the law of the
State of New York. Except as provided herein, the Forward Transaction Agreement
remains unchanged.
Please indicate your agreement to the terms of this letter by executing this
letter below and returning it to us.
Very truly yours,
Empresas Tolteca de Mexico, S.A. de C.V.
By: /s/ Rodrigo Trevino
______________________________
Name: Rodrigo Trevino
Title: Chief Financial Officer
Accepted and Agreed:
ABN AMRO Special Corporate Services, B.V.
By: /s/ R.H.I. de Laus
___________________________
Name: R.H.I. de Laus
Title: Managing Director
By: /s/ E.J. Holst
___________________________
Name: E.J. Holst
Title: Proxy Holder
Exhibit 4.15
Empresas Tolteca de Mexico, S.A. de C.V.
Ave. Constitucion 444 Pte.
Monterrey, N.L. 64000
Mexico
Amendment No. 1 to Confirmation
dated December 13, 2002
between Empresas Tolteca
de Mexico, S.A. de C.V. and
Citibank, N.A. (Transaction Reference No. [___])
October 15, 2003
Ladies and Gentlemen:
Reference is hereby made to (i) the ISDA Master Agreement dated as of December
13, 1999 and the Confirmation thereunder dated December 13, 2002 (the
Confirmation), each between you and us, and the Calculation Agency and Interbank
Agreement between you, us, Citibank, N.A. as Calculation Agent and the other
Participants listed therein dated as of December 13, 1999, as amended by
Amendment No. 1 thereto dated as of December 13, 2002 (as amended, the
Calculation Agency and Interbank Agreement and, together with the Confirmation,
the Forward Transaction Agreement), (ii) an Escrow Agreement dated as of
September 26, 2003 (the Escrow Agreement) between you, Cemex, S.A. de C.V., us,
Citibank, N.A., as Escrow Agent, Citibank, N.A., acting through its Emerging
Markets and Sales Group, as Designated Selling Shareholder, and the other
depositors referred to therein and (iii) a Share Purchase Agreement to be
entered into (the Espana Share Purchase Agreement) between you and us, pursuant
to which you will agree to sell, and we will agree to buy, the Specified Number
of Espana Shares. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Confirmation, or if not defined therein, in the
Calculation Agency and Interbank Agreement. For purposes of the Confirmation and
the Calculation Agency and Interbank Agreement, references herein to "Espana"
shall be deemed to be references to "Valenciana".
Notwithstanding the provisions of Paragraphs 5 and 6 of the First Confirmation,
you and we agree as follows:
1. In the event that, prior to October 30, 2003, (a) Bank enters into one or
more underwriting agreements with Cemex, Citigroup Global Markets Inc. (the
Underwriter), other underwriters specified therein and the other Participants
providing for the sale of Cemex ADS and/or Ordinary Participation Certificates
and (b) Underwriter and Cemex deliver the Initial Closing Delivery Instructions
(as defined in the Escrow Agreement), the Transaction will terminate with
respect to the Specified Number of Cemex ADS and the Specified Number of Espana
Shares on October 29, 2003 (such date, for purposes hereof, the Net Cash
Settlement Termination Date). In the event that less than the Specified Number
of Cemex ADS are sold in connection with the initial closing of the Global
Offering (as defined in the Escrow Agreement) or in connection with the exercise
by the Underwriter of the Over-Allotment Option (as defined in the Escrow
Agreement), we agree to purchase, or cause a third-party to purchase, the
remaining Specified Number of Cemex ADS for settlement on or prior to the Net
Cash Settlement Termination Date.
On the Net Cash Settlement Termination Date, (a) if the Final Payment
Amount is a positive number, Bank shall pay to Counterparty the Final Payment
Amount and (b) if the Final Payment Amount is a negative number, Counterparty
shall pay the absolute value of the Final Payment Amount to Bank.
For purposes of this paragraph 1,
(i) the Final Payment Amount shall be an amount equal to (a) the Net Cash
Settlement Amount minus (b) the sum of all Advance Payments (as defined
below) made to Counterparty;
(ii) the Net Cash Settlement Amount shall be an amount equal to (a) the
Cemex ADS Total Purchase Price plus (b) the Espana Value on the
Valuation Date immediately preceding the Net Cash Settlement
Termination Date multiplied by the Specified Number of Espana Shares
minus (c) the Adjusted Forward Payment Amount as of the Net Cash
Settlement Termination Date minus (d) the sum of all Transfer Payments
(as defined below) made to Bank in accordance with the Escrow
Agreement;
(iii) the Cemex ADS Total Purchase Price shall be an amount determined by (1)
multiplying (A) the number of Cemex ADS sold (or the number of Cemex
ADS representing Ordinary Participation Certificates sold) in
connection with each sale by Bank of a portion of the Specified Number
of Cemex ADS (or the underlying Ordinary Participation Certificates) by
(B) the price at which such Cemex ADS were sold (or, in the case of a
sale of Ordinary Participation Certificates, the price at which
Ordinary Participation Certificates represented by one Cemex ADS were
sold (converted at the exchange rate at which the proceeds from such
sale are converted to USD in accordance with the Escrow Agreement)) and
(2) summing the amounts determined pursuant to clause (1); and
(iv) the amounts transferred to Bank in accordance with the Escrow Agreement
(each such transfer, a Transfer Payment) in connection with each sale
by Bank of a portion of the Specified Number of Cemex ADS on and after
the initial closing of the Global Offering shall be deemed to be
Advanced Forward Payment Amounts for purposes of determining the
Adjusted Forward Payment Amount, except that the FV2 with respect to
such amounts shall be determined using a Swap Rate based on
USD-LIBOR-BBA for deposits with a maturity closest to the period of
time from the date on which such amount is transferred to Bank to the
Termination Date.
Upon payment of the Final Payment Amount, (i) Bank shall have no obligation
under the Forward Transaction Agreement to deliver the Specified Number of Cemex
ADS and the Specified Number of Espana Shares to Counterparty and Counterparty
shall have no obligation to pay to Bank the Adjusted Forward Payment Amount and
(ii) the Forward Transaction Agreement and any voting agreement entered into by
or on behalf of the Bank with respect to the Cemex ADS and/or the Espana Shares
shall be terminated.
2. In connection with each sale by Bank of Cemex ADS from and including the
initial closing of the Global Offering to but excluding the Net Cash Settlement
Termination Date, Bank agrees to advance to Counterparty (each such advance, an
Advance Payment), as specified in the Escrow Agreement, an amount equal to the
amount by which the aggregate proceeds from such sale and all prior sales of
Cemex ADS exceed the Adjusted Forward Payment Amount on the date of such sale.
3. Counterparty hereby agrees to indemnify Bank, upon demand, for losses or
expenses incurred by Bank in the event that, in connection with a proposed sale
of Cemex ADS, Bank terminates any agreement pursuant to which it has hedged its
position under the Forward Transaction Agreement in the Eurodollar market and
such sale (whether as the result of a Settlement Disruption Event or otherwise)
does not occur.
We are seeking to obtain the same agreements from the other Participants, and
this letter shall not become effective until each other Participant has
delivered a signed letter in substantially the same form as this letter.
This letter shall be construed in accordance with, and this letter and all
matters arising out of or relating in any way whatsoever to this letter (whether
in contract, tort or otherwise) shall be governed by, the law of the State of
New York. Except as provided herein, the Forward Transaction Agreement remains
unchanged.
Please indicate your agreement to the terms of this letter by executing this
letter below and returning it to us.
Very truly yours,
Empresas Tolteca de Mexico, S.A. de C.V.
By: /s/ Rodrigo Trevino
______________________________
Name: Rodrigo Trevino
Title: Chief Financial Officer
Accepted and Agreed:
Citibank, N.A.
By: /s/ Kurt Vogt
___________________________
Name: Kurt Vogt
Title: Managing Director
Exhibit 4.16
Empresas Tolteca de Mexico, S.A. de C.V.
Ave. Constitucion 444 Pte.
Monterrey, N.L. 64000
Mexico
Amendment No. 1 to Confirmation
dated December 13, 2002
between Empresas Tolteca
de Mexico, S.A. de C.V. and
Credit Suisse First Boston International
(Transaction Reference No. 8118223)
October 15, 2003
Ladies and Gentlemen:
Reference is hereby made to (i) the ISDA Master Agreement dated as of December
13, 1999 and the Confirmation thereunder dated December 13, 2002 (the
CONFIRMATION), each between you and us, and the Calculation Agency and Interbank
Agreement between you, us, Citibank, N.A. as Calculation Agent and the other
Participants listed therein dated as of December 13, 1999, as amended by
Amendment No. 1 thereto dated as of December 13, 2002 (as amended, the
CALCULATION AGENCY AND INTERBANK AGREEMENT and, together with the Confirmation,
the FORWARD TRANSACTION AGREEMENT), (ii) an Escrow Agreement dated as of
September 26, 2003 (the ESCROW AGREEMENT) between you, Cemex, S.A. de C.V., us,
Citibank, N.A., as Escrow Agent, Citibank, N.A., acting through its Emerging
Markets and Sales Group, as Designated Selling Shareholder, and the other
depositors referred to therein and (iii) a Share Purchase Agreement to be
entered into (the ESPANA SHARE PURCHASE AGREEMENT) between you and us, pursuant
to which you will agree to sell, and we will agree to buy, the Specified Number
of Espana Shares. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Confirmation, or if not defined therein, in the
Calculation Agency and Interbank Agreement. For purposes of the Confirmation and
the Calculation Agency and Interbank Agreement, references herein to "Espana"
shall be deemed to be references to "Valenciana".
Notwithstanding the provisions of Paragraphs 5 and 6 of the First Confirmation,
you and we agree as follows:
1. In the event that, prior to October 30, 2003, (a) Bank enters into one or
more underwriting agreements with Cemex, Credit Suisse First Boston LLC (the
UNDERWRITER), other underwriters specified therein and the other Participants
providing for the sale of Cemex ADS and/or Ordinary Participation Certificates
and (b) Underwriter and Cemex deliver the Initial Closing Delivery Instructions
(as defined in the Escrow Agreement), the Transaction will terminate with
respect to the Specified Number of Cemex ADS and the Specified Number of Espana
Shares on October 29, 2003 (such date, for purposes hereof, the NET CASH
SETTLEMENT TERMINATION DATE). In the event that less than the Specified Number
of Cemex ADS are sold in connection with the initial closing of the Global
Offering (as defined in the Escrow Agreement) or in connection with the exercise
by the Underwriter of the Over-Allotment Option (as defined in the Escrow
Agreement), we agree to purchase, or cause a third-party to purchase, the
remaining Specified Number of Cemex ADS for settlement on or prior to the Net
Cash Settlement Termination Date.
On the Net Cash Settlement Termination Date, (a) if the Final Payment
Amount is a positive number, Bank shall pay to Counterparty the Final Payment
Amount and (b) if the Final Payment Amount is a negative number, Counterparty
shall pay the absolute value of the Final Payment Amount to Bank.
For purposes of this paragraph 1,
(i) the FINAL PAYMENT AMOUNT shall be an amount equal to (a) the Net Cash
Settlement Amount MINUS (b) the sum of all Advance Payments (as defined
below) made to Counterparty;
(ii) the NET CASH SETTLEMENT AMOUNT shall be an amount equal to (a) the
Cemex ADS Total Purchase Price PLUS (b) the Espana Value on the
Valuation Date immediately preceding the Net Cash Settlement
Termination Date MULTIPLIED BY the Specified Number of Espana Shares
MINUS (c) the Adjusted Forward Payment Amount as of the Net Cash
Settlement Termination Date MINUS (d) the sum of all Transfer Payments
(as defined below) made to Bank in accordance with the Escrow
Agreement;
(iii) the CEMEX ADS TOTAL PURCHASE PRICE shall be an amount determined by
(1) multiplying (A) the number of Cemex ADS sold (or the number of
Cemex ADS representing Ordinary Participation Certificates sold) in
connection with each sale by Bank of a portion of the Specified Number
of Cemex ADS (or the underlying Ordinary Participation Certificates)
by (B) the price at which such Cemex ADS were sold (or, in the case of
a sale of Ordinary Participation Certificates, the price at which
Ordinary Participation Certificates represented by one Cemex ADS were
sold (converted at the exchange rate at which the proceeds from such
sale are converted to USD in accordance with the Escrow Agreement))
and (2) summing the amounts determined pursuant to clause (1); and
(iv) the amounts transferred to Bank in accordance with the Escrow Agreement
(each such transfer, a TRANSFER PAYMENT) in connection with each sale
by Bank of a portion of the Specified Number of Cemex ADS on and after
the initial closing of the Global Offering shall be deemed to be
Advanced Forward Payment Amounts for purposes of determining the
Adjusted Forward Payment Amount, except that the FV2 with respect to
such amounts shall be determined using a Swap Rate based on
USD-LIBOR-BBA for deposits with a maturity closest to the period of
time from the date on which such amount is transferred to Bank to the
Termination Date.
Upon payment of the Final Payment Amount, (i) Bank shall have no obligation
under the Forward Transaction Agreement to deliver the Specified Number of Cemex
ADS and the Specified Number of Espana Shares to Counterparty and Counterparty
shall have no obligation to pay to Bank the Adjusted Forward Payment Amount and
(ii) the Forward Transaction Agreement and any voting agreement entered into by
or on behalf of the Bank with respect to the Cemex ADS and/or the Espana Shares
shall be terminated.
2. In connection with each sale by Bank of Cemex ADS from and including the
initial closing of the Global Offering to but excluding the Net Cash Settlement
Termination Date, Bank agrees to advance to Counterparty (each such advance, an
ADVANCE PAYMENT), as specified in the Escrow Agreement, an amount equal to the
amount by which the aggregate proceeds from such sale and all prior sales of
Cemex ADS exceed the Adjusted Forward Payment Amount on the date of such sale.
3. Counterparty hereby agrees to indemnify Bank, upon demand, for losses or
expenses incurred by Bank in the event that, in connection with a proposed sale
of Cemex ADS, Bank terminates any agreement pursuant to which it has hedged its
position under the Forward Transaction Agreement in the Eurodollar market and
such sale (whether as the result of a Settlement Disruption Event or otherwise)
does not occur.
We are seeking to obtain the same agreements from the other Participants, and
this letter shall not become effective until each other Participant has
delivered a signed letter in substantially the same form as this letter.
This letter shall be construed in accordance with, and this letter and all
matters arising out of or relating in any way whatsoever to this letter (whether
in contract, tort or otherwise) shall be governed by, the law of the State of
New York. Except as provided herein, the Forward Transaction Agreement remains
unchanged.
Please indicate your agreement to the terms of this letter by executing this
letter below and returning it to us.
Very truly yours,
Empresas Tolteca de Mexico, S.A. de C.V.
By: /s/ Rodrigo Trevino
______________________________
Name: Rodrigo Trevino
Title: Chief Financial Officer
Accepted and Agreed:
Credit Suisse First Boston International
By: /s/ Andrew Walton
___________________________
Name: Andrew Walton
Title: Director
By: /s/ Konstantin Orlov
___________________________
Name: Konstantin Orlov
Title: Director
Exhibit 4.17
Empresas Tolteca de Mexico, S.A. de C.V.
Ave. Constitucion 444 Pte.
Monterrey, N.L. 64000
Mexico
Amendment No. 1 to Confirmation
dated December 13, 2002
between Empresas Tolteca
de Mexico, S.A. de C.V. and
Deutsche Bank AG London (Transaction Reference No. ________)
October 15, 2003
Ladies and Gentlemen:
Reference is hereby made to (i) the ISDA Master Agreement dated as of December
13, 1999 and the Confirmation thereunder dated December 13, 2002 (the
CONFIRMATION), each between you and us, and the Calculation Agency and
Interbank Agreement between you, us, Citibank, N.A. as Calculation Agent and
the other Participants listed therein dated as of December 13, 1999, as amended
by Amendment No. 1 thereto dated as of December 13, 2002 (as amended, the
CALCULATION AGENCY AND INTERBANK AGREEMENT and, together with the Confirmation,
the FORWARD TRANSACTION AGREEMENT), (ii) an Escrow Agreement dated as of
September 26, 2003 (the ESCROW AGREEMENT) between you, Cemex, S.A. de C.V., us,
Citibank, N.A., as Escrow Agent, Citibank, N.A., acting through its Emerging
Markets and Sales Group, as Designated Selling Shareholder, and the other
depositors referred to therein and (iii) a Share Purchase Agreement to be
entered into (the ESPANA SHARE PURCHASE AGREEMENT) between you and us, pursuant
to which you will agree to sell, and we will agree to buy, the Specified Number
of Espana Shares. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Confirmation, or if not defined therein, in
the Calculation Agency and Interbank Agreement. For purposes of the
Confirmation and the Calculation Agency and Interbank Agreement, references
herein to "Espana" shall be deemed to be references to "Valenciana".
Notwithstanding the provisions of Paragraphs 5 and 6 of the First Confirmation,
you and we agree as follows:
1. In the event that, prior to October 30, 2003, (a) Bank enters into one or
more underwriting agreements with Cemex, DeutscheBank Securities Inc. (the
UNDERWRITER), other underwriters specified therein and the other Participants
providing for the sale of Cemex ADS and/or Ordinary Participation Certificates
and (b) Underwriter and Cemex deliver the Initial Closing Delivery Instructions
(as defined in the Escrow Agreement), the Transaction will terminate with
respect to the Specified Number of Cemex ADS and the Specified Number of Espana
Shares on October 29, 2003 (such date, for purposes hereof, the NET CASH
SETTLEMENT TERMINATION DATE). In the event that less than the Specified Number
of Cemex ADS are sold in connection with the initial closing of the Global
Offering (as defined in the Escrow Agreement) or in connection with the
exercise by the Underwriter of the Over-Allotment Option (as defined in the
Escrow Agreement), we agree to purchase, or cause a third-party to purchase,
the remaining Specified Number of Cemex ADS for settlement on or prior to the
Net Cash Settlement Termination Date.
On the Net Cash Settlement Termination Date, (a) if the Final Payment
Amount is a positive number, Bank shall pay to Counterparty the Final Payment
Amount and (b) if the Final Payment Amount is a negative number, Counterparty
shall pay the absolute value of the Final Payment Amount to Bank.
For purposes of this paragraph 1,
(i) the FINAL PAYMENT AMOUNT shall be an amount equal to (a) the Net Cash
Settlement Amount MINUS (b) the sum of all Advance Payments (as
defined below) made to Counterparty;
(ii) the NET CASH SETTLEMENT AMOUNT shall be an amount equal to (a) the
Cemex ADS Total Purchase Price PLUS (b) the Espana Value on the
Valuation Date immediately preceding the Net Cash Settlement
Termination Date MULTIPLIED BY the Specified Number of Espana Shares
MINUS (c) the Adjusted Forward Payment Amount as of the Net Cash
Settlement Termination Date MINUS (d) the sum of all Transfer Payments
(as defined below) made to Bank in accordance with the Escrow
Agreement;
(iii) the CEMEX ADS TOTAL PURCHASE PRICE shall be an amount determined by
(1) multiplying (A) the number of Cemex ADS sold (or the number of
Cemex ADS representing Ordinary Participation Certificates sold) in
connection with each sale by Bank of a portion of the Specified Number
of Cemex ADS (or the underlying Ordinary Participation Certificates)
by (B) the price at which such Cemex ADS were sold (or, in the case of
a sale of Ordinary Participation Certificates, the price at which
Ordinary Participation Certificates represented by one Cemex ADS were
sold (converted at the exchange rate at which the proceeds from such
sale are converted to USD in accordance with the Escrow Agreement))
and (2) summing the amounts determined pursuant to clause (1); and
(iv) the amounts transferred to Bank in accordance with the Escrow
Agreement (each such transfer, a TRANSFER PAYMENT) in connection with
each sale by Bank of a portion of the Specified Number of Cemex ADS on
and after the initial closing of the Global Offering shall be deemed
to be Advanced Forward Payment Amounts for purposes of determining the
Adjusted Forward Payment Amount, except that the FV2 with respect to
such amounts shall be determined using a Swap Rate based on
USD-LIBOR-BBA for deposits with a maturity closest to the period of
time from the date on which such amount is transferred to Bank to the
Termination Date.
Upon payment of the Final Payment Amount, (i) Bank shall have no obligation
under the Forward Transaction Agreement to deliver the Specified Number of
Cemex ADS and the Specified Number of Espana Shares to Counterparty and
Counterparty shall have no obligation to pay to Bank the Adjusted Forward
Payment Amount and (ii) the Forward Transaction Agreement and any voting
agreement entered into by or on behalf of the Bank with respect to the Cemex
ADS and/or the Espana Shares shall be terminated.
2. In connection with each sale by Bank of Cemex ADS from and including the
initial closing of the Global Offering to but excluding the Net Cash Settlement
Termination Date, Bank agrees to advance to Counterparty (each such advance, an
ADVANCE PAYMENT), as specified in the Escrow Agreement, an amount equal to the
amount by which the aggregate proceeds from such sale and all prior sales of
Cemex ADS exceed the Adjusted Forward Payment Amount on the date of such sale.
3. Counterparty hereby agrees to indemnify Bank, upon demand, for losses or
expenses incurred by Bank in the event that, in connection with a proposed sale
of Cemex ADS, Bank terminates any agreement pursuant to which it has hedged its
position under the Forward Transaction Agreement in the Eurodollar market and
such sale (whether as the result of a Settlement Disruption Event or otherwise)
does not occur.
We are seeking to obtain the same agreements from the other Participants, and
this letter shall not become effective until each other Participant has
delivered a signed letter in substantially the same form as this letter.
This letter shall be construed in accordance with, and this letter and all
matters arising out of or relating in any way whatsoever to this letter
(whether in contract, tort or otherwise) shall be governed by, the law of the
State of New York. Except as provided herein, the Forward Transaction Agreement
remains unchanged.
Please indicate your agreement to the terms of this letter by executing this
letter below and returning it to us.
Very truly yours,
Empresas Tolteca de Mexico, S.A. de C.V.
By: /s/ Rodrigo Trevino
______________________________
Name: Rodrigo Trevino
Title: Chief Financial Officer
Accepted and Agreed:
Deutsche Bank AG London
By: /s/ Illegible
___________________________
Name: Illegible
Title: Illegible
Exhibit 4.18
Empresas Tolteca de Mexico, S.A. de C.V.
Ave. Constitucion 444 Pte.
Monterrey, N.L. 64000
Mexico
Amendment No. 1 to Confirmation
dated December 13, 2002
between Empresas Tolteca
de Mexico, S.A. de C.V. and
ING Bank, N.V. (Transaction Reference No. FC7114-Emptolmex)
October 15, 2003
Ladies and Gentlemen:
Reference is hereby made to (i) the ISDA Master Agreement dated as of December
13, 1999 and the Confirmation thereunder dated December 13, 2002 (the
CONFIRMATION), each between you and us, and the Calculation Agency and
Interbank Agreement between you, us, Citibank, N.A. as Calculation Agent and
the other Participants listed therein dated as of December 13, 1999, as amended
by Amendment No. 1 thereto dated as of December 13, 2002 (as amended, the
CALCULATION AGENCY AND INTERBANK AGREEMENT and, together with the Confirmation,
the FORWARD TRANSACTION AGREEMENT), (ii) an Escrow Agreement dated as of
September 26, 2003 (the ESCROW AGREEMENT) between you, Cemex, S.A. de C.V., us,
Citibank, N.A., as Escrow Agent, Citibank, N.A., acting through its Emerging
Markets and Sales Group, as Designated Selling Shareholder, and the other
depositors referred to therein and (iii) a Share Purchase Agreement to be
entered into (the ESPANA SHARE PURCHASE AGREEMENT) between you and us, pursuant
to which you will agree to sell, and we will agree to buy, the Specified Number
of Espana Shares. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Confirmation, or if not defined therein, in
the Calculation Agency and Interbank Agreement. For purposes of the
Confirmation and the Calculation Agency and Interbank Agreement, references
herein to "Espana" shall be deemed to be references to "Valenciana".
Notwithstanding the provisions of Paragraphs 5 and 6 of the First Confirmation,
you and we agree as follows:
1. In the event that, prior to October 30, 2003, (a) Bank enters into one or
more underwriting agreements with Cemex, ING Financial Markets LLC (the
UNDERWRITER), other underwriters specified therein and the other Participants
providing for the sale of Cemex ADS and/or Ordinary Participation Certificates
and (b) Underwriter and Cemex deliver the Initial Closing Delivery Instructions
(as defined in the Escrow Agreement), the Transaction will terminate with
respect to the Specified Number of Cemex ADS and the Specified Number of Espana
Shares on October 29, 2003 (such date, for purposes hereof, the NET CASH
SETTLEMENT TERMINATION DATE). In the event that less than the Specified Number
of Cemex ADS are sold in connection with the initial closing of the Global
Offering (as defined in the Escrow Agreement) or in connection with the
exercise by the Underwriter of the Over-Allotment Option (as defined in the
Escrow Agreement), we agree to purchase, or cause a third-party to purchase,
the remaining Specified Number of Cemex ADS for settlement on or prior to the
Net Cash Settlement Termination Date.
On the Net Cash Settlement Termination Date, (a) if the Final Payment
Amount is a positive number, Bank shall pay to Counterparty the Final Payment
Amount and (b) if the Final Payment Amount is a negative number, Counterparty
shall pay the absolute value of the Final Payment Amount to Bank.
For purposes of this paragraph 1,
(i) the FINAL PAYMENT AMOUNT shall be an amount equal to (a) the Net Cash
Settlement Amount MINUS (b) the sum of all Advance Payments (as
defined below) made to Counterparty;
(ii) the NET CASH SETTLEMENT AMOUNT shall be an amount equal to (a) the
Cemex ADS Total Purchase Price PLUS (b) the Espana Value on the
Valuation Date immediately preceding the Net Cash Settlement
Termination Date MULTIPLIED BY the Specified Number of Espana Shares
MINUS (c) the Adjusted Forward Payment Amount as of the Net Cash
Settlement Termination Date MINUS (d) the sum of all Transfer Payments
(as defined below) made to Bank in accordance with the Escrow
Agreement;
(iii) the CEMEX ADS TOTAL PURCHASE PRICE shall be an amount determined by
(1) multiplying (A) the number of Cemex ADS sold (or the number of
Cemex ADS representing Ordinary Participation Certificates sold) in
connection with each sale by Bank of a portion of the Specified Number
of Cemex ADS (or the underlying Ordinary Participation Certificates)
by (B) the price at which such Cemex ADS were sold (or, in the case of
a sale of Ordinary Participation Certificates, the price at which
Ordinary Participation Certificates represented by one Cemex ADS were
sold (converted at the exchange rate at which the proceeds from such
sale are converted to USD in accordance with the Escrow Agreement))
and (2) summing the amounts determined pursuant to clause (1); and
(iv) the amounts transferred to Bank in accordance with the Escrow
Agreement (each such transfer, a TRANSFER PAYMENT) in connection with
each sale by Bank of a portion of the Specified Number of Cemex ADS on
and after the initial closing of the Global Offering shall be deemed
to be Advanced Forward Payment Amounts for purposes of determining the
Adjusted Forward Payment Amount, except that the FV2 with respect to
such amounts shall be determined using a Swap Rate based on
USD-LIBOR-BBA for deposits with a maturity closest to the period of
time from the date on which such amount is transferred to Bank to the
Termination Date.
Upon payment of the Final Payment Amount, (i) Bank shall have no obligation
under the Forward Transaction Agreement to deliver the Specified Number of
Cemex ADS and the Specified Number of Espana Shares to Counterparty and
Counterparty shall have no obligation to pay to Bank the Adjusted Forward
Payment Amount and (ii) the Forward Transaction Agreement and any voting
agreement entered into by or on behalf of the Bank with respect to the Cemex
ADS and/or the Espana Shares shall be terminated.
2. In connection with each sale by Bank of Cemex ADS from and including the
initial closing of the Global Offering to but excluding the Net Cash Settlement
Termination Date, Bank agrees to advance to Counterparty (each such advance, an
ADVANCE PAYMENT), as specified in the Escrow Agreement, an amount equal to the
amount by which the aggregate proceeds from such sale and all prior sales of
Cemex ADS exceed the Adjusted Forward Payment Amount on the date of such sale.
3. Counterparty hereby agrees to indemnify Bank, upon demand, for losses or
expenses incurred by Bank in the event that, in connection with a proposed sale
of Cemex ADS, Bank terminates any agreement pursuant to which it has hedged its
position under the Forward Transaction Agreement in the Eurodollar market and
such sale (whether as the result of a Settlement Disruption Event or otherwise)
does not occur.
We are seeking to obtain the same agreements from the other Participants, and
this letter shall not become effective until each other Participant has
delivered a signed letter in substantially the same form as this letter.
This letter shall be construed in accordance with, and this letter and all
matters arising out of or relating in any way whatsoever to this letter
(whether in contract, tort or otherwise) shall be governed by, the law of the
State of New York. Except as provided herein, the Forward Transaction Agreement
remains unchanged.
Please indicate your agreement to the terms of this letter by executing this
letter below and returning it to us.
Very truly yours,
Empresas Tolteca de Mexico, S.A. de C.V.
By: /s/ Rodrigo Trevino
______________________________
Name: Rodrigo Trevino
Title: Chief Financial Officer
Accepted and Agreed: ING Bank, N.V.
ING Bank, N.V.
By: /s/ Illegible
______________________________
Name: Illegible
By: /s/ A.B. Rosario Title: Director, Chief Financial
___________________________ Officer
Name: A.B. Rosario
Title: Risk Manager
Exhibit 4.19
Empresas Tolteca de Mexico, S.A. de C.V.
Ave. Constitucion 444 Pte.
Monterrey, N.L. 64000
Mexico
Amendment No. 1 to Confirmation
dated December 13, 2002
between Empresas Tolteca
de Mexico, S.A. de C.V. and
JPMorgan Chase Bank (Transaction Reference No. _______________)
October 15, 2003
Ladies and Gentlemen:
Reference is hereby made to (i) the ISDA Master Agreement dated as of December
13, 1999 and the Confirmation thereunder dated December 13, 2002 (the
CONFIRMATION), each between you and us, and the Calculation Agency and
Interbank Agreement between you, us, Citibank, N.A. as Calculation Agent and
the other Participants listed therein dated as of December 13, 1999, as amended
by Amendment No. 1 thereto dated as of December 13, 2002 (as amended, the
CALCULATION AGENCY AND INTERBANK AGREEMENT and, together with the Confirmation,
the FORWARD TRANSACTION AGREEMENT), (ii) an Escrow Agreement dated as of
September 26, 2003 (the ESCROW AGREEMENT) between you, Cemex, S.A. de C.V., us,
Citibank, N.A., as Escrow Agent, Citibank, N.A., acting through its Emerging
Markets and Sales Group, as Designated Selling Shareholder, and the other
depositors referred to therein and (iii) a Share Purchase Agreement to be
entered into (the ESPANA SHARE PURCHASE AGREEMENT) between you and us, pursuant
to which you will agree to sell, and we will agree to buy, the Specified Number
of Espana Shares. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Confirmation, or if not defined therein, in
the Calculation Agency and Interbank Agreement. For purposes of the
Confirmation and the Calculation Agency and Interbank Agreement, references
herein to "Espana" shall be deemed to be references to "Valenciana".
Notwithstanding the provisions of Paragraphs 5 and 6 of the First Confirmation,
you and we agree as follows:
1. In the event that, prior to October 30, 2003, (a) Bank enters into one or
more underwriting agreements with Cemex, J.P. Morgan Securities Inc. (the
UNDERWRITER), other underwriters specified therein and the other Participants
providing for the sale of Cemex ADS and/or Ordinary Participation Certificates
and (b) Underwriter and Cemex deliver the Initial Closing Delivery Instructions
(as defined in the Escrow Agreement), the Transaction will terminate with
respect to the Specified Number of Cemex ADS and the Specified Number of Espana
Shares on October 29, 2003 (such date, for purposes hereof, the NET CASH
SETTLEMENT TERMINATION DATE). In the event that less than the Specified Number
of Cemex ADS are sold in connection with the initial closing of the Global
Offering (as defined in the Escrow Agreement) or in connection with the
exercise by the Underwriter of the Over-Allotment Option (as defined in the
Escrow Agreement), we agree to purchase, or cause a third-party to purchase,
the remaining Specified Number of Cemex ADS for settlement on or prior to the
Net Cash Settlement Termination Date.
On the Net Cash Settlement Termination Date, (a) if the Final Payment
Amount is a positive number, Bank shall pay to Counterparty the Final Payment
Amount and (b) if the Final Payment Amount is a negative number, Counterparty
shall pay the absolute value of the Final Payment Amount to Bank.
For purposes of this paragraph 1,
(i) the FINAL PAYMENT AMOUNT shall be an amount equal to (a) the Net Cash
Settlement Amount MINUS (b) the sum of all Advance Payments (as
defined below) made to Counterparty;
(ii) the NET CASH SETTLEMENT AMOUNT shall be an amount equal to (a) the
Cemex ADS Total Purchase Price PLUS (b) the Espana Value on the
Valuation Date immediately preceding the Net Cash Settlement
Termination Date MULTIPLIED BY the Specified Number of Espana Shares
MINUS (c) the Adjusted Forward Payment Amount as of the Net Cash
Settlement Termination Date MINUS (d) the sum of all Transfer Payments
(as defined below) made to Bank in accordance with the Escrow
Agreement;
(iii) the CEMEX ADS TOTAL PURCHASE PRICE shall be an amount determined by
(1) multiplying (A) the number of Cemex ADS sold (or the number of
Cemex ADS representing Ordinary Participation Certificates sold) in
connection with each sale by Bank of a portion of the Specified Number
of Cemex ADS (or the underlying Ordinary Participation Certificates)
by (B) the price at which such Cemex ADS were sold (or, in the case of
a sale of Ordinary Participation Certificates, the price at which
Ordinary Participation Certificates represented by one Cemex ADS were
sold (converted at the exchange rate at which the proceeds from such
sale are converted to USD in accordance with the Escrow Agreement))
and (2) summing the amounts determined pursuant to clause (1); and
(iv) the amounts transferred to Bank in accordance with the Escrow
Agreement (each such transfer, a TRANSFER PAYMENT) in connection with
each sale by Bank of a portion of the Specified Number of Cemex ADS on
and after the initial closing of the Global Offering shall be deemed
to be Advanced Forward Payment Amounts for purposes of determining the
Adjusted Forward Payment Amount, except that the FV2 with respect to
such amounts shall be determined using a Swap Rate based on
USD-LIBOR-BBA for deposits with a maturity closest to the period of
time from the date on which such amount is transferred to Bank to the
Termination Date.
Upon payment of the Final Payment Amount, (i) Bank shall have no obligation
under the Forward Transaction Agreement to deliver the Specified Number of
Cemex ADS and the Specified Number of Espana Shares to Counterparty and
Counterparty shall have no obligation to pay to Bank the Adjusted Forward
Payment Amount and (ii) the Forward Transaction Agreement and any voting
agreement entered into by or on behalf of the Bank with respect to the Cemex
ADS and/or the Espana Shares shall be terminated.
2. In connection with each sale by Bank of Cemex ADS from and including the
initial closing of the Global Offering to but excluding the Net Cash Settlement
Termination Date, Bank agrees to advance to Counterparty (each such advance, an
ADVANCE PAYMENT), as specified in the Escrow Agreement, an amount equal to the
amount by which the aggregate proceeds from such sale and all prior sales of
Cemex ADS exceed the Adjusted Forward Payment Amount on the date of such sale.
3. Counterparty hereby agrees to indemnify Bank, upon demand, for losses or
expenses incurred by Bank in the event that, in connection with a proposed sale
of Cemex ADS, Bank terminates any agreement pursuant to which it has hedged its
position under the Forward Transaction Agreement in the Eurodollar market and
such sale (whether as the result of a Settlement Disruption Event or otherwise)
does not occur.
We are seeking to obtain the same agreements from the other Participants, and
this letter shall not become effective until each other Participant has
delivered a signed letter in substantially the same form as this letter.
This letter shall be construed in accordance with, and this letter and all
matters arising out of or relating in any way whatsoever to this letter
(whether in contract, tort or otherwise) shall be governed by, the law of the
State of New York. Except as provided herein, the Forward Transaction Agreement
remains unchanged.
Please indicate your agreement to the terms of this letter by executing this
letter below and returning it to us.
Very truly yours,
Empresas Tolteca de Mexico, S.A. de C.V.
By: /s/ Rodrigo Trevino
______________________________
Name: Rodrigo Trevino
Title: Chief Financial Officer
Accepted and Agreed:
JPMorgan Chase Bank
By: /s/ Peter Turk
___________________________
Name: Peter Turk
Title: Managing Director
Exhibit 4.20
Empresas Tolteca de Mexico, S.A. de C.V.
Ave. Constitucion 444 Pte.
Monterrey, N.L. 64000
Mexico
Amendment No. 1 to Confirmation
dated December 13, 2002
between Empresas Tolteca
de Mexico, S.A. de C.V. and
Societe Generale (Transaction Reference No. _______________)
October 15, 2003
Ladies and Gentlemen:
Reference is hereby made to (i) the ISDA Master Agreement dated as of December
13, 1999 and the Confirmation thereunder dated December 13, 2002 (the
CONFIRMATION), each between you and us, and the Calculation Agency and
Interbank Agreement between you, us, Citibank, N.A. as Calculation Agent and
the other Participants listed therein dated as of December 13, 1999, as amended
by Amendment No. 1 thereto dated as of December 13, 2002 (as amended, the
CALCULATION AGENCY AND INTERBANK AGREEMENT and, together with the Confirmation,
the FORWARD TRANSACTION AGREEMENT), (ii) an Escrow Agreement dated as of
September 26, 2003 (the ESCROW AGREEMENT) between you, Cemex, S.A. de C.V., us,
Citibank, N.A., as Escrow Agent, Citibank, N.A., acting through its Emerging
Markets and Sales Group, as Designated Selling Shareholder, and the other
depositors referred to therein and (iii) a Share Purchase Agreement to be
entered into (the ESPANA SHARE PURCHASE AGREEMENT) between you and us, pursuant
to which you will agree to sell, and we will agree to buy, the Specified Number
of Espana Shares. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Confirmation, or if not defined therein, in
the Calculation Agency and Interbank Agreement. For purposes of the
Confirmation and the Calculation Agency and Interbank Agreement, references
herein to "Espana" shall be deemed to be references to "Valenciana".
Notwithstanding the provisions of Paragraphs 5 and 6 of the First Confirmation,
you and we agree as follows:
1. In the event that, prior to October 30, 2003, (a) Bank enters into one or
more underwriting agreements with Cemex, SG Cowen Securities Corporation (the
UNDERWRITER), other underwriters specified therein and the other Participants
providing for the sale of Cemex ADS and/or Ordinary Participation Certificates
and (b) Underwriter and Cemex deliver the Initial Closing Delivery Instructions
(as defined in the Escrow Agreement), the Transaction will terminate with
respect to the Specified Number of Cemex ADS and the Specified Number of Espana
Shares on October 29, 2003 (such date, for purposes hereof, the NET CASH
SETTLEMENT TERMINATION DATE). In the event that less than the Specified Number
of Cemex ADS are sold in connection with the initial closing of the Global
Offering (as defined in the Escrow Agreement) or in connection with the
exercise by the Underwriter of the Over-Allotment Option (as defined in the
Escrow Agreement), we agree to purchase, or cause a third-party to purchase,
the remaining Specified Number of Cemex ADS for settlement on or prior to the
Net Cash Settlement Termination Date.
On the Net Cash Settlement Termination Date, (a) if the Final Payment
Amount is a positive number, Bank shall pay to Counterparty the Final Payment
Amount and (b) if the Final Payment Amount is a negative number, Counterparty
shall pay the absolute value of the Final Payment Amount to Bank.
For purposes of this paragraph 1,
(i) the FINAL PAYMENT AMOUNT shall be an amount equal to (a) the Net Cash
Settlement Amount MINUS (b) the sum of all Advance Payments (as
defined below) made to Counterparty;
(ii) the NET CASH SETTLEMENT AMOUNT shall be an amount equal to (a) the
Cemex ADS Total Purchase Price PLUS (b) the Espana Value on the
Valuation Date immediately preceding the Net Cash Settlement
Termination Date MULTIPLIED BY the Specified Number of Espana Shares
MINUS (c) the Adjusted Forward Payment Amount as of the Net Cash
Settlement Termination Date MINUS (d) the sum of all Transfer Payments
(as defined below) made to Bank in accordance with the Escrow
Agreement;
(iii) the CEMEX ADS TOTAL PURCHASE PRICE shall be an amount determined by
(1) multiplying (A) the number of Cemex ADS sold (or the number of
Cemex ADS representing Ordinary Participation Certificates sold) in
connection with each sale by Bank of a portion of the Specified Number
of Cemex ADS (or the underlying Ordinary Participation Certificates)
by (B) the price at which such Cemex ADS were sold (or, in the case of
a sale of Ordinary Participation Certificates, the price at which
Ordinary Participation Certificates represented by one Cemex ADS were
sold (converted at the exchange rate at which the proceeds from such
sale are converted to USD in accordance with the Escrow Agreement))
and (2) summing the amounts determined pursuant to clause (1); and
(iv) the amounts transferred to Bank in accordance with the Escrow
Agreement (each such transfer, a TRANSFER PAYMENT) in connection with
each sale by Bank of a portion of the Specified Number of Cemex ADS on
and after the initial closing of the Global Offering shall be deemed
to be Advanced Forward Payment Amounts for purposes of determining the
Adjusted Forward Payment Amount, except that the FV2 with respect to
such amounts shall be determined using a Swap Rate based on
USD-LIBOR-BBA for deposits with a maturity closest to the period of
time from the date on which such amount is transferred to Bank to the
Termination Date.
Upon payment of the Final Payment Amount, (i) Bank shall have no obligation
under the Forward Transaction Agreement to deliver the Specified Number of
Cemex ADS and the Specified Number of Espana Shares to Counterparty and
Counterparty shall have no obligation to pay to Bank the Adjusted Forward
Payment Amount and (ii) the Forward Transaction Agreement and any voting
agreement entered into by or on behalf of the Bank with respect to the Cemex
ADS and/or the Espana Shares shall be terminated.
2. In connection with each sale by Bank of Cemex ADS from and including the
initial closing of the Global Offering to but excluding the Net Cash Settlement
Termination Date, Bank agrees to advance to Counterparty (each such advance, an
ADVANCE PAYMENT), as specified in the Escrow Agreement, an amount equal to the
amount by which the aggregate proceeds from such sale and all prior sales of
Cemex ADS exceed the Adjusted Forward Payment Amount on the date of such sale.
3. Counterparty hereby agrees to indemnify Bank, upon demand, for losses or
expenses incurred by Bank in the event that, in connection with a proposed sale
of Cemex ADS, Bank terminates any agreement pursuant to which it has hedged its
position under the Forward Transaction Agreement in the Eurodollar market and
such sale (whether as the result of a Settlement Disruption Event or otherwise)
does not occur.
We are seeking to obtain the same agreements from the other Participants, and
this letter shall not become effective until each other Participant has
delivered a signed letter in substantially the same form as this letter.
This letter shall be construed in accordance with, and this letter and all
matters arising out of or relating in any way whatsoever to this letter
(whether in contract, tort or otherwise) shall be governed by, the law of the
State of New York. Except as provided herein, the Forward Transaction Agreement
remains unchanged.
Please indicate your agreement to the terms of this letter by executing this
letter below and returning it to us.
Very truly yours,
Empresas Tolteca de Mexico, S.A. de C.V.
By: /s/ Rodrigo Trevino
______________________________
Name: Rodrigo Trevino
Title: Chief Financial Officer
Accepted and Agreed:
Societe Generale
By: /s/ Illegible
___________________________
Name:
Title:
Exhibit 4.21
EUR 250,000,000
(Y) 19,308,000,000
FACILITIES AGREEMENT
dated 30 March 2004
for
CEMEX ESPANA, S.A.
as Borrower
CEMEX CARACAS INVESTMENTS B.V.
CEMEX CARACAS II INVESTMENTS B.V.
CEMEX EGYPTIAN INVESTMENTS B.V.
CEMEX MANILA INVESTMENTS B.V.
SANDWORTH PLAZA HOLDING B.V.
as Guarantors
arranged by
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
SOCIETE GENERALE, S.A.
with
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
acting as Agent
---------------------------------------------------------------------------
TERM AND REVOLVING FACILITIES AGREEMENT
---------------------------------------------------------------------------
CONTENTS
Clause Page
1. Definitions and Interpretation..................................................................4
2. The Facilities.................................................................................19
3. Purpose........................................................................................19
4. Conditions of Utilisation......................................................................19
5. Utilisation....................................................................................22
6. Optional Currencies............................................................................23
7. Repayment......................................................................................26
8. Prepayment and cancellation....................................................................26
9. Interest.......................................................................................29
10. Interest Periods...............................................................................30
11. Changes to the calculation of interest.........................................................31
12. Fees...........................................................................................32
13. Tax Gross Up and Indemnities..................................................................33
14. Increased costs................................................................................35
15. Other indemnities..............................................................................36
16. Mitigation by the Lenders......................................................................37
17. Costs and expenses.............................................................................38
18. Guarantee and indemnity........................................................................39
19. Representations................................................................................42
20. Information undertakings.......................................................................45
21. Financial Covenants............................................................................47
22. General undertakings...........................................................................50
23. Events of Default..............................................................................57
24. Changes to the Lenders.........................................................................61
25. Changes to the Obligors........................................................................64
26. Role of the Agent and the Arranger.............................................................66
27. Conduct of business by the Finance Parties.....................................................71
28. Sharing among the Finance Parties..............................................................71
29. Payment mechanics..............................................................................73
30. Set-off........................................................................................75
31. Notices........................................................................................75
32. Calculations and certificates..................................................................77
33. Partial invalidity.............................................................................77
34. Remedies and waivers...........................................................................77
35. Amendments and waivers.........................................................................77
36. Counterparts...................................................................................78
37. Governing law..................................................................................79
38. Enforcement....................................................................................79
SCHEDULE 1 The Original Parties.......................................................................80
Part I The Obligors...................................................................................80
Part II The Original Lenders..........................................................................81
SCHEDULE 2 Conditions Precedent.......................................................................83
Part I Conditions Precedent to initial Utilisation....................................................83
Part II Conditions Precedent required to be delivered by an Additional Guarantor......................85
SCHEDULE 3 Requests...................................................................................87
Part I Utilisation Request............................................................................87
Part II Selection Notice..............................................................................88
SCHEDULE 4 Mandatory Cost Formulae....................................................................89
SCHEDULE 5 Form of Transfer Certificate...............................................................91
SCHEDULE 6 Form of Compliance Certificate.............................................................93
SCHEDULE 7 Existing Security..........................................................................95
SCHEDULE 8 Existing Notarisations.....................................................................96
SCHEDULE 9 LMA Form of confidentiality undertaking....................................................97
SCHEDULE 10 Timetables...............................................................................102
SCHEDULE 11 Form of Accession Letter.................................................................104
SCHEDULE 12 Material Subsidiaries....................................................................105
SCHEDULE 13 Defining the JPY Fix Rate................................................................106
THIS AGREEMENT is dated 30 March 2004 and made between:
(1) CEMEX ESPANA, S.A. (the "Borrower");
(2) CEMEX CARACAS INVESTMENTS B.V., CEMEX CARACAS II INVESTMENTS B.V., CEMEX
EGYPTIAN INVESTMENTS B.V., CEMEX MANILA INVESTMENTS B.V. and SANDWORTH
PLAZA HOLDING B.V. (the " Original Guarantors");
(3) BANCO BILBAO VIZCAYA ARGENTARIA, S.A. and SOCIETE GENERALE, S.A. as
mandated lead arrangers (whether acting individually or together the
"Arranger");
(4) THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1
(The Original Parties) as lenders (the "Original Lenders"); and
(5) BANCO BILBAO VIZCAYA ARGENTARIA, S.A. as agent of the other Finance
Parties (the "Agent").
IT IS AGREED as follows:
SECTION 1
INTERPRETATION
1. Definitions and Interpretation
1.1 Definitions
In this Agreement:
"Accession Letter" means a document substantially in the form set out
in Schedule 11 (Form of Accession Letter).
"Additional Cost Rate" has the meaning given to it in Schedule 4
(Mandatory Cost Formulae).
"Additional Guarantor" means a company which becomes an Additional
Guarantor in accordance with Clause 25 (Changes to the Obligors).
"Affiliate" means, in relation to any person, a Subsidiary of that
person or a Holding Company of that person or any other Subsidiary of
that Holding Company.
"Asia Fund" means Cemex Asia Holdings Ltd. ("CAH") or any other
vehicles used by the Borrower or any other member of the Group to
invest, or finance investments already made, in companies involved in
or assets dedicated to the cement, concrete or aggregates business in
Asia in both cases, such company or vehicle, as applicable, with
committed third parties with minority interests other than members of
the Group or CEMEX, S.A. de C.V. and its Subsidiaries and with the
Borrower maintaining control of its management.
"Authorisation" means an authorisation, consent, approval, resolution,
licence, exemption, filing, notarisation or registration.
"Authorised Signatory" means, in relation to any Obligor, any person
who is duly authorised and in respect of whom the Agent has received a
certificate signed by a director or another Authorised Signatory of
such Obligor setting out the name and signature of such person and
confirming such person's authority to act.
"Availability Period" means:
(a) in relation to Facility A and Facility C, the period from and
including the date of this Agreement to and including the day
falling one Month after the date of this Agreement; and
(b) in relation to Facility B, the period from and including the
date of this Agreement to and including the day falling one
week (or, if the Borrower has selected three Interest Periods
of less than one Month, one Month) before the Termination
Date.
"Available Commitment" means, in relation to a Facility, a Lender's
Commitment under that Facility minus:
(a) the Base Currency Amount (in respect of Facility A and
Facility B) or the yen amount (in respect of Facility C) of
its participation in any outstanding Loans under that
Facility; and
(b) in relation to any proposed Utilisation, the Base Currency
Amount (in respect of Facility A and Facility B) or the yen
amount (in respect of Facility C) of its participation in any
Loans that are due to be made under that Facility on or before
the proposed Utilisation Date,
other than, in relation to any proposed Utilisation under Facility B
only, that Lender's participation in any Facility B Loans that are
repaid or prepaid on or before the proposed Utilisation Date.
"Available Facility" means, in relation to a Facility, the aggregate for
the time being of each Lender's Available Commitment in respect of that
Facility.
"Base Currency" means euro.
"Base Currency Amount" means, in relation to a Facility A Loan or a
Facility B Loan, the amount specified in the Utilisation Request for
that Loan (or, if the amount requested is not denominated in the Base
Currency, that amount converted into the Base Currency at the Spot Rate
of Exchange on the date which is three Business Days before the
Utilisation Date) adjusted to reflect any repayment (other than, in
relation to Facility A, a repayment arising from a change of currency)
or prepayment of the Loan.
"Break Costs" means:
(a) in the case of Facility A and Facility B, the amount (if any)
by which:
(i) the interest which a Lender should have received for
the period from the date of receipt of all or any
part of its participation in a Loan or Unpaid Sum to
the last day of the current Interest Period in
respect of that Loan or Unpaid Sum, had the principal
amount or Unpaid Sum received been paid on the last
day of that Interest Period;
exceeds:
(ii) the amount which that Lender would be able to obtain
by placing an amount equal to the principal amount or
Unpaid Sum received by it on deposit with a leading
bank in the Relevant Interbank Market for a period
starting on the Business Day following receipt or
recovery and ending on the last day of the current
Interest Period; and
(b) in the case of Facility C, the amount of any costs incurred by
a Lender (whether as a result of terminating any Hedging
Agreements or otherwise) in respect of any prepayment under
this Agreement and justified in writing to the Borrower.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks are open for general business in Madrid and:
(a) (in relation to any date for payment or lending or purchase of
a currency other than euro) the principal financial centre of
the country of that currency;
(b) (in relation to any date for determination of an interest rate
in relation to a currency other than euro) the principal
financial centre of that currency and London;
(c) (in relation to any date for determination of a rate of
exchange in relation to a currency other than euro) a TARGET
Day; or
(d) (in relation to any date for payment or lending or purchase
of, or determination of an interest rate or a rate of exchange
in relation to, euro) a TARGET Day.
"Capital Lease" means any lease that is capitalised on the balance
sheet prepared in accordance with Spanish GAAP.
"Commitment" means a Facility A Commitment and/or Facility B Commitment
and/or Facility C Commitment.
"Compliance Certificate" means a certificate substantially in the form
set out in Schedule 6 (Form of Compliance Certificate).
"Confidentiality Undertaking" means a confidentiality undertaking
substantially in a recommended form of the LMA as set out in Schedule 9
(LMA Form of Confidentiality Undertaking) or in any other form agreed
between the Borrower and the Agent.
"Default" means an Event of Default or any event or circumstance
specified in Clause 23 (Events of Default) which would (with the expiry
of a grace period, the giving of notice, the making of any
determination under the Finance Documents or any combination of any of
the foregoing) be an Event of Default.
"Domestic Lender" means any person described in paragraph (c) of
article 57 of Royal Decree 537/1997, of 14 April (Real Decreto 537/1997
de 14 de abril) as amended by Royal Decree 2717/1998, of 18 December
(Real Decreto 2717/1998, de 18 de diciembre) or in the second paragraph
of article 12.1 of Royal Decree 326/1999, of 26 February (Real Decreto
326/1999, de 26 de febrero).
"Environmental Claim" means any claim, proceeding or investigation by
any person in respect of any Environmental Law.
"Environmental Law" means any applicable law or regulation in any
jurisdiction in which any member of the Group conducts business which
relates to the pollution or protection of the environment or harm to or
the protection of human health or the health of animals or plants.
"Environmental Permits" means any permit, licence, consent, approval
and other authorisation and the filing of any notification, report or
assessment required under any Environmental Law for the operation of
the business of any member of the Group conducted on or from the
properties owned or used by the relevant member of the Group.
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder.
"EURIBOR" means, in relation to any Loan in euro:
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for the Interest Period of
that Loan) the rate calculated by way of interpolation of the
rates for the immediately preceding and the immediately
following periods for which a Screen Rate is available; or
(c) (if no Screen Rate is available for the immediately preceding
and the immediately following periods) the arithmetic mean
(rounded upwards to four decimal places) as supplied to the
Agent at its request quoted by the Reference Banks to leading
banks in the European interbank market,
as of the Specified Time on the Quotation Day for the offering of
deposits in euro for a period comparable to the Interest Period of the
relevant Loan.
"Event of Default" means any event or circumstance specified as such in
Clause 23 (Events of Default).
"Facility" means Facility A or Facility B or Facility C.
"Facility A" means the multicurrency term loan facility made available
under this Agreement as described in Clause 2 (The Facilities).
"Facility A Commitment" means:
(a) in relation to an Original Lender, the amount in the Base
Currency set opposite its name under the heading "Facility A
Commitment" in Part II of Schedule 1 (The Original Parties)
and the amount of any other Facility A Commitment transferred
to it under this Agreement; and
(b) in relation to any other Lender, the amount in the Base
Currency of any Facility A Commitment transferred to it under
this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"Facility A Loan" means the loan made or to be made under Facility A or
the principal amount outstanding for the time being of that loan.
"Facility A Repayment Date" means the day falling 60 Months after the
date of this Agreement.
"Facility B" means the revolving loan facility made available under
this Agreement as described in Clause 2 (The Facilities).
"Facility B Commitment" means:
(a) in relation to an Original Lender, the amount in the Base
Currency set opposite its name under the heading "Facility B
Commitment" in Part II of Schedule 1 (The Original Parties)
and the amount of any other Facility B Commitment transferred
to it under this Agreement; and
(b) in relation to any other Lender, the amount in the Base
Currency of any Facility B Commitment transferred to it under
this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"Facility B Loan" means a loan made or to be made under Facility B or
the principal amount outstanding for the time being of that loan.
"Facility C" means the yen term loan facility made available under this
Agreement as described in Clause 2 (The Facilities).
"Facility C Commitment" means:
(a) in relation to an Original Lender, the amount in yen set
opposite its name under the heading "Facility C Commitment" in
Part II of Schedule 1 (The Original Parties) and the amount of
any other Facility C Commitment transferred to it under this
Agreement; and
(b) in relation to any other Lender, the amount in yen of any
Facility C Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"Facility C Loan" means the loan made or to be made under Facility C or
the principal amount outstanding for the time being of that loan.
"Facility C Repayment Date" means the day falling 60 Months after the
date of this Agreement.
"Facility Office" means the office or offices notified by a Lender to
the Agent in writing on or before the date it becomes a Lender (or,
following that date, by not less than five Business Days' written
notice) as the office or offices through which it will perform its
obligations under this Agreement.
"Fee Letter" means any letter or letters dated on or about the date of
this Agreement between the Arranger and the Borrower (or the Agent and
the Borrower) setting out any of the fees referred to in Clause 12
(Fees).
"Finance Document" means this Agreement, any Accession Letter, any Fee
Letter and any other document designated as such by the Agent and the
Borrower.
"Finance Party" means the Agent, the Arranger or a Lender.
"Financial Indebtedness" means, without duplication, any indebtedness
for or in respect of:
(a) moneys borrowed (including, but not limited to, any amount
raised by acceptance under any acceptance credit facility and
receivables sold or discounted on a recourse basis (it being
understood that Permitted Securitisations shall be deemed not
to be on a recourse basis));
(b) any amount raised pursuant to any note purchase facility or
the issue of bonds, notes, debentures, loan stock or any
similar instrument;
(c) the amount of any liability in respect of any lease or hire
purchase contract that would, in accordance with Spanish GAAP,
be treated as a Capital Lease;
(d) the deferred purchase price of assets or the deferred payment
of services, except trade accounts payable in the ordinary
course of business;
(e) obligations of a person under repurchase agreements for the
stock issued by such person or another person;
(f) obligations of a person with respect to product invoices
incurred in connection with exporting financing;
(g) all Financial Indebtedness of others secured by Security on
any asset of a person, regardless of whether such Financial
Indebtedness is assumed by such person in an amount equal to
the lower of (i) the net book value of such asset and (ii) the
amount secured thereby; and
(h) guarantees of Financial Indebtedness of other persons.
"GAAP" means, in relation to an Obligor, the generally accepted
accounting principles applying to it (i) in the country of its
incorporation; or (ii) in a jurisdiction agreed to by the Agent.
"Group" means the Borrower and its Subsidiaries for the time being.
"Guarantors" means the Original Guarantors and any Additional Guarantor
other than any such Original Guarantor or Additional Guarantor which
has ceased to be a Guarantor pursuant to Clause 25.3 (Resignation of a
Guarantor) and has not subsequently become an Additional Guarantor
pursuant to Clause 25.2 (Additional Guarantors) and "Guarantor" means
any of them.
"Hedging Agreements" means any hedging agreements entered into by any
Lender (whether internally with one of its own departments or
externally with a third party) in order to hedge its interest rate
exposure in relation to the calculation of the yen rate in accordance
with Schedule 13 (Defining the JPY Fix Rate) for Facility C.
"Holding Company" means, in relation to a company or corporation, any
other company or corporation in respect of which it is a Subsidiary.
"Information Memorandum" means the document in the form approved by the
Borrower concerning the Borrower and the Group which, at the Borrower's
request and on its behalf, was prepared in relation to this transaction
and distributed by the Arranger to selected financial institutions
before the date of this Agreement.
"Interest Period" means, in relation to a Loan, each period determined
in accordance with Clause 10 (Interest Periods) and, in relation to an
Unpaid Sum, each period determined in accordance with Clause 9.3
(Default interest).
"International Accounting Standards" means the accounting standards
approved by the International Accounting Standards Board from time to
time.
"Investment Grade" means a Rating assigned by S&P and Moody's of at
least BBB- and at least Baa3 respectively.
"Lender" means:
(a) any Original Lender; and
(b) any bank, financial institution, securitisation trust or fund
or other entity which has become a Party in accordance with
Clause 24 (Changes to the Lenders),
which in each case has not ceased to be a Party in accordance with the
terms of this Agreement.
"LIBOR" means, in relation to any Loan:
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for the currency or Interest
Period of that Loan) the rate calculated by way of
interpolation of the rates for the immediately preceding and
the immediately following periods for which a Screen Rate is
available; or
(c) (if no Screen Rate is available for the immediately preceding
and the immediately following periods) the arithmetic mean
(rounded upwards to four decimal places) as supplied to the
Agent at its request quoted by the Reference Banks to leading
banks in the London interbank market,
as of the Specified Time on the Quotation Day for the offering of
deposits in the currency of that Loan and for a period comparable to
the Interest Period for that Loan.
"LMA" means the Loan Market Association.
"Loan" means the Facility A Loan or a Facility B Loan or the Facility C
Loan.
"Majority Lenders" means:
(a) if there are no Loans then outstanding, a Lender or Lenders
whose Commitments aggregate more than 51% of the Total
Commitments (or, if the Total Commitments have been reduced to
zero, aggregated more than 51% of the Total Commitments
immediately prior to the reduction); or
(b) at any other time, a Lender or Lenders whose undrawn
Commitments and participations in the Loans then outstanding
aggregate more than 51% of all the undrawn Commitments and
Loans then outstanding.
For the purposes of aggregating Lenders' Commitments and participations
in Loans pursuant to this definition, any Facility A or Facility B
Commitments and any participations in Facility A or Facility B Loans
shall refer to their Base Currency Amount and any Facility C
Commitments and any participations in Facility C Loans shall be
converted into euro at the rate of exchange of 128.72 yens to EUR1.
"Mandatory Cost" means the percentage rate per annum calculated in
accordance with Schedule 4 (Mandatory Cost Formulae).
"Margin" means, subject to the proviso below, in respect of the
Facility A Loan and the Facility C Loan, 0.575 per cent. per annum,
and, in respect of a Facility B Loan, 0.350 per cent. per annum, but
if:
(a) no Default has occurred and is continuing; and
(b) the ratio of Net Borrowings to Adjusted EBITDA in respect of
the most recently completed Relevant Period (ending on or
after receipt by the Agent, pursuant to paragraph (a) (i) or
(b) of Clause 20.1 (Financial Statements), of the Borrower's
consolidated financial statements) is within the range set out
in Column 1 below,
then the Margin shall be the percentage rate per annum set out opposite
such range in Column 2 (in respect of the Facility A Loan or the
Facility C Loan) or Column 3 (in respect of a Facility B Loan).
Column 1 Column 2 Column 3
Net Borrowings to Facility A/C Margin (%) Facility B Margin (%)
Adjusted EBITDA
Equal to or greater than 2.6 0.650 0.425
Less than 1.6 0.500 0.275
and any change in the Margin shall take effect three Business Days
after receipt by the Agent of the Compliance Certificate for that
Relevant Period pursuant to Clause 20.2 (Compliance Certificate) and in
the case of a then current Interest Period will apply to the whole of
such Interest Period unless any payments of interest have already been
made in which case any adjustment to the Margin will apply only from
the date of such payment.
For the purpose of determining the Margin:
"Relevant Period", "Net Borrowings" and "Adjusted EBITDA" shall be
determined in accordance with Clause 21.1 (Financial Definitions).
"Material Adverse Effect" means a material adverse effect on:
(a) the business, condition (financial or otherwise) or operations
of the Group taken as a whole;
(b) the rights or remedies of any Finance Party under the Finance
Documents; or
(c) the ability of any Obligor to perform its obligations under
the Finance Documents.
"Material Subsidiary" means those companies set out in Schedule 12
(Material Subsidiaries) and any other Subsidiary of the Borrower:
(a) which becomes a Subsidiary of the Borrower after the date
hereof or acquires substantial assets or businesses after the
date hereof; and
(b) which:
(i) has total assets representing 5 per cent. or more of
the total consolidated assets of the Group; and/or
(ii) has revenues representing 5 per cent. or more of the
consolidated turnover of the Group,
in each case calculated on a consolidated basis and any Holding Company
of any such Subsidiary (save unless such company is a Guarantor
hereunder).
Compliance with the conditions set out in paragraphs (a) and (b) shall
be determined by reference to the most recent Compliance Certificate
supplied by the Borrower and/or the latest audited financial statements
of that Subsidiary (consolidated in the case of a Subsidiary which
itself has Subsidiaries) and the latest audited consolidated financial
statements of the Group, but if a Subsidiary has been acquired since
the date as at which the latest audited consolidated financial
statements of the Group were prepared, the financial statements shall
be adjusted in order to take into account the acquisition of that
Subsidiary (that adjustment being certified by the Group's auditors as
representing an accurate reflection of each of the respective revised
total assets and turnover of the Group).
A report by the auditors of the Borrower that a Subsidiary is a
Material Subsidiary shall, in the absence of manifest error, be
conclusive and binding on all Parties.
"Month" means a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next calendar month,
except that:
(a) if the numerically corresponding day is not a Business Day,
that period shall end on the next Business Day in that
calendar month in which that period is to end if there is one,
or if there is not, on the immediately preceding Business Day;
(b) if there is no numerically corresponding day in the calendar
month in which that period is to end, that period shall end on
the last Business Day in that calendar month.
The above rules will only apply to the last Month of any period.
"Moody's" means Moody's Investors Service Inc..
"Obligors" means the Borrower and the Guarantors and "Obligor" means
any of them.
"Optional Currency" means a currency (other than the Base Currency)
which complies with the conditions set out in Clause 4.3 (Conditions
relating to Optional Currencies).
"Original Financial Statements" means:
(a) in relation to the Borrower, its audited unconsolidated and
consolidated financial statements for its financial year ended
31 December 2002 and its unaudited unconsolidated and
consolidated financial statements for its financial year ended
31 December 2003; and
(b) in relation to each Guarantor, its respective audited
unconsolidated (and, to the extent available, its audited
consolidated) financial statements for its financial year
ended 31 December 2002 and unaudited unconsolidated (and, to
the extent available, its unaudited consolidated) financial
statements for its financial year ended 31 December 2003.
"Outlook" means the rating outlook of the Borrower with regard to the
Borrower's economic and/or fundamental business condition, as assigned
by S&P or Moody's.
"Participating Member State" means any member state of the European
Union that adopts or has adopted the euro as its lawful currency in
accordance with legislation of the European Union relating to Economic
and Monetary Union.
"Party" means a party to this Agreement.
"Permitted Securitisations" means a sale, transfer or other
securitisation of receivables and related assets by the Borrower or its
Subsidiaries, including a sale at a discount, provided that (i) such
receivables have been transferred, directly or indirectly, by the
originator thereof to a Special Purpose Vehicle in a manner that
satisfies the requirements for an absolute conveyance, and not merely a
pledge, under the laws and regulations of the jurisdiction in which
such originator is organised, (ii) such Special Purpose Vehicle issues
notes, certificates or other obligations which are to be repaid from
collections and other proceeds of such receivables and (iii) except for
customary representations, warranties, covenants and indemnities, such
sale, transfer or other securitisation is carried out on a non-recourse
basis.
"Qualifying Lender" means:
(a) any legal person or entity (including, for the avoidance of
doubt, any securitisation trust or fund) habitually resident
for taxation purposes in a Qualifying State which is not
acting through a territory considered as a tax haven pursuant
to Spanish laws and regulations (currently set out in Royal
Decree 1080/1991 of 5 July (Real Decreto 1080/1991 de 5 de
julio)) or through a permanent establishment in Spain; or
(b) any legal person or entity (including, for the avoidance of
doubt, any securitisation trust or fund) resident in a country
which, as a result of any applicable double taxation treaty,
would not require any payments made by the Borrower to such
financial institution hereunder to be subject to any deduction
or withholding in Spain; or
(c) any Domestic Lender.
"Qualifying State" means a member state of the European Union (other
than Spain).
"Quotation Day" means, in relation to any period for which an
interest rate is to be determined:
(a) (if the currency is euro) two TARGET Days before the first day
of that period; or
(b) (for any other currency) two Business Days before the first
day of that period,
unless market practice differs in the Relevant Interbank Market for a
currency, in which case the Quotation Day for that currency will be
determined by the Agent in accordance with market practice in the
Relevant Interbank Market (and if quotations would normally be given by
leading banks in the Relevant Interbank Market on more than one day,
the Quotation Day will be the last of those days).
"Rating" means at any time the solicited long term credit rating or the
senior implied rating of the Borrower or an issue of securities of or
guaranteed by the Borrower, where the rating is based primarily on the
senior unsecured credit risk of the Borrower and/or, in the case of the
senior implied rating, on the characteristics of any particular issue,
assigned by S&P or Moody's.
"Reference Banks" means Barclays Bank PLC, Credit Agricole Indosuez and
Deutsche Bank AG or such other banks as may be appointed by the Agent
in consultation with the Borrower.
"Relevant Interbank Market" means in relation to euro, the European
interbank market, and, in relation to any other currency, the London
interbank market.
"Repeating Representations" means each of the representations set out
in Clauses 19.1 (Status) to 19.6 (Governing law and enforcement),
Clause 19.9 (No default), paragraphs (a) and (b) of Clause 19.11
(Financial statements), Clause 19.13 (No proceedings pending or
threatened), Clause 19.14 (No winding up) and Clause 19.16 (Material
Adverse Change).
"Rollover Loan" means one or more Facility B Loans:
(a) made or to be made on the same day that a maturing Facility B
Loan is due to be repaid;
(b) the aggregate amount of which is equal to or less than the
maturing Facility B Loan;
(c) in the same currency as the maturing Facility B Loan (unless
it arose as a result of the operation of Clause 6.2
(Unavailability of a currency)); and
(d) made or to be made for the purpose of refinancing a maturing
Facility B Loan.
"S&P" means Standard and Poors Corporation.
"Screen Rate" means:
(a) in relation to LIBOR, the British Bankers' Association
Interest Settlement Rate for the relevant currency and period;
and
(b) in relation to EURIBOR, the percentage rate per annum
determined by the Banking Federation of the European Union for
the relevant period,
displayed on the appropriate page of the Reuters screen (being
currently EURIBOR01 for EURIBOR and LIBOR01 for LIBOR). If the agreed
page is replaced or service ceases to be available, the Agent may
specify another page or service displaying the appropriate rate after
consultation with the Borrower and the Lenders.
"Security" means a mortgage, charge, pledge, lien or other security
interest securing any obligation of any person or any other agreement
or arrangement having a similar effect.
"Selection Notice" means a notice substantially in the form set out in
Part II of Schedule 3 (Selection Notice) given in accordance with
Clause 10 (Interest Periods) or Clause 6.1 (Selection of Currency) in
relation to Facility A.
"Spanish Public Document" means any obligation in an Escritura Publica
or documento intervenido.
"Special Purpose Vehicle" means a securitisation trust or fund, limited
liability company, partnership or other special purpose person
established to implement a securitisation of receivables, provided that
the business of such person is limited to acquiring, servicing and
funding receivables and related assets and activities incidental
thereto.
"Specified Time" means a time determined in accordance with Schedule 10
(Timetables).
"Spot Rate of Exchange" means the spot rate of exchange displayed on
the appropriate page of the Reuters screen (being currently ECB37) of
the Reuters screen for the purchase of the relevant currency with the
Base Currency at or about 2:20 p.m. on a particular day.
"Stake" means a number of shares in any Group member held by another
Group member the disposal of which would cause the first Group member
to cease to be a Subsidiary of the second Group member.
"Subsidiary" means in relation to any company or corporation, a company
or corporation:
(a) which is controlled, directly or indirectly, by the first
mentioned company or corporation;
(b) more than half the issued share capital of which is
beneficially owned, directly or indirectly by the first
mentioned company or corporation; or
(c) which is a Subsidiary of another Subsidiary of the first
mentioned company or corporation,
and for this purpose, a company or corporation shall be treated as
being controlled by another if that other company or corporation is
able to direct its affairs and/or to control the composition of its
board of directors or equivalent body.
"TARGET" means Trans-European Automated Real-time Gross Settlement
Express Transfer payment system.
"TARGET Day" means any day on which TARGET is open for the settlement
of payments in euro.
"Tax" means any tax, levy, impost, duty or other charge or withholding
of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying any of the
same).
"Termination Date" means:
(a) in relation to Facility A, the day falling 60 Months after the
date of this Agreement;
(b) in relation to Facility B, the day falling 364 days after the
date of this Agreement or, in case of an extension, from the
Original Facility B Termination Date (as defined in Clause 4.5
(Extension Request)); and (c) in relation to Facility C, the
day falling 60 Months after the date of this Agreement.
"Total Commitments" means the aggregate of the Total Facility A
Commitments, the Total Facility B Commitments and the Total Facility C
Commitments. For the purposes of calculating such aggregate, the Total
Facility C Commitments shall be converted into euro at the rate of
128.72 yens to EUR1.
"Total Facility A Commitments" means the aggregate of the Facility A
Commitments, being EUR 150,000,000 at the date of this Agreement.
"Total Facility B Commitments" means the aggregate of the Facility B
Commitments, being EUR 100,000,000 at the date of this Agreement.
"Total Facility C Commitments" means the aggregate of the Facility C
Commitments, being (Y) 19,308,000,000 at the date of this Agreement.
"Transfer Certificate" means a certificate substantially in the form
set out in Schedule 5 (Form of Transfer Certificate) or any other form
agreed between the Agent and the Borrower.
"Transfer Date" means, in relation to a transfer, the date specified as
such in the relevant Transfer Certificate:
"Unpaid Sum" means any sum due and payable but unpaid by an Obligor
under the Finance Documents.
"Utilisation" means a utilisation of a Facility.
"Utilisation Date" means the date of a Utilisation, being the date on
which the relevant Loan is to be made.
"Utilisation Request" means a notice substantially in the form set out
in Part I of Schedule 3 (Utilisation Request).
"VAT" means value added tax as provided for in the Value Added Tax Act
1994 and any other tax of a similar nature.
"2001 Facility" means the EUR 800,000,000 revolving credit facility
dated 29 October 2001 entered into between Compania Valenciana de
Cementos Portland, S.A. as borrower, certain of its subsidiaries as
original guarantors and certain financial institutions as arrangers,
underwriters, agents and original lenders.
1.2 Construction
(a) Unless a contrary indication appears any reference in this
Agreement to:
(i) the "Agent", the "Arranger", any "Finance Party", any
"Lender", any "Obligor" or any "Party" shall be
construed so as to include its successors in title,
permitted assigns and permitted transferees;
(ii) "assets" includes present and future properties,
revenues and rights of every description;
(iii) a "Finance Document" or any other agreement or
instrument is a reference to that Finance Document or
other agreement or instrument as amended or novated;
(iv) "indebtedness" includes any obligation (whether
incurred as principal or as surety) for the payment
or repayment of money, whether present or future,
actual or contingent;
(v) a "person" includes any person, firm, company,
corporation, government, state or agency of a state
or any association, trust or partnership (whether or
not having separate legal personality) of two or more
of the foregoing;
(vi) a "regulation" includes any regulation, rule,
official directive, request or guideline (whether or
not having the force of law) of any governmental,
intergovernmental or supranational body, agency,
department or regulatory, self-regulatory or other
authority or organisation;
(vii) the "winding-up", "dissolution", "administration" or
"reorganisation" of a company or corporation shall be
construed so as to include any equivalent or
analogous proceedings (such as, in Spain, suspension
de pagos, quiebra, concurso or any other situacion
concursal) under the laws and regulations of the
jurisdiction in which such company or corporation is
incorporated or any jurisdiction in which such
company or corporation carries on business including
the seeking of liquidation, winding-up,
reorganisation, bankruptcy, dissolution,
administration, arrangement, adjustment, protection
or relief of debtors;
(viii) a provision of law is a reference to that provision
as amended or re-enacted; and
(ix) a time of day is a reference to Madrid time.
(b) Section, Clause and Schedule headings are for ease of
reference only.
(c) Unless a contrary indication appears, a term used in any other
Finance Document or in any notice given under or in connection
with any Finance Document has the same meaning in that Finance
Document or notice as in this Agreement.
(d) A Default (other than an Event of Default) is "continuing" if
it has not been remedied or waived and an Event of Default is
"continuing" if it has not been waived.
1.3 Currency Symbols and Definitions "$" and "dollars" denote lawful
currency of the United States of America, "EUR" and "euro" means the
single currency unit of the Participating Member States and "(Y)" and
"yen" denote lawful currency of Japan.
1.4 Third party rights A person who is not a Party has no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the
benefit of any term of this Agreement.
SECTION 2
THE FACILITIES
2. The Facilities
2.1 The Facilities
Subject to the terms of this Agreement, the Lenders make available to
the Borrower:
(a) a multicurrency term loan facility in an aggregate amount
equal to the Total Facility A Commitments;
(b) a multicurrency revolving loan facility in an aggregate amount
equal to the Total Facility B Commitments; and
(c) a yen term loan facility in an aggregate amount equal to the
Total Facility C Commitments.
2.2 Finance Parties' rights and obligations
(a) The obligations of each Finance Party under the Finance
Documents are several. Failure by a Finance Party to perform
its obligations under the Finance Documents does not affect
the obligations of any other Party under the Finance
Documents. No Finance Party is responsible for the obligations
of any other Finance Party under the Finance Documents.
(b) Except as otherwise stated in the Finance Documents, the
rights of each Finance Party under or in connection with the
Finance Documents are separate and independent rights and any
debt arising under the Finance Documents to a Finance Party
from an Obligor shall be a separate and independent debt.
(c) A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce its rights under the Finance
Documents.
3. Purpose
3.1 Purpose
The Borrower shall apply all amounts borrowed by it under each Facility first
towards repayment of the 2001 Facility and thereafter towards its general
corporate purposes and short term liquidity requirements.
3.2 Monitoring
No Finance Party is bound to monitor or verify the application of any amount
borrowed pursuant to this Agreement.
4. Conditions of Utilisation
4.1 Initial conditions precedent
The Borrower may not deliver a Utilisation Request unless the Agent has received
all of the documents and other evidence listed in Part I of Schedule 2
(Conditions Precedent to initial Utilisation). The Agent shall notify the
Borrower and the Lenders promptly upon receiving such documents.
4.2 Further conditions precedent
(a) The Lenders will only be obliged to comply with Clause 5.4
(Lenders' participation) if on the date of the Utilisation
Request and on the proposed Utilisation Date:
(i) in the case of a Rollover Loan, no Default is
continuing or would result from the proposed Loan
and, in the case of any other Loan, no Default is
continuing or would result from the proposed Loan;
and
(ii) the Repeating Representations to be made by each
Obligor are true in all material respects.
(b) The Lenders will only be obliged to comply with Clause 6.3
(Change of currency) if, on the first day of an Interest
Period, no Default is continuing or would result from the
change of currency and the Repeating Representations to be
made by each Obligor are true in all material respects.
(c) If only one but not both of the Facility A Loan and the
Facility C Loan have, as of the last day of the Availability
Period, been made, the Borrower shall on such day prepay the
entire amount of the Facility A Loan or, as the case may be,
the Facility C Loan.
4.3 Conditions relating to Optional Currencies
A currency will constitute an Optional Currency in relation to a Loan
if:
(a) it is readily available in the amount required and freely
convertible into the Base Currency in the Relevant Interbank
Market on the Quotation Day and the Utilisation Date for that
Loan; and
(b) it is dollars.
4.4 Maximum number of Loans
(a) The Borrower may not deliver a Utilisation Request if as a
result of the proposed Utilisation:
(i) two or more Facility A Loans would be outstanding; or
(ii) six or more Facility B Loans would be outstanding; or
(iii) two or more Facility C Loans would be outstanding.
(b) Any Loan made by a single Lender under Clause 6.2
(Unavailability of a currency) shall not be taken into account
in this Clause 4.4.
4.5 Extension Request
The Borrower shall be entitled to request an extension of Facility B,
for an additional period of 364 days, by giving notice to the Agent
(the "Extension Request") not more than 60 nor less than 30 days before
the Termination Date (in this Clause 4.5 the "Original Facility B
Termination Date"). Such notice shall be made in writing and shall be
unconditional and binding on the Borrower except as set out in Clause
4.9 (Revocation of Extension).
4.6 Notification of Extension Request
The Agent shall forward a copy of the Extension Request to the Lenders
as soon as practicable after receipt of it.
4.7 Lenders' Response to Extension Request
If a Lender, in its individual and sole discretion, agrees to the
extension requested by the Borrower, it shall give notice to the Agent
(a "Notice of Extension") (revocable only in the case mentioned in
Clause 4.9 (Revocation of Extension)) no later than 20 days prior to
the Original Facility B Termination Date. If a Lender does not give
such Notice of Extension by such date, then that Lender shall be deemed
to have refused that extension.
4.8 Lender's Discretion
Nothing shall oblige a Lender to agree to an Extension Request.
4.9 Revocation of Extension
If Lenders whose Facility B Commitments amount in aggregate to 50 per
cent. or less of the Total Facility B Commitments give Notices of
Extension, then the Extension Request will be deemed to have been
refused and the Agent shall notify the Borrower and Lenders
accordingly.
4.10 Extension Date
(a) The Original Facility B Termination Date shall be extended if
and when Lenders whose Facility B Commitments amount in
aggregate to more than 50 per cent. of the Total Facility B
Commitments have agreed to it by giving a Notice of Extension
and, provided that the Borrower has not withdrawn its
Extension Request on or before the date falling 10 days prior
to the Original Facility B Termination Date, the Original
Facility B Termination Date shall then be extended to the day
which is 364 days from (and including) the Original Facility B
Termination Date.
(b) If less than all the Lenders give a Notice of Extension, then
the Facility B Commitments shall be reduced to zero and the
share of any outstanding Loans of the Lenders which have not
agreed to the extension shall be fully repaid on the Original
Facility B Termination Date (and those Lenders shall cease
from that date to be Lenders in respect of Facility B under
this Agreement) and the amount of Facility B shall be reduced
accordingly.
4.11 Notification of Extension
The Agent shall promptly inform the Borrower and the Lenders which will
continue to remain party to this Agreement of the size of Facility B if
reduced.
SECTION 3
UTILISATION
5. Utilisation
5.1 Delivery of a Utilisation Request
The Borrower may utilise a Facility by delivery to the Agent of a duly
completed Utilisation Request not later than the Specified Time.
5.2 Completion of a Utilisation Request
(a) Each Utilisation Request is irrevocable and will not be
regarded as having been duly completed unless:
(i) it identifies the Facility to be utilised;
(ii) the proposed Utilisation Date is a Business Day
within the Availability Period applicable to that
Facility;
(iii) the currency and amount of the Utilisation comply
with Clause 5.3 (Currency and amount); and
(iv) the proposed Interest Period complies with Clause 10
(Interest Periods).
(b) Only one Loan may be requested in each Utilisation Request.
5.3 Currency and amount
(a) The currency specified in a Utilisation Request must be:
(i) in relation to the Facility A Loan or a Facility B
Loan, the Base Currency or the Optional Currency; and
(ii) in relation to the Facility C Loan, yen.
(b) In relation to the Facility A Loan or a Facility B Loan, the
amount of the proposed Loan must be:
(i) if the currency selected is the Base Currency:
(A) in the case of the Facility A Loan, EUR
150,000,000; and
(B) in the case of a Facility B Loan, a minimum
of EUR 20,000,000 and, if more, an integral
multiple of EUR 5,000,000 or, if less, the
Available Facility; or
(ii) if the currency selected is dollars:
(A) in the case of the Facility A Loan, the
equivalent in dollars at the Spot Rate of
Exchange at the Specified Time of EUR
150,000,000; and
(B) in the case of a Facility B Loan, a minimum
of the equivalent in dollars at the Spot
Rate of Exchange at the Specified Time of
EUR 20,000,000 and, if more, an integral
multiple of $5,000,000 or, if less, the
Available Facility; and
(iii) in any event such that its Base Currency Amount is
less than or equal to the Available Facility.
For the purposes of paragraph (b) (ii) above and in
respect of Facility B only, the Availability Facility
shall be calculated by deducting from the Total
Facility B Commitments the aggregate amount of all
outstanding Facility B Loans converted (to the extent
that any such Loans are denominated in Optional
Currencies) into the Base Currency at the Spot Rate
of Exchange at the Specified Time relating to the
delivery of the Utilisation Request.
(c) In relation to the Facility C Loan, the amount of the proposed
Loan must be(Y)19,308,000,000.
5.4 Lenders' participation
(a) If the conditions set out in this Agreement have been met,
each Lender shall make its participation in each Loan
available by the Utilisation Date through its Facility Office.
(b) The amount of each Lender's participation in each Loan will be
equal to the proportion borne by its Available Commitment to
the Available Facility immediately prior to making the Loan.
(c) The Agent shall determine the Base Currency Amount of each
Loan which is to be made in an Optional Currency and shall
notify each Lender of the amount, currency and the Base
Currency Amount of each Loan and the amount of its
participation in that Loan, in each case by the Specified
Time.
6. Optional Currencies
6.1 Selection of currency
(a) The Borrower shall select the currency of a Loan:
(i) (in the case of an initial Utilisation) in a
Utilisation Request; and
(ii) (afterwards in relation to a Facility A Loan made to
it) in a Selection Notice.
(b) If the Borrower fails to issue a Selection Notice in relation
to the Facility A Loan, the Loan will remain denominated for
its next Interest Period in the same currency in which it is
then outstanding.
(c) If the Borrower issues a Selection Notice requesting a change
of currency and the first day of the requested Interest Period
is not a Business Day for the new currency, the Agent shall
promptly notify the Borrower and the Lenders and the Loan will
remain in the existing currency (with Interest Periods running
from one Business Day until the next Business Day) until the
next day which is a Business Day for both currencies, on which
day the requested Interest Period will begin.
6.2 Unavailability of a currency
If before the Specified Time on any Quotation Day:
(a) a Lender notifies the Agent that the Optional Currency
requested is not readily available to it in the amount
required, and provides in writing an objectively justified
reason therefor; or
(b) a Lender notifies the Agent that compliance with its
obligation to participate in a Loan in the proposed Optional
Currency would contravene a law or regulation applicable to
it,
the Agent will give notice to the Borrower to that effect by the
Specified Time on that day. In this event, any Lender that gives notice
pursuant to this Clause 6.2 will be required to participate in the Loan
in the Base Currency (in an amount equal to that Lender's proportion of
the Base Currency Amount, or in respect of a Rollover Loan, an amount
equal to that Lender's proportion of the Base Currency Amount of the
Rollover Loan that is due to be made) and its participation will be
treated as a separate Loan denominated in the Base Currency during that
Interest Period.
6.3 Change of currency
If a Facility A Loan is to be denominated in different currencies
during two successive Interest Periods:
(a) if the currency for the second Interest Period is an Optional
Currency, the amount of the Loan in that Optional Currency
will be calculated by the Agent as the amount of that Optional
Currency equal to the Base Currency Amount of the Loan at the
Spot Rate of Exchange at the Specified Time;
(b) if the currency for the second Interest Period is the Base
Currency, the amount of the Loan will be equal to the Base
Currency Amount;
(c) the Borrower shall repay the Loan on the last day of the first
Interest Period in the currency in which it was denominated
for that Interest Period; and
(d) (subject to Clause 4.2 (Further conditions precedent)) the
Lenders shall re-advance the Loan in the new currency in
accordance with Clause 6.5 (Agent's calculations) on the last
day of the first Interest Period.
6.4 Same Optional Currency during successive Interest Periods - Facility A
(a) If a Facility A Loan is to be denominated in the same Optional
Currency during two successive Interest Periods, the Agent
shall calculate the amount of the Facility A Loan in the
Optional Currency for the second of those Interest Periods (by
calculating the amount of Optional Currency equal to the Base
Currency Amount of that Facility A Loan at the Spot Rate of
Exchange at the Specified Time) and (subject to paragraph (b)
below):
(i) if the amount calculated is less than the existing
amount of that Facility A Loan in the Optional
Currency during the first Interest Period, promptly
notify the Borrower and the Borrower shall pay, on
the last day of the first Interest Period, an amount
equal to the difference; or
(ii) if the amount calculated is more than the existing
amount of that Facility A Loan in the Optional
Currency during the first Interest Period, promptly
notify each Lender and, if no Default is continuing,
each Lender shall, on the last day of the first
Interest Period, pay its participation in an amount
equal to the difference.
(b) If the calculation made by the Agent pursuant to paragraph (a) above
shows that the amount of the Facility A Loan in the Optional Currency
for the second of those Interest Periods converted into the Base
Currency at the Spot Rate of Exchange at the Specified Time has
increased or decreased by less than 5 per cent. compared to its Base
Currency Amount (for the avoidance of doubt, taking into account any
payments made pursuant to paragraph (a) above) or that the Spot Rate of
Exchange at the Specified Time has increased or decreased by less than
5 per cent. compared to the Spot Rate of Exchange used either for the
initial calculation of the amount of the Facility A Loan in the
Optional Currency or, if a payment has been made in accordance with
paragraph (a) above, the Spot Rate of Exchange so used at such time, no
notification shall be made by the Agent and no payment shall be
required under paragraph (a) above.
6.5 Agent's calculations
(a) All calculations made by the Agent pursuant to this Clause 6 will take
into account any repayment or prepayment of Facility A Loans to be made
on the last day of the first Interest Period.
(b) Each Lender's participation in a Loan will, subject to paragraph (a)
above, be determined in accordance with paragraph (b) of Clause 5.4
(Lenders' participation).
SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
7. Repayment
7.1 Repayment of Facility A Loan
The Borrower shall repay the Facility A Loan in full on the Termination
Date.
7.2 Repayment of Facility B Loans
The Borrower shall repay each Facility B Loan on the last day of its
Interest Period. If such Loan is to be refinanced with a Rollover Loan,
the amount of each Loan required to be repaid shall be set off against
the amount of the applicable Rollover Loan.
7.3 Repayment of Facility C Loan
The Borrower shall repay the Facility C Loan in full on the Termination
Date.
8. Prepayment and cancellation
8.1 Illegality
If, at any time, it is or will become unlawful in any applicable
jurisdiction for a Lender to perform any of its obligations as
contemplated by this Agreement or to fund or maintain its participation
in any Loan:
(a) that Lender shall promptly notify the Agent upon becoming
aware of that event and in any event at a time which permits
the Borrower to repay that Lender's participation on the date
such repayment is required to be made);
(b) upon the Agent notifying the Borrower, the Commitment of that
Lender will be immediately cancelled; and
(c) the Borrower shall repay that Lender's participation in the
Loans made to the Borrower on the last day of the Interest
Period for each Loan occurring after the Agent has notified
the Borrower or, if earlier, the date specified by the Lender
in the notice delivered to the Agent.
8.2 Voluntary cancellation
The Borrower may, if it gives the Agent not less than five Business
Days' prior written notice, cancel the whole or any part (in the case
of Facility A and Facility B, being a minimum amount of EUR 15,000,000
and, if more, an integral multiple of EUR 5,000,000) of an Available
Facility. Any cancellation under this Clause 8.2 shall reduce the
Commitments of the Lenders rateably under that Facility. Cancellations
shall be made proportionally between Facility A and Facility C.
8.3 Voluntary prepayment of Facility A Loan
(a) The Borrower may, if it gives the Agent not less than five
Business Days' prior written notice, prepay the whole or any
part of the Facility A Loan (but, if in part, being an amount
that reduces the Base Currency Amount of the Facility A Loan
by a minimum amount of EUR 15,000,000 and, if more, an
integral multiple of EUR 5,000,000).
(b) The Facility A Loan may only be prepaid after the last day of
the Availability Period (or, if earlier, the day on which the
applicable Available Facility is zero).
8.4 Voluntary Prepayment of Facility B Loans
The Borrower may, if it gives the Agent not less than five Business
Days' prior written notice, prepay the whole or any part of a
Facility B Loan (but if in part, being an amount that reduces the
Base Currency Amount of the Facility B Loan by a minimum amount of
EUR 15,000,000 and, if more, an integral multiple of EUR 5,000,000).
8.5 Voluntary Prepayment of Facility C Loan
(a) The Borrower may, if it gives the Agent not less than five
Business Days' prior written notice, prepay the whole or any
part of the Facility C Loan.
(b) The Facility C Loan may only be prepaid after the last day of
the Availability Period (or, if earlier, the day on which the
applicable Available Facility is zero).
8.6 Right of repayment and cancellation in relation to a single Lender
(a) If:
(i) any sum payable to any Lender by an Obligor is
required to be increased under paragraph (c) of
Clause 13.2 (Tax gross-up); or
(ii) any Lender claims indemnification from the Borrower
under Clause 13.3 (Tax indemnity) or Clause 14.1
(Increased costs),
the Borrower may, whilst the circumstance giving rise to the
requirement or indemnification continues, give the Agent
notice of cancellation of the Commitment of that Lender and
its intention to procure the repayment of that Lender's
participation in the Loans.
(b) On receipt of a notice referred to in paragraph (a) above, the
Commitment of that Lender shall immediately be reduced to
zero.
(c) On the last day of each Interest Period which ends after the
Borrower has given notice under paragraph (a) above (or, if
earlier, the date specified by the Borrower in that notice),
the Borrower shall repay that Lender's participation in that
Loan provided that such repayment does not result in a Default
under this Agreement.
8.7 Restrictions
(a) Any notice of cancellation or prepayment given by any Party
under this Clause 8 shall be irrevocable and, unless a
contrary indication appears in this Agreement, shall specify
the date or dates upon which the relevant cancellation or
prepayment is to be made and the amount of that cancellation
or prepayment.
(b) Any prepayment under this Agreement shall be made together
with accrued interest on the amount prepaid and, subject to
any Break Costs, without premium or penalty.
(c) The Borrower may not reborrow any part of Facility A or
Facility C which is prepaid.
(d) Unless a contrary indication appears in this Agreement, any
part of Facility B which is prepaid may be reborrowed in
accordance with the terms of this Agreement.
(e) The Borrower shall not repay or prepay all or any part of the
Loans or cancel all or any part of the Commitments except at
the times and in the manner expressly provided for in this
Agreement.
(f) No amount of the Total Commitments cancelled under this
Agreement may be subsequently reinstated.
(g) If the Agent receives a notice under this Clause 8 it shall
promptly forward a copy of that notice to either the Borrower
or the affected Lender, as appropriate.
(h) Any profit received by a Lender as a result of terminating any
Hedging Agreements pursuant to a prepayment under this
Agreement shall be for the account of the Borrower. The exact
amount of such profit shall be calculated by the relevant
Lender and shall be justified in writing to the Borrower.
(i) Prepayments shall be made proportionally between Facility A
and Facility C.
SECTION 5
COSTS OF UTILISATION
9. Interest
9.1 Calculation of interest
(a) The rate of interest on the Facility A Loan and each Facility
B Loan for each Interest Period is the percentage rate per
annum which is the aggregate of the applicable:
(i) Margin;
(ii) LIBOR or, in relation to any Loan in euro, EURIBOR;
and
(iii) Mandatory Cost, if any.
(b) The rate of interest on the Facility C Loan for its Interest
Period is the percentage rate per annum which is the aggregate
of:
(i) The applicable Margin;
(ii) The rate determined in accordance with Schedule 13
(Defining the JPY Fix Rate); and
(iii) Mandatory Cost, if any.
9.2 Payment of interest
On the last day of each Interest Period relating to the Facility A Loan
and each Facility B Loan, the Borrower shall pay accrued interest on
the Loan to which that Interest Period relates (and, if the Interest
Period is longer than six Months, on the dates falling at six Monthly
intervals after the first day of the Interest Period). The Borrower
shall pay accrued interest on the Facility C Loan on the dates falling
at six Monthly intervals after the first day of its Interest Period
with the exception of the last interest payment which shall take place
on the Termination Date.
9.3 Default interest
(a) If an Obligor fails to pay any amount payable by it under a
Finance Document on its due date, interest shall accrue on the
overdue amount from the due date up to the date of actual
payment (both before and after judgment) at a rate which,
subject to paragraph (b) below, is two per cent higher than
the rate which would have been payable if the overdue amount
had, during the period of non-payment, constituted a Loan in
the currency of the overdue amount for successive Interest
Periods, each of a duration of one Month. Any interest
accruing under this Clause 9.3 shall be immediately payable by
the Obligor on demand by the Agent.
(b) If any overdue amount consists of all or part of a Loan which
became due on a day which was not the last day of an Interest
Period relating to that Loan:
(i) the first Interest Period for that overdue amount
shall have a duration equal to the unexpired portion
of the current Interest Period relating to that Loan;
and
(ii) the rate of interest applying to the overdue amount
during that first Interest Period shall be two per
cent. higher than the rate which would have applied
if the overdue amount had not become due.
(c) Default interest (if unpaid) arising on an overdue amount will
be compounded with the overdue amount at the end of each
Interest Period applicable to that overdue amount but will
remain immediately due and payable.
9.4 Notification of rates of interest
The Agent shall promptly notify the Lenders and the Borrower of the
determination of a rate of interest under this Agreement.
10. Interest Periods
10.1 Selection of Interest Periods
(a) The Borrower may select an Interest Period for a Loan other
than the Facility C Loan in the Utilisation Request for that
Loan or (if the Loan has already been borrowed) in a Selection
Notice.
(b) Each Selection Notice for the Facility A Loan is irrevocable
and must be delivered to the Agent by the Borrower not later
than the Specified Time.
(c) If the Borrower fails to deliver a Selection Notice to the
Agent in accordance with paragraph (b) above, the relevant
Interest Period will be one Month.
(d) Subject to this Clause 10, the Borrower may select an Interest
Period of:
(i) in the case of the Facility A Loan, one, two, three
or six Months; and
(ii) in the case of a Facility B Loan, one or two weeks or
one, two, three or six Months provided that periods
of less than one Month may only be selected three
times or less
or any other period agreed between the Borrower and the Agent
(acting on the instructions of all the Lenders).
(e) An Interest Period for a Loan shall not extend beyond the
Termination Date applicable to its Facility.
(f) Each Interest Period for the Facility A Loan shall start on
the Utilisation Date or (if already made) on the last day of
its preceding Interest Period.
(g) A Facility B Loan has one Interest Period only.
(h) The Facility C Loan has one Interest Period starting on the
Utilisation Date and ending on the Termination Date.
10.2 Non-Business Days
If an Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period will instead end on the next
Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not).
11. Changes to the calculation of interest
11.1 Absence of quotations
Subject to Clause 11.2 (Market disruption), if LIBOR or, if applicable,
EURIBOR is to be determined by reference to the Reference Banks but a
Reference Bank does not supply a quotation by the Specified Time on the
Quotation Day, the applicable LIBOR or EURIBOR shall be determined on
the basis of the quotations of the remaining Reference Banks.
11.2 Market disruption
(a) If a Market Disruption Event occurs in relation to a Loan for
any Interest Period, then the rate of interest on each
Lender's share of that Loan for the Interest Period shall be
the rate per annum which is the sum of:
(i) the Margin;
(ii) the rate notified to the Agent by that Lender as soon
as practicable and in any event before interest is
due to be paid in respect of that Interest Period, to
be that which expresses as a percentage rate per
annum the cost to that Lender of funding its
participation in that Loan from whatever source it
may reasonably select; and
(iii) the Mandatory Cost, if any, applicable to that
Lender's participation in the Loan.
(b) In this Agreement "Market Disruption Event" means:
(i) at or about noon on the Quotation Day for the
relevant Interest Period the Screen Rate is not
available and none or only one of the Reference Banks
supplies a rate to the Agent to determine LIBOR or,
if applicable, EURIBOR for the relevant currency and
Interest Period; or
(ii) before close of business in London on the Quotation
Day for the relevant Interest Period, the Agent
receives notifications from a Lender or Lenders
(whose participations in a Loan exceed 50 per cent.
of that Loan) that the cost to it of obtaining
matching deposits in the Relevant Interbank Market
would be in excess of LIBOR or, if applicable,
EURIBOR.
11.3 Alternative basis of interest or funding
(a) If a Market Disruption Event occurs and the Agent or the
Borrower so requires, the Agent and the Borrower shall enter
into negotiations (for a period of not more than thirty days)
with a view to agreeing a substitute basis for determining the
rate of interest.
(b) Any alternative basis agreed pursuant to paragraph (a) above
shall, with the prior consent of all the Lenders and the
Borrower, be binding on all Parties.
11.4 Break Costs
(a) The Borrower shall, within three Business Days of demand by a
Finance Party, pay to that Finance Party its Break Costs
attributable to all or any part of a Loan or Unpaid Sum being
paid by the Borrower on a day other than the last day of an
Interest Period for that Loan or Unpaid Sum.
(b) Each Lender shall, as soon as reasonably practicable after a
demand by the Agent, provide a certificate confirming the
amount of its Break Costs for any Interest Period in which
they accrue.
12. Fees
12.1 Arrangement fee
The Borrower shall pay to the Arranger an arrangement fee in the amount
and at the times agreed in a Fee Letter.
12.2 Facility fee
The Borrower shall pay to the Agent (for the account of each Original
Lender) a fee in euro computed at the rate of 0.05 per cent. of each
Original Lender's Facility B Commitment, payable within 15 Business
Days of the date of this Agreement.
12.3 Agency fee
The Borrower shall pay to the Agent (for its own account) an agency fee
in the amount and at the times agreed in a Fee Letter.
12.4 Extension fee
If Facility B is extended, the Borrower shall pay to the Agent (for the
account of each Lender extending under Facility B) a fee in euro
computed at the rate of 0.075 per cent. of each Lender's Facility B
Commitment on the date of such extension, payable within 15 Business
Days of such extension.
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
13. Tax Gross Up and Indemnities
13.1 Definitions
(a) In this Agreement:
"Protected Party" means a Finance Party which is or will be
subject to any liability, or required to make any payment, for
or on account of Tax in relation to a sum received or
receivable (or any sum deemed for the purposes of Tax to be
received or receivable) under a Finance Document.
"Tax Deduction" means a deduction or withholding for or on
account of Tax from a payment under a Finance Document.
"Tax Payment" means either the increase in a payment made by
an Obligor to a Finance Party under Clause 13.2 (Tax gross-up)
or a payment under Clause 13.3 (Tax indemnity).
(b) Unless a contrary indication appears, in this Clause 13 a
reference to "determines" or "determined" means a
determination made in the absolute discretion of the person
making the determination.
13.2 Tax gross-up
(a) Each Obligor shall make all payments to be made by it without
any Tax Deduction, unless a Tax Deduction is required by law
or regulation.
(b) The Borrower or a Lender shall promptly upon becoming aware
that an Obligor must make a Tax Deduction (or that there is
any change in the rate or the basis of a Tax Deduction) notify
the Agent accordingly. If the Agent receives such notification
from a Lender it shall notify the Borrower and that Obligor.
(c) If a Tax Deduction is required by law or regulation to be made
by an Obligor, the amount of the payment due from that Obligor
shall be increased to an amount which (after making any Tax
Deduction) leaves an amount equal to the payment which would
have been due if no Tax Deduction had been required.
(d) If an Obligor is required to make a Tax Deduction, that
Obligor shall make that Tax Deduction and any payment required
in connection with that Tax Deduction within the time allowed
and in the minimum amount required by law or regulation.
(e) Within thirty days of making either a Tax Deduction or any
payment required in connection with that Tax Deduction, the
Obligor making that Tax Deduction shall deliver to the Agent
for the Finance Party entitled to the payment an original
receipt (or certified copy thereof) or if unavailable such
other evidence as is reasonably satisfactory to that Finance
Party that the Tax Deduction has been made or (as applicable)
any appropriate payment paid to the relevant taxing authority.
13.3 Tax indemnity
(a) The Borrower shall (within three Business Days of demand by
the Agent) pay to a Protected Party an amount equal to the
amount of any Tax assessed on that Protected Party (together
with any interest, costs or expenses payable, directly or
indirectly, or incurred in connection therewith) in relation
to a sum received or receivable (or any sum deemed for the
purposes of Tax to be received or receivable) under a Finance
Document.
(b) Paragraph (a) of this Clause 13.3 above shall not apply with
respect to any Tax assessed on a Finance Party:
(i) under the laws and regulations of the jurisdiction in
which that Finance Party is incorporated or, if
different, the jurisdiction (or jurisdictions) in
which that Finance Party is treated as resident for
tax purposes; or
(ii) under the laws and regulations of the jurisdiction in
which that Finance Party's Facility Office is located
in respect of amounts received or receivable in that
jurisdiction,
if that Tax is imposed on or calculated by reference to the
net income (but not on any sum deemed to be received or
receivable in respect of any payment made under Clause 13.2
(Tax gross-up)) of that Finance Party.
(c) A Protected Party making, or intending to make a claim
pursuant to Paragraph (a) of this Clause 13.3 shall promptly
notify the Agent of the event which will give, or has given,
rise to the claim, following which the Agent shall notify the
Borrower.
(d) A Protected Party shall, on receiving a payment from an
Obligor under this Clause 13.3, notify the Agent.
13.4 Tax Certificates
(a) Without prejudice to the other provisions of this Clause 13,
in relation to any exemption from or application of a rate
lower than that of general application pursuant to any
legislation in Spain or any double taxation treaty, or
pursuant to any other cause relating to residence status, any
Lender which is not a Domestic Lender shall supply the
Borrower, through the Agent, prior to the interest payment
date with a certificate of residence issued by the pertinent
fiscal administration, in the case of a Qualifying Lender
which is not a Domestic Lender, accrediting such Qualifying
Lender as resident for tax purposes in a Qualifying State or,
as the case may be, accrediting such Lender as resident for
tax purposes in a State which has signed and ratified a double
taxation treaty with Spain.
(b) As such certificates referred to in Paragraph (a) of this
Clause 13.4 are, at the date hereof, only valid for a period
of one year, each such Lender will be required to so supply a
further such certificate upon expiry of the previous
certificate in relation to any further payment of interest.
13.5 Stamp taxes
The Borrower shall pay and, within three Business Days of demand,
indemnify each Finance Party against any cost, loss or liability that
Finance Party incurs in relation to all stamp duty, registration and
other similar Taxes payable in respect of any Finance Document.
13.6 Value added tax
(a) All consideration expressed to be payable under a Finance
Document by any Party to a Finance Party shall be deemed to be
exclusive of any VAT. If VAT is chargeable on any supply made
by any Finance Party to any Party in connection with a Finance
Document, that Party shall pay to the Finance Party (in
addition to and at the same time as paying the consideration)
an amount equal to the amount of the VAT.
(b) Where a Finance Document requires any Party to reimburse a
Finance Party for any costs or expenses, that Party shall also
at the same time pay and indemnify the Finance Party against
all VAT incurred by the Finance Party in respect of the costs
or expenses to the extent that the Finance Party reasonably
determines that it is not entitled to credit or repayment of
the VAT.
14. Increased costs
14.1 Increased costs
(a) Subject to Clause 14.3 (Exceptions) the Borrower shall, within
three Business Days of a demand by the Agent, pay for the
account of a Finance Party the amount of any Increased Costs
incurred by that Finance Party or any of its Affiliates as a
result of (i) the introduction of or any change in (or in the
interpretation, administration or application of) any law or
regulation (including any change in the Mandatory Cost from
that existing at the date of this Agreement) or (ii)
compliance with any law or regulation made after the date of
this Agreement.
(b) In this Agreement "Increased Costs" means:
(i) a reduction in the rate of return from the Facility
or on a Finance Party's (or its Affiliate's) overall
capital;
(ii) an additional or increased cost; or
(iii) a reduction of any amount due and payable under any
Finance Document,
which is incurred or suffered by a Finance Party or any of its
Affiliates to the extent that it is attributable to that
Finance Party having entered into its Commitment or funding or
performing its obligations under any Finance Document.
14.2 Increased cost claims
(a) A Finance Party intending to make a claim pursuant to Clause
14.1 (Increased costs) shall notify the Agent of the event
giving rise to the claim, following which the Agent shall
promptly notify the Borrower.
(b) Each Finance Party shall, as soon as practicable after a
demand by the Agent, provide a certificate confirming the
amount of its Increased Costs.
14.3 Exceptions
(a) Clause 14.1 (Increased costs) does not apply to the extent any
Increased Cost is:
(i) attributable to a Tax Deduction required by law or
regulation to be made by an Obligor;
(ii) compensated for by Clause 13.3 (Tax indemnity) (or
would have been compensated for under Clause 13.3
(Tax indemnity) but was not so compensated solely
because any of the exclusions in paragraph (b) of
Clause 13.3 (Tax indemnity) applied);
(iii) compensated for by the payment of the Mandatory Cost;
or
(iv) attributable to the wilful breach by the relevant
Finance Party or its Affiliates of any law or
regulation.
(b) In this Clause 14.3, a reference to a "Tax Deduction" has the
same meaning given to the term in Clause 13.1 (Definitions).
15. Other indemnities
15.1 Currency indemnity
(a) If any sum due from an Obligor under the Finance Documents (a
"Sum"), or any order, judgment or award given or made in
relation to a Sum, has to be converted from the currency (the
"First Currency") in which that Sum is payable into another
currency (the "Second Currency") for the purpose of:
(i) making or filing a claim or proof against that
Obligor;
(ii) obtaining or enforcing an order, judgment or award in
relation to any litigation or arbitration
proceedings,
that Obligor shall as an independent obligation, within three
Business Days of demand, indemnify each Finance Party to whom
that Sum is due against any cost, loss or liability arising
out of or as a result of the conversion including any
discrepancy between (A) the rate of exchange used to convert
that Sum from the First Currency into the Second Currency and
(B) the rate or rates of exchange available to that person at
the time of its receipt of that Sum.
(b) Each Obligor waives any right it may have in any jurisdiction
to pay any amount under the Finance Documents in a currency or
currency unit other than that in which it is expressed to be
payable.
15.2 Other indemnities
Each Obligor shall, within five Business Days of demand, indemnify each
Finance Party against any cost, loss or liability not otherwise
compensated under the provisions of this Agreement and excluding any
lost profits, consequential or indirect damages (other than interest or
default interest) incurred by that Finance Party as a result of its
Commitment or the making of any Loan under the Finance Documents as a
result of:
(a) the occurrence of any Event of Default;
(b) a failure by an Obligor to pay any amount due under a Finance
Document on its due date, including without limitation, any
cost, loss or liability arising as a result of Clause 28
(Sharing among the Finance Parties);
(c) funding, or making arrangements to fund, its participation in
a Loan requested by a Borrower in a Utilisation Request but
not made by reason of the operation of any one or more of the
provisions of this Agreement (other than by reason of default
or negligence by that Finance Party alone); or
(d) a Loan (or part of a Loan) not being prepaid in accordance
with a notice of prepayment given by the Borrower.
15.3 Indemnity to the Agent
The Borrower shall promptly indemnify the Agent against any cost, loss
or liability directly related to this Agreement incurred by the Agent
(acting reasonably and otherwise than by reason of the Agent's gross
negligence or wilful misconduct) as a result of:
(a) investigating any event which it reasonably believes (acting
prudently and, if possible, following consultation with the
Borrower) is a Default; or
(b) acting or relying on any notice, request or instruction which
it reasonably believes to be genuine, correct and
appropriately authorised.
16. Mitigation by the Lenders
16.1 Mitigation
(a) Each Finance Party shall, in consultation with the Borrower,
take all reasonable steps to mitigate any circumstances which
arise after the date of this Agreement and which would result
in any amount becoming payable under or pursuant to, or
cancelled pursuant to, any of Clause 8.1 (Illegality), Clause
13 (Tax gross-up and indemnities), Clause 14 (Increased costs)
or paragraph 3 of Schedule 4 (Mandatory Cost Formulae)
including (but not limited to) transferring its rights and
obligations under the Finance Documents to another Affiliate
or Facility Office.
(b) Paragraph (a) above does not in any way limit the obligations
of any Obligor under the Finance Documents.
16.2 Limitation of liability
(a) The Borrower shall indemnify each Finance Party for all costs
and expenses reasonably incurred by that Finance Party as a
result of steps taken by it under Clause 16.1 (Mitigation).
(b) A Finance Party is not obliged to take any steps under Clause
16.1 (Mitigation) if, in the opinion of that Finance Party
(acting reasonably), to do so might be prejudicial to it.
17. Costs and expenses
17.1 Transaction expenses
The Borrower shall promptly on demand pay the Agent and the Arranger
the amount of all costs and expenses (including legal fees and fees
relating to publicity which has been approved by the Borrower)
reasonably incurred by any of them in connection with the negotiation,
preparation, printing, execution and syndication of:
(a) this Agreement and any other documents referred to in this
Agreement; and
(b) any other Finance Documents executed after the date of this
Agreement.
17.2 Amendment costs
If (a) an Obligor requests an amendment, waiver or consent or (b) an
amendment is required pursuant to Clause 29.9 (Change of currency), the
Borrower shall, within three Business Days of demand, reimburse the
Agent, the Arranger and each Lender for the amount of all costs and
expenses (including legal fees, but in this case, only the legal fees
of one law firm in each relevant jurisdiction acting on behalf of all
the Lenders) reasonably incurred by such parties in responding to,
evaluating, negotiating or complying with that request or requirement.
17.3 Enforcement costs
The Borrower shall, within three Business Days of demand, pay to each
Finance Party the amount of all costs and expenses (including legal
fees) incurred by that Finance Party in connection with the enforcement
of, or the preservation of any rights under, any Finance Document.
SECTION 7
GUARANTEE
18. Guarantee and indemnity
18.1 Guarantee and indemnity
Each Guarantor irrevocably and unconditionally jointly and severally:
(a) guarantees to each Finance Party punctual performance by the
Borrower of all the Borrower's obligations under the Finance
Documents;
(b) undertakes with each Finance Party that whenever the Borrower
does not pay any amount when due under or in connection with
any Finance Document, it shall immediately on demand pay that
amount as if it was the principal obligor; and
(c) indemnifies each Finance Party immediately on demand against
any cost, loss or liability suffered by that Finance Party if
any obligation guaranteed by it is or becomes unenforceable,
invalid or illegal. The amount of the cost, loss or liability
shall be equal to the amount which that Finance Party would
otherwise have been entitled to recover.
18.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the
ultimate balance of sums payable by the Borrower under the Finance
Documents, regardless of any intermediate payment or discharge in whole
or in part.
18.3 Reinstatement
If any payment by the Borrower or any discharge given by a Finance
Party (whether in respect of the obligations of the Borrower or any
security for those obligations or otherwise) is avoided or reduced as a
result of insolvency or any similar event:
(a) the liability of the Borrower shall continue as if the
payment, discharge, avoidance or reduction had not occurred;
and
(b) each Finance Party shall be entitled to recover the value or
amount of that security or payment from the Borrower, as if
the payment, discharge, avoidance or reduction had not
occurred.
18.4 Waiver of defences
The obligations of each Guarantor under this Clause 18 will not be
affected by an act, omission, matter or thing which, but for this
Clause, would reduce, release or prejudice any of its obligations under
this Clause 18 (without limitation and whether or not known to it or
any Finance Party) including:
(a) any time, waiver or consent granted to, or composition with,
the Borrower or other person;
(b) the release of the Borrower or any other person under the
terms of any composition or arrangement with any creditor of
any member of the Group;
(c) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, the
Borrower or other person or any non-presentation or
non-observance of any formality or other requirement in
respect of any instrument or any failure to realise the full
value of any security;
(d) any incapacity or lack of power, authority or legal
personality of or dissolution or change in the members or
status of the Borrower or any other person;
(e) any amendment (however fundamental) or replacement of a
Finance Document or any other document or security;
(f) any unenforceability, illegality or invalidity of any
obligation of any person under any Finance Document or any
other document or security; or
(g) any insolvency or similar proceedings.
18.5 Immediate recourse
Each Guarantor waives any right it may have of first requiring any
Finance Party (or any trustee or agent on its behalf) to proceed
against or enforce any other rights or security or claim payment from
any person before claiming from a Guarantor under this Clause 18. This
waiver applies irrespective of any law or regulation or any provision
of a Finance Document to the contrary.
18.6 Appropriations
Until all amounts which may be or become payable by the Borrower under
or in connection with the Finance Documents have been irrevocably paid
in full, each Finance Party (or any trustee or agent on its behalf)
may:
(a) refrain from applying or enforcing any other moneys, security
or rights held or received by that Finance Party (or any
trustee or agent on its behalf) in respect of those amounts,
or apply and enforce the same in such manner and order as it
sees fit (whether against those amounts or otherwise) and no
Guarantor shall be entitled to the benefit of the same; and
(b) hold in an interest-bearing suspense account any moneys
received from a Guarantor or on account of such Guarantor's
liability under this Clause 18.
18.7 Deferral of Guarantors' rights
Until all amounts which may be or become payable by the Borrower under
or in connection with the Finance Documents have been irrevocably paid
in full and unless the Agent otherwise directs, no Guarantor will
exercise any rights which it may have by reason of performance by it of
its obligations under the Finance Documents:
(a) to be indemnified by the Borrower;
(b) to claim any contribution from any other guarantor of the
Borrower's obligations under the Finance Documents; and/or
(c) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Finance Parties
under the Finance Documents or of any other guarantee or
security taken pursuant to, or in connection with, the Finance
Documents by any Finance Party.
18.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by
any other guarantee or security now or subsequently held by any Finance
Party.
SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
19. Representations
Each Obligor makes the representations and warranties set out in this
Clause 19 to each Finance Party on the date of this Agreement.
19.1 Status
(a) It is a corporation, duly organised and validly existing under
the laws and regulations of its jurisdiction of incorporation.
(b) It has the power to own its assets and carry on its business
as it is being conducted.
19.2 Binding obligations
The obligations expressed to be assumed by it in each Finance Document
are, subject to any reservations which are specifically referred to in
any legal opinion delivered pursuant to Clause 4 (Conditions of
Utilisation), legal, valid, binding and enforceable obligations.
19.3 Non-conflict with other obligations
The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not and will not conflict
with:
(a) any law or regulation applicable to it;
(b) its constitutional documents; or
(c) any agreement or instrument binding upon it or any of its
assets.
19.4 Power and authority
It has the power to enter into, perform and deliver, and has taken all
necessary action to authorise its entry into, performance and delivery
of, the Finance Documents to which it is a party and the transactions
contemplated by those Finance Documents.
19.5 Validity and admissibility in evidence
All Authorisations required or desirable:
(a) to enable it lawfully to enter into, exercise its rights and
comply with its obligations in the Finance Documents to which
it is a party; and
(b) to make the Finance Documents to which it is a party
admissible in evidence in its jurisdiction of incorporation,
(c) have been obtained or effected and are in full force and
effect.
19.6 Governing law and enforcement
(a) The choice of English law as the governing law of the Finance
Documents will be recognised and enforced in its jurisdiction
of incorporation.
(b) Any judgment obtained in England in relation to a Finance
Document will be recognised and enforced in its jurisdiction
of incorporation, subject to any reservations which are
specifically referred to in any legal opinion delivered
pursuant to Clause 4 (Conditions of Utilisation).
19.7 Deduction of Tax
It is not required under the laws and regulations of its jurisdiction
of incorporation to make any deduction for or on account of Tax from
any payment it may make under any Finance Document to any Qualifying
Lender.
19.8 No filing or stamp taxes
Under the laws and regulations of its jurisdiction of incorporation it
is not necessary that the Finance Documents be filed, recorded or
enrolled with any court or other authority in that jurisdiction or that
any stamp, registration or similar tax be paid on or in relation to the
Finance Documents or the transactions contemplated by the Finance
Documents.
19.9 No default
(a) No Default or Event of Default is continuing or might
reasonably be expected to result from the making of any
Utilisation.
(b) No other event or circumstance is outstanding which
constitutes a default under any other agreement or instrument
which is binding on it or any of its Subsidiaries or to which
its (or its Subsidiaries') assets are subject which might have
a Material Adverse Effect.
19.10 No misleading information
(a) Any factual information provided by the Borrower for the
purposes of the Information Memorandum was true and accurate
in all material respects as at the date it was provided or as
at the date (if any) at which it is stated.
(b) The financial projections contained in the Information
Memorandum have been prepared in good faith on the basis of
recent historical information and on the basis of the
assumptions stated therein, which assumptions were fair in the
light of conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, the
Borrower's best estimate of its future performance.
(c) Nothing has occurred or been omitted from the Information
Memorandum and no information has been given or withheld that
results in the information contained in the Information
Memorandum being untrue or misleading in any material respect.
(d) All written information (other than the Information
Memorandum) supplied by any member of the Group is true,
complete and accurate in all material respects as at the date
it was given and is not misleading in any respect.
19.11 Financial statements
(a) Its Original Financial Statements were prepared in accordance
with GAAP consistently applied and are complete and accurate
in all material respects.
(b) Its Original Financial Statements fairly represent its
financial condition and operations during the relevant
financial year.
(c) For the purposes of any repetition of the representation
contained in paragraphs (a) and (b) of this Clause 19.11
(pursuant to Clause 19.17 (Repetition)) the representations
will be made in respect of the latest consolidated financial
statements of each Obligor instead of the Original Financial
Statements.
19.12 Pari passu ranking
Its payment obligations under the Finance Documents rank at least pari
passu with the claims of all its other unsecured and unsubordinated
creditors, except for obligations mandatorily preferred by law or
regulation applying to companies generally.
19.13 No proceedings pending or threatened
No litigation, arbitration or administrative proceedings of or before
any court, arbitral body or agency which would be reasonably likely to
have a Material Adverse Effect or purports to affect the legality,
validity or enforceability of any of the obligations under the Finance
Documents have been started or threatened against any Obligor or any
Material Subsidiary.
19.14 No winding-up
No legal proceedings or other procedures or steps have been taken or
are threatening in relation to the winding-up, dissolution,
administration or reorganisation of any Obligor or Material Subsidiary
(other than a solvent liquidation or reorganisation of any Material
Subsidiary which is not an Obligor).
19.15 Security
It is in compliance with its obligations under Clause 22.6 (Negative
pledge).
19.16 Material Adverse Change
There has been no material adverse change in the Borrower's business,
condition (financial or otherwise), operations, performance or assets
taken as a whole (or the business, consolidated condition (financial or
otherwise) operations, performance or the assets generally of the Group
taken as a whole) since its Original Financial Statements.
19.17 Environmental compliance
Each member of the Group has performed and observed in all material
respects all Environmental Law, Environmental Permits and all other
material covenants, conditions, restrictions or agreements directly or
indirectly concerned with any contamination, pollution or waste or the
release or discharge of any toxic or hazardous substance in connection
with any real property which is or was at any time owned, leased or
occupied by any member of the Group or on which any member of the Group
has conducted any activity where failure to do so might reasonably be
expected to have a Material Adverse Effect.
19.18 Environmental Claims
No Environmental Claim has been commenced or (to the best of its
knowledge and belief) is threatened against any member of the Group
where that claim would be reasonably likely, if determined against that
member of the Group to have a Material Adverse Effect.
19.19 No Immunity
In any proceedings taken in its jurisdiction of incorporation in
relation to this Agreement, it will not be entitled to claim for itself
or any of its assets immunity from suit, execution, attachment or other
legal process.
19.20 Private and commercial acts
Its execution of the Finance Documents constitutes, and its exercise of
its rights and performance of its obligations hereunder will
constitute, private and commercial acts done and performed for private
and commercial purposes.
19.21 Repetition
The Repeating Representations are deemed to be made by each Obligor (by
reference to the facts and circumstances then existing) on the date of
each Utilisation Request and the first day of each Interest Period.
20. Information undertakings
The undertakings in this Clause 20 remain in force from the date of
this Agreement for so long as any amount is outstanding under the
Finance Documents or any Commitment is in force.
20.1 Financial statements
The Borrower shall supply to the Agent in sufficient copies for all the
Lenders:
(a) as soon as the same become available, but in any event within
180 days after the end of each of such Obligor's respective
financial years:
(i) the Borrower's audited consolidated and
unconsolidated financial statements for that
financial year; and
(ii) each Guarantor's respective audited consolidated (to
the extent available) and unconsolidated financial
statements for that financial year; and
(b) as soon as the same become available, but in any event within
90 days after the end of each half of each of its financial
years, its consolidated and unconsolidated financial
statements for that financial half year.
20.2 Compliance Certificate
(a) The Borrower shall supply to the Agent, with each set of
consolidated financial statements delivered pursuant to
paragraphs (a) (i) and (b) of Clause 20.1 (Financial
statements), a Compliance Certificate setting out (in
reasonable detail) computations as to compliance with Clause
21 (Financial Covenants) as at the date as at which those
financial statements were drawn up.
(b) Each Compliance Certificate shall be signed by an Authorised
Signatory of the Borrower and, if required to be delivered
with the consolidated financial statements delivered pursuant
to paragraph (a) (i) of Clause 20.1 (Financial statements), by
the Borrower's auditors.
20.3 Requirements as to financial statements
(a) Each set of financial statements delivered by the Borrower
pursuant to Clause 20.1 (Financial statements) shall be
certified by an Authorised Signatory of the relevant company
as fairly representing its financial condition as at the date
as at which those financial statements were drawn up.
(b) The Borrower shall procure that each set of financial
statements delivered pursuant to Clause 20.1 (Financial
statements) is prepared using GAAP and accounting practices
and financial reference periods consistent with those applied
in the preparation of the audited Original Financial
Statements for that Obligor unless, in relation to any set of
financial statements, it notifies the Agent that there has
been a change in GAAP, or the accounting practices or
reference periods and, unless amendments are agreed in
accordance with paragraph (c) of this Clause 20.3, its
auditors (or, if appropriate, the auditors of the Obligor)
deliver to the Agent:
(i) a description of any change necessary for those
financial statements to reflect the GAAP, accounting
practices and reference periods upon which that
Obligor's audited Original Financial Statements were
prepared; and
(ii) sufficient information, in form and substance as may
be reasonably required by the Agent, to enable the
Lenders to determine whether Clause 21 (Financial
covenants) has been complied with and make an
accurate comparison between the financial position
indicated in those financial statements and that
Obligor's audited Original Financial Statements.
(c) If the Borrower adopts International Accounting Standards, the
Borrower and the Agent shall, at the Borrower's request,
negotiate in good faith with a view to agreeing such
amendments to the financial covenants in Clause 21 (Financial
Covenants) and the ratios used to calculate the Margin and, in
each case, the definitions used therein as may be necessary to
ensure that the criteria for evaluating the Group's financial
condition grant to the Lenders protection equivalent to that
which would have been enjoyed by them had the Borrower not
adopted International Accounting Standards. Any amendments
agreed will take effect on the date agreed between the Agent
and the Borrower subject to the consent of the Majority
Lenders. If no such agreement is reached within 90 days of the
Borrower's request, the Borrower will remain subject to the
obligation to deliver the information specified in paragraph
(b) of this Clause 20.3.
20.4 Information: miscellaneous
The Borrower shall supply to the Agent (in sufficient copies for all
the Lenders, if the Agent so requests):
(a) all documents dispatched by the Borrower to its shareholders
(or any class of them) or its creditors generally at the same
time as they are dispatched;
(b) promptly upon becoming aware of them, the details of any
litigation, arbitration or administrative proceedings which
are current, threatened or pending against any member of the
Group, and which might, if adversely determined, have a
Material Adverse Effect; and
(c) promptly, such further information regarding the financial
condition, assets and business of any Obligor or member of the
Group as the Agent (or any Lender through the Agent) may
reasonably request (including, but not limited to, information
on Rating, if such credit rating has not been publicly
announced) other than any information the disclosure of which
would result in a breach of any applicable law or regulation
or confidentiality agreement entered into in good faith
provided that the Borrower shall use reasonable efforts to be
released from any such confidentiality agreement.
20.5 Notification of default
(a) Each Obligor shall notify the Agent of any Default (and the
steps, if any, being taken to remedy it) promptly upon
becoming aware of its occurrence (unless that Obligor is aware
that a notification has already been provided by another
Obligor).
(b) Promptly upon a request by the Agent, the Borrower shall
supply to the Agent a certificate signed by an Authorised
Signatory on its behalf certifying that no Default is
continuing (or if a Default is continuing, specifying the
Default and the steps, if any, being taken to remedy it).
20.6 Money laundering obligations
(a) Each Obligor shall promptly upon the request of the Agent or
any Lender supply, or procure the supply of, such
documentation (if any) and other evidence (if any) as is
reasonably requested by the Agent (for itself or on behalf of
any Lender) or any Lender (for itself or on behalf of any
prospective New Lender) in order for the Agent, such Lender or
any prospective New Lender to comply with its obligations
under any laws or regulations relating to money laundering.
(b) Each Lender shall promptly upon the request of the Agent
supply, or procure the supply of, such documentation and other
evidence as is reasonably requested by the Agent (for itself)
in order for the Agent to comply with its obligations under
any laws or regulations relating to money laundering.
20.7 Notarisations
Each Obligor shall notify the Agent of any Notarisations referred to in
paragraph (a) (iv) of Clause 22.5 (Notarisation) promptly upon such
Notarisations taking place.
21. Financial Covenants
21.1 Financial definitions
In this Clause 21:
"Adjusted EBITDA" means, for any Relevant Period, the sum of (a) EBITDA
and (b) with respect to any business acquired during such period, the
sum of (i) the operating income and (ii) depreciation and amortization
expense for such business, as determined in accordance with GAAP for
such Relevant Period, provided that the Borrower need only make the
adjustments contemplated by "(b)" above if the operating income and
depreciation and amortization expense of the acquired business in the
12 Months prior to its acquisition amount to EUR 10,000,000 or more.
"Cemex Capital Contributions" means contributions in cash to the
capital of the Borrower by CEMEX S.A. de C.V. or by any of its
Subsidiaries not being a Subsidiary of the Borrower made after 1
January 2004.
"EBITDA" means EBITDA for the Relevant Period immediately preceding the
date on which it is to be calculated, operating profit plus annual
depreciation for fixed assets plus annual amortisation of intangible
assets plus annual amortisation of start-up costs of the Group plus
dividends received from non-consolidated companies and from companies
consolidated by the equity method plus an amount equal to the amount of
Cemex Capital Contributions made during such period immediately
preceding the date on which it is to be calculated (up to an amount
equal to the amount of Royalty Expenses made in such period). Such
calculation shall be made in accordance with GAAP.
"Finance Charges" means for any Relevant Period, the sum (without
duplication) of (a) all interest expense in respect of Financial
Indebtedness (including imputed interest on Capital Leases) for such
period plus (b) all debt discount and expense (including, without
limitation, expenses relating tithe issuance of instruments
representing Financial Indebtedness) amortized during such period plus
(c) amortization of discounts on sales of receivables during such
period plus (d) all factoring charges for such period plus (e) all
guarantee charges for such period plus (f) any charges analogous to the
foregoing relating to Off-Balance-Sheet Transactions for such period,
all determined on a consolidated basis in accordance with GAAP.
"Guarantees" means any guarantee or indemnity (in the case of the
latter for any specified amount or otherwise in the amount specified in
or for which provision has been made in the accounts of the
indemnifier) in any form made other than in the ordinary course of
business of the guarantor.
"Intellectual Property Rights" means all copyrights (including rights
in computer software), trade marks, service marks, business names,
patents, rights in inventions, registered designs, design rights,
database rights and similar rights, rights in trade secrets or other
confidential information and any other intellectual property rights and
any interests (including by way of license) in any of the foregoing (in
each case whether registered or not and including all applications for
the same) which may subsist in any given jurisdiction.
"Net Borrowings" means, at any time, the remainder of (a) Total
Borrowings at such time less (b) the aggregate amount of the following
items held by the Borrower and its Subsidiaries at such time: cash on
hand, marketable securities, investments in money market funds,
banker's acceptances, short-term deposits and other liquid investments.
"Off-Balance-Sheet Transactions" means any present or future financing
transaction not reflected as indebtedness on the consolidated balance
sheet of the Borrower, but being structured in a way that may result in
payment obligations by any Group member, excluding any financing
transaction in the form of:
(a) interest rate and currency exchange rate hedging agreements to
hedge risks arising in the normal course of business;
(b) transactions containing potential payments by any Group member
(e.g. via a put-option agreement or similar structures) under
which payments are incapable of being triggered until three
days after the Termination Date in relation to Facility A; or
(c) any supply arrangement or equipment lease in respect of energy
or raw material sourcing containing contingent obligations to
directly or indirectly purchase (including through the
purchase of shares or other equity participation) the
underlying operations or assets up to an aggregate maximum of
$100,000,000.
"Relevant Period" means each period of twelve Months ending on the last
day of the first half of the Borrower's financial year and each period
of twelve Months ending on the last day of the Borrower's financial
year.
"Rolling Basis" means the calculation of a ratio or an amount made at
the end of a financial half year in respect of that financial half year
and the immediately preceding financial half year.
"Royalty Expenses" means expenses incurred by the Borrower or any of
its Subsidiaries to CEMEX S.A. de C.V. or any of its Subsidiaries not
being a Subsidiary of the Borrower as (a) consideration for the
granting to the Borrower or any Subsidiary of a licence to use, exploit
and enjoy Intellectual Property Rights and any other intangible assets
such as, but not limited to, know-how, formulae, process technology and
other forms of intellectual and industrial property, whether or not
registered, held by CEMEX S.A. de C.V. or any of its Subsidiaries not
being a Subsidiary of the Borrower; or (b) fees, commissions or other
amounts accrued in respect of any management contract, services
contract, overhead expenses allocation arrangement or any other similar
transaction; provided that in clauses (a) and (b) such amounts shall
have been taken into consideration in the calculation of operating
profit under Spanish GAAP.
"Subordinated Debt" means debt granted by CEMEX S.A. de C.V. (a company
registered in Mexico) or any of its Subsidiaries not being a member of
the Group to the Borrower or any of its Subsidiaries on terms such that
no payments of principal may be made thereunder (including but not
limited to following any winding up, suspension de pagos or quiebra or
other like event of the Borrower) until the Agent has confirmed in
writing that all amounts outstanding hereunder have been paid in full.
"Total Borrowings" means without duplication, in respect of any person
all Guarantees granted by such person, plus all Off-Balance-Sheet
Transactions entered into by such person, plus all such person's
Financial Indebtedness, but excluding any Subordinated Debt.
21.2 Financial condition
The Borrower shall ensure that in respect of any Relevant Period:
(a) the ratio of Net Borrowings to Adjusted EBITDA calculated on a
Rolling Basis shall be less than or equal to 3.5:1; and
(b) the ratio of EBITDA to Finance Charges calculated on a Rolling
Basis shall be greater than or equal to 3:1.
21.3 Financial testing
The financial covenants set out in Clause 21.2 (Financial condition)
shall be tested semi-annually by reference to each of the Borrower's
consolidated financial statements delivered pursuant to and/or each
Compliance Certificate delivered with respect to any such consolidated
financial statements pursuant to Clause 20.1 (Financial statements) and
Clause 20.2 (Compliance Certificate).
21.4 Accounting terms
All accounting expressions which are not otherwise defined herein shall
have the meaning ascribed thereto in GAAP.
22. General undertakings
The undertakings in this Clause 22 remain in force from the date of
this Agreement for so long as any amount is outstanding under the
Finance Documents or any Commitment is in force.
22.1 Authorisations
Each Obligor shall promptly:
(a) obtain, comply with and do all that is necessary to maintain
in full force and effect; and
(b) supply certified copies to the Agent of,
any Authorisation required under any law or regulation of its
jurisdiction of incorporation to enable it to perform its obligations
under the Finance Documents and to ensure the legality, validity,
enforceability or admissibility in evidence in its jurisdiction of
incorporation of any Finance Document.
22.2 Preservation of corporate existence
Subject to Clause 22.8 (Merger), each Obligor shall (and the Borrower
shall ensure that each of its Subsidiaries will), preserve and maintain
its corporate existence and rights.
22.3 Preservation of properties
Each Obligor shall (and the Borrower shall ensure that each of its
Subsidiaries will) maintain and preserve all of its properties that are
used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
22.4 Compliance with laws and regulations
(a) Each Obligor shall (and shall procure that each of its
Subsidiaries will) comply in all respects with all laws and
regulations to which it may be subject, if failure to so
comply would be likely to have a Material Adverse Effect.
(b) The Borrower shall (and shall procure that each of its
Subsidiaries will) comply with ERISA and will ensure that the
levels of contribution to pension schemes are and continue to
be sufficient to comply with all its and their material
obligations under such schemes and generally under applicable
laws and regulations, except where failure to make such
contributions would not reasonably be expected to have a
Material Adverse Effect.
22.5 Notarisation
(a) Subject to paragraph (b) of this Clause 22.5, the Borrower
shall not (and shall procure that none of its Subsidiaries
will) permit any of its unsecured indebtedness to be notarised
as a Spanish Public Document (any such notarisation, a
"Notarisation"), other than the following permitted
Notarisations ("Permitted Notarisations"):
(i) any Permitted Notarisations listed in Schedule 8
(Existing Notarisations) and any amendments or
modifications thereof, provided that any such
amendment or modification shall not result in the
increase of the principal amount of the relevant
indebtedness nor the extension of the maturity
thereof nor, for the avoidance of doubt, relate to
any refinancing of the relevant indebtedness;
(ii) Notarisations which are required by applicable law or
regulation or which arise by operation of law other
than pursuant to any issue of debt securities in
accordance with Article 285 of the Spanish
Corporations Law (Ley de Sociedades Anonimas);
(iii) Notarisations with the prior written consent of the
Majority Lenders;
(iv) any Notarisations securing indebtedness the principal
amount of which (when aggregated with the principal
amount of any other Notarisations other than any
Permitted Notarisations under paragraphs (i) or (iii)
above) do not exceed EUR 100,000,000 (or its
equivalent in another currency or currencies); and
(v) any Notarisations relating to indebtedness in respect
of any sale and purchase agreement customarily
registered in a public register in Spain and payment
of which indebtedness is made within seven days of
the date of such agreement.
(b) Paragraph (a) of this Clause 22.5 shall not apply if the
Borrower, concurrently with any such Notarisation (not being a
Permitted Notarisation) referred to in paragraph (a) of this
Clause 22.5 and at its own cost and expense, causes this
Agreement to be the subject of a Notarisation.
22.6 Negative pledge
The Borrower shall not and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or permit to exist any
Security on or with respect to any of its property or assets or those
of any Subsidiary, whether now owned or held or hereafter acquired,
other than the following Security ("Permitted Security"):
(a) Security for taxes, assessments and other governmental charges
the payment of which is being contested in good faith by
appropriate proceedings promptly initiated and diligently
conducted and for which such reserves or other appropriate
provision, if any, as shall be required by GAAP shall have
been made;
(b) statutory liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due or the
payment of which is being contested in good faith by
appropriate proceedings promptly initiated and diligently
conducted and for which such reserves or other appropriate
provision, if any, as shall be required by GAAP shall have
been made;
(c) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation,
unemployment insurance and other types of social security;
(d) any judgment lien, unless the judgment it secures shall not,
within 60 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have
been discharged within 60 days after the expiration of any
such stay;
(e) Security existing on the date of this Agreement as described
in Schedule 7 (Existing Security) provided that the amount
secured thereby is not increased;
(f) any Security on property acquired by the Borrower or any of
its Subsidiaries after the date of this Agreement that was
existing on the date of acquisition of such property; provided
that such Security was not incurred in anticipation of such
acquisition, and any Security created to secure all or any
payment of the purchase price, or to secure indebtedness
incurred or assumed to pay all or any part of the purchase
price, of property acquired by the Borrower or any of its
Subsidiaries after the date of this Agreement provided,
further, that (i) any such Security permitted pursuant to this
paragraph (f) shall be confined solely to the item or items of
property so acquired (including, in the case of any
acquisition of a corporation through the acquisition of 51% or
more of the voting stock of such corporation, the stock and
assets of any acquired Subsidiary or acquiring Subsidiary by
which the acquired Subsidiary will be directly or indirectly
controlled) and, if required by the terms of the instrument
originally creating such Security, other property which is an
improvement to, or is acquired for specific use with, such
acquired property; (ii) if applicable, any such Security shall
be created within nine Months after, in the case of property,
its acquisition, or, in the case of improvements, their
completion; and (iii) no such Security shall be made in
respect of any indebtedness in relation to repayment of which
recourse may be had to any member of the Group other than in
relation to the item or items as referred to in (i) above;
(g) any Security renewing, extending or refinancing the
indebtedness to which any Security permitted by paragraph (f)
above relates; provided that the principal amount of
indebtedness secured by such Security immediately prior
thereto is not increased and such Security is not extended to
other property;
(h) the transfer of shares or any other instrument of title
representing an equity participation in the Asia Fund into a
trust;
(i) any Security created on shares representing no more than a
Stake in the capital stock of any of the Borrower's
Subsidiaries solely as a result of the deposit or transfer of
such shares into a trust or a special purpose corporation
(including any entity with legal personality) of which such
shares constitute the sole assets provided that the proceeds
from the deposit or transfer of such shares into such trust,
corporation or entity and from any transfer of or
distributions in respect of the Borrower's or any Subsidiary's
interest in such trust, corporation or entity are applied as
provided under Clause 22.7 (Disposals) and provided further
that such Security may not secure Financial Indebtedness of
the Borrower or any Subsidiary unless otherwise permitted
under this Clause 22.6 and that the economic and voting rights
in such capital stock is maintained by the Borrower in its
Subsidiaries;
(j) any Security permitted by the Agent, acting on the
instructions of the Majority Lenders;
(k) any securitisation of receivables notwithstanding that it is
made at discount from the amount due on such receivables and
provided that it is made on a non recourse basis or that
recourse is directly or indirectly limited to collection of
the receivables plus related interest and financial and
collection costs and expenses;
(l) in addition to the Security permitted by the foregoing
paragraphs (a) to (k), Security securing indebtedness of the
Borrower and its Subsidiaries (taken as a whole) not in excess
of an amount equal to 5% of the Adjusted Consolidated Net
Tangible Assets of the Group, as determined in accordance with
GAAP;
unless, in each case, the Obligors have made or caused to be made
effective provision whereby the obligations hereunder are secured
equally and rateably with, or prior to, the indebtedness secured by
such Security (other than Permitted Security) for so long as such
indebtedness is so secured.
For the purposes of paragraph (l) of this Clause 22.6, "Adjusted
Consolidated Net Tangible Assets" means, with respect to any person,
the total assets of such person and its Subsidiaries (less applicable
depreciation, amortisation and other valuation reserves), including any
write-ups or restatements required under GAAP (other than with respect
to items referred to in (ii) below), minus (i) all current liabilities
of such person and its Subsidiaries (excluding the current portion of
long-term debt) and (ii) all goodwill, trade names, trademarks,
licences, concessions, patents, un-amortised debt discount and expense
and other intangibles, all as determined on a consolidated basis in
accordance with GAAP.
22.7 Disposals
(a) Subject to paragraph (b) of this Clause 22.7, the Borrower shall
not (and the Borrower shall ensure that none of its Subsidiaries will),
without the prior written consent of the Majority Lenders, enter into a
single transaction or a series of transactions (whether related or not)
and whether voluntary or involuntary to sell, lease, transfer or
otherwise dispose of all its assets or a substantial part of its assets
representing more than 5 per cent. in aggregate of the total
consolidated assets of the Group, calculated by reference to the latest
consolidated financial statements of the Borrower, delivered pursuant
to paragraph (a) (i) of Clause 20.1 (Financial statements), unless (i)
full value for such assets is received by the Borrower or its
Subsidiaries; (ii) an amount equal to the net proceeds of any such
sale, lease, transfer or other disposal to the extent that such sale,
lease, transfer or other disposal relates to assets representing more
than 5 per cent. in aggregate of the total consolidated assets of the
Group, calculated by reference to the latest consolidated financial
statements of the Borrower delivered pursuant to paragraph (a) (i) of
Clause 20.1 (Financial statements) is reinvested within twelve Months
of receipt by the Borrower or its Subsidiaries in the business of the
Group; and (iii) neither such sale, lease, transfer or other disposal
nor such reinvestment directly results in an adverse change to the
Rating of the Borrower as at the date hereof (namely, S&P:BBB- and
Moody's:Baa3).
(b) Paragraph (a) of this Clause 22.7 does not apply to any sale,
lease, transfer or other disposal of assets:
(i) made on arm's length terms and for fair market value
in the ordinary course of business of the disposing
entity;
(ii) in respect of any securitisation of receivables
notwithstanding that it is made at discount from the
amount due on such receivables and provided that it
is made on a non-recourse basis or that recourse is
directly or indirectly limited to collection of the
receivables plus related interest and financial and
collection costs and expenses;
(iii) from any member of the Group to another member of the
Group on arm's length terms and for fair market or
book value provided that the exception contained in
this paragraph (iii) shall not apply to any sale,
lease, transfer or other disposal of an asset
(A) from any Obligor to another member of the
Group which is not an Obligor unless the
person to whom such sale, lease, transfer or
other disposal is made (the "Transferee")
becomes a Guarantor; or
(B) from any Material Subsidiary to another
member of the Group which is not a Material
Subsidiary unless the person making such
sale, lease, transfer or other disposal does
not cease to be a Material Subsidiary or, if
it ceases to be a Material Subsidiary, any
Transferee shall be deemed to be a Material
Subsidiary;
(iv) (A) in respect of which the net proceeds are used to
repay any amounts outstanding hereunder in an amount
equal to such net proceeds and (B) if the Available
Commitments in an amount equal thereto are cancelled;
(v) in respect of which the proceeds are applied pursuant
to any prepayment requirement included as at the date
hereof in existing loan agreements of any Subsidiary
in relation to the use of proceeds received from the
disposal of any assets.
22.8 Merger
(a) Subject to paragraphs (b) and (c) of this Clause 22.8, unless
it has obtained the prior written approval of the Majority
Lenders, no Obligor shall (and the Borrower shall ensure that
none of its Subsidiaries will) enter into any amalgamation,
demerger, merger or other corporate reconstruction (a
"Reconstruction"), other than (i) a Reconstruction relating
only to the Borrower's Subsidiaries inter se; (ii) a
Reconstruction between the Borrower and any of its
Subsidiaries; or (iii) a solvent reorganisation or liquidation
of any of the Subsidiaries not being Obligors, provided that
in any case no Default shall have occurred and be continuing
at the time of such transaction or would result therefrom and
provided further that (a) none of the Security (if any)
granted to the Lenders nor the guarantees granted by the
Guarantors hereunder is or are adversely affected as a result,
and (b) the resulting entity, if it is not an Obligor, assumes
the obligations of the Obligor the subject of the merger.
(b) Subject to paragraph (c) of this Clause 22.8, the Obligors may
merge with any other person if the book value of such person's
assets prior to the merger does not exceed 3 per cent. of the
book value of the Group's assets taken as a whole considered
on a consolidated basis.
(c) In paragraphs (a) and (b) of this Clause 22.8, the Rating of
the Borrower as of the date hereof (namely, S&P:BBB- and
Moody's:Baa3) shall not be adversely affected whether at the
time of, or within 3 Months of, the date of announcement of a
Reconstruction, directly as a result of any merger involving
the Borrower, and the resulting entity, if it is not an
Obligor, shall assume the obligations of the Obligor the
subject of the merger.
22.9 Change of business
(a) None of the Obligors shall make a substantial change to the
general nature of its business from that carried on at the
date of this Agreement and there shall be no cessation of
business in relation to any of the Obligors (save (except in
the case of the Borrower which shall in no event cease or
substantially change its business) unless another Obligor
continues to operate any such business).
(b) The Borrower shall procure that no substantial change is made
to the general nature of the business of any of its Material
Subsidiaries (other than a Guarantor) from that carried on at
the date of this Agreement and that there shall be no
cessation of such business.
22.10 Insurance
The Obligors shall (and the Borrower shall ensure that each of its
Material Subsidiaries (other than the Obligors) will) maintain
insurances on and in relation to its business and assets with reputable
underwriters or insurance companies against those risks and to the
extent as is usual for companies carrying on the same or substantially
similar business.
22.11 Environmental Compliance
The Borrower shall (and the Borrower shall ensure that each of its
Subsidiaries will) comply in all material respects with all
Environmental Law and obtain and maintain any Environmental Permits and
take all reasonable steps in anticipation of known or expected future
changes to or obligations under the same, in each case where failure to
do so might reasonably be expected to have a Material Adverse Effect.
22.12 Environmental Claims
The Borrower shall inform the Agent in writing as soon as reasonably
practicable upon becoming aware of the same:
(a) if any Environmental Claim has been commenced or (to the best
of the Borrower's knowledge and belief) is threatened against
any member of the Group, or
(b) of any facts or circumstances which will or are reasonably
likely to result in any Environmental Claim being commenced or
threatened against any member of the Group,
where the claim would be reasonably likely, if determined against that
member of the Group, to have a Material Adverse Effect.
22.13 Transactions with Affiliates
Each Obligor shall (and the Borrower shall ensure that its Subsidiaries
will) ensure that any transactions with respective Affiliates are on
terms that are fair and reasonable and no less favourable to such
Obligor or such Subsidiary than it would obtain in a comparable
arm's-length transaction with a person not an Affiliate.
22.14 Pari passu ranking
Each Obligor shall ensure that its payment obligations under the
Finance Documents rank at least pari passu with the claims of all its
other unsecured and unsubordinated creditors, except for obligations
mandatorily preferred by law or regulation applying to companies
generally from time to time.
22.15 Payment restrictions affecting Subsidiaries
The Borrower shall not enter into or suffer to exist, or permit any of
its Subsidiaries to enter into or suffer to exist, any agreement or
arrangement directly limiting the ability of any of its Subsidiaries
to:
(a) declare or pay dividends or other distributions in respect of
its or their respective equity interests in a Subsidiary,
except any agreement or arrangement (other than in relation to
the Asia Fund as at the date hereof) entered into by a person
prior to such person becoming a Subsidiary, in which case the
Borrower shall use its reasonable endeavours to remove such
limitations. If, however, as a result of the acquisition of
such person, any of the Ratings assigned by S&P or Moody's to
the Borrower or any of the Ratings assigned by S&P or Moody's
to any issue under the Euro 2,000 million medium term note
programme guaranteed by the Borrower and the guarantors (the
"Programme") (i) are reduced but the Ratings of both S&P and
Moody's of the Borrower and the Programme remain Investment
Grade, the Borrower shall use its best endeavours to remove
such limitation; or (ii) are reduced below Investment Grade,
the Borrower shall procure that such limitation be removed
within 3 Months of the date of such acquisition. In any event,
the Borrower shall have the option, in any of the
circumstances described above, to procure that the person
acquired becomes a Guarantor instead of removing such
limitations;
or
(b) repay any intercompany indebtedness owed by any Subsidiary to
any Obligor and, for the avoidance of doubt, subordination
provisions shall not be considered a limitation for the
purpose of this Clause 22.15.
22.16 Indebtedness of Guarantors
None of the Guarantors shall incur or permit to exist any Financial
Indebtedness other than:
(a) Financial Indebtedness in respect of its taxes or costs,
incurred pursuant to legal requirements;
(b) Financial Indebtedness owed to another member of the Group;
(c) Financial Indebtedness of another member of the Group
guaranteed by a Guarantor; and
(d) Financial Indebtedness not falling within paragraph (a) to (c)
above, in an aggregate amount not exceeding Euro 3,000,000 (or
the equivalent thereof in any other currency).
22.17 Notification of adverse change in Rating
The Borrower shall promptly notify the Agent of any adverse change in
its Rating or Outlook.
23. Events of Default
Each of the events or circumstances set out in this Clause 23 is an
Event of Default.
23.1 Non-payment
An Obligor does not pay on the due date any amount payable pursuant to
a Finance Document at the place at and in the currency in which it is
expressed to be payable unless such failure to pay is caused by an
administrative error or technical difficulties within the banking
system in relation to the transmission of funds and payment is made
within three Business Days of its due date.
23.2 Financial covenants
Any requirement of Clause 21 (Financial Covenants) is not satisfied.
23.3 Other obligations
(a) An Obligor does not comply with any provision of the Finance
Documents (other than those referred to in Clause 23.1
(Non-payment) and Clause 23.2 (Financial covenants)).
(b) No Event of Default under paragraph (a) of this Clause 23.3
above will occur if the failure to comply is capable of remedy
and is remedied within fifteen Business Days of the Agent
giving written notice to the Borrower or the Borrower becoming
aware of the failure to comply whichever is the earlier.
23.4 Misrepresentation
Any representation or statement made or deemed to be made by an Obligor
in the Finance Documents or any other document delivered by or on
behalf of any Obligor under or in connection with any Finance Document
is or proves to have been incorrect or misleading in any material
respect when made or deemed to be made.
23.5 Cross acceleration
(a) Any Financial Indebtedness of any Obligor or member of the
Group is not paid when due nor within any originally
applicable grace period.
(b) Any Financial Indebtedness of any Obligor or member of the
Group is declared to be or otherwise becomes due and payable
prior to its specified maturity as a result of an event of
default (however described).
(c) No Event of Default will occur under this Clause 23.5 if the
aggregate amount of Financial Indebtedness falling within
paragraphs (a) and (b) of this Clause 23.5 above is less than
EUR 27,500,000 (or its equivalent in any other currency or
currencies).
23.6 Insolvency
(a) Any of the Obligors or Material Subsidiaries is unable or
admits inability to pay its debts as they fall due, suspends
making payments on any of its debts or, by reason of actual or
anticipated financial difficulties, commences negotiations
with one or more of its creditors with a view to rescheduling
any of its indebtedness.
(b) The value of the assets of any of the Obligors or Material
Subsidiaries is less than its liabilities (taking into account
contingent and prospective liabilities).
(c) A moratorium is declared in respect of any indebtedness of any
of the Obligors or Material Subsidiaries.
23.7 Insolvency proceedings
Any corporate action, legal proceedings or other procedure or step is
taken in relation to:
(a) the suspension of payments, a moratorium of any indebtedness,
winding-up, dissolution, administration or reorganisation (by
way of voluntary arrangement, scheme of arrangement or
otherwise) of any of the Obligors or Material Subsidiaries
other than a solvent liquidation or reorganisation of any of
the Material Subsidiaries not being Obligors;
(b) a composition, assignment or arrangement with any creditor of
any of the Obligors or Material Subsidiaries;
(c) the appointment of a liquidator (other than in respect of a
solvent liquidation of any of the Material Subsidiaries not
being Obligors), receiver, administrator, administrative
receiver, compulsory manager or other similar officer in
respect of any of the Obligors or Material Subsidiaries or any
of their assets;
or any analogous procedure or step is taken in any jurisdiction.
23.8 Expropriation and sequestration
Any expropriation or sequestration affects any asset or assets of any
Obligor or any Material Subsidiary and has a Material Adverse Effect.
23.9 Creditors' process and enforcement of Security
(a) Any Security is enforced against any Obligor or any Material
Subsidiary.
(b) Any attachment, distress or execution affects any asset or
assets of any Obligor or any Material Subsidiary.
(c) No Event of Default under paragraphs (a) or (b) of this Clause
23.9 above will occur if:
(i) the action is being contested in good faith by
appropriate proceedings;
(ii) the principal amount of the indebtedness secured by
such Security or in respect of which such attachment,
distress or execution is carried out represents less
than EUR 27,500,000 (or its equivalent in any other
currency or currencies); and
(iii) the enforcement proceedings, attachment, distress or
execution is or are discharged within 28 days of
commencement.
23.10 Failure to comply with judgment
Any Obligor or any Material Subsidiary fails to comply with or pay any
sum due from it under any judgment or any order made or given by any
court of competent jurisdiction save unless payment of any such sum is
suspended pending an appeal.
23.11 Unlawfulness
It is or becomes unlawful for an Obligor to perform any of its
obligations under the Finance Documents.
23.12 Repudiation
An Obligor repudiates a Finance Document or evidences an intention to
repudiate a Finance Document.
23.13 Change of Control
If CEMEX, S.A. de C.V. ceases to:
(a) be entitled to (whether by way of ownership of shares, proxy,
contract, agency or otherwise):
(i) cast, or control the casting of, at least 51 per
cent. of the maximum number of votes that might be
cast at a general meeting of the Borrower;
(ii) appoint or remove all, or the majority, of the
directors or other equivalent officers of the
Borrower;
(iii) give directions with respect to the operating and
financial policies of the Borrower which the
directors or other equivalent officers of the
Borrower are obliged to comply with; or
(b) hold at least 51 per cent. of the common shares in the
Borrower.
23.14 Material adverse change
Any material adverse change arises in the financial condition of the
Group taken as a whole which the Majority Lenders reasonably determine
would result in the failure by any Obligor to perform its payment
obligations under any of the Finance Documents.
23.15 Acceleration
On and at any time after the occurrence of an Event of Default the
Agent may, and shall if so directed by the Majority Lenders, by notice
to the Borrower:
(a) cancel the Total Commitments whereupon they shall immediately
be cancelled;
(b) declare that all or part of the Loans, together with accrued
interest, and all other amounts accrued under the Finance
Documents be immediately due and payable, whereupon they shall
become immediately due and payable; and/or
(c) declare that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand by
the Agent on the instructions of the Majority Lenders.
SECTION 9
CHANGES TO PARTIES
24. Changes to the Lenders
24.1 Assignments and transfers by the Lenders
Subject to this Clause 24, a Lender (the "Existing Lender") may:
(a) assign any of its rights; or
(b) transfer by novation any of its rights and obligations,
to another bank or financial institution or to a securitisation trust
or fund or (subject to paragraph (a) of Clause 24.2 (Conditions of
assignment or transfer) other entity (the "New Lender") provided that
any assignment or transfer in respect of Facility A or Facility C by a
Lender having participations in both Facility A and Facility C shall be
made proportionally as between Facility A and Facility C.
24.2 Conditions of assignment or transfer
(a) The consent of the Borrower is required for an assignment or
transfer to an entity which is not a bank or financial
institution or a securitisation trust or fund.
(b) The consent of the Borrower to an assignment or transfer must
not be unreasonably withheld or delayed. The Borrower will be
deemed to have given its consent five Business Days after the
Existing Lender has requested it unless consent is expressly
refused by the Borrower within that time.
(c) An assignment will only be effective on:
(i) receipt by the Agent of written confirmation from the
New Lender that the New Lender will assume the same
obligations to the other Finance Parties as it would
have been under if it was an Original Lender; and
(ii) performance by the Agent of all checks relating to
any person that it is required to carry out pursuant
to any laws or regulations relating to money
laundering in relation to such assignment to a New
Lender, the completion of which the Agent shall
promptly notify to the Existing Lender and the New
Lender.
(d) A transfer will only be effective if the procedure set out in
Clause 24.5 (Procedure for transfer) is complied with.
(e) If:
(i) a Lender assigns or transfers any of its rights or
obligations under the Finance Documents or changes
its Facility Office; and
(ii) as a result of circumstances existing at the date the
assignment, transfer or change occurs, an Obligor
would be obliged to make a payment to the New Lender
or Lender acting through its new Facility Office
under Clause 13 (Tax gross-up and indemnities) or
Clause 14 (Increased costs),
then the New Lender or Lender acting through its new Facility
Office is only entitled to receive payment under those Clauses
to the same extent as the Existing Lender or Lender acting
through its previous Facility Office would have been if the
assignment, transfer or change had not occurred.
24.3 Assignment or transfer fee
The New Lender shall, on the date upon which an assignment or transfer
takes effect, pay to the Agent (for its own account) a fee of EUR
2,000.
24.4 Limitation of responsibility of Existing Lenders
(a) Unless expressly agreed to the contrary, an Existing Lender
makes no representation or warranty and assumes no
responsibility to a New Lender for:
(i) the legality, validity, effectiveness, adequacy or
enforceability of the Finance Documents or any other
documents;
(ii) the financial condition of any Obligor;
(iii) the performance and observance by any Obligor of its
obligations under the Finance Documents or any other
documents; or
(iv) the accuracy of any statements (whether written or
oral) made in or in connection with any Finance
Document or any other document,
and any representations or warranties implied by law or
regulation are excluded.
(b) Each New Lender confirms to the Existing Lender and the other
Finance Parties that it:
(i) has made (and shall continue to make) its own
independent investigation and assessment of the
financial condition and affairs of each Obligor and
its related entities in connection with its
participation in this Agreement and has not relied
exclusively on any information provided to it by the
Existing Lender in connection with any Finance
Document; and
(ii) will continue to make its own independent appraisal
of the creditworthiness of each Obligor and its
related entities whilst any amount is or may be
outstanding under the Finance Documents or any
Commitment is in force.
(c) Nothing in any Finance Document obliges an Existing Lender to:
(i) accept a re-transfer from a New Lender of any of the
rights and obligations assigned or transferred under
this Clause 24; or
(ii) support any losses directly or indirectly incurred by
the New Lender by reason of the non-performance by
any Obligor of its obligations under the Finance
Documents or otherwise.
24.5 Procedure for transfer
(a) Subject to the conditions set out in Clause 24.2 (Conditions
of assignment or transfer) a transfer is effected on the
Transfer Date in accordance with paragraph (b) below provided
that a duly completed Transfer Certificate is delivered to the
Agent by the Existing Lender and the New Lender at least five
Business Days prior to the Transfer Date.
(b) On the Transfer Date:
(i) to the extent that in the Transfer Certificate the
Existing Lender seeks to transfer by novation its
rights and obligations under the Finance Documents
each of the Obligors and the Existing Lender shall be
released from further obligations towards one another
under the Finance Documents and their respective
rights against one another under the Finance
Documents shall be cancelled (being the "Discharged
Rights and Obligations");
(ii) each of the Obligors and the New Lender shall assume
obligations towards one another and/or acquire rights
against one another which differ from the Discharged
Rights and Obligations only insofar as that Obligor
and the New Lender have assumed and/or acquired the
same in place of that Obligor and the Existing
Lender;
(iii) the Agent, the Arranger, the New Lender and other
Lenders shall acquire the same rights and assume the
same obligations between themselves as they would
have acquired and assumed had the New Lender been an
Original Lender with the rights and/or obligations
acquired or assumed by it as a result of the transfer
and to that extent the Agent, the Arranger and the
Existing Lender shall each be released from further
obligations to each other under the Finance
Documents; and
(iv) the New Lender shall become a Party as a "Lender".
24.6 Copy of Transfer Certificate to Borrower
The Agent shall, as soon as reasonably practicable after it has
received a Transfer Certificate, send to the Borrower a copy of that
Transfer Certificate.
24.7 Disclosure of information
Any Lender may disclose to any of its Affiliates and any other person:
(a) to (or through) whom that Lender assigns or transfers (or may
potentially assign or transfer) all or any of its rights and
obligations under this Agreement;
(b) with (or through) whom that Lender enters into (or may
potentially enter into) any sub-participation in relation to,
or any other transaction under which payments are to be made
by reference to, this Agreement or any Obligor; or
(c) to whom, and to the extent that, information is required to be
disclosed by any applicable law or regulation,
any information about any Obligor, the Group and the Finance Documents
as that Lender shall consider appropriate if, in relation to paragraphs
(a) and (b) above, the person to whom the information is to be given
has entered into a Confidentiality Undertaking.
24.8 Interest
All interest accrued in the Interest Period in which a transfer is
effective shall be paid to the Existing Lender.
25. Changes to the Obligors
25.1 Assignments and transfers by Obligors
No Obligor may assign any of its rights or transfer any of its rights
or obligations under the Finance Documents.
25.2 Additional Guarantors
(a) The Borrower shall procure that, in respect of (i) each of its
Subsidiaries to whom a sale, lease, transfer or other disposal
is made by an Obligor pursuant to paragraph (b) (iii) (A) of
Clause 22.7 (Disposals); (ii) each of its Subsidiaries which
is or which is deemed to be a Material Subsidiary, whether
pursuant to paragraph (b) (iii) (B) of Clause 22.7 (Disposals)
or otherwise; or (iii) each person whom the Borrower elects to
procure to become a Guarantor pursuant to Clause 22.15
(Payment restrictions affecting Subsidiaries), such Subsidiary
or the Holding Company of such Material Subsidiary or such
person respectively become an Additional Guarantor (unless
such Subsidiary or such Material Subsidiary (in the case of
(i) and (ii) respectively) is already a Guarantor) by:
(A) the Borrower delivering to the Agent a duly-completed
and executed Accession Letter; and
(B) the Agent receiving from the Borrower all of the
documents and other evidence referred listed in Part
II of Schedule 2 (Conditions Precedent required to be
delivered by an Additional Guarantor) in relation to
that Additional Guarantor.
(b) The Agent shall notify the Guarantors and the Lenders promptly
upon being satisfied that it has received all the documents
and other evidence listed in Part II of Schedule 2 (Conditions
Precedent required to be delivered by an Additional
Guarantor).
(c) For the purposes of this Clause 25.2 only, a "Holding Company"
means, in relation to a Material Subsidiary, any company or
corporation in respect of which it is a Subsidiary and which
is not in turn a Subsidiary of a Holding Company (as defined
in Clause 1.1 (Definitions)).
25.3 Resignation of Guarantor
A Guarantor (a "Resigning Guarantor") will cease to be a Guarantor if:
(a) it makes a sale, lease, transfer or other disposal of all or
substantially all (but not a part only) of its assets to
another member of the Group which is or becomes a Guarantor in
accordance with paragraph (a) (i) of Clause 25.2 (Additional
Guarantors); or
(b) its Holding Company becomes a Guarantor,
provided that such Resigning Guarantor also, if applicable, ceases
concurrently to be a guarantor in respect of any other indebtedness of
the Group or of any member of the Group and provided further that such
Resigning Guarantor notifies the Agent of any sale, lease, transfer or
other disposal in accordance with paragraph (a) of this Clause 25.3.
25.4 Repetition of Representations
Delivery of an Accession Letter constitutes confirmation by the
relevant Affiliate that the Repeating Representations are true and
correct in relation to it as at the date of delivery as if made by
reference to the facts and circumstances then existing.
SECTION 10
THE FINANCE PARTIES
26. Role of the Agent and the Arranger
26.1 Appointment of the Agent
(a) Each other Finance Party appoints the Agent to act as its
agent under and in connection with the Finance Documents.
(b) Each other Finance Party authorises the Agent to exercise the
rights, powers, authorities and discretions specifically given
to the Agent under or in connection with the Finance Documents
together with any other incidental rights, powers, authorities
and discretions.
26.2 Duties of the Agent
(a) The Agent shall promptly forward to a Party the original or a
copy of any document (including, but not limited to, the
Borrower's annual financial statements) which is delivered to
the Agent for that Party by any other Party.
(b) The Agent is not obliged to review or check the adequacy,
accuracy or completeness of any document it forwards to
another Party.
(c) If the Agent receives notice from a Party referring to this
Agreement, describing a Default and stating that the
circumstance described is a Default, it shall promptly notify
the other Finance Parties.
(d) If the Agent is aware of the non-payment of any principal,
interest or fee payable to a Finance Party (other than the
Agent or the Arranger) under this Agreement it shall promptly
notify the other Finance Parties.
(e) The Agent's duties under the Finance Documents are solely
mechanical and administrative in nature.
26.3 Role of the Arranger
Except as specifically provided in the Finance Documents, the Arranger
has no obligations of any kind to any other Party under or in
connection with any Finance Document.
26.4 No fiduciary duties
(a) Nothing in this Agreement constitutes the Agent or the
Arranger as a trustee or fiduciary of any other person.
(b) Neither the Agent nor the Arranger shall be bound to account
to any Lender for any sum or the profit element of any sum
received by it for its own account.
26.5 Business with the Group
The Agent and the Arranger may accept deposits from, lend money to and
generally engage in any kind of banking or other business with any
member of the Group.
26.6 Rights and discretions of the Agent
(a) The Agent may rely on:
(i) any representation, notice or document (including,
for the avoidance of doubt, any representation,
notice or document communicating the consent of the
Majority Lenders pursuant to Clause 35.1 (Required
consents) believed by it to be genuine, correct and
appropriately authorised; and
(ii) any statement made by a director, authorised
signatory or employee of any person regarding any
matters which may reasonably be assumed to be within
his knowledge or within his power to verify.
(b) The Agent may assume (unless it has received notice to the
contrary in its capacity as agent for the Lenders) that:
(i) no Default has occurred (unless it has actual
knowledge of a Default arising under Clause 23.1
(Non-payment));
(ii) any right, power, authority or discretion vested in
any Party or the Majority Lenders has not been
exercised; and
(iii) any notice or request made by the Borrower (other
than a Utilisation Request or Selection Notice) is
made on behalf of and with the consent and knowledge
of the Guarantor.
(c) The Agent may engage, pay for and rely on the advice or
services of any lawyers, accountants, surveyors or other
experts.
(d) The Agent may act in relation to the Finance Documents through
its personnel and agents.
(e) The Agent may disclose to any other Party any information it
reasonably believes it has received as agent under this
Agreement.
(f) Notwithstanding any other provision of any Finance Document to
the contrary, neither the Agent nor the Arranger is obliged to
do or omit to do anything if it would or might in its
reasonable opinion constitute a breach of any law and
regulation or a breach of a fiduciary duty or duty of
confidentiality.
26.7 Majority Lenders' instructions
(a) Unless a contrary indication appears in a Finance Document,
the Agent shall (i) exercise any right, power, authority or
discretion vested in it as Agent in accordance with any
instructions given to it by the Majority Lenders (or, if so
instructed by the Majority Lenders, refrain from exercising
any right, power, authority or discretion vested in it as
Agent) and (ii) not be liable for any act (or omission) if it
acts (or refrains from taking any action) in accordance with
an instruction of the Majority Lenders.
(b) Unless a contrary indication appears in a Finance Document,
any instructions given by the Majority Lenders will be binding
on all the Finance Parties.
(c) The Agent may refrain from acting in accordance with the
instructions of the Majority Lenders (or, if appropriate, the
Lenders) until it has received such security as it may require
for any cost, loss or liability (together with any associated
VAT) which it may incur in complying with the instructions.
(d) In the absence of instructions from the Majority Lenders, (or,
if appropriate, the Lenders) the Agent may act (or refrain
from taking action) as it considers to be in the best interest
of the Lenders.
(e) The Agent is not authorised to act on behalf of a Lender
(without first obtaining that Lender's consent) in any legal
or arbitration proceedings relating to any Finance Document.
26.8 Responsibility for documentation
Neither the Agent nor the Arranger:
(a) is responsible for the adequacy, accuracy and/or completeness
of any information (whether oral or written) supplied by the
Agent, the Arranger, an Obligor or any other person given in
or in connection with any Finance Document or the Information
Memorandum; or
(b) is responsible for the legality, validity, effectiveness,
adequacy or enforceability of any Finance Document or any
other agreement, arrangement or document entered into, made or
executed in anticipation of or in connection with any Finance
Document.
26.9 Exclusion of liability
(a) Without limiting paragraph (b) below, the Agent will not be
liable for any action taken by it under or in connection with
any Finance Document, unless directly caused by its wilful
misconduct.
(b) No Party (other than the Agent) may take any proceedings
against any officer, employee or agent of the Agent in respect
of any claim it might have against the Agent or in respect of
any act or omission of any kind by that officer, employee or
agent in relation to any Finance Document and any officer,
employee or agent of the Agent may rely on this Clause 26.
(c) The Agent will not be liable for any delay (or any related
consequences) in crediting an account with an amount required
under the Finance Documents to be paid by the Agent if the
Agent has taken all necessary steps as soon as reasonably
practicable to comply with the regulations or operating
procedures of any recognised clearing or settlement system
used by the Agent for that purpose.
(d) Nothing in this Agreement shall oblige the Agent or the
Arranger to carry out any checks pursuant to any laws or
regulations relating to money laundering in relation to any
person on behalf of any Lender and each Lender confirms to the
Agent and the Arranger that it is solely responsible for any
such checks it is required to carry out and that it may not
rely on any statement in relation to such checks made by the
Agent or the Arranger.
26.10 Lenders' indemnity to the Agent
Each Lender shall (in proportion to its share of the Total Commitments
or, if the Total Commitments are then zero, to its share of the Total
Commitments immediately prior to their reduction to zero) indemnify the
Agent, within three Business Days of demand, against any cost, loss or
liability incurred by the Agent (otherwise than by reason of the
Agent's gross negligence or wilful misconduct) in acting as Agent under
the Finance Documents (unless the Agent has been reimbursed by an
Obligor pursuant to a Finance Document).
26.11 Resignation of the Agent
(a) The Agent may resign and appoint one of its Affiliates acting
through an office in the European Union as successor by giving
notice to the other Finance Parties and the Borrower.
(b) Alternatively the Agent may resign by giving notice to the
other Finance Parties and the Borrower, in which case the
Majority Lenders (after consultation with the Borrower) may
appoint a successor Agent.
(c) If the Majority Lenders have not appointed a successor Agent
in accordance with paragraph (b) above within 30 days after
notice of resignation was given, the Agent (after consultation
with the Borrower) may appoint a successor Agent (acting
through an office in the European Union).
(d) The retiring Agent shall, at its own cost, make available to
the successor Agent such documents and records and provide
such assistance as the successor Agent may reasonably request
for the purposes of performing its functions as Agent under
the Finance Documents.
(e) The Agent's resignation notice shall only take effect upon the
appointment of a successor.
(f) Upon the appointment of a successor, the retiring Agent shall
be discharged from any further obligation in respect of the
Finance Documents but shall remain entitled to the benefit of
this Clause 26. Its successor and each of the other Parties
shall have the same rights and obligations amongst themselves
as they would have had if such successor had been an original
Party.
(g) After consultation with the Borrower, the Majority Lenders
may, by notice to the Agent, require it to resign in
accordance with paragraph (b) above. In this event, the Agent
shall resign in accordance with paragraph (b) above.
26.12 Confidentiality
(a) In acting as agent for the Finance Parties, the Agent shall be
regarded as acting through its agency division which shall be
treated as a separate entity from any other of its divisions
or departments.
(b) If information is received by another division or department
of the Agent, it may be treated as confidential to that
division or department and the Agent shall not be deemed to
have notice of it.
26.13 Relationship with the Lenders
(a) The Agent may treat each Lender as a Lender, entitled to
payments under this Agreement and acting through its Facility
Office unless it has received not less than five Business Days
prior notice from that Lender to the contrary in accordance
with the terms of this Agreement.
(b) Each Lender shall supply the Agent with any information
required by the Agent in accordance with Schedule 4 (Mandatory
Cost Formulae).
26.14 Credit appraisal by the Lenders
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance
Document, each Lender confirms to the Agent and the Arranger that it
has been, and will continue to be, solely responsible for making its
own independent appraisal and investigation of all risks arising under
or in connection with any Finance Document including but not limited
to:
(a) the financial condition, status and nature of each member of
the Group;
(b) the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document and any other
agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any
Finance Document;
(c) whether that Lender has recourse, and the nature and extent of
that recourse, against any Party or any of its respective
assets under or in connection with any Finance Document, the
transactions contemplated by the Finance Documents or any
other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any
Finance Document; and
(d) the adequacy, accuracy and/or completeness of the Information
Memorandum and any other information provided by the Agent,
any Party or by any other person under or in connection with
any Finance Document, the transactions contemplated by the
Finance Documents or any other agreement, arrangement or
document entered into, made or executed in anticipation of,
under or in connection with any Finance Document.
26.15 Agent's Management Time
Any amount payable to the Agent under Clause 15.3 (Indemnity to the
Agent), Clause 17 (Costs and expenses) and Clause 26.10 (Lenders'
indemnity to the Agent) shall include the cost of utilising the Agent's
management time or other resources and will be calculated on the basis
of such reasonable daily or hourly rates as the Agent may notify to the
Borrower and the Lenders, and is in addition to any fee paid or payable
to the Agent under Clause 12 (Fees).
26.16 Deduction from amounts payable by the Agent
If any Party owes an amount to the Agent under the Finance Documents
the Agent may, after giving notice to that Party, deduct an amount not
exceeding that amount from any payment to that Party which the Agent
would otherwise be obliged to make under the Finance Documents and
apply the amount deducted in or towards satisfaction of the amount
owed. For the purposes of the Finance Documents that Party shall be
regarded as having received any amount so deducted.
27. Conduct of business by the Finance Parties
No provision of this Agreement will:
(a) interfere with the right of any Finance Party to arrange its
affairs (tax or otherwise) in whatever manner it thinks fit;
(b) oblige any Finance Party to investigate or claim any credit,
relief, remission or repayment available to it or the extent,
order and manner of any claim; or
(c) oblige any Finance Party to disclose any information relating
to its affairs (tax or otherwise) or any computations in
respect of Tax.
28. Sharing among the Finance Parties
28.1 Payments to Finance Parties
If a Finance Party (a "Recovering Finance Party") receives or recovers
any amount from an Obligor other than in accordance with Clause 29
(Payment mechanics) (whether by set-off or otherwise) and applies that
amount to a payment due under the Finance Documents then:
(a) the Recovering Finance Party shall, within three Business
Days, notify details of the receipt or recovery, to the Agent;
(b) the Agent shall determine whether the receipt or recovery is
in excess of the amount the Recovering Finance Party would
have been paid had the receipt or recovery been received or
made by the Agent and distributed in accordance with Clause 29
(Payment mechanics), without taking account of any Tax which
would be imposed on the Agent in relation to the receipt,
recovery or distribution; and
(c) the Recovering Finance Party shall, within three Business Days
of demand by the Agent, pay to the Agent an amount (the
"Sharing Payment") equal to such receipt or recovery less any
amount which the Agent determines may be retained by the
Recovering Finance Party as its share of any payment to be
made, in accordance with Clause 29.5 (Partial payments).
28.2 Redistribution of payments
The Agent shall treat the Sharing Payment as if it had been paid by the
relevant Obligor and distribute it between the Finance Parties (other
than the Recovering Finance Party) in accordance with Clause 29.5
(Partial payments).
28.3 Recovering Finance Party's rights
(a) On a distribution by the Agent under Clause 28.2
(Redistribution of payments), the Recovering Finance Party
will be subrogated to the rights of the Finance Parties which
have shared in the redistribution.
(b) If and to the extent that the Recovering Finance Party is not
able to rely on its rights under paragraph (a) above, the
relevant Obligor shall be liable to the Recovering Finance
Party for a debt equal to the Sharing Payment which is
immediately due and payable.
28.4 Reversal of redistribution
If any part of the Sharing Payment received or recovered by a
Recovering Finance Party becomes repayable and is repaid by that
Recovering Finance Party, then:
(a) each Finance Party which has received a share of the relevant
Sharing Payment pursuant to Clause 28.2 (Redistribution of
payments) shall, upon request of the Agent, pay to the Agent
for account of that Recovering Finance Party an amount equal
to the appropriate part of its share of the Sharing Payment
(together with an amount as is necessary to reimburse that
Recovering Finance Party for its proportion of any interest on
the Sharing Payment which that Recovering Finance Party is
required to pay); and
(b) that Recovering Finance Party's rights of subrogation in
respect of any reimbursement shall be cancelled and the
relevant Obligor will be liable to the reimbursing Finance
Party for the amount so reimbursed.
28.5 Exceptions
(a) This Clause 28 shall not apply to the extent that the
Recovering Finance Party would not, after making any payment
pursuant to this Clause, have a valid and enforceable claim
against the relevant Obligor.
(b) A Recovering Finance Party is not obliged to share with any
other Finance Party any amount which the Recovering Finance
Party has received or recovered as a result of taking legal or
arbitration proceedings, if:
(i) it notified that other Finance Party of the legal or
arbitration proceedings; and
(ii) that other Finance Party had an opportunity to
participate in those legal or arbitration proceedings
but did not do so as soon as reasonably practicable
having received notice and did not take separate
legal or arbitration proceedings.
SECTION 11
ADMINISTRATION
29. Payment mechanics
29.1 Payments to the Agent
(a) On each date on which an Obligor or a Lender is required to
make a payment under a Finance Document, that Obligor or
Lender shall make the same available to the Agent (unless a
contrary indication appears in a Finance Document) for value
on the due date at the time and in such funds specified by the
Agent as being customary at the time for settlement of
transactions in the relevant currency in the place of payment.
(b) Payments by Obligors or Lenders shall be made to such account
in New York (in relation to dollars), Tokyo (in relation to
yen) or a principal financial centre in a Participating Member
State or London (in relation to euro) with such bank as the
Agent specifies.
29.2 Distributions by the Agent
Each payment received by the Agent under the Finance Documents for
another Party shall, subject to Clause 29.3 (Distributions to an
Obligor), Clause 29.4 (Clawback) and Clause 26.17 (Deduction from
amounts payable by the Agent) be made available by the Agent as soon as
practicable after receipt to the Party entitled to receive payment in
accordance with this Agreement (in the case of a Lender, for the
account of its Facility Office), to such account as that Party may
notify to the Agent by not less than five Business Days' notice with a
bank in New York (in relation to dollars), Tokyo (in relation to yen)
or the principal financial centre of a Participating Member State or
London (in relation to euro).
29.3 Distributions to an Obligor
The Agent may (with the consent of the Obligor or in accordance with
Clause 30 (Set-off) apply any amount received by it for that Obligor in
or towards payment (on the date and in the currency and funds of
receipt) of any amount due from that Obligor under the Finance
Documents or in or towards purchase of any amount of any currency to be
so applied.
29.4 Clawback
(a) Where a sum is to be paid to the Agent under the Finance
Documents for another Party, the Agent is not obliged to pay
that sum to that other Party (or to enter into or perform any
related exchange contract) until it has been able to establish
to its satisfaction that it has actually received that sum.
(b) If the Agent pays an amount to another Party and it proves to
be the case that the Agent had not actually received that
amount, then the Party to whom that amount (or the proceeds of
any related exchange contract) was paid by the Agent shall on
demand refund the same to the Agent together with interest on
that amount from the date of payment to the date of receipt by
the Agent, calculated by the Agent to reflect its cost of
funds.
29.5 Partial payments
(a) If the Agent receives a payment that is insufficient to
discharge all the amounts then due and payable by an Obligor
under the Finance Documents, the Agent shall apply that
payment towards the obligations of that Obligor under the
Finance Documents in the following order:
(i) first, in or towards payment pro rata of any unpaid
fees, costs and expenses of the Agent and the
Arranger under the Finance Documents;
(ii) secondly, in or towards payment pro rata of any
accrued interest, fee or commission due but unpaid
under this Agreement;
(iii) thirdly, in or towards payment pro rata of any
principal due but unpaid under this Agreement; and
(iv) fourthly, in or towards payment pro rata of any other
sum due but unpaid under the Finance Documents.
(b) The Agent shall, if so directed by the Majority Lenders, vary
the order set out in paragraphs (a)(ii) to (iv) above.
(c) Paragraphs (a) and (b) above will override any appropriation
made by an Obligor.
29.6 No set-off by Obligors
All payments to be made by an Obligor under the Finance Documents shall
be calculated and be made without (and free and clear of any deduction
for) set-off or counterclaim.
29.7 Business Days
(a) Any payment which is due to be made on a day that is not a
Business Day shall be made on the next Business Day in the
same calendar month (if there is one) or the preceding
Business Day (if there is not).
(b) During any extension of the due date for payment of any
principal or Unpaid Sum under this Agreement interest is
payable on the principal or Unpaid Sum at the rate payable on
the original due date.
29.8 Currency of account
(a) Subject to paragraphs (b) to (e) below, the Base Currency (in
the case of Facility A and Facility B) and yen (in the case of
Facility C) is the currency of account and payment for any sum
due from an Obligor under any Finance Document.
(b) A repayment of a Loan or Unpaid Sum or a part of a Loan or
Unpaid Sum shall be made in the currency in which that Loan or
Unpaid Sum is denominated on its due date.
(c) Each payment of interest shall be made in the currency in
which the sum in respect of which the interest is payable was
denominated when that interest accrued.
(d) Each payment in respect of costs, expenses or Taxes shall be
made in the currency in which the costs, expenses or Taxes are
incurred.
(e) Any amount expressed to be payable in a currency other than
the Base Currency (in respect of Facility A and Facility B) or
yen (in respect of Facility C) shall be paid in that other
currency.
29.9 Change of currency
(a) Unless otherwise prohibited by law or regulation, if more than
one currency or currency unit are at the same time recognised
by the central bank of any country as the lawful currency of
that country, then:
(i) any reference in the Finance Documents to, and any
obligations arising under the Finance Documents in,
the currency of that country shall be translated
into, or paid in, the currency or currency unit of
that country designated by the Agent (after
consultation with the Borrower); and
(ii) any translation from one currency or currency unit to
another shall be at the official rate of exchange
recognised by the central bank for the conversion of
that currency or currency unit into the other.
(b) If a change in any currency of a country occurs, this
Agreement will be amended to comply with any generally
accepted conventions and market practice in the Relevant
Interbank Market and otherwise to reflect the change in
currency.
30. Set-off
A Finance Party may set off any matured obligation due from an Obligor
under the Finance Documents (to the extent beneficially owned by that
Finance Party) against any matured obligation owed by that Finance Party
to that Obligor, regardless of the place of payment, booking branch or
currency of either obligation. If the obligations are in different
currencies, the Finance Party may convert either obligation at a market
rate of exchange in its usual course of business for the purpose of the
set-off.
31. Notices
31.1 Communications in writing
Any communication to be made under or in connection with the Finance
Documents shall be made in writing and, unless otherwise stated, may be
made by fax or letter.
31.2 Addresses
The address and fax number (and the department or officer, if any, for
whose attention the communication is to be made) of each Party for any
communication or document to be made or delivered under or in
connection with the Finance Documents is:
(a) in the case of the Borrower, that identified with its name
below;
(b) in the case of each Lender or any other Obligor, that notified
in writing to the Agent on or prior to the date on which it
becomes a Party; and
(c) in the case of the Agent, that identified with its name below,
or any substitute address or fax number or department or officer as the
Party may notify to the Agent (or the Agent may notify to the other
Parties, if a change is made by the Agent) by not less than five
Business Days' notice.
31.3 Delivery
(a) Any communication or document made or delivered by one person
to another under or in connection with the Finance Documents
will only be effective:
(i) if by way of fax, when received in legible form; or
(ii) if by way of letter, when it has been left at the
relevant address or five Business Days after being
deposited in the post postage prepaid in an envelope
addressed to it at that address,
and, if a particular department or officer is specified as
part of its address details provided under Clause 31.2
(Addresses), if addressed to that department or officer.
(b) Any communication or document to be made or delivered to the
Agent will be effective only when actually received by the
Agent and then only if it is expressly marked for the
attention of the department or officer identified with the
Agent's signature below (or any substitute department or
officer as the Agent shall specify for this purpose).
(c) All notices from or to an Obligor shall be sent through the
Agent.
(d) Any communication or document made or delivered to the
Borrower in accordance with this Clause will be deemed to have
been made or delivered to the Guarantor.
31.4 Notification of address and fax number
Promptly upon receipt of notification of an address and fax number or
change of address or fax number pursuant to Clause 31.2 (Addresses) or
changing its own address or fax number, the Agent shall notify the
other Parties.
31.5 English language
(a) Any notice given under or in connection with any Finance
Document must be in English.
(b) All other documents provided under or in connection with any
Finance Document must be:
(i) in English; or
(ii) if not in English or Spanish, accompanied by a
certified English translation and, in this case, the
English translation will prevail unless the document
is a constitutional, statutory or other official
document.
32. Calculations and certificates
32.1 Accounts
In any litigation or arbitration proceedings arising out of or in
connection with a Finance Document, the entries made in the accounts
maintained by a Finance Party are prima facie evidence of the matters
to which they relate.
32.2 Certificates and Determinations
Any certification or determination by a Finance Party of a rate or
amount under any Finance Document is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
32.3 Day count convention
Any interest, commission or fee accruing under a Finance Document will
accrue from day to day and is calculated on the basis of the actual
number of days elapsed and a year of 360 days or, in any case where the
practice in the Relevant Interbank Market differs, in accordance with
that market practice.
32.4 Spanish Civil Procedure
In the event that this Agreement is raised to a Spanish Public
Document, for the purposes of Article 572.2 of the Spanish Civil
Procedure Law (Ley de Enjuiciamiento Civil), all parties expressly
agree that the exact amount due at any time by the Obligors to the
Lenders will be the amount specified in a certificate issued by the
Agent (and/or any Lender) in accordance with Clause 32.2 (Certificates
and Determinations) as representative of the Lenders reflecting the
balance of the accounts referred to in Clause 32.1 (Accounts).
33. Partial invalidity
If, at any time, any provision of the Finance Documents is or becomes
illegal, invalid or unenforceable in any respect under any law or
regulation of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions nor the legality, validity
or enforceability of such provision under the laws and regulations of
any other jurisdiction will in any way be affected or impaired.
34. Remedies and waivers
No failure to exercise, nor any delay in exercising, on the part of any
Finance Party, any right or remedy under the Finance Documents shall
operate as a waiver, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise or the exercise
of any other right or remedy. The rights and remedies provided in this
Agreement are cumulative and not exclusive of any rights or remedies
provided by law or regulation.
35. Amendments and waivers
35.1 Required consents
(a) Subject to Clause 35.2 (Exceptions) any term of the Finance
Documents may be amended or waived only with the consent of
the Majority Lenders and the Obligors and any such amendment
or waiver will be binding on all Parties.
(b) The Agent may effect, on behalf of any Finance Party, any
amendment or waiver permitted by this Clause.
35.2 Exceptions
(a) An amendment or waiver that has the effect of changing or
which relates to:
(i) the definition of "Majority Lenders" in Clause 1.1
(Definitions);
(ii) an extension to the Availability Period or to the
date of payment of any amount under the Finance
Documents;
(iii) a reduction in the Margin or a reduction in the
amount of any payment of principal, interest or fees;
(iv) an increase in or an extension of any Commitment;
(v) a change to the Borrower or any of the Guarantors;
(vi) any provision which expressly requires the consent of
all the Lenders; or
(vii) Clause 2.2 (Finance Parties' rights and obligations),
Clause 18 (Guarantee and Indemnity), Clause 24
(Changes to the Lenders), Clause 25 (Changes to the
Obligors) or this Clause 35; or
(viii) a change in the definition of Optional Currencies.
shall not be made without the prior consent of all the
Lenders.
(b) An amendment or waiver which relates to the rights or
obligations of the Agent or the Arranger may not be effected
without the consent of the Agent or the Arranger.
36. Counterparts
Each Finance Document may be executed in any number of counterparts,
and this has the same effect as if the signatures on the counterparts
were on a single copy of the Finance Document.
SECTION 12
GOVERNING LAW AND ENFORCEMENT
37. Governing law
37.1 This Agreement is governed by English law.
37.2 If any of the Original Guarantors is represented by an attorney or
attorneys in connection with the signing and/or execution and/or
delivery of this Agreement or any agreement or document referred to
herein or made pursuant hereto and the relevant power or powers of
attorney is or are expressed to be governed by the laws and regulations
of a particular jurisdiction, it is hereby expressly acknowledged and
accepted by the other parties hereto that such laws and regulations
shall govern the existence and extent of such attorney's or attorneys'
authority and the effects of the exercise thereof.
38. Enforcement
38.1 Jurisdiction
(a) The courts of England have exclusive jurisdiction to settle
any dispute arising out of or in connection with this
Agreement (including a dispute regarding the existence,
validity or termination of this Agreement) (a "Dispute").
(b) The Parties agree that the courts of England are the most
appropriate and convenient courts to settle Disputes and
accordingly no Party will argue to the contrary.
(c) This Clause 38.1 is for the benefit of the Finance Parties
only. As a result, no Finance Party shall be prevented from
taking proceedings relating to a Dispute in any other courts
with jurisdiction. To the extent allowed by law and
regulation, the Finance Parties may take concurrent
proceedings in any number of jurisdictions.
38.2 Service of process
Without prejudice to any other mode of service allowed under any
relevant law or regulation, each Obligor (other than an Obligor
incorporated in England and Wales):
(a) irrevocably appoints Clifford Chance Secretaries Limited as
its agent for service of process in relation to any
proceedings before the English courts in connection with any
Finance Document; and
(b) agrees that failure by a process agent to notify the relevant
Obligor of the process will not invalidate the proceedings
concerned.
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
SCHEDULE 1
THE ORIGINAL PARTIES
Part I
The Obligors
Name of Borrower Registration number
(or equivalent, if any)
Cemex Espana, S.A. N(0)Hoja-Registro Mercantil, Madrid:
M- 156542
NIF: A46/004214
Name of Guarantor Registration number
(or equivalent, if any)
Trade Register of the Chamber of Commerce and
Industry in Amsterdam (The Netherlands)
Cemex Caracas Investments B.V. 34121194
Cemex Caracas II Investments B.V. 34159953
Cemex Egyptian Investments B.V. 34108365
Cemex Manila Investments B.V. 34108359
Sandworth Plaza Holding B.V. 33234378
Part II
The Original Lenders
- ---------------------------------------------------------------------------------------------------------------
Name of Original Lender Facility A Commitment Facility B Commitment Facility C
(euro) (euro) Commitment
(yen)
- ---------------------------------------------------------------------------------------------------------------
Banco Bilbao Vizcaya Argentaria, S.A. 5,059,020.43 9,250,000.00 2,920,782,887
Societe Generale, S.A. 4,101,908.48 7,500,000.00 2,368,202,341
Banco Espanol de Credito S.A. 3,322,545.87 6,075,000.00 1,918,243,896
Banco Santander Central Hispano, S.A. 3,322,545.87 6,075,000.00 1,918,243,896
BNP Paribas, Sucursal en Espana 3,322,545.87 6,075,000.00 1,918,243,896
Citibank International plc, Sucursal en
Espana 3,322,545.87 6,075,000.00 1,918,243,896
HSBC Bank PLC, Sucursal en Espana 3,322,545.87 6,075,000.00 1,918,243,896
ING Belgium S.A., Sucursal en Espana 3,322,545.87 6,075,000.00 1,918,243,896
The Royal Bank of Scotland PLC 3,322,545.87 6,075,000.00 1,918,243,896
Banco de Galicia, S.A. 9,187,500.00 3,062,500.00
Banco de Sabadell, S.A. 9,187,500.00 3,062,500.00
Bank of America N.A., Sucursal en Espana 9,187,500.00 3,062,500.00
Caixa d'Estalvis de Catalunya 9,187,500.00 3,062,500.00
Caja Madrid 9,187,500.00 3,062,500.00
Fortis Bank, S.A., Sucursal en Espana 4,593,750.00 3,062,500.00 591,307,500
Natexis Banques Populaires, Sucursal en
Espana 9,187,500.00 3,062,500.00
WestLB Ireland plc 9,187,500.00 3,062,500.00
Banco Simeon, S.A. 6,825,000.00 2,275,000.00
ABN Amro Bank N.V., Sucursal en Espana 4,650,000.00 1,550,000.00
Banca di Roma SpA, Sucursal en Espana, Madrid 4,650,000.00 1,550,000.00
Banco Atlantico, S.A. 4,650,000.00 1,550,000.00
Banco de Valencia, S.A. 4,650,000.00 1,550,000.00
Banco Itau Europa S.A., Sucursal Financiera
Exterior - Madeira 4,650,000.00 1,550,000.00
Centrobanca - Banca di Credito Finanziario e
Mobiliare S.p.A. 4,650,000.00 1,550,000.00
Commerzbank Aktiengesellschaft, Sucursal en
Espana 4,650,000.00 1,550,000.00
JP Morgan Bank, S.A. 4,650,000.00 1,550,000.00
Lloyds TSB Bank plc, Sucursal en Espana 4,650,000.00 1,550,000.00
- ---------------------------------------------------------------------------------------------------------------
TOTALS 150,000,000.00 100,000,000.00 19,308,000,000.00
- ---------------------------------------------------------------------------------------------------------------
SCHEDULE 2
CONDITIONS PRECEDENT
Part I
Conditions Precedent to initial Utilisation
1. Obligors
(a) A copy of the constitutional documents of each Obligor.
(a) A power of attorney granting a specific individual or
individuals sufficient power to sign the Finance Documents on
behalf of the Borrower and a copy of a resolution of the
board of directors of each Original Guarantor:
(i) approving the terms of, and the transactions
contemplated by, the Finance Documents to which it
is a party and resolving that it execute the Finance
Documents to which it is a party;
(ii) authorising a specified person or persons to execute
the Finance Documents to which it is a party on its
behalf; and
(iii) authorising a specified person or persons, on its
behalf, to sign and/or despatch all documents and
notices (including, if relevant, any Utilisation
Request) to be signed and/or despatched by it under
or in connection with the Finance Documents to which
it is a party.
(b) A specimen of the signature of each person authorised by the
resolution or power of attorney referred to in paragraph (b)
above.
(c) A certificate of each of the Obligors (signed by an
Authorised Signatory) confirming that borrowing or
guaranteeing, as appropriate, the Total Commitments would not
cause any borrowing, guarantee or similar limit binding on
any Obligor to be exceeded.
(d) A certificate of an Authorised Signatory of the relevant
Obligor certifying that each copy document relating to it
specified in this Part I of Schedule 2 is correct, complete
and in full force and effect as at a date no earlier than the
date of this Agreement.
2. Legal opinions
(a) An opinion with respect to the laws and regulations of
England from Clifford Chance, substantially in the form
distributed to the Original Lenders prior to signing this
Agreement.
(b) An opinion with respect to the laws and regulations of the
Kingdom of Spain from Clifford Chance, substantially in the
form distributed to the Original Lenders prior to signing
this Agreement.
(c) An opinion with respect to the laws and regulations of The
Netherlands from Clifford Chance, substantially in the form
distributed to the Original Lenders prior to signing this
Agreement.
(d) An opinion from in-house counsel of the Borrower,
substantially in the form distributed to the Original Lenders
prior to signing the Agreement.
3. Other documents and evidence
(a) Evidence that any process agent referred to in Clause 38.2
(Service of process) has accepted its appointment.
(b) The Original Financial Statements of each Obligor.
(c) A copy of form PE-1 stamped by the Bank of Spain (Banco de
Espana), whereby it assigns a Financial Operation Number
("NOF") to the Facility.
Part II
Conditions Precedent required to be delivered by an Additional Guarantor
1. Obligors
(a) An Accession Letter, duly executed by the Additional
Guarantor and the Borrower.
(b) A copy of the constitutional documents of the Additional
Guarantor.
(c) A copy of a resolution of the board of directors of the
Additional Guarantor:
(i) approving the terms of, and the transactions
contemplated by, the Accession Letter and this
Agreement and resolving that it execute the
Accession Letter;
(ii) authorising a specified person or persons to execute
the Accession Letter on its behalf; and
(iii) authorising a specified person or persons, on its
behalf, to sign and/or despatch all documents and
notices (including, if relevant, any Utilisation
Request) to be signed and/or despatched by it under
or in connection with this Agreement.
(d) A specimen of the signature of each person authorised by the
resolution referred to in paragraph (c) above.
(e) Should the legal advisers of the Lenders consider it
advisable, a copy of a resolution signed by all the holders
of the issued shares of the Additional Guarantor, approving
the terms of, and the transactions contemplated by, the
Finance Documents to which the Additional Guarantor is a
party.
(f) A certificate of the Additional Guarantor (signed by an
Authorised Signatory) confirming that guaranteeing the Total
Commitments would not cause any guaranteeing or similar limit
binding on it to be exceeded.
(g) A certificate of an Authorised Signatory of the Additional
Guarantor certifying that each copy document listed in this
Part II of Schedule 2 is correct, complete and in full force
and effect as at a date no earlier than the date of the
Accession Letter.
2. Legal opinion
(a) A legal opinion of the legal advisers to the Additional
Guarantor in form and substance reasonably satisfactory to
the legal advisers of the Lenders.
(b) A legal opinion of Clifford Chance, or other firm that can
opine for the Additional Guarantor if not Clifford Chance,
legal advisers to the Lenders.
3. Other documents and evidence
(a) Evidence that any process agent referred to in Clause 38.2
(Service of process) has accepted its appointment.
(b) A copy of any other Authorisation or other document, opinion
or assurance which the Agent considers (after having taken
appropriate legal advice) to be necessary or desirable (if it
has notified the Additional Guarantor and the Borrower
accordingly) in connection with the entry into and
performance of the transactions contemplated by any Finance
Document or for the validity and enforceability of any
Finance Document.
(c) The Original Financial Statements of the Additional
Guarantor.
SCHEDULE 3
REQUESTS
Part I
Utilisation Request
From: Cemex Espana, S.A.
To: Banco Bilbao Vizcaya Argentaria, S.A.
Dated:
Dear Sirs
Cemex Espana, S.A. - EUR 250,000,000 and (Y) 19,308,000,000 Facilities
Agreement dated 30 March 2004 (the "Agreement")
1. We refer to the Agreement. This is a Utilisation Request. Terms
defined in the Agreement have the same meaning in this Utilisation
Request unless given a different meaning in this Utilisation Request.
2. We wish to borrow a Loan on the following terms:
Proposed Utilisation Date: [ ] (or, if that is not a Business
Day, the next Business Day)
Facility to be utilised: [Facility A]/[Facility B]/[Facility C]*
Currency of Loan: [ ]
Amount: [ ] or, if less, the Available
Facility
Interest Period: [ ]
3. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Utilisation
Request.
4. The proceeds of this Loan should be credited to [account].
5. This Utilisation Request is irrevocable.
Yours faithfully
................................
authorised signatory for
Cemex Espana, S.A.
* delete as appropriate
Part II
Selection Notice
Applicable to the Facility A Loan
From: Cemex Espana, S.A.
To: Banco Bilbao Vizcaya Argentaria, S.A.
Dated:
Dear Sirs
Cemex Espana, S.A. - EUR 250,000,000 and (Y) 19,308,000,000 Facilities
Agreement dated 30 March 2004 (the "Agreement")
1. We refer to the Agreement. This is a Selection Notice. Terms defined
in the Agreement have the same meaning in this Selection Notice unless
given a different meaning in this Selection Notice.
2. We refer to the Facility A Loan in [identify currency] with an
Interest Period ending on [ ]*.
3. We request that the next Interest Period for the Facility A Loan is
[ ].
4. We request that the Facility A Loan is [denominated in the same
currency for the next Interest Period]/[denominated in the following
currencies: [ ]. As this results in a change of currency we
confirm that each condition specified in Clause 4.2 (Further conditions
precedent) is satisfied on the date of this Selection Notice. The
proceeds of any change in currency should be credited to [account].] .
5. This Selection Notice is irrevocable.
Yours faithfully
.....................................
authorised signatory for
Cemex Espana, S.A.
- --------------
* Insert details of the Facility A Loan.
SCHEDULE 4
MANDATORY COST FORMULAE
1. The Mandatory Cost is an addition to the interest rate to compensate
Lenders for the cost of compliance with (a) the requirements of the
Financial Services Authority (or any other authority which replaces
all or any of its functions) or (b) the requirements of the European
Central Bank.
2. On the first day of each Interest Period (or as soon as possible
thereafter) each Lender shall calculate, as a percentage rate, a rate
(the "Additional Cost Rate"), in accordance with the paragraphs set
out below. The Mandatory Cost will be a weighted average of the
Lenders' Additional Cost Rates (weighted in proportion to the
percentage participation of each Lender in the relevant Loan) and will
be expressed as a percentage rate per annum.
3. The Additional Cost Rate for any Lender lending from a Facility Office
in a Participating Member State will be the percentage notified by
that Lender to the Agent. This percentage will be certified by that
Lender in its notice to the Agent to be its reasonable determination
of the cost (expressed as a percentage of that Lender's participation
in all Loans made from that Facility Office) of complying with the
minimum reserve requirements of the European Central Bank in respect
of loans made from that Facility Office.
4. The Additional Cost Rate for any Lender lending from a Facility Office
in the United Kingdom will be calculated by the relevant Lender as
follows:
Ex 0.01
----------- per cent. per annum.
300
Where:
E is designed to compensate Lenders for amounts payable under the
Fees Rules and is calculated by the relevant Lender as being the
average of the most recent rates of charge supplied by the
Reference Banks to the relevant Lender pursuant to paragraph 6
below and expressed in pounds per (pound)1,000,000.
5. For the purposes of this Schedule:
(a) "Fees Rules" means the rules on periodic fees contained in the
FSA Supervision Manual or such other law or regulation as may be
in force from time to time in respect of the payment of fees for
the acceptance of deposits;
(b) "Fee Tariffs" means the fee tariffs specified in the Fees Rules
under the activity group A.1 Deposit acceptors (ignoring any
minimum fee or zero rated fee required pursuant to the Fees
Rules but taking into account any applicable discount rate); and
(c) "Tariff Base" has the meaning given to it in, and will be
calculated in accordance with, the Fees Rules.
6. If requested by a Lender, each Reference Bank shall, as soon as
practicable after publication by the Financial Services Authority,
supply to such Lender, the rate of charge payable by that Reference
Bank to the Financial Services Authority pursuant to the Fees Rules in
respect of the relevant financial year of the Financial Services
Authority (calculated for this purpose by that Reference Bank as being
the average of the Fee Tariffs applicable to that Reference Bank for
that financial year) and expressed in pounds per (pound)1,000,000 of
the Tariff Base of that Reference Bank.
7. The rates of charge of each Reference Bank for the purpose of E above
shall be determined by the relevant Lender based upon the information
supplied to it pursuant to paragraph 6 above.
8. The Agent shall have no liability to any person if such determination
results in an Additional Cost Rate which over or under compensates any
Lender and shall be entitled to assume that the information provided
by any Lender or Reference Bank pursuant to paragraphs 3 and 6 above
is true and correct in all respects.
9. The Agent shall distribute the additional amounts received as a result
of the Mandatory Cost to the Lenders on the basis of the Additional
Cost Rate for each Lender based on the information provided by each
Lender and each Reference Bank pursuant to paragraphs 3 and 6 above.
10. Any determination by a Lender pursuant to this Schedule in relation to
a formula, the Mandatory Cost, an Additional Cost Rate or any amount
payable to a Lender shall, in the absence of manifest error, be
conclusive and binding on all Parties.
11. The Agent may from time to time, if so requested by any Lender, notify
to all Parties any amendments which are required by such Lender to be
made to this Schedule in order to comply with any change in law or
regulation or any requirements from time to time imposed by the
Financial Services Authority or the European Central Bank (or, in any
case, any other authority which replaces all or any of its functions).
SCHEDULE 5
FORM OF TRANSFER CERTIFICATE
To: Banco Bilbao Vizcaya Argentaria, S.A. as Agent
From: [The Existing Lender] (the "Existing Lender") and [The New Lender]
(the "New Lender")
Dated:
Cemex Espana, S.A. - EUR 250,000,000 and (Y) 19,308,000,000 Facilities
Agreement dated 30 March 2004 (the "Agreement")
1. We refer to the Agreement. This is a Transfer Certificate. Terms
defined in the Agreement have the same meaning in this Transfer
Certificate unless given a different meaning in this Transfer
Certificate.
2. We refer to Clause 24.5 (Procedure for transfer):
(a) The Existing Lender and the New Lender agree to the Existing
Lender transferring to the New Lender by novation all or part
of the Existing Lender's Commitment, rights and obligations
referred to in the Schedule in accordance with Clause 24.5
(Procedure for transfer).
(b) The proposed Transfer Date is [ ].
(c) The Facility Office and address, fax number and attention
details for notices of the New Lender for the purposes of
Clause 31.2 (Addresses) are set out in the Schedule.
3. The New Lender expressly acknowledges the limitations on the Existing
Lender's obligations set out in paragraph (c) of Clause 24.4
(Limitation of responsibility of Existing Lenders).
4. This Transfer Certificate may be executed in any number of
counterparts and this has the same effect as if the signatures on the
counterparts were on a single copy of this Transfer Certificate.
5. This Transfer Certificate is governed by English law.
THE SCHEDULE
Commitment/rights and obligations to be transferred
[insert relevant details]
[Facility Office address, fax number and attention details for notices
and account details for payments,]
[Existing Lender] [New Lender]
By: By:
SCHEDULE 6
FORM OF COMPLIANCE CERTIFICATE
To: Banco Bilbao Vizcaya Argentaria, S.A. as Agent
From: Cemex Espana, S.A.
Dated:
Dear Sirs
Cemex Espana, S.A. - EUR 250,000,000 and (Y) 19,308,000,000 Facilities
Agreement dated 30 March 2004 (the "Agreement")
1. We refer to the Agreement. This is a Compliance Certificate. Terms
defined in the Agreement have the same meaning when used in this
Compliance Certificate unless given a different meaning in this
Compliance Certificate.
2. We confirm that:
(a) Pursuant to Clause 21.2 (Financial condition) the financial
condition of the Group as of [ ] evidenced by the
consolidated financial statements for the financial
year/first half/second half of the financial year then ended
comply with the following conditions:
(i) Net Borrowings EUR ______________ ("A")
comprising EUR [Guarantees]
EUR [Off-Balance-Sheet Transactions]
EUR [Financial Indebtedness]
EUR [Liquid Investments]
Adjusted EBITDA
comprising:
EUR [operating profit]
EUR [annual depreciation for fixed assets]
EUR [annual amortisation of intangible assets]
EUR [annual amortisation of start-up costs of the
Group]
EUR [dividends received from non-consolidated
companies]
EUR [dividends received from companies consolidated
by the equity method]
EUR [Cemex Capital Contributions]
EUR [acquired business (i) operating income and (ii)
depreciation and amortisation expense]
EUR ______________ ("B")
A:B to be less than or equal to 3.5:1
(ii) EBITDA EUR ______________ ("B")
Finance Charges
comprising EUR [interest expenses]
EUR [other expenses]
EUR ______________ ("C")
B:C to be greater than or equal to 3:1
(b) As at the date of this Certificate the following Subsidiaries
of the Group fall within the definition of Material
Subsidiaries as set out in Clause 1.1 (Definitions):
3. We confirm that no Default is continuing.
Signed: ........................................
Authorised Signatory
of
Cemex Espana, S.A.
[insert applicable certification language]
.........................................
for and on behalf of
[name of auditors of the Borrower]
SCHEDULE 7
EXISTING SECURITY
Company Lender Security Total Principal Amount of
Indebtedness Secured as
of 31 December 2003
(millions of euro)
CEMEX Construction Materials, L.P. Navistar Financial Equipment related 1.08
with the Credit
CEMEX Construction Materials, L.P. GE Capital 7964, 8069 Equipment related 0.93
with the Credit
CEMEX Construction Materials, L.P. City of Long Beach Cement Terminal 7.77
(Capital Lease
Obligation)
CEMEX Construction Materials, L.P. Hampton Land related with the 0.25
Credit
CEMEX Construction Materials, L.P. RIO Land related with the 3.97
credt
CEMEX Construction Materials, L.P. Met-South, Inc. Ash storage facility 0.18
-------------
14.18
SCHEDULE 8
EXISTING NOTARISATIONS
Type of Agreement Borrower/Guarantor Maturity Date Total Principal
Amount of
Indebtedness
notarised as
of 31
December 2003
Bilateral lines Cemex Espana S.A./n.a. Between Jan. 2004 and Dec. EUR 55,593,620 (1) (2)
2005
Deferred purchase price Aricemex S.A./n.a. July, 2005 EUR 961,619
5-year term loan Cementos Diamante/ Cemex October 19th, 2004 US$ 37,172,250
Espana S.A.
(1) Corresponds to the total committed amount under
the facilities. Amount drawn as of 12.31.03: EUR 25,897,210
(2) EUR 4,507,591 matured in January 14, 2004.
SCHEDULE 9
LMA FORM OF cONFIDENTIALITY uNDERTAKING
[Letterhead of Seller/Seller's agent/broker]
To:
===========================
[insert name of Potential
Purchaser/Purchaser's agent/broker]
===========================
Re: The Agreement
===========================
Borrower:
Date:
Amount:
Agent:
===========================
Dear Sirs
We understand that you are considering [acquiring]/[arranging the acquisition
of] an interest in the Agreement (the "Acquisition"). In consideration of us
agreeing to make available to you certain information, by your signature of a
copy of this letter you agree as follows:
1. Confidentiality Undertaking
You undertake (a) to keep the Confidential Information confidential
and not to disclose it to anyone except as provided for by paragraph 2
below and to ensure that the Confidential Information is protected
with security measures and a degree of care that would apply to your
own confidential information, (b) to use the Confidential Information
only for the Permitted Purpose, (c) to use all reasonable endeavours
to ensure that any person to whom you pass any Confidential
Information (unless disclosed under paragraph 2[(c)/(d)] below)
acknowledges and complies with the provisions of this letter as if
that person were also a party to it, and (d) not to make enquiries of
any member of the Group or any of their officers, directors, employees
or professional advisers relating directly or indirectly to the
Acquisition.
2. Permitted Disclosure
We agree that you may disclose Confidential Information:
(a) to members of the Purchaser Group and their officers,
directors, employees and professional advisers to the extent
necessary for the Permitted Purpose and to any auditors of
members of the Purchaser Group;
(b) [subject to the requirements of the Agreement, in accordance
with the Permitted Purpose so long as any prospective
purchaser has delivered a letter to you in equivalent form to
this letter;]
[(b/c)] subject to the requirements of the Agreement, to any person
to (or through) whom you assign or transfer (or may
potentially assign or transfer) all or any of the rights,
benefits and obligations which you may acquire under the
Agreement or with (or through) whom you enter into (or may
potentially enter into) any sub-participation in relation to,
or any other transaction under which payments are to be made
by reference to, the Agreement or the Borrower or any member
of the Group in each case so long as that person has
delivered a letter to you in equivalent form to this letter;
and
[(c/d)] (i) where requested or required by any court of competent
jurisdiction or any competent judicial, governmental,
supervisory or regulatory body, (ii) where required by the
rules of any stock exchange on which the shares or other
securities of any member of the Purchaser Group are listed or
(iii) where required by the laws or regulations of any
country with jurisdiction over the affairs of any member of
the Purchaser Group.
3. Notification of Required or Unauthorised Disclosure
You agree (to the extent permitted by law) to inform us of the full
circumstances of any disclosure under paragraph 2[(c)/(d)]3 or upon
becoming aware that Confidential Information has been disclosed in
breach of this letter.
4. Return of Copies
If we so request in writing, you shall return all Confidential
Information supplied to you by us and destroy or permanently erase all
copies of Confidential Information made by you and use all reasonable
endeavours to ensure that anyone to whom you have supplied any
Confidential Information destroys or permanently erases such
Confidential Information and any copies made by them, in each case save
to the extent that you or the recipients are required to retain any
such Confidential Information by any applicable law, rule or regulation
or by any competent judicial, governmental, supervisory or regulatory
body or in accordance with internal policy, or where the Confidential
Information has been disclosed under paragraph 2[(c)/(d)]3 above.
5. Continuing Obligations
The obligations in this letter are continuing and, in particular, shall
survive the termination of any discussions or negotiations between you
and us. Notwithstanding the previous sentence, the obligations in this
letter shall cease (a) if you become a party to or otherwise acquire
(by assignment or sub-participation) an interest, direct or indirect,
in the Agreement or (b) twelve months after you have returned all
Confidential Information supplied to you by us and destroyed or
permanently erased all copies of Confidential Information made by you
(other than any such Confidential Information or copies which have been
disclosed under paragraph 2 above (other than sub-paragraph 2(a)) or
which, pursuant to paragraph 4 above, are not required to be returned
or destroyed).
6. No Representation; Consequences of Breach, etc
You acknowledge and agree that:
(a) neither we, [nor our principal] nor any member of the Group
nor any of our or their respective officers, employees or
advisers (each a "Relevant Person") (i) make any
representation or warranty, express or implied, as to, or
assume any responsibility for, the accuracy, reliability or
completeness of any of the Confidential Information or any
other information supplied by us or the assumptions on which
it is based or (ii) shall be under any obligation to update
or correct any inaccuracy in the Confidential Information or
any other information supplied by us or be otherwise liable
to you or any other person in respect to the Confidential
Information or any such information; and
(b) we [or our principal] or members of the Group may be
irreparably harmed by the breach of the terms hereof and
damages may not be an adequate remedy; each Relevant Person
may be granted an injunction or specific performance for any
threatened or actual breach of the provisions of this letter
by you.
7. No Waiver; Amendments, etc
This letter sets out the full extent of your obligations of
confidentiality owed to us in relation to the information the subject
of this letter. No failure or delay in exercising any right, power or
privilege hereunder will operate as a waiver thereof nor will any
single or partial exercise of any right, power or privilege preclude
any further exercise thereof or the exercise of any other right, power
or privileges hereunder. The terms of this letter and your obligations
hereunder may only be amended or modified by written agreement between
us.
8. Inside Information
You acknowledge that some or all of the Confidential Information is or
may be price-sensitive information and that the use of such information
may be regulated or prohibited by applicable legislation relating to
insider dealing and you undertake not to use any Confidential
Information for any unlawful purpose.
9. Nature of Undertakings
The undertakings given by you under this letter are given to us and
(without implying any fiduciary obligations on our part) are also given
for the benefit of [our principal,]4 the Borrower and each other member
of the Group.
10. Third Party Rights
(a) Subject to this paragraph 10 and to paragraphs 6 and 9, a
person who is not a party to this letter has no right under
the Contracts (Rights of Third Parties) Act 1999 (the "Third
Parties Act") to enforce or to enjoy the benefit of any term
of this letter.
(b) The Relevant Persons may enjoy the benefit of the terms of
paragraphs 6 and 9 subject to and in accordance with this
paragraph 10 and the provisions of the Third Parties Act.
(c) The parties to this letter do not require the consent of the
Relevant Persons to rescind or vary this letter at any time.
11. Governing Law and Jurisdiction
(a) This letter (including the agreement constituted by your
acknowledgement of its terms) is governed by English law.
(b) The parties submit to the non-exclusive jurisdiction of the
English courts.
12. Definitions
In this letter (including the acknowledgement set out below) terms
defined in the Agreement shall, unless the context otherwise requires,
have the same meaning and:
"Confidential Information" means any information relating to the
Borrower, the Group, the Agreement and/or the Acquisition provided to
you by us or any of our affiliates or advisers, in whatever form, and
includes information given orally and any document, electronic file or
any other way of representing or recording information which contains
or is derived or copied from such information but excludes information
that (a) is or becomes public knowledge other than as a direct or
indirect result of any breach of this letter or (b) is known by you
before the date the information is disclosed to you by us or any of our
affiliates or advisers or is lawfully obtained by you thereafter, other
than from a source which is connected with the Group and which, in
either case, as far as you are aware, has not been obtained in
violation of, and is not otherwise subject to, any obligation of
confidentiality;
"Group" means the Borrower and each of its holding companies and
subsidiaries and each subsidiary of each of its holding companies (as
each such term is defined in the Companies Act 1985);
"Permitted Purpose" means [subject to the terms of this letter, passing
on information to a prospective purchaser for the purpose of]2
considering and evaluating whether to enter into the Acquisition; and
"Purchaser Group" means you, each of your holding companies and
subsidiaries and each subsidiary of each of your holding companies (as
each such term is defined in the Companies Act 1985).
Please acknowledge your agreement to the above by signing and returning the
enclosed copy.
Yours faithfully
....................
For and on behalf of
[Seller/Seller's agent/broker]
To: [Seller]
[Seller's agent/broker]
The Borrower and each other member of the Group
We acknowledge and agree to the above:
...........................
For and on behalf of
[Potential Purchaser/Purchaser's agent/broker]
SCHEDULE 10
TIMETABLES
Loans in euro Loans in other currencies
Delivery of a duly completed Utilisation Request U-3 U-3
(Clause 5.1 (Delivery of a Utilisation Request)) or
a Selection Notice (Clause 10.1 (Selection of 11.30am 11.30am
Interest Periods))
Agent determines (in relation to a Utilisation) the U-3 U-3
Base Currency Amount or yen amount of the Loan, if
required under Clause 5.4 (Lenders' participation) 2.30pm 2.30pm
Agent notifies the Lenders of the Loan in U-3 U-3
accordance with Clause 5.4 (Lenders' participation)
4.30pm 4.30pm
Agent receives a notification from a Lender under U-3 U-3
Clause 6.2 (Unavailability of a currency) as of 5.00pm as of 5.00pm
Agent gives notice in accordance with Clause 6.2 U-3 U-3
(Unavailability of a currency) as of 5.30pm as of 5.30pm
Agent determines amount of the Loan in Optional U-3 U-3
Currency in accordance with Clause 6.3 (Change of as of 2.30pm as of 2.30pm
currency)
Agent determines amount of the Facility A Loan in U-3 U-3
Optional Currency in accordance with Clause 6.4 as of 2.30pm as of 2.30pm
(Same Optional Currency during successive
Interest Periods)
Agent determines amount of the Facility A Loan U-3 U-3
in Optional Currency converted into Base as of 2.30pm as of 2.30pm
Currency in accordance with paragraph (b)
of Clause 6.4 (Same Optional Currency
during successive Interest Periods)
LIBOR or EURIBOR is fixed Quotation Day as Quotation Day as of
of 11:00 a.m. 11:00 a.m.
London time in
respect of LIBOR
and as of 11.00
a.m. Brussels
time in respect
of EURIBOR
"U" = date of utilisation
"U - X" = X Business Days prior to date of utilisation
SCHEDULE 11
FORM OF ACCESSION LETTER
To: Banco Bilbao Vizcaya Argentaria, S.A. as Agent
From: [Additional Guarantor] and Cemex Espana, S.A.
Dated:
Dear Sirs
Cemex Espana, S.A. - EUR 250,000,000 and (Y) 19,308,000,000 Facilities
Agreement dated 30 March 2004 (the "Agreement")
1. [Additional Guarantor] agrees to become an Additional
Guarantor and to be bound by the terms of the Facility
Agreement as an Additional Guarantor pursuant to Clause 25
(Changes to the Obligors) of the Facility Agreement.
[Additional Guarantor] is a company duly incorporated under
the laws and regulations of [name of relevant jurisdiction].
2. (0)Additional Guarantor's] administrative details are as
follows:
Address:
Fax No:
Attention:
3. This Accession Letter is governed by English law and is
entered into by deed.
[Additional Guarantor] Cemex Espana, S.A.
SCHEDULE 12
MATERIAL SUBSIDIARIES
Cemex Inc.
Cemex Corp.
Cemex Venezuela SACA
Vencement Investments
Construction Fund Corporation
SCHEDULE 13
DEFINING THE JPY FIX RATE
1. Defining the JPY Fix Rate
(a) Defining the five year Japanese Yen fix rate in the case the
five year swap spread between bid and ask is 3 (three) basis
points.
Add to Mid-market of five year Japanese swap rate shown on the
"ICAP1" Reuters screen 5 (five) basis points. This calculation
should take place on April 13 2004 (for a swap from 15 April
2004 to 30 March 2009) at or about 10 a.m. Madrid time. The
result of this procedure will be the five year Japanese Yen
fix rate for Facility C.
If the "ICAP1" Reuters screen is not showing a market value at
that moment, then there would be a delay of 10 to 15 minutes,
assuming that "ICAP1" corrects its quotation.
If after 10:15 a.m. Madrid time on 13 April 2004, the "ICAP1"
Reuters screen is still showing a non market quotable rate,
then the five year Japanese swap rate shown on the "ICAP1"
Reuters screen will be replaced in accordance with the
following procedure:
Ask for a quotation of a mid-market value of the reference
transaction from the London offices of the following 3 (three)
banks:
(i) Deutsche Bank AG
(ii) Barclays Bank PLC
(iii) Credit Agricole Indosuez
The average of the 3 (three) quotes from the banks will be
the Mid-market of five year Japanese swap rate that will
apply.
(b) Defining the five year Japanese Yen fix rate in the case the
five year swap spread between bid-ask is more than 3 (three)
basis points.
If the five year swap spread between bid-ask on 13 April 2004
is more than 3 (three) basis points, the Borrower will have
the option of waiting until it comes back to 3 (three) basis
points (until 28 April 2004 at the latest), in which case the
calculation method described in "(a)" above will apply, or,
alternatively, to opt for the following calculation method:
Add to the offer side of the five year Japanese swap rate
shown on the "ICAP1" Reuters screen 3.5 (three and a half)
basis points. This calculation should take place at or about
10 a.m. Madrid time. The result of this procedure will be the
five year Japanese Yen fix rate for Facility C.
If the "ICAP1" Reuters screen is not showing a market value
at that moment, then there would be a delay of 10 to 15
minutes, assuming that "ICAP1" corrects its quotation. If
after 10:15 a.m. Madrid time on 28 April 2004 the "ICAP1"
Reuters screen is still showing a non market quotable rate,
then the five year Japanese swap rate shown on the "ICAP1"
Reuters screen will be replaced in accordance with the
following procedure:
Ask for a quotation of an offer value for the reference
transaction from the London offices of the following 3
(three) banks:
(i) Deutsche Bank AG
(ii) Barclays Bank PLC
(iii) Credit Agricole Indosuez
The five year Japanese swap rate will be the average of the 3
(three) quotes from the banks.
In any event, if the bid-ask spread remains above 3 (three)
basis points during the full period 13 April 2004 - 28 April
2004, the calculation method described in "(b)" will have to
apply on 28 April 2004.
2. Definitions
"Mid-market" means the average of the bid and the offer.
3. Calculations
All calculations described in this schedule shall be made by the
treasury departments of the Borrower and all of the Facility C Lenders
together.
SIGNATURES
THE BORROWER
CEMEX ESPANA, S.A.
By: PILAR RUIZ
Address: Hernandez de Tejada, 1, 28027 Madrid, Spain
Fax: +34 91 377 94 94/+34 91 353 63 50
Attention: Hector Campa Martinez
THE ORIGINAL GUARANTORS
CEMEX CARACAS INVESTMENTS B.V.
By: PILAR RUIZ
Address: Hernandez de Tejada, 1, 28027 Madrid, Spain
Fax: +34 91 377 94 94/+34 91 353 63 50
Attention: Hector Campa Martinez
CEMEX CARACAS II INVESTMENTS B.V.
By: PILAR RUIZ
Address: Hernandez de Tejada, 1, 28027 Madrid, Spain
Fax: +34 91 377 94 94/+34 91 353 63 50
Attention: Hector Campa Martinez
CEMEX EGYPTIAN INVESTMENTS B.V.
By: PILAR RUIZ
Address: Hernandez de Tejada, 1, 28027 Madrid, Spain
Fax: +34 91 377 94 94/+34 91 353 63 50
Attention: Hector Campa Martinez
CEMEX MANILA INVESTMENTS B.V.
By: PILAR RUIZ
Address: Hernandez de Tejada, 1, 28027 Madrid, Spain
Fax: +34 91 377 94 94/+34 91 353 63 50
Attention: Hector Campa Martinez
SANDWORTH PLAZA HOLDING B.V.
By: PILAR RUIZ
Address: Hernandez de Tejada, 1, 28027 Madrid, Spain
Fax: +34 91 377 94 94/+34 91 353 63 50
Attention: Hector Campa Martinez
THE AGENT
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
By: ALVARO BAREZ/JOSE MARIA SAGARDOY
Address: Via de los Poblados s/n - 4(a)planta, 28033 Madrid, Spain
Fax: +34 91 374 41 40
Attention: Jose Luis Madrid Lopez/Juan Ramon Arcos Sanz
THE ARRANGER
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
By: ALVARO BAREZ/JOSE MARIA SAGARDOY
Address: Via de los Poblados s/n - 4(a)planta, 28033 Madrid, Spain
Fax: +34 91 374 41 40
Attention: Jose Luis Madrid Lopez/Juan Ramon Arcos Sanz
SOCIETE GENERALE, S.A.
By: ALVARO COROMINAS/JOSE ANTONIO OLANO
Address: 17, cours Valmy, 92972 Paris la Defense Cedex, France
Fax: +33 1 42 14 09 45
Attention: Sylvie Le Tensorer
THE ORIGINAL LENDERS
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
By: ALVARO BAREZ/JOSE MARIA SAGARDOY
Address: Via de los Poblados s/n - 4(a)planta, 28033 Madrid, Spain
Fax: +34 91 374 41 40
Attention: Jose Luis Madrid Lopez/Juan Ramon Arcos Sanz
SOCIETE GENERALE, S.A.
By: ALVARO COROMINAS/JOSE ANTONIO OLANO
Address: 17, cours Valmy, 92972 Paris la Defense Cedex, France
Fax: +33 1 42 14 09 45
Attention: Sylvie Le Tensorer
BANCO ESPANOL DE CREDITO, S.A.
By: EDURNE URIBE/JOSE VILLANUEVA
Address: Gran Via de Hortaleza 3, 28033 Madrid, Spain
Fax: + 34 91 338 28 88
Attention: Antonio Sanchez / Carolina Fernandez Iniesta
BANCO SANTANDER CENTRAL HISPANO, S.A
By: JAVIER VISEDO/CARLOS DE PEDROSO
Address: Paseo de la Castellana 75, 28046 Madrid, Spain
Fax: +91 342 37 63
Attention: Daniel Esteve
BNP PARIBAS, SUCURSAL EN ESPANA
By: JOSE GEFAELL/CARMEN PINO
Address: Avda. Ribera del Loira 28, 28042 Madrid, Spain
Fax: +91 388 80 25
Attention: Jose Gefaell
CITIBANK INTERNATIONAL PLC, SUCURSAL EN ESPANA
By: FELIX AGUIRRE
Address: c/ Jose Ortega y Gasset 29, 28006 Madrid, Spain
Fax: +34 435 28 11
Attention: Pedro Lopez-Quesada / Miguel Trueba
HSBC BANK PLC, SUCURSAL EN ESPANA
By: PETER ATKINS
Address: Plaza Pablo Ruiz de Picasso 1, planta 33, Edificio Torre
Picasso, 28020 Madrid, Spain
Fax: +34 91 456 61 40
Attention: Esther de Alba / Luis Vegue
ING BELGIUM S.A., SUCURSAL EN ESPANA
By: EDWARD O'LOGHLEN VELICIA/ENRIQUE MARQUINA PEREZ
Address: Paseo de la Castellana 95, planta 14, 28046 Madrid, Spain
Fax: +34 91 598 40 01
Attention: Edward O'Loghlen Velicia
THE ROYAL BANK OF SCOTLAND PLC
By: CARMEN ALLO PEREZ/ANTONIO CASTELEIRO DE TORRES
Address: 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland
Fax: +34 91 701 53 07
Attention: Antonio Casteleiro / Javier Figar
BANCO DE GALICIA, S.A.
By: ANTONIO CARLOS GONZALEZ GARCIA/SILVIA FERNANDEZ HERNANDEZ
Address: c/ Policarpo Sanz n(0) 23, Vigo, Spain
Fax: +34 91 578 29 31
Attention: Arantxa Zabal Ibisate
BANCO DE SABADELL, S.A.
By: ISABEL COROMINAS GUERIN/DAVID NOGUERA BALLUS
Address: Plaza Catalunya 1, 08201 Sabadell, Spain
Fax: +34 93 591 60 22
Attention: Enrique Oriol Bitaube
BANK OF AMERICA N.A., SUCURSAL EN ESPANA
By: VICENTE BEULLOCH FERNANDEZ CUESTA/TERESA DIAZ ARIAS
Address: Paseo de la Castellana 35, 3(a) planta, 28046 Madrid, Spain
Fax: +34 396 51 23
Attention: Carlos Karam
CAIXA D'ESTALVIS DE CATALUNYA
By: AGUSTI FAUS RIERA
Address: Pl. Antoni Maura 6, 08003 Barcelona, Spain
Fax: +34 93 484 51 76
Attention: Carmelo Sanchez-Herrera / Belen Borque
CAJA MADRID
By: PALOMA MATEO CUELLAR/JOSE LUIS GARCIA PEREZ
Address: Paseo de la Castellana 189, 28046 Madrid, Spain
Fax: +34 91 423 97 16
Attention: Paloma Mateo
FORTIS BANK, S.A. SUCURSAL EN ESPANA
By: AGUSTIN JIMENEZ DE PARGA/IGNACIO GOROSTIZA SANTIESTEBAN
Address: Ortega y Gasset 29, 28006 Madrid
Fax: +34 91 432 67 34
Attention:
NATEXIS BANQUES POPULAIRES, SUCURSAL EN ESPANA
By: JOSE LUIS SANCHEZ GARCIA/FREDERIC MARECHAUX
Address: Paseo de Recoletos 7-9, 28004 Madrid, Spain
Fax: +34 91 837 47 80
Attention: Jose Luis Sanchez / Padro Aragones
WESTLB IRELAND PLC
By: TERRY KELLY/TRUDY TUGWELL
Address: IFSC House, I.F.S.C., Dublin 1, Ireland
Fax: +353 1 612 71 10
Attention: Terry Kelly / Gabriele Hess / Trudy Tugwell
BANCO SIMEON, S.A.
By: MANUEL ANGEL YAGUES VEGA/RICARDO OTEO VAZQUEZ
Address: Calle Maria de Molina 39, 28006 Madrid, Spain
Fax: +34 91 309 90 28
Attention: Manuel Angel Yagues Vega
ABN AMRO, N.V., SUCURSAL EN ESPANA
By: IGNACIO MADURGA/EMILIO GOMEZ
Address: c/ Jose Ortega y Gasset 29, 28006 Madrid, Spain
Fax: +34 91 423 69 48
Attention: Ignacio Madurga
BANCA DI ROMA SpA, SUCURSAL EN ESPANA
By: JOAQUIN CALVO-SOTELO/MARIO CAMPANA
Address: Plaza Pablo Ruiz Picasso 1, Torre Picasso planta 42,
28020 Madrid, Spain
Fax: +34 91 555 05 03
Attention: Joaquin Calvo-Sotelo
BANCO ATLANTICO, S.A.
By: JOSE RAMON MONTANO RUIZ/MARIA DEL CARMEN COMPANY BARAHONA
Address: Gran Via 46, 28013 Madrid, Spain
Fax: +34 91 559 32 76
Attention: Carlos Izcue Cuella
BANCO DE VALENCIA, S.A.
By: FRANCISCO JAVIER CHIVATO PEREZ/JUAN CARLOS CALDES MOORE
Address: Principe de Vergara 95, 28006 Madrid, Spain
Fax: +34 91 562 22 13
Attention: Francisco Javier Chivato Perez
BANCO ITAU EUROPA S.A., SUCURSAL FINANCIERA EXTERIOR - MADEIRA
By: ALMIR VIGNOTO/RITA CORREIA DE CAMPOS
Address: Av. Arriaga 77, 2(a)sala 201, 9000-060 Funchal, Madeira,
Portugal
Fax: +351 291 241 514
Attention: Rita Correla de Campos
CENTROBANCA - BANCA DI CREDITO FINANZIARIO E MOBILIARE S.P.A.
By: DANIELLE QUARTIERI
Address: Corso Europa n. 16, 20122 Milan, Italy
Fax: +39 2 7781 42 35
Attention: Daniele Quartieri
COMMERZBANK AKTIENGESELLSCHAFT, SUCURSAL EN ESPANA
By: RICARDO TEISSIERE/JORGE DE SEDANO
Address: Paseo de la Castellena 110, 28046 Madrid
Fax: +34 91 572 48 21
Attention: Jorge de Sedano Tarrancon
LLOYDS TSB BANK PLC, SUCURSAL EN ESPANA
By: JOSE MARIA CEMBORAIN GARCIA/SILVIA MANCY RICHOU
Address: c/ Serrano 90, 28006 Madrid
Fax: +34 91 431 47 31
Attention: Sylvie Mancy
JP MORGAN BANK, S.A.
By: CARLOS ZULOAGA/ROSA GARCIA
Address: C/Jose Ortega y Gasset, 29, 28006 Madrid
Fax: +34 91 516 1309/+34 91 516 1490/+1 646 534 0829
Attention: Carlos Zuloaga / Rosa Garcia / cc: Linda Meyer
Exhibit 8.1
List of Subsidiaries
The following is a list of the significant subsidiaries of CEMEX, S.A.
de C.V. as of December 31, 2003, including the name of each subsidiary and its
country of incorporation:
CEMEX Mexico, S.A. De C.V.............................. Mexico
CEMEX Espana, S.A...................................... Spain
CEMEX Corp............................................. United States (DE)
CEMEX, Inc............................................. United States (LA)
Exhibit 12.1
Certification of the Principal Executive Officer of
CEMEX, S.A. de C.V.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CERTIFICATIONS
I, Lorenzo H. Zambrano, certify that:
1. I have reviewed this annual report on Form 20-F of CEMEX, S.A. de C.V.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and
have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
company, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in
which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(c) Disclosed in this report any change in the company's internal control
over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably
likely to materially affect, the company's internal control over
financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the company's auditors and the audit committee of the company's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the company's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the company's internal
control over financial reporting.
Date: May 11, 2004
/s/ Lorenzo H. Zambrano
------------------------------
Lorenzo H. Zambrano
Chief Executive Officer
CEMEX, S.A. de C.V.
Exhibit 12.2
Certification of the Principal Financial Officer of
CEMEX, S.A. de C.V.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CERTIFICATIONS
I, Hector Medina, certify that:
1. I have reviewed this annual report on Form 20-F of CEMEX, S.A. de C.V.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and
have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
company, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in
which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(c) Disclosed in this report any change in the company's internal control
over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably
likely to materially affect, the company's internal control over
financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the company's auditors and the audit committee of the company's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the company's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the company's internal
control over financial reporting.
Date: May 11, 2004
/s/ Hector Medina
------------------------------
Hector Medina
Executive Vice President of
Planning and Finance
CEMEX, S.A. de C.V.
Exhibit 12.3
Certification of the Principal Executive Officer of
CEMEX Mexico, S.A. de C.V.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CERTIFICATIONS
I, Lorenzo H. Zambrano, certify that:
1. I have reviewed this annual report on Form 20-F of CEMEX Mexico, S.A. de
C.V.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
company, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the company's internal
control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the company's internal
control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the company's auditors and the audit committee of the company's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the company's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the company's
internal control over financial reporting.
Date: May 11, 2004
/s/ Lorenzo H. Zambrano
-----------------------------
Lorenzo H. Zambrano
Chief Executive Officer
CEMEX Mexico, S.A. de C.V.
Exhibit 12.4
Certification of the Principal Financial Officer of
CEMEX Mexico, S.A. de C.V.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CERTIFICATIONS
I, Hector Medina, certify that:
1. I have reviewed this annual report on Form 20-F of CEMEX Mexico, S.A. de
C.V.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and
have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
company, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(c) Disclosed in this report any change in the company's internal
control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the company's internal
control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the company's auditors and the audit committee of the company's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the company's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the company's
internal control over financial reporting.
Date: May 11, 2004
/s/ Hector Medina
----------------------------
Hector Medina
Executive Vice President of
Planning and Finance
CEMEX Mexico, S.A. de C.V.
Exhibit 12.5
Certification of the Principal Executive Officer of
Empresas Tolteca de Mexico, S.A. de C.V.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CERTIFICATIONS
I, Lorenzo H. Zambrano, certify that:
1. I have reviewed this annual report on Form 20-F of Empresas Tolteca de
Mexico, S.A. de C.V.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and
have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
company, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(c) Disclosed in this report any change in the company's internal
control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the company's internal
control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the company's auditors and the audit committee of the company's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the company's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the company's
internal control over financial reporting.
Date: May 11, 2004 /s/ Lorenzo H. Zambrano
----------------------------------------
Lorenzo H. Zambrano
Chief Executive Officer
Empresas Tolteca de Mexico, S.A. de C.V.
Exhibit 12.6
Certification of the Principal Financial Officer of
Empresas Tolteca de Mexico, S.A. de C.V.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CERTIFICATIONS
I, Hector Medina, certify that:
1. I have reviewed this annual report on Form 20-F of Empresas
Tolteca de Mexico, S.A. de C.V.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the company as of, and for, the
periods presented in this report;
4. The company's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the company's internal
control over financial reporting that occurred during the
period covered by the annual report that has materially
affected, or is reasonably likely to materially affect, the
company's internal control over financial reporting; and
5. The company's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the company's auditors and the audit
committee of the company's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
company's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
company's internal control over financial reporting.
Date: May 11, 2004
/s/ Hector Medina
----------------------------------------
Hector Medina
Executive Vice President of
Planning and Finance
Empresas Tolteca de Mexico, S.A. de C.V.
Exhibit 13.1
Certification of the Principal Executive and Financial Officers of
CEMEX, S.A. de C.V.
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 20-F of CEMEX, S.A. de C.V. (the
"Company") for the year ended December 31, 2003 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), Lorenzo H. Zambrano,
as Chief Executive Officer of the Company, and Hector Medina, as Executive Vice
President of Planning and Finance of the Company, each hereby certifies,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Lorenzo H. Zambrano
- -------------------------------------
Name: Lorenzo H. Zambrano
Title: Chief Executive Officer
Date: May 11, 2004
/s/ Hector Medina
- -------------------------------------
Name: Hector Medina
Title: Executive Vice President of
Planning and Finance
Date: May 11, 2004
This certification is furnished as an exhibit to the Report and accompanies the
Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not
be deemed filed by the Company for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended.
Exhibit 13.2
Certification of the Principal Executive and Financial Officers of
CEMEX Mexico, S.A. de C.V.
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 20-F of CEMEX Mexico, S.A. de
C.V. (the "Company") for the year ended December 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Lorenzo
H. Zambrano, as Chief Executive Officer of the Company, and Hector Medina, as
Executive Vice President of Planning and Finance of the Company, each hereby
certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Lorenzo H. Zambrano
- ------------------------------------
Name: Lorenzo H. Zambrano
Title: Chief Executive Officer
Date: May 11, 2004
/s/ Hector Medina
- ------------------------------------
Name: Hector Medina
Title: Executive Vice President of
Planning and Finance
Date: May 11, 2004
This certification is furnished as an exhibit to the Report and accompanies
the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall
not be deemed filed by the Company for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended.
Exhibit 13.3
Certification of the Principal Executive and Financial Officers of
Empresas Tolteca de Mexico, S.A. de C.V.
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 20-F of Empresas Tolteca de
Mexico, S.A. de C.V. (the "Company") for the year ended December 31, 2003 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Lorenzo H. Zambrano, as Chief Executive Officer of the Company, and
Hector Medina, as Executive Vice President of Planning and Finance of the
Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best
of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Lorenzo H. Zambrano
- ------------------------------------
Name: Lorenzo H. Zambrano
Title: Chief Executive Officer
Date: May 11, 2004
/s/ Hector Medina
- ------------------------------------
Name: Hector Medina
Title: Executive Vice President of
Planning and Finance
Date: May 11, 2004
This certification is furnished as an exhibit to the Report and accompanies
the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall
not be deemed filed by the Company for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended.
EXHIBIT 14.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference into (i) the Registration
Statement on Form F-3 (File No. 333-86700) of CEMEX, S.A. de C.V., (ii) the
Registration Statement on Form S-8 (File No. 333-13970) of CEMEX, S.A. de C.V.,
(iii) the Registration Statement on Form S-8 (File No. 333-83962) of CEMEX,
S.A. de C.V. and (iv) the Registration Statement on Form S-8 (File No.
333-86060) of CEMEX, S.A. de C.V., of our report, dated January 15, 2004
(except for note 23, which is as of March 31, 2004), with respect to the
consolidated balance sheets of CEMEX, S.A. de C.V. and subsidiaries as of
December 31, 2002 and 2003, and the related consolidated statements of income,
changes in stockholders' equity and changes in financial position for each of
the years in the three year period ended December 31, 2003, which report
appears in this Annual Report on Form 20-F of CEMEX, S.A. de C.V.
KPMG Cardena Dosal, S.C.
/s/ Leandro Castillo Parada
Leandro Castillo Parada
Monterrey, N.L., Mexico
May 7, 2004