EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT FOR PERSONALTY UNDER TITLE QUALIFICATION, ENTERED
INTO BY THE FEDERAL GOVERNMENT OF THE UNITED MEXICAN STATES (HEREINAFTER
"SELLER") THROUGH THE FEDERAL EXECUTIVE BRANCH BY WAY OF THE COMMUNICATIONS AND
TRANSPORTATION DEPARTMENT, REPRESENTED BY ▇▇▇▇▇ DE LA ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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(HEREINAFTER THE "DEPARTMENT"), AS PARTY OF THE FIRST PART; COMPANIA DE
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FERROCARRILES CHIAPAS-MAYAB, S.A. DE C.V. (HEREINAFTER "BUYER"), REPRESENTED
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HEREIN BY ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, AS PARTY OF THE SECOND PART; AND, AS
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PARTY OF THE THIRD PART, FERROCARRILES NACIONALES DE MEXICO (HEREINAFTER
"FERRONALES"), REPRESENTED HEREIN BY ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇; IN ACCORDANCE WITH THE
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FOLLOWING RECITALS AND CLAUSES:
RECITALS
I. Seller hereby represents through the Department that:
(a) It holds good title to the personalty and equipment described in Exhibit 1
to this Agreement, consisting in the office furniture and equipment, the shop
machinery, the locomotive and trailer stock and railroad machinery, and the
radio communications equipment with which the Chiapas-Mayab Railroad operates
(hereinafter the "Personalty and Equipment"), forming an integral part thereof,
which are free and clear of any encumbrance and title restriction as of this
date.
By means of a Call for Bids and Tender Terms published in the Official Gazette
of the Federation on March 24, 1999, as amended on April 29 and June 18, 1999,
the concession for the operation and exploitation of the Chiapas and Mayab short
lines was tendered, including the delivery of public railroad transportation and
the sale of assets related thereto, which as a whole constitute a productive
Economic Unit, following the relevant approval by the Interdepartmental
Commission for Privatization as regards the opening of the Mexican Railroad
System Short Lines to investment capital (hereinafter the "Call for Bids").
b) COMPANIA DE FERROCARRILES CHIAPAS-MAYAB, S.A. DE C.V. (Winning Bidder)
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won the aforementioned Bid and was advised thereof through Letter No. 717 ,
dated July 9, 1999, signed by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Poltolarek, Undersecretary of
Transportation and Chairman of the Restructuring Committee for the Mexican
Railroad System (see Exhibit 2).
c) By virtue of the above, it is Seller's desire to sell the Personalty and
Equipment indicated in Section One of this Agreement to Buyer, on the terms and
conditions hereunder provided.
d) Its legal representative is authorized to enter into this Agreement as
evidenced by the documentation appended to Exhibit 3 hereto, which are deemed an
integral part hereof.
II. Buyer represents that:
a) It is a company incorporated under the laws of the United Mexican States, as
evidenced by Public Instrument 37,606 dated March 25, 1999, executed in the
presence of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Esq., Notary Public No. 53 in and for
the City of Mexico, in the Federal District, recorded in the Public Registry
for Property and Commerce in folio No. 250,283. Exhibit 4.
b) It won the public bid in connection with the awarding of a concession for
the operation and exploitation of the general railroad communications system
corresponding to the Chiapas and Mayab short lines, as well as the delivery of
Public Railroad Transportation Service as operated thereon.
On the terms of the Call for Bids and the concession which the Federal
Government will grant in respect of the Chiapas and Mayab Short Lines, Buyer
shall perform, within 12 months following the initial concession date, the
urgent repair works specified in Exhibit 7-Bis of the Concession Agreement, a
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copy of which is attached as Exhibit 9 hereto, the minimum aggregate value of
which amounts to $ 91'600,000.00 (Ninety one million six hundred thousand pesos
00/100 Local Currency), which shall be used as payment for the Personalty and
Equipment hereunder; provided, however, that if the cost of the urgent works is
higher, it shall not be revised downward to the price.
c) It is familiar with the list of Personalty and Equipment sold hereunder,
being further aware that they are used and that, in as much as title thereto is
conveyed to Buyer and that the same are conveyed to Buyer in any of the forms
indicated herein by Seller, Ferronales shall continue using them in the delivery
of the applicable railroad service. It is familiar with the condition in which
said Personalty and Equipment are found and, if applicable, the reasons why they
are undergoing repairs, the scope of said repair work and the technical
characteristics thereof.
d) It is legally, technically and financially able to be bound under the terms
of this Agreement.
e) Its representative is endowed with sufficient authority to bind Buyer on the
terms hereof, as evidenced by means of Public Instrument No. 37,659, dated
April 22, 1999, executed in the presence of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.,
Notary Public No. 53 in
and for the City of Mexico, in the Federal District, recorded with the
applicable Public Registry of Property and Commerce Exhibit 5.
III. Ferronales represents that:
a) It is a decentralized public entity of the Federal Government, established
under the Act of December 11, 1948, published in the Official Gazette of the
Federation on May 30, 1948, the legal existence of which is acknowledged and
continued under its new organic law published in the Official Gazette of the
Federation on January 14, 1985.
b) By means of a grant agreement entered into prior to the date hereof and
following the applicable authorization of its Board of Directors, it conveyed
title to the Personalty and Equipment hereunder to the Federal Government,
Ferronales remaining thereinafter in charge of the operation thereof through the
date of their effective delivery to Buyer hereunder. The above grant was
authorized by the Department of Administrative Oversight and Development.
Exhibit 6.
c) Seller has instructed Ferronales to deliver the Personalty and Equipment
hereunder to Buyer on the terms and conditions herein provided, and that until
said delivery is completed, it shall continue operating the same in order not to
suspend the public service delivered through said Personalty and Equipment, in
the understanding that Buyer is capable of delivering the respective railroad
services and shall commence the effective term of the Concession Agreement.
d) It is legally capable of binding itself under the terms of this Agreement.
e) ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ signs these presents in his capacity as legal representative
of the entity, which capacity is evidenced by means of Public Instrument No.
53,423, dated May 26, 1998, executed in the presence of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Esq., Notary Public No. 19
in and for the City of Mexico, Federal District which capacity has not been
revoked nor limited in any manner whatsoever. Exhibit 7.
In consideration of the above recitals, the parties agree to be bound by the
terms of the following:
CLAUSES
ONE: PURPOSE. Seller hereby conveys, with qualified title and free and clear
of any encumbrances, to Buyer, who acquires under said terms, the Personalty and
Equipment consisting in the office furniture and equipment; the shop machinery;
the locomotive and trailer stock and railroad machinery, and the radio
communications equipment with which the Chiapas-Mayab Railroad operates and
which are indicated in Exhibit 1.
The Personalty and Equipment indicated in Exhibit 1 shall be sold with all
things factual and legal are attached thereto, as indicated in said Exhibit.
TWO: PRICE. The price for the purchase and sale of the Personalty and
Equipment indicated in the above Section is stated in the sum of $
116'084,888.50 (One hundred sixteen million eighty four thousand one hundred
eighty eight pesos 50/100 Local Currency).
THREE: TERMS OF PAYMENT. As of this date, on October 20, 1999, at the latest,
Buyer has delivered to the Federal Treasury, by means of an electronic wire
transfer, the sum of $ 24'484,888.50 (Twenty four million four hundred eighty
four thousand eight hundred eighty eight pesos 50/100 Local Currency), ("Initial
payment").
The outstanding balance on this price, amounting to the sum of $ 91,600,000.00
(ninety-one million six hundred thousand Mexican Pesos) shall be paid by Buyer
upon the passage
of one year from the execution date of this Agreement, earning interest as
provided in paragraph one of Clause Five. The above term is compulsory for
Buyer, who may only pay said balance prior to the passage of one year from the
execution date of this Agreement in case Seller shall have accepted hand-over of
all the works referred to in the following Clause.
FOUR: URGENT WORKS. Buyer may pay the balance on the price with the sum total
of the works referred to in numeral 2.4 of Exhibit 7-B to the Concession
Agreement, which is attached as Exhibit 9 hereto and forms an integral part
hereof.
By virtue of the fact that performance of said works is the reason why Seller
enters into this Agreement, payment of the balance on the price as herein
provided shall only apply if all the works are complete within one year from the
execution date of this Agreement, provided that the works be performed in
accordance with the works schedule authorized on the terms set forth in numeral
2.4 of the Concession Agreement and Exhibit 7-B thereto, and upon acceptance of
said works by Seller. Such work schedule, after being authorized by the
Department, will become a part of the above mentioned Exhibit 7-B.
The above provided, however, that : (i) if the cost of performing the works is
lower, Buyer shall perform additional works above and beyond those provided in
Exhibit 7-Bis to the Concession Agreement until they amount to an even sum with
the outstanding balance, and (ii) if the cost of the works is higher than the
balance indicated in Clause Three, second paragraph, said excess cost shall be
borne by Buyer without any claim accruing in Buyer's favor against Seller.
Upon completion of the works and their acceptance by Seller, Seller shall deem
the price balance as paid and the interest indicated in the following Clause
shall not accrue.
FIVE: INTEREST. The outstanding balance on the price shall accrue, starting on
the execution date of this Agreement and through full payment of the said
balance, interest at
a rate equivalent to the mathematical daily average of the 28-day Equilibrium
Inter-Bank Interest Rate (TIIE) published in the Official Gazette of the
Federation during said period by the Bank of Mexico, or in lieu thereof at any
rate replacing the same. A 360-day year shall be used to calculate interest.
SIX: SECURITY. As security for the payment of the balance on the price, on the
date when the Initial Payment is made, at the latest, Buyer shall enter into an
irrevocable security trust indenture with Nacional Financiera SNC, on the terms
provided herein and to the Department's satisfaction, which agreement is
attached as Exhibit 10 hereto, contributing an initial sum of:
a) $ 91,600,000.00 (ninety-one million six hundred thousand Mexican Pesos)/1/,
which corresponds to the balance on the price and shall be used in performing
the works or, if applicable, to pay the outstanding price balance on the terms
hereof, in cash; and
b) $ 9,160,000.00 (nine million one hundred and sixty thousand Mexican
Pesos)/2/, equivalent to 10% of the above sum, to be used as liquidated damages
in case not all of the works are performed or if the same are not accepted by
Seller.
The aforementioned sum shall be part of the trust, as well as the proceeds
thereof. The cost of the trust shall be paid through said proceeds.
SEVEN: PERFORMANCE OF THE WORKS. Buyer shall perform the works with a debit to
the trust indicated in paragraph a) of the above Clause. For said purposes, the
trustee company shall deliver the funds as follows:
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/1/ In the case of the Oaxaca Railroad, the sum shall be $ 34,200,000.00
(thirty-four million two hundred thousand Mexican Pesos).
/2/ In the case of the Oaxaca Railroad, the sum shall be $ 3,420,000 (three
million four hundred and twenty thousand Mexican Pesos).
a) Buyer shall serve written notice to Seller, asking for authorization to use
the funds, indicating the stage to which they pertain per the authorized works
schedule and for up to an amount equivalent to the percentage that corresponds
to the applicable stage, and starting with stage two, said request shall be
accompanied by a report evidencing completion of the previous stage, with an
itemized list of the works performed.
b) Seller, within 10 business days after receiving the aforementioned request,
shall advise its acceptance and authorization or, otherwise, its rejection. If
Seller accepts, Seller shall advise the trustee in writing in connection
therewith, indicating the amount of funds which may be delivered to Buyer and
the stage to which they shall be destined.
If Seller shall fail to serve the above notice within the prescribed term, the
timeline for the works shall be extended commensurate to the delay incurred by
Seller in serving said notice to Buyer.
c) Seller shall under no circumstances authorize the delivery of funds if any
funds shall have been previously delivered for the performance of a stage which
shall not be yet completed and accepted by Seller. Buyer hereby authorizes
Seller to supervise the performance of said works directly or through a third
party.
In case funds shall be received by Buyer to perform any stage and Buyer shall
fail to commence the respective works other than due to an act of God or force
majeure or shall suspend their performance and thereby materially affect the
timetable of the works schedule, Buyer agrees that said event shall be deemed as
its decision not to cover the outstanding balance of the price under Clause
Four, and shall consequently pay said outstanding balance on the terms provided
in Clauses Nine and Ten.
Seller's supervision in accordance with paragraph c) shall be conducted without
prejudice to the Department's authority under the Railroad Service Act, the
Regulations thereto, the Concession Agreement and other applicable provisions.
EIGHT: TITLE QUALIFICATION. The parties agree that Seller qualifies conveyance
of title to the Personalty and Equipment hereunder as follows:
a) Upon delivery of the Personalty and Equipment under Clause Ten hereof,
Seller shall qualify conveyance of title to the Personalty and Equipment which
shall have a value equivalent to said outstanding price balance.
b) Seller shall release its qualification on the title to part of the
Personalty and Equipment commensurate first, to the Initial Price and then, to
the value allocated to the stages of the completed works and which it shall have
accepted, serving written notice thereof upon Buyer.
c) Seller may release its qualification on the title to the Personalty and
Equipment prior to payment of the outstanding balance provided that Buyer shall
previously guarantee said payment by means of a letter of credit opened with a
credit corporation to the Department's satisfaction, payable on sight,
unconditional and irrevocable, confirmed and to the benefit of the Federal
Treasury, in an amount equivalent to 100% (one hundred percent) of the
personalty, title to which shall remain qualified at the date of said request.
Any default by Buyer under the terms of Clause Three above will entitle Seller
to cash the letter of credit, the amount of which may be reduced as the work
stages are completed and accepted by Seller.
NINE: LIQUIDATED DAMAGES. Buyer is aware of the fact that the reason why Seller
enters into this Agreement is that Buyer shall perform the works referred to in
Exhibit 9 hereto. Consequently, Buyer agrees to pay Seller, in case it fails to
complete all of the aforementioned works within the compulsory term indicated in
Clause Four above other than by reason of an act of God or force majeure,
liquidated damages in the equivalent of 10% of the outstanding balance on the
price indicated in paragraph b) of
Clause Six above. In case that liquidated damages are applicable, Seller shall
refund Buyer for the interest earned by said amount under the trust indenture.
TEN: PAYMENT PROCEDURE UPON FAILURE TO PERFORM THE WORKS. In case that not all
of the works are performed or accepted, or if they are only performed in part,
and in addition to the liquidated damages provided hereunder, Buyer shall pay
the interest referred to in the first paragraph of Clause Five, calculated, in
connection with the outstanding balance of $ 91,600,000 (ninety-one million six
hundred thousand Mexican Pesos), starting on the execution date of this
Agreement through the date of actual payment. The foregoing shall apply
provided that no authorization shall have been given to extend said term to
complete the works in accordance with Exhibit 7-Bis
In case that Buyer shall have only performed the works schedule in part, Seller
shall apply to the payment of the outstanding balance and interest determined in
accordance with the above Clause, only the value of the works performed and
accepted by Seller in accordance with the following:
a) The value of each stage shall be deemed as the costs anticipated in the
works schedule as corresponding to the works actually performed.
b) Seller shall apply said sums to payment of liquidated damages, the interest
earned pursuant to paragraph one of Clause Five and the outstanding price
balance, in this order.
Buyer agrees to issue instructions to the trustee, upon establishment of the
trust referred to in Clause Six, in order that said company proceed to pay the
liquidated damages, the interest referred to in paragraph one of Clause Five and
the outstanding price balance, in that order, with a debit to the trust funds
and without any need for a court order, upon deduction of the value of the
stages completed as hereunder provided. Upon payment of
the foregoing, the Department shall authorize the trust company to deliver to
Buyer any sums remaining in the trust.
In case that the trust funds shall be insufficient following deduction of the
value of the completed stages pursuant to this Clause, Seller shall require
Buyer to deliver payment for the outstanding balance within five business days
following the date of said requirement. If Buyer fails to deliver payment
within said term, Seller shall enforce the title qualification or cash the
letter of credit, as applicable, and Buyer agrees to pay late interest in the
equivalent of 1.5 times the interest rate indicated in the first paragraph of
Clause Five above starting of the due date of said payment and through the
actual date of payment.
Until such time as Buyer shall pay Seller, through the Federal Treasury, the
principal, including the Initial Payment interest, liquidated damages and any
other sum to which it may be entitled hereunder, Seller shall continue to
qualify conveyance of title to the Personalty and Equipment not theretofore
released, on the terms of article 2312 of the Federal District Civil Code and
Federal Civil Code.
The provisions in this Clause are notwithstanding any sanctions as may be
applicable under the Concession Agreement and other applicable provisions.
Upon completion of the works to the satisfaction of Seller, Seller shall
authorize the trust company to deliver to Buyer such trust fund interests as are
earned in connection with the sums deposited with regard to the value of the
works indicated in paragraph a) of Clause Six, the 10% additional deposit made
in accordance with paragraph b) of this Clause, plus interest thereon, and the
letter of credit or the qualification of conveyance of title to the applicable
Personalty and Equipment shall be released, as the case may be.
ELEVEN: DELIVERY. The parties agree that conveyance of title to the Personalty
and Equipment shall be effected on the earlier of the final hand-over
certificate execution date or August 30, 1999.
Seller shall deliver the Personalty and Equipment to Buyer through Ferronales on
the terms established in the respective hand-over certificate, and said delivery
shall take place at the offices and shops where said Personalty and Equipment
shall be found, delivery thereof being consequently physical.
The foregoing is notwithstanding any agreements between the parties to make
physical deliveries at locations other than those mentioned above.
The parties expressly agree that the hand-over process for the Personalty and
Equipment may start on August 18, 1999, which process shall be completed on or
before August 30, 1999. Seller may authorize extensions to said terms if it
deems so advisable.
Buyer shall not be obligated to receive the Personalty and Equipment prior to
the first date indicated hereinabove, unless so agreed in writing with Seller.
If Buyer fails to receive the Personalty and Equipment which Seller shall
deliver to Buyer or which it shall advise Buyer in the sense that they are ready
for delivery on such date or any subsequent date, the provisions of Clauses
Twelve, Seventeen, Eighteen and Twenty of this Agreement shall apply, without
prejudice to any additional liabilities in which Buyer shall incur due to its
delay in receiving the Personalty and Equipment.
The parties agree that the Personalty and Equipment shall be delivered by
Ferronales in "AS-IS" condition at the moment of delivery, notwithstanding the
provisions in Clause Seventeen.
In any case, the hand-over of each unit of Personalty and Equipment shall be
effected by issuing the applicable hand-over certificates, which shall be signed
by the representatives of Buyer and Ferronales. In such case, possession of the
applicable Personalty and Equipment shall pass upon the execution of the
respective partial certificates and the property of such personality shall be
transferred as established in Clause Eight.
The hand-over certificates shall include a listing of the Personalty and
Equipment conveyed at such time to Buyer, stating the general condition thereof.
In the case of fuels and lubricants, the volume thereof shall be determined at
the time of the hand-over procedure, and Buyer agrees to pay Seller the going
market price effective as of said date therefor. Payment shall be made within
10 calendar days following the date of the respective hand-over certificate.
In the case of fuels and lubricants previously incorporated into the Personalty
and Equipment, they shall be deemed a part thereof.
TWELVE: DELIVERY OF DOCUMENTS. At the respective hand-over ceremony, Seller
shall deliver to Buyer the documentation accrediting title to the Personalty and
Equipment and other documentation in connection therewith as may be in Seller's
possession.
THIRTEEN: RECORDING OF AGREEMENT. In order for this Agreement and its
termination clause to be enforceable against third parties as provided in
article 2312 of the Federal District Civil Code and Federal Civil Code, Seller
may record the same with the Public Registry for Property and Commerce of Mexico
City on behalf of Buyer. Buyer agrees to instruct the trust company, upon
establishing the trust, in order that it may draw funds from said trust to cover
recording and notarization expenses as hereinabove provided if applicable.
FOURTEEN: LOSS OF PERSONALTY AND EQUIPMENT. The parties agree that Seller
shall be held liable for any loss of and damage to the Personalty and Equipment
through the execution date of the hand-over certificate in connection therewith,
as indicated in Clause Eleven above, unless delivery thereof is prevented by
reasons attributable to Buyer, in which case the latter shall be held liable
starting on the date on
which Ferronales shall have advised Buyer in writing as the date for the
respective hand-over.
In case that Buyer does not opt for the course of action indicated in paragraph
c) of Clause Eight above, the parties agree that Buyer shall be held liable for
any loss of or damage to the Personalty and Equipment until the qualification to
title to said Personalty and Equipment shall be released as hereunder provided.
FIFTEEN: PRESERVATION OF PERSONALTY AND EQUIPMENT. Ferronales agrees to
preserve the Personalty and Equipment in their present condition, normal wear
and tear excepted, and to maintain them as it has done from time to time prior
to the execution of this Agreement.
This obligation of Ferronales shall remain in force through the date of
execution of the Personalty and Equipment hand-over certificate hereunder, or
until such date as Ferronales shall advise Buyer in writing to conduct the
respective hand-over procedure if it shall not have been effected for reasons
attributable to Buyer, in which case Seller shall be discharged from its
obligation to care for and watch over said assets.
Buyer agrees to preserve the Personalty and Equipment which are delivered in
deposit as provided in Clause Six above, in "AS-IS" condition at their time of
delivery, normal wear and tear excepted, and to maintain the same in the same
manner as Ferronales has done from time to time prior to the execution of this
Agreement.
SIXTEEN: SELLER'S LIMITATIONS TO LIABILITY. Inasmuch as the Personalty and
Equipment are used and sold in "AS-IS" condition at the moment of hand-over, and
that Buyer agrees to receive the same in said "AS-IS" condition, Seller shall
not be held liable for any hidden defects or for the operational quality,
capability and conditions thereof, nor shall provide any warranties in respect
thereof, with the exception of any warranties made by the manufacturer or
provider of maintenance or repair service and
which remain in effect; nor shall Seller be obligated to replace, remove or
accept the return of, any Personalty and Equipment, nor to reduce the
transaction price. Accordingly, Buyer hereby expressly waives any claims against
Seller for any quality flaws and hidden defects which the Personalty and
Equipment may contain.
SEVENTEEN: PRICE ADJUSTMENT. The price for the Personalty and Equipment
described in Exhibit 1 hereto shall be adjusted only if a net difference arises
in favor of Buyer in excess of $ 500,000.00 (five hundred thousand Mexican
Pesos) and arising solely as the result of:
a) Liabilities directly affecting the assets sold and purchased hereunder,
which shall not have been disclosed to the Bidders during the Bidding Process
(as defined hereinbelow) arising from events, acts or omissions occurring prior
to the hand-over date of said assets; and
b) Fixed assets included in the list attached as Exhibit 1 hereto, which shall
be found to be non-existent upon completion of the hand-over procedure, not
considering for these purposes any variations in value which said assets may
cause to the list of assets.
The results obtained in the above paragraphs shall be offset, at Seller's
discretion, with existing assets not listed in Exhibit 1 which may be part of
the aforementioned Personalty and Equipment and which arise during the hand-over
procedure, in order to obtain a net difference in favor of Buyer, if any.
Seller shall only be liable for the Personalty and Equipment found to be non-
existent at the date of the final hand-over certificate, provided that said
Personalty and Equipment shall be actually listed in whole or part in Exhibit 1
hereto, and for liabilities directly affecting the Personalty and Equipment and
which shall not have been disclosed to the Bidders in the bidding process in
accordance with the Call for Bids and Bidding Guidelines referred to in recital
I, subClause a), second paragraph, of this Agreement.
The notice whereby Buyer shall demand the price adjustment on the terms
indicated in paragraphs a) and b) above shall be stated in a single document, to
be delivered within 90 calendar days following the earlier between the date of
completion of the hand-over procedure and the effective date of the Concession
Agreement, which notice may not be revised following its delivery.
Adjustments to the price in accordance with this and the following Clause shall
be made on the basis of the appraisal value set forth in Exhibit 1 or in other
Exhibits thereto, regarding which the Department may opt for either replacing
the applicable fixed asset with another in comparable condition or applying the
appraisal value against payment of the price.
Exceptions to this Clause shall be those liabilities indicated in paragraph a)
above as may arise from tax, financial or labor obligations, in which case the
term to file the claim shall be the same as the applicable legislation shall
provide at the execution date of the Concession Agreement for the statute of
limitations or expiration of the right or action on which said claim shall be
based, as the case may be.
Likewise, the parties agree that the above claims shall apply only if the
Personalty and Equipment are found to be non-existent and may not be based on
the quality, state of preservation or other grounds not expressly indicated in
the above paragraphs, provided that said non-existence be or shall have been
claimed in accordance with this and the following Clause.
Buyer may conduct an audit to determine the existence of liabilities or non-
existence of assets, the results of which shall not be binding on Seller.
The price for the Personalty and Equipment sold and purchased hereunder shall be
adjusted in case a net difference shall arise in favor of Buyer as aforesaid,
not taking into
account any variations which said assets may have undergone. The parties agree
that if any credit balance shall remain in favor of Seller for any reason or by
virtue of the delivery of Personalty or Equipment not included in the exhibits
hereto, Seller may make the applicable setoffs up to the amount of the lesser
indebtedness.
For the purposes of the above paragraph, the applicable financial cost shall be
calculated at the daily mathematical average of a yield equivalent to the
discount rate of 28-day Mexican Federal Treasury Bills (CETES), applicable
during the respective period.
EIGHTEEN: CLAIMS PROCEDURE. The parties agree that any claims arising from the
events indicated in the above Clause shall only be deemed filed as hereunder
provided when:
a) Buyer shall conclusively notify Seller in writing within 5 calendar days as
to the existence of any liability or any claim arising therefrom in connection
with the non-existence of any one or part of the assets, whether judicially or
extra-judicially, in order for Seller to take any action it may deem warranted,
provided that the liability or claim arising therefrom shall not be the result
of acts or omissions attributable to Buyer.
b) Buyer shall defend judicially or extra-judicially any applicable claims,
following Seller's instructions. Buyer shall not held liable for the results of
said defense provided it shall follow Seller's instructions and act in
accordance with the law, being in any case responsible for acting with the same
diligence it uses in conducting its own affairs.
c) Buyer shall furnish Seller or its representative, provided the request is
made on the established terms, with any available information and elements
necessary in case Seller shall decide to defend the claims and have the adequate
means therefor. In this case, Buyer shall be required to issue all requisite
powers-of-attorneys to the persons whom Seller shall determine; provided,
however, that the non-issuance of said powers-of-attorney shall result in the
price not being adjusted as it otherwise would have been.
d) The claim must be filed within the terms indicated in the above paragraphs.
If the claims referred to hereinabove arise from acts for which Seller shall be
liable hereunder, all costs and expenses arising from the defense carried out by
Buyer shall be refunded by Seller, provided they are reasonable, duly evidenced
and directly related to the claims mentioned hereinabove. The amounts
pertaining to the items referred to herein shall be refunded to Buyer by Seller
within 20 calendar days as of the date of determination thereof.
If need be, Seller and Buyer shall jointly appoint a third party to decide
whether the claims by Buyer and arising from undisclosed liabilities or non-
existent assets are applicable, in order for the price to be adjusted as
provided herein. This third party shall be appointed from among the auditing
firms that work with the Administrative Oversight and Development Department.
Buyer and Seller shall pay for the costs and expenses incurred by said auditing
firm share and share alike. The opinion of the auditing firm shall be final,
binding upon the parties in accordance with its terms and not subject to any
means of recourse.
The provisions of the foregoing paragraph shall constitute an arbitration
procedure in accordance with article 1423 of the Code of Commerce, which
procedure shall be conducted as set forth in said body of law.
NINETEEN: OBLIGATIONS AND LIABILITIES OF BUYER. Buyer is obligated to secure
all the permits, licenses and authorizations required for the operation of the
Personalty and Equipment, to which end Seller shall furnish the documentation in
its possession and shall assist Buyer as necessary to the extent Seller is
capable.
TWENTY: OBLIGATION TO RECEIVE. The parties agree that Seller and Ferronales
shall be released from any liability as to the Personalty and Equipment
effective
as of the execution date of the applicable hand-over certificate, whereupon said
liability shall pass to Buyer. If the delivery is not effected due to reasons
solely attributable to Buyer, then Buyer shall be held liable starting on the
date which Ferronales shall have advised in writing for the applicable delivery;
provided, however, that Buyer shall not be obligated to receive the Personalty
and Equipment prior to the earlier of the date of the final hand-over
certificate or August 30, 1999, unless otherwise agreed by the parties in
writing theretofore.
Buyer shall receive the Personalty and Equipment even if they are undergoing
repairs or reconstruction, and shall be deemed to have received them.
TWENTY-ONE. ASSUMPTION OF LIABILITIES. From the execution date of the hand-
over certificate for the Personalty and Equipment, Buyer agrees to assume all
liabilities in connection with the payment of any taxes, fines and other civil,
administrative, fiscal, labor-related, criminal or other liabilities, arising
from the possession, use, operation, service or exploitation thereof in any
manner, and Seller shall consequently not be held liable for any damages caused
or suffered by the Personalty and Equipment starting on the date of the
respective hand-over certificate.
The contents of this Clause shall be expressly recorded at the Public Registry
of Property and Commerce of Mexico City.
TWENTY-TWO: INDEMNIFICATION. Buyer hereby agrees to defend and hold harmless
Seller from and against any liability, particularly strict liability, arising
from the possession, use and operation of the Personalty and Equipment starting
on the date of the hand-over as provided herein, and to refund Seller any amount
that Seller shall have been forced to pay therefor, within 5 business days
following written request to that effect; provided, however, that failure to pay
said amounts in time and form shall obligate Buyer to pay late interest at the
Interest Rate indicated in Clause Five above, calculated from the original due
date through full payment of said sums.
TWENTY-THREE: INSURANCE. Ferronales agrees to maintain insurance policies
covering the Personalty and Equipment against the risks and on the terms and
conditions indicated in Exhibit 8, from the date of this Agreement through the
delivery of said Personalty and Equipment hereunder, notwithstanding the
provisions set forth in Clause Eleven above.
In case Buyer shall not opt for the alternative indicated in paragraph c) of
Clause Eight above, Buyer nonetheless agrees to maintain the Personalty and
Equipment insured against the risks and on the terms and conditions indicated in
Exhibit 8 in favor of Seller, from the date of this Agreement and through
release of the qualification on the title to the Personalty and Equipment as
provided hereunder.
TWENTY-FOUR: TERMINATION. Seller may terminate this Agreement without any need
for a previous court resolution and with Buyer assuming liability therefor upon
default under any of the obligations set forth in this Agreement.
TWENTY-FIVE: CARE AND INSPECTION OF THE PERSONALTY AND EQUIPMENT. From the
date of this Agreement and through the hand-over of the Personalty and
Equipment, Buyer will be entitled to see that proper action is taken for their
care, preservation and maintenance, as well as to check on their normal use, and
also that the insurance and, if applicable, the warranty policies remain in
effect.
Seller shall make all necessary arrangements for Buyer to exercise the rights
indicated hereinabove, and shall honor the recommendations made by Buyer's
representative to the extent they are consistent.
In case that Buyer does not opt for the course of action indicated in paragraph
e) of Clause Eight above, Seller will be entitled to see that proper action is
taken for their care,
preservation and maintenance, as well as to check on their normal use, and also
that the insurance and, if applicable, the warranty policies remain in effect.
Buyer shall make all necessary arrangements for Seller to exercise the rights
indicated hereinabove, and shall honor the recommendations made by Seller's
representative to the extent they are consistent.
TWENTY-SIX: CONSIDERATION FOR THE USE OF PERSONALTY AND EQUIPMENT. Buyer hereby
acknowledges and accepts that, during the period from the date of this Agreement
through the hand-over of the Personalty and Equipment as provided in Clause
Eleven above, Buyer shall not be entitled to receive any consideration for the
use and usufruct thereof by Ferronales.
TWENTY-SEVEN: ASSIGNMENTS. Buyer may not assign the rights and obligations
hereunder in whole or in part except with the express written authorization of
Seller.
TWENTY-EIGHT: TAXES. Any taxes levied on this Agreement and in connection with
performance hereunder shall be paid by the party on whom applicable legislation
imposes said obligation.
TWENTY-NINE: EVICTION. Seller agrees to carry out all title clearance
procedures on behalf of Buyer in case of eviction.
THIRTY: The parties state the following addresses for service of notice or
process:
Seller
For payment purposes:
The Department Tesoreria de la Federacion
▇▇. ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Col. Narvarte Edificio "C" Planta Baja
Mexico, D.F. Col. Belen de las ▇▇▇▇▇▇
Mexico D.F. C.P. 1001
Ferronales Buyer
Avenida ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇ ▇▇▇▇▇▇ and Number
Colonia Buenavista Neighborhood
Deleg. ▇▇▇▇▇▇▇▇▇▇ Municipal Subdivision
▇▇▇▇▇ ▇▇▇▇▇▇ D.F. City
THIRTY-ONE: JURISDICTION. For the purposes of interpreting and performing
under this Agreement as well as in any other matter not expressly provided
herein, the parties submit to the jurisdiction and competence of the Federal
Courts of Mexico City, and they consequently waive any other jurisdiction to
which they may be entitled by virtue of their present or future domiciles or
otherwise.
This Agreement is executed in 22 counterparts, being [its Spanish original] 26
useful pages in addition to the Exhibits hereto, in Mexico City, Federal
District, this 17th day of August, 1999.
SELLER BUYER
/s/ Lic. ▇▇▇▇▇ De La ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ Lic. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------- -----------------------------------------
Chief Administrative Officer Legal representative of the Company
Department of Communications and
Transportation
FERRONALES
/s/ Lic. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
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Attorney-in-Fact
EXHIBITS TO THE PURCHASE AND SALE AGREEMENT
*Exhibit 1 - Property Sold
*Exhibit 2 - Letter appointing Buyer as the winner of the Bid.
*Exhibit 3 - Legal capacity of the Department's representative
*Exhibit 4 - Articles of Incorporation of Buyer
*Exhibit 5 - Legal capacity of Buyer's representative
*Exhibit 6 - Letter by SECODAM authorizing the donation
*Exhibit 7 - Legal capacity of Ferronales's representative
*Exhibit 8 - Insurance to be maintained by Ferronales
*Exhibit 9 - Concession Agreement
*Exhibit 10 - Irrevocable security trust indenture
* OMITTED EXHIBITS
UPON WRITTEN REQUEST, THE REGISTRANT WILL PROVIDE COPIES OF ANY OF THE
REFERENCED OMITTED EXHIBITS.