EXHIBIT 10.11
EXECUTION COUNTERPART
EDC LOAN NO. 880-CHIL-7078
IDB LOAN NO. 1227/0C-CH
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AMENDED AND RESTATED DIRECT AGREEMENT
Dated as of December 22,1999
among
SR TELECOM INC.,
COMUNICACION Y TELEFONlA RURAL S.A.,
EXPORT DEVELOPMENT CORPORATION
and
INTER-AMERICAN DEVELOPMENT BANK
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AMENDED AND RESTATED DIRECT AGREEMENT (this "Direct
Agreement") dated as of December 22, 1999 among SR TELECOM INC., a company duly
organized and validly existing under the laws of Canada ("SRT"), COMUNICACION Y
TELEFONIA RURAL S.A., a sociedad anonima duly organized and validly existing
under the laws of Chile (the "Borrower"), EXPORT DEVELOPMENT CORPORATION, a
corporation established by an Act of the Parliament of Canada ("EDC"), and
INTER-AMERICAN DEVELOPMENT BANK, an international organization established by
the Articles of Agreement among its member countries ("IDB", collectively with
EDC the "Senior Lenders").
W I T N E S S E T H
WHEREAS, the Borrower has undertaken to design, construct,
install and operate a rural telecommunications network in nine primary zones of
Chile (the "Project");
WHEREAS, SRT and the Borrower have entered into a Procurement
of Service Agreement dated as of March 31, 1999 (as amended, supplemented or
modified and in effect from time to time, the "Assigned Agreement");
WHEREAS, in order to finance the development and construction
of the Project, the Borrower has requested that EDC and IDB separately make
loans to it in an aggregate principal amount not exceeding $50,000,000;
WHEREAS, in order to finance a portion of the Project, the
Borrower and EDC are parties to an Amended and Restated Loan Agreement dated as
of the date hereof (the "EDC Loan Agreement"), providing, subject to the terms
and conditions thereof, for a loan to be made by EDC to the Borrower in an
aggregate amount not exceeding $25,000,000;
WHEREAS, in order to finance a portion of the Project, the
Borrower and IDB are parties to a Loan Agreement dated as of the date hereof
(the "IDB Loan Agreement"), providing, subject to the terms and conditions
thereof, for a loan to be made by IDB to the Borrower in an aggregate amount not
exceeding $25,000,000;
WHEREAS, the conditional assignment under the laws of Chile of
the Assigned Agreement by the Borrower to the Senior Lenders and the execution
and delivery of this Direct Agreement are conditions to the extension of
financing by the Senior Lenders under the Common Agreement;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Each capitalized term used herein and not
otherwise defined shall have the meaning assigned to such term (whether by
reference to another agreement or otherwise) in Appendix A hereto.
2. Interpretation. In this Direct Agreement and in the
Appendix hereto, except to the extent that the context otherwise requires:
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(a) the headings are for convenience only and shall not affect
the interpretation of this Direct Agreement;
(b) unless otherwise specified, references to Articles,
Sections, clauses and Appendices are references to Articles, Sections and
clauses of, and Appendices to, this Direct Agreement;
(c) references to any document or agreement, including this
Direct Agreement, shall be deemed to include references to such document or
agreement as amended, supplemented or replaced from time to time in accordance
with its terms and (where applicable) subject to compliance with the
requirements set forth therein; and
(d) references to any party to this Direct Agreement or any
other document or agreement shall include its successors and permitted assigns.
3. Consent to Assignment. SRT hereby acknowledges notice of
the conditional assignment of the Assigned Agreement being granted under Chilean
law by the Borrower in favour of the Senior Lenders (a copy of which has been
delivered to SRT) and consents to such granting by the Borrower as well as the
terms and provisions of such conditional assignment and this Direct Agreement.
4. Representations and Warranties. SRT hereby represents and
warrants that:
(a) Organization and Powers. Each of SRT and its Subsidiaries:
(a) is a corporation or other entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization; (b) has
all requisite corporate or other power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (c) is
qualified to do business and is in good standing in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary
and where failure so to qualify could (either individually or in the aggregate)
have a Borrower Material Adverse Effect or an SRT Material Adverse Effect.
(b) Authorization; Enforceability. SRT has all necessary
corporate power, authority and legal right to execute, deliver and perform its
obligations under this Direct Agreement and each of the other Transaction
Documents to which it is a party; the execution, delivery and performance by SRT
of this Direct Agreement and each of the other Transaction Documents to which it
is a party have been duly authorized by all necessary corporate action on its
part (including, without limitation, any required shareholder approvals); and
this Direct Agreement has been duly and validly executed and delivered by SRT
and constitutes, and the other Transaction Documents to which it is a party when
executed and delivered will constitute, its legal valid and binding obligation,
enforceable against SRT in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
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(c) Approvals. No Governmental Approvals are necessary for the
execution, delivery or performance by SRT of this Direct Agreement or any of the
other Transaction Documents to which it is a party or for the legality, validity
or enforceability hereof or thereof.
(d) No Breach. None of the execution and delivery of this
Direct Agreement and the other Transaction Documents to which SRT is a party,
the consummation of the transactions herein and therein contemplated or
compliance with the terms and provisions hereof and thereof will conflict with
or result in a breach of, or require any consent under, the organizational
documents of SRT, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or Governmental Body, or any agreement or
instrument to which SRT or any of its Subsidiaries is a party or by which it or
any of its Property is bound or to which it is subject, or constitute a default
under any such agreement or instrument, or (except for the Liens created
pursuant to the Security Documents) result in the creation or imposition of any
Lien upon any Property of SRT or any of its Subsidiaries pursuant to the terms
of any such agreement or instrument.
(e) Financial Condition; No Material Adverse Change.
(i) Financial Condition. SRT has heretofore furnished to the
Senior Lenders the audited consolidated and consolidating balance
sheets of SRT and its Subsidiaries as at December 31,1998 and the
related audited consolidated and unaudited consolidating statements of
income, retained earnings and cash flows of SRT and its Subsidiaries
for the fiscal year ended on such date, with the opinion thereon (in
the case of such consolidated balance sheet and statements) of Deloitte
& Touche. All such financial statements are complete and correct and
fairly present the consolidated financial condition of SRT and its
Subsidiaries, and (in the case of such consolidating financial
statements) the respective unconsolidated financial condition of SRT
and its Subsidiaries, as at such dates and the consolidated and
unconsolidated results of their operations for the fiscal year ended on
such date, all in accordance with Canadian generally accepted
accounting principles and practices applied on a consistent basis. None
of SRT and its Subsidiaries has on the date hereof any material
contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided
for in such balance sheets as at such date.
(ii) No Material Adverse Change. Since December 31, 1998,
there has been no material adverse change in the consolidated financial
condition, operations, business or prospects taken as a whole of SRT
and its Subsidiaries from that set forth in the financial statements as
at such date referred to in paragraph (i) of this Section 4(e).
(iii) Year 2000 Issues. SRT has undertaken a review and
assessment of all areas within its and its Subsidiaries' business and
operations that could be adversely affected by its or their failure to
be Year 2000 Compliant on a timely basis and has developed and
implemented a comprehensive detailed program for it and its
Subsidiaries to become Year 2000 Compliant and is presently Year 2000
Compliant and, on the basis of inquiries made, SRT reasonably believes
that each supplier and vendor of SRT and its Subsidiaries
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that is of material importance to the financial well-being of SRT and
its Subsidiaries has achieved Year 2000 Compliance, and will remain
Year 2000 Compliant.
(f) Properties.
(i) Property Generally. SRT owns and has on the date hereof
good and marketable title (subject only to Liens disclosed in its most
recent financial statements) to the Properties shown to be owned in the
financial statements referred to in Section 4(e)(i) (other than
Properties disposed of in the ordinary course of business).
(ii) Intellectual Property. Each of SRT and its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights,
patents and other intellectual property material to its business, and
the use thereof by SRT and its Subsidiaries does not infringe upon the
rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to
result in a Borrower Material Adverse Effect or an SRT Material Adverse
Effect.
(g) Litigation. There are no legal or arbitral proceedings, or
any proceedings by or before any governmental or regulatory authority or agency,
now pending or (to the knowledge of SRT) threatened against SRT or any of its
Subsidiaries that, if adversely determined, could (either individually or in the
aggregate) have a Borrower Material Adverse Effect or an SRT Material Adverse
Effect.
(h) Compliance with Laws and Agreements. Each of SRT and its
Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Body applicable to it or its Property and all indentures,
agreements and other instruments binding upon it or its Property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Borrower Material Adverse Effect or an SRT Material
Adverse Effect.
(i) Taxes. SRT and its Subsidiaries have filed all material
tax returns that are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by SRT or any of
its Subsidiaries. The charges, accruals and reserves on the books of SRT and its
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of SRT, adequate. SRT has not given or been requested to give a waiver
of the statute of limitations relating to the payment of any or other
impositions.
(j) True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of SRT to the Senior Lenders in connection with the negotiation,
preparation or delivery of this Direct Agreement and the other Transaction
Documents or included herein or therein or delivered pursuant hereto or thereto,
(a) have been prepared in good faith, based upon assumptions believed by SRT to
be reasonable and (b) when taken as a whole do not contain any untrue statement
of material fact or omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading. All written information furnished after the date
hereof by SRT and its Subsidiaries to the Senior Lenders in connection with this
Direct Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby will be true, complete and accurate in every
material respect, or (in the case
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of projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to SRT that could
have a Borrower Material Adverse Effect or an SRT Material Adverse Effect that
has not been disclosed herein, in the other Transaction Documents or in a
report, financial statement, exhibit, schedule, disclosure letter or other
writing furnished to the Senior Lenders for use in connection with the
transactions contemplated hereby or thereby.
(k) Legal Form. Each of the Transaction Documents to which SRT
is a party is in proper legal form under the laws of Canada for the enforcement
thereof against SRT under such laws, and if such Transaction Documents were
stated to be governed by such laws, they would constitute legal, valid and
binding obligations of SRT under such laws, enforceable in accordance with their
respective terms. All formalities required in Canada for the validity and
enforceability of each such Transaction Document (including, without limitation,
any necessary registration, recording or filing with any court or other
authority in Canada) have been accomplished, and no Covered Taxes are required
to be paid to Canada, or any political subdivision thereof or therein, and no
notarization is required, for the validity and enforceability thereof.
(1) Ranking. This Direct Agreement and the other Transaction
Documents to which SRT is a party and the obligations evidenced hereby and
thereby are and will at all times be direct and unconditional general
obligations of SRT, and rank and will at all times rank in right of payment and
otherwise at least pari passu with all other unsecured Indebtedness of SRT,
whether now existing or hereafter outstanding.
(m) Defaults. SRT is not in default under any material
covenant or obligation hereunder or under the Assigned Agreement and no such
default has occurred prior to the date hereof. To the best knowledge of SRT, the
Borrower is not in default under any material covenant or obligation of the
Assigned Agreement and no such default has occurred prior to the date hereof and
there exists no event or condition which would, with the giving of notice or
lapse of time or both, constitute a default under the Assigned Agreement. SRT
and the Borrower have satisfied each of the conditions precedent, if any,
contained in the Assigned Agreement.
5. Covenants of SRT.
5.1. SRT covenants and agrees with the Senior Lenders that, so
long as any Commitment or Senior Loan is outstanding under either Senior Loan
Agreement and until payment in full of all amounts payable by the Borrower
thereunder:
(a) Financial Statements and Other Information. SRT shall
deliver to Senior Lenders:
(i) a copy of all financial statements, whether annual or
interim, of SRT and the report, if any, of SRT's auditors thereon and
of all annual and other periodic reports of SRT furnished to its
shareholders at the same time as they are furnished to such
shareholders;
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(ii) promptly upon their becoming available, copies of all
documents, if any, that SRT shall have filed with the Ontario
Securities Commission (or any securities regulatory agency substituted
therefor);
(iii) from time to time such other information regarding the
financial condition, operations, business or prospects of SRT or any of
its Subsidiaries, or compliance with the terms of this Direct Agreement
and the other Transaction Documents, as the Senior Lenders may
reasonably request.
(b) Notices of Material Events. SRT will furnish the following
to each Senior Lender in writing:
(i) promptly after SRT knows or has reason to believe that any
Default or Event of Default has occurred, notice of such Default or
Event of Default;
(ii) prompt notice of all legal or arbitral proceedings, and
of all proceedings by or before any governmental or regulatory
authority or agency, and of any material development in respect of such
legal or other proceedings, affecting SRT or any of its Subsidiaries,
except proceedings that, if adversely determined, would not (either
individually or in the aggregate) have a Borrower Material Adverse
Effect or an SRT Material Adverse Effect;
(iii) prompt notice of material changes to the Project;
(iv) within five days of the earlier of (A) Borrower's receipt
thereof and (B) SUBTEL's sending thereof, notice and copies of any
material communication with SUBTEL concerning the Concessions; and
(v) prompt notice of any other development that results in, or
could reasonably be expected to result in, a Borrower Material Adverse
Effect or an SRT Material Adverse Effect.
Each notice delivered under this Section 5.1(b) shall be accompanied by a
statement of a Financial Officer or other executive officer of SRT setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
(c) Existence. Compliance, Records, Inspection. Etc. SRT will,
and will cause each of its Subsidiaries to:
(i) preserve and maintain its legal existence and all of its
Governmental Approvals, material rights, privileges, licenses and
franchises, including, without limitation, rights under the
Concessions;
(ii) comply with the requirements of all applicable laws,
rules, regulations and orders of any Governmental Body if failure to
comply with such requirements could (either individually or in the
aggregate) have a Borrower Material Adverse Effect or an SRT Material
Adverse Effect;
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(iii) pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained;
and
(iv) permit representatives of the Senior Lenders, during
normal business hours, to examine, copy and make extracts from its
books and records, to inspect any of its Properties, and to discuss its
business and affairs with its officers and the Independent Accountants,
all to the extent reasonably requested by the Senior Lenders.
(d) SRT will cause the Borrower:
(i) to use the Borrower's bank account with Banco Xxxxxxxx
only for purposes of payroll; and
(ii) on or prior to the Closing Date, to enter into the
Collection Account o Agreements in form and substance satisfactory to
the Senior Lenders.
5.2. SRT covenants and agrees with the Senior Lenders that, so
long as Financial Completion has not occurred:
(a) Limitation on Incurrence of Additional Indebtedness SRT
will not and will not permit its Restricted Subsidiaries to, directly or
indirectly, incur additional Indebtedness unless, after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof:
(i) Consolidated Indebtedness to Consolidated EBITDA for the
period comprised of the four consecutive completed fiscal quarters
ended immediately prior to the incurrence of such Indebtedness, would
be less than 4:1; and
(ii) Consolidated Indebtedness as a percentage of Consolidated
Capitalization would be less than 50%.
(b) Minimum Shareholders' Equity. SRT will at all times
maintain Shareholders' Equity in excess of $90,000,000.
(c) Limitation on Liens. It will not, and will not permit any
of its Restricted Subsidiaries to, assign, pledge or otherwise grant a security
interest in their assets in favour of any Indebtedness except for (i) Liens for
taxes, assessments or other government charges not then due and delinquent or
the validity of which is being contested in good faith; (ii) Liens arising in
the ordinary course of business and not incurred in connection with the
borrowing of money; (iii) Liens securing Indebtedness of any Restricted
Subsidiary in favour of SRT; (iv) Liens existing as of the Closing Date,
provided that such Liens may not be subsequently extended to any other property
of SRT or any Restricted Subsidiary; (v) Liens securing all or any part of the
purchase price or to secure Indebtedness incurred or assumed to pay all or any
part of the purchase price or cost of construction of property (including
equipment manufactured by SRT acquired or constructed by SRT or a Restricted
Subsidiary after the Closing Date, subject to
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customary provisions including that such Liens be created within 90 days after
the purchase or construction of such property or equipment; (vi) Liens renewing
or extending any Lien permitted in (iii) through (v) above provided the
principal amount of Indebtedness secured by such Lien is not increased and the
Lien is not extended to any other property; and (vii) other Liens, provided such
other Liens do not exceed in the aggregate 5% of SRT's Shareholders' Equity.
6. Consent and Agreement. Notwithstanding anything to the
contrary in the Assigned Agreement, SRT hereby acknowledges and agrees that:
(a) After any Senior Lender gives written notice to SRT that
an Event of Default has occurred, the Senior Lenders and any assignee thereof
shall be entitled to exercise any and all rights of the Borrower under the
Assigned Agreement in accordance with its respective terms and SRT shall comply
in all respects with such exercise.
(b) SRT will not, without the prior written consent of the
Senior Lenders, take any action to (i) cancel or terminate, or suspend
performance under, the Assigned Agreement unless such cancellation, termination
or suspension is expressly provided for in the Assigned Agreement, SRT shall
have first delivered to the Senior Lenders written notice stating that it
intends to exercise such right on a date not less than 90 days after the date of
such notice and the Senior Lenders have consented to such cancellation,
termination or suspension, (ii) consent to or accept any cancellation,
termination or suspension of the Assigned Agreement, (iii) amend, supplement or
otherwise modify the Assigned Agreement (as in effect on the date hereof) or
(iv) sell, assign or otherwise dispose of (by operation of law or otherwise) any
part of its interest in the Assigned Agreement.
(c) SRT shall deliver to the Senior Lenders at the address set
forth in this Direct Agreement, or at such other address as the Senior Lenders
may designate in writing from time to time to SRT, concurrently with the
delivery thereof to the Borrower, a copy of each notice, request or demand given
by SRT pursuant to the Assigned Agreement.
(d) In the event that the Senior Lenders or their designee(s)
succeeds to the Borrower's interest under the Assigned Agreement, whether by
foreclosure or otherwise, the Senior Lenders or their designee(s) shall assume
liability for all of the Borrower's obligations under the Assigned Agreement
arising after the date of such succession. Except as otherwise set forth in the
immediately preceding sentence, the Senior Lenders shall not have any duties or
obligations whatsoever to SRT under the Assigned Agreement or with respect to
any of the transactions contemplated hereby or thereby.
(e) Upon SRT's receipt of a notice from the Senior Lenders
stating that it intends to take one or more actions, or exercise one or more
remedies after the occurrence and during the continuance of an Event of Default,
the Senior Lenders may assign their rights and interests and the rights and
interests of the Borrower under the Assigned Agreement to any purchaser or
transferee of the Project, if such purchaser or transferee has agreed to assume
all of the obligations of the Borrower under the Assigned Agreement. Upon such
assignment and assumption, the Senior Lenders shall be relieved of all
obligations under the Assigned Agreement arising after such assignment and
assumption.
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(f) In the event that (i) the Assigned Agreement is rejected
by a trustee or debtor-in-possession in any bankruptcy or insolvency proceeding
involving the Borrower or (ii) the Assigned Agreement is terminated as a result
of any bankruptcy or insolvency proceeding involving the Borrower and, if within
90 days after such rejection or termination, the Senior Lenders or their
designee(s) shall so request and shall certify in writing to SRT that they or it
intends to perform the obligations of the Borrower as and to the extent required
under the Assigned Agreement, SRT will execute and deliver to the Senior Lenders
or such designee(s) a new Assigned Agreement which shall be for the balance of
the remaining term under the original Assigned Agreement before giving effect to
such rejection or termination and shall contain the same conditions, agreements,
terms, provisions and limitations as the original Assigned Agreement (except for
any requirements which have been fulfilled by the Borrower and SRT prior to such
rejection or termination). References in this Direct Agreement to the "Assigned
Agreement" shall be deemed also to refer to the new Assigned Agreement.
(g) In the event that the Senior Lenders or their designee(s),
or any purchaser, transferee, grantee or assignee of the interests of the Senior
Lenders or their designee(s) in the Project shall assume or be liable under the
Assigned Agreement (as contemplated in subsection (d), (e) or (f) above or
otherwise), liability in respect of any and all obligations of any such party
under the Assigned Agreement shall be limited solely to such party's interest in
the Project (and no officer, director, employee, shareholder or agent thereof
shall have any liability with respect thereto).
7. Special Agreements. Notwithstanding any provisions of the
Assigned Agreement to the contrary, SRT agrees that:
(a) the Senior Lenders shall have the right at any time, upon
reasonable notice to SRT, to review and audit the relevant internal
records of SRT which support or verify the invoices and charges levied
against the Borrower with respect to services provided under the
Assigned Agreement;
(b) except with the consent of the Senior Lenders, and
notwithstanding the amount of invoices and charges levied against the
Borrower with respect to services provided under the Assigned
Agreement, SRT shall not collect from or be paid by the Borrower any
amount in excess of 10% of the Canadian scope of the maintenance
replacement costs set out in the Agreed Financial Model in respect of
such services;
(c) after the occurrence and during the continuation of an
Event of Default, except with the consent of the Senior Lenders, the
Borrower shall not pay, and SRT shall not collect, any amounts due or
falling due under the Assigned Agreement and any such amounts that
accrue during such time shall only be paid (A) after the Event of
Default is cured or ceases to exist; and (B) payment of any such amount
will not result in the occurrence of an Event of Default; and
(d) the occurrence of an Event of Default shall in no way
relieve or excuse SRT from its obligations under the Assigned
Agreement.
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8. Arrangements Regarding Payments. To the extent that any
payments are made by SRT to the Borrower after the occurrence and during the
continuation of an Event of Default, all such payments to be made by SRT to the
Borrower under the Assigned Agreement shall be made in lawful money of the
United States of America, directly to the Senior Lenders pro rata to the
aggregate outstanding Obligations then owing to the Senior Lenders. If such
payments are made to EDC, such payment should be made for deposit at Citibank
N.A., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, XXX, for the credit of EDC, UID
number 189284, account number 00000000 (or such other account or financial
institution as EDC may, from time to time, notify SRT) to be held as security
for payment of all obligations owing to EDC by the Borrower, and shall be
accompanied by a notice from SRT stating that such payments are made under the
Assigned Agreement. If such payments are made to IDB, such payments shall be
made for deposit at Bankers Trust Company, New York, ABA number 000000000,
Attention: MT-Foreign Section, for credit to the account of IDB-PRI account
number 00000000 (or such other account or financial institution at IDB may from
time to time, notify SRT) to be held as security for payment of all obligations
owing to IDB by the Borrower, and shall be accompanied by a notice from SRT
stating that such payments are made under the Assigned Agreement.
9. Miscellaneous.
(a) No failure on the part of the Senior Lenders or any of
their agents to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege hereunder shall operate as a
waiver thereof, and no single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
(b) This Direct Agreement shall terminate on the date on which
(i) all of the Commitments have been reduced to zero or have expired; and (ii)
all of the Borrower's obligations under the Senior Loan Agreements are
indefeasibly paid in full. Upon the termination of this Direct Agreement, the
obligations of the parties hereto shall terminate.
(c) If any provision of this Direct Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
If any provision of this Direct Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
such provision shall not in any way be affected or impaired in any other
jurisdiction thereby.
(d) Any notice, claim, request, demand, consent designation,
direction, instruction, certificate, report or other communication to be given
hereunder shall be given in writing in the English language (or accompanied by
an accurate English language translation upon which the recipient shall have the
right to rely for all purposes) and will be deemed duly given when (i)
personally delivered, (ii) sent by facsimile transmission (but only if,
immediately after the transmission, the sender's facsimile machine records in
writing the correct answer back) or (iii) ten days have elapsed after mailing by
certified or registered mail, postage prepaid, in each case addressed to a party
at its address or facsimile transmission number as set forth below or to another
address or facsimile number of which that party has given notice. Notice of
address or facsimile number change shall be effective only upon receipt.
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If to SRT:
0000 Xxxxx Xxxxxx Xxxxxxx
Xx. Xxxxxxx, Xxxxxx, X0X IM5
Attention: President & CEO
Telecopier: 000-000-0000
If to EDC:
000 X'Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0X0
Attention: Loans Operations
Telecopier: 000-000-0000
If to IDB:
Private Sector Department
Inter-American Development Bank
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Loan Administration Unit
Telecopier: 000-000-0000
If to the Borrower:
Xx. Xxxxxxxx 0000
Xxxxxxxx 000-X
Xxx Xxxxxx,
Xxxxxxxx, Xxxxx
Attention: Xxxxx Xxxxxxx
Telecopier: 000-000-0000
(e) No amendment or waiver of any provision of this Direct
Agreement or consent to any departure herefrom by any party hereto shall in any
event be effective against any party hereto unless the same shall be in writing
and signed by the party against whom enforcement is sought and then such
amendment or waiver shall be effective only in the specific instance and for the
specific purpose for which it was given.
(f) This Direct Agreement shall be binding upon and enure to
the benefit of the parties hereto and their respective successors and assigns.
SRT shall not assign or transfer any of its rights or obligations hereunder.
(g) This Direct Agreement may be executed in any number of
counterparts, all of which when taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Direct Agreement by
signing any such counterpart.
DIRECT AGREEMENT
- 12 -
(h) THIS DIRECT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(i) SRT hereby agrees that any suit, action or proceeding with
respect to this Direct Agreement, any other Transaction Document or any judgment
entered by any court in respect thereof may be brought by any Senior Lender in
the courts of the Province of Ontario, Canada or in the United States District
Court for the Southern District of New York, in the Supreme Court of the State
of New York sitting in New York County (including its Appellate Division) or in
any other appellate court in the State of New York, as the party commencing such
suit, action or proceeding may elect in its sole discretion: and SRT hereby
irrevocably submits to the jurisdiction of such courts for the purpose of any
such suit, action, proceeding or judgment. SRT further submits, for the purpose
of any such suit, action, proceeding or judgment brought or rendered against it,
to the appropriate courts of the jurisdiction of its domicile.
(j) SRT hereby agrees that service of all writs, process and
summonses in any such suit, action or proceeding with respect to this Direct
Agreement, any other Transaction Document or any judgment entered by any court
in respect thereof brought in (i) the Province of Ontario may be made upon SRT,
presently located at the address noted in Section 9(d) (the "Canadian Process
Agent") or (ii) the State of New York may be made upon CT Corporation, presently
located at 000 Xxxxxx Xxxxxx, 13th Floor, New York, New York 10011, USA, (the
"US Process Agent" and, together with the Canadian Process Agent, the "Process
Agents"), and hereby confirms and agrees that the Process Agents have been duly
and irrevocably appointed as its agent and true and lawful attorney-in-fact in
its name, place and stead to accept such service of any and all such writs,
process and summonses, and agrees that the failure of the Process Agents to give
any notice of any such service of process to SRT shall not impair or affect the
validity of such service or of any judgment based thereon. SRT hereby further
irrevocably consents to the service of process in any suit, action or proceeding
in said courts by the mailing thereof by the Senior Lenders by registered or
certified mail, postage prepaid, at its address set forth beneath its signature
hereto.
(k) Nothing herein shall in any way be deemed to limit the
ability of the Senior Lenders to serve any such writs, process or summonses in
any other manner permitted by applicable law or to obtain jurisdiction over SRT
in such other jurisdictions, and in such manner, as may be permitted by
applicable law.
(1) SRT hereby irrevocably waives any objection that it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Direct Agreement or any other
Transaction Document brought in the courts of the Province of Ontario, Canada or
in the Supreme Court of the State of New York, County of New York or in the
United States District Court for the Southern District of New York, and hereby
further irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
(m) This Direct Agreement shall come into full force and
effect, and amend and restate the Direct Agreement dated as of April 13. 1999
among SRT, the Borrower and EDC as
DIRECT AGREEMENT
- 13 -
of the date on which the EDC Loan Agreement becomes effective in accordance with
Section 6 thereof.
(n) THE BORROWER AND SRT HEREBY IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS DIRECT AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
(o) Any specification of Dollars and payment in New York City
contained in this Direct Agreement is of the essence, and the obligations of SRT
under this Direct Agreement to make payment to (or for account of) the Senior
Lenders 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 or in another place except to the extent that such tender or recovery
results in the effective receipt by the Senior Lenders in New York City of the
full amount of Dollars payable to the Senior Lenders under this Direct
Agreement. If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due hereunder in Dollars into another currency (in this Section
9(o) called the "Judgment Currency"), the rate of exchange that shall be applied
shall be that at which in accordance with normal banking procedures the Senior
Lenders could purchase such Dollars with the Judgment Currency on the Business
Day next preceding the day on which such judgment is rendered. The obligation of
SRT in respect of any such sum due from it to the Senior Lenders hereunder or
under any other Financing Document shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only to the extent
that on the Business Day following receipt by the Senior Lenders of any sum
adjudged to be due hereunder in the Judgment Currency the Senior Lenders may in
accordance with normal banking procedures purchase and transfer Dollars to New
York City with the amount of the Judgment Currency so adjudged to be due; and
SRT hereby, as a separate obligation and notwithstanding any such judgment,
agrees to indemnify the Senior Lenders against, and to pay the Senior Lenders on
demand, in Dollars, the amount (if any) by which the sum originally due to the
Senior Lenders in Dollars hereunder exceeds the amount of the Dollars so
purchased and transferred.
(p) The SRT Guarantee dated as of April 13, 1999 between EDC
and SRT shall terminate and be of no further force and effect as of the date on
which the EDC Loan Agreement becomes effective in accordance with Section 6
thereof.
DIRECT AGREEMENT
- 14 -
IN WITNESS WHEREOF, each of the parties hereto has caused this
Direct Agreement to be duly executed and delivered by its duly authorized
officer as of the date first written above.
SR TELECOM INC.
By: /s/ W. Xxxxxx Xxxxxxxx
----------------------------------
Name: W. Xxxxxx Xxxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
COMUNICACION Y TELEFONIA RURAL S.A.
By: /s/ D'Arcy X. Xxxxx
----------------------------------
Name: D'Arcy X. Xxxxx
Title: Director
DIRECT AGREEMENT
- 15 -
EXPORT DEVELOPMENT CORPORATION
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
Title: Financial Services Manager
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Financial Services Manager
DIRECT AGREEMENT
- 16 -
INTER-AMERICAN DEVELOPMENT BANK
By: /s/ Xxxxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Deputy Manager, Private Sector
Department
DIRECT AGREEMENT
APPENDIX A
Direct Agreement
DEFINITIONS
In this Appendix, the Direct Agreement and in any other document that
references this Appendix, the following terms shall have the meanings assigned
below (the singular includes the plural and vice versa) (unless otherwise
specified, section, Schedule and Exhibit references in this Appendix are to
sections of the Direct Agreement).
"Accounts" has the meaning assigned to such term in Section
4.01(a) of the Common Agreement.
"Agreed Financial Model" means the financial model dated
December 1999, in form and substance satisfactory to the Senior Lenders,
prepared and certified by the Borrower and SRT and designed to assess the
current and future revenues and expenditures of the Borrower.
"Assigned Agreement" has the meaning assigned to such term in
the Recitals to this Agreement.
"Borrower" has the meaning assigned to such term in the
Preamble to this Agreement.
"Borrower Material Adverse Effect" means the occurrence of any
event which could result in a material adverse effect on (a) the Project, (b)
the Property, business, operations, financial condition, liabilities or
capitalization of the Borrower, (c) the ability of the Borrower to perform its
obligations under any of the Transaction Documents to which it is a party, (d)
the validity or enforceability of any of the Transaction Documents, (e) the
rights and remedies of the Senior Lenders under any of the Transaction Documents
or (f) the timely payment of the principal of or interest on the Senior Loans or
other amounts payable in connection therewith.
"Business Day" means (a) with respect to a borrowing of, a
payment or prepayment of principal of or interest on, or an "Interest Period"
(as defined in each Senior Loan Agreement) for, any Senior Loan or a notice by
the Borrower with respect to any such borrowing, payment, prepayment or Interest
Period, a day which is both a New York Business Day and a London Business Day
and (b) with respect to any other reference to "Business Day", any day on which
commercial banks are not authorized or required to close in Xxx Xxxx Xxxx xxx
Xxxxxx, Xxxxxxx.
"Business Plan" means the Information for Proposed Debt
Holders dated November 1998 and reviewed by Deloitte & Touche, Chartered
Accountants.
DIRECT AGREEMENT
- 2 -
"BVI Holdco" means CTR Holdings Limited, a limited liability
company duly organized and validly existing under the laws of the British Virgin
Islands.
"Canadian GAAP" means generally accepted accounting principles
in Canada, in effect from time to time.
"Capital Expenditures" means, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Borrower to acquire or
construct fixed assets, plant and equipment and related installation charges
(including renewals, improvements and replacements, but excluding repairs)
during such period computed in accordance with Canadian GAAP.
"Canadian Process Agent" has the meaning assigned to such term
in Section 9(j).
"Capital Lease Obligations" means, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under Canadian GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with Canadian GAAP.
"Chile" means the Republic of Chile.
"Chilean Holdco" means Servicios Rurales de Telecomunicaciones
S.A., a sociedad anonima duly organized and validly existing under the laws of
Chile.
"Chilean Holdco Pledge Agreements" means, collectively, (a)
that certain shareholders pledge agreement dated as of April 13, 1999, created
by of BVI Holdco in favour of EDC, (b) that certain shareholders pledge
agreement dated as of April 13, 1999, created by SR (BV) Holdings in favour of
EDC, and (c) that certain shareholders pledge agreement, to be executed and
delivered in form and substance satisfactory to the Senior Lenders on or prior
to the Closing Date, created by BVI Holdco in favour of IDB, in each case,
pledging the capital stock of Chilean Holdco.
"Chilean Pledge Agreements" means the Shareholders Pledge
Agreements and the Chilean Holdco Pledge Agreements.
"Chilean Security Documents" means, collectively, the
Commercial Pledge to EDC on Concessions of Telecommunications, Commercial Pledge
to IDB on Concessions of Telecommunications, the Pledges Without Conveyance on
Chattel Property, the Chilean Pledge Agreements, the Conditional Assignments,
the Promise to Grant a Commercial Pledge on Concessions of Telecommunications,
the Promise to Grant a Pledge Without Conveyance on Chattel Property, the
Promise to Execute Conditional Assignment of Rights and the Project Account
Agreement.
"Closing Date" means the date upon which (a) each of the
conditions set forth in Section 6.01 of the Common Agreement are satisfied or
waived and (b) the initial disbursement of the IDB Loan is made pursuant to
Section 2.02 of the IDB Loan Agreement.
DIRECT AGREEMENT
- 3 -
"Collection Account Agreements" means, collectively, (a) that
certain account agreement to be executed and delivered in form and substance
satisfactory to the Senior Lenders on or prior to the Closing Date by the
Borrower and Banco BHIF and (b) that certain account agreement to be executed
and delivered in form and substance satisfactory to the Senior Lenders by the
Borrower and Banco del Estado, in each case, providing for the automatic
transfer of collection credit balance of any Collection Account to the Operating
Account and prohibiting the Borrower from making any other transfers from any
Collection Account.
"Collection Accounts" has the meaning assigned to such term in
Section 4.01 (b)(ii) of the Common Agreement.
"Commercial Pledge to EDC on Concessions of
Telecommunications" means the pledge dated as of April 13, 1999 regulated by
articles 813 and following of the Commerce Code of Chile created by the Borrower
on certain concessions of telecommunications held by the Borrower granted in
favour of EDC.
"Commercial Pledge to IDB on Concessions of
Telecommunications" means the pledge, to be executed and delivered in form and
substance satisfactory to the Senior Lenders on or prior to the Closing Date,
regulated by articles 813 and following of the Commerce Code of Chile created by
the Borrower on certain concessions of telecommunications held by the Borrower
granted in favour of IDB.
"Commitment" means, collectively, the EDC Commitment and the
IDB Commitment.
"Common Agreement" means the Common Agreement dated as of the
date hereof between the Borrower and the Senior Lenders.
"Completion of Network Construction" has the meaning assigned
to such term in Section 2.01 of the Performance Undertaking.
"Concessions" means each of the concessions, listed under the
heading "Concessions" on Schedule II of the Common Agreement and any other
concessions obtained subsequent to the date hereof, for the operation of a
public telephone network in each of the nine primary zones involved in the
Project.
"Conditional Assignments" means, collectively, the Telsur
Conditional Assignment, the ENTEL Conditional Assignment, the CTC Conditional
Assignment, the SRT Conditional Assignment and any other conditional assignment
(in form and content satisfactory to the Senior Lenders, acting reasonably) from
each Person (other than the Borrower) party to a Project Document.
"Consolidated Capitalization" means the consolidated
capitalization of SRT calculated in accordance with Canadian GAAP, but excluding
from such calculation Unrestricted Subsidiaries.
"Consolidated EBITDA" means earnings before interest, taxes,
depreciation and amortization of SRT and its Subsidiaries, but excluding
therefrom any Unrestricted Subsidiary.
DIRECT AGREEMENT
- 4 -
"Consolidated Indebtedness" means the Indebtedness of SRT and
of its Subsidiaries, excluding Indebtedness of Unrestricted Subsidiaries, as
determined by Canadian GAAP.
"Cost Overrun" has the meaning assigned to such term in
Section 2.01(ii) of the Project Funds Agreement.
"Covered Taxes" means all present and future income, stamp,
registration and other taxes and levies, imposts, deductions, charges,
compulsory loans and withholdings whatsoever, and all interest, penalties or
similar amounts with respect thereto, now or hereafter imposed, assessed, levied
or collected by any authority of or in any jurisdiction (including, without
limitation, Chile or any political subdivision or taxing authority thereof or
therein, or any federal or other association of or with which Chile may be a
member or associated) on or in respect of the Senior Loans, the Common
Agreement, the EDC Notes, the IDB Notes, the other Financing Documents, the
recording, registration, notarization or other formalization of any thereof, the
enforcement thereof or the introduction thereof in any judicial proceedings, or
on or in respect of any payments of principal, interest, premium, charges, fees
or other amounts made on, under or in respect of any thereof.
"CTC" means Compania de Telecomunicaciones de Chile S.A., a
sociedad anonima duly organized and validly existing under the laws of Chile.
"CTC Conditional Assignment" means the Conditional Assignment,
to be executed and delivered in form and substance satisfactory to the Senior
Lenders on or prior to the Closing Date, among CTC, the Borrower and the Senior
Lenders.
"CTC Interconnection Agreement" means, collectively, (a) the
Interconnection Agreement for long distance telephone calls dated as of July 26,
1999 between CTC and the Borrower, and (b) the Service Agreement for long
distance telephone calls dated as of May 25, 1998 between CTC and the Borrower.
"Custodian" means Banco Sud Americano in its capacity as
Custodian under the Custodian Agreements.
"Custodian Agreements" means the EDC Custodian Agreement and
the IDB Custodian Agreement.
"Debentures" means the 8.15% senior unsecured Debentures due
April 22, 2005 issued by SRT.
"Debt Service Reserve Account" has the meaning assigned to
such term in Section 4.01(a)(iii) of the Common Agreement.
"Debt Service Reserve Deficiency" means, on any date of
determination, the amount, if any, by which the collected credit balance of the
Debt Service Reserve Account is less than the Debt Service Reserve Requirement
for such date of determination.
DIRECT AGREEMENT
- 5 -
"Debt Service Reserve Requirement" means, on any date of
determination, an amount equal to the sum of (a) the aggregate amount of
interest on the Senior Loans projected to accrue during the six-month period
following such date using the interest rates in effect with respect to such
Senior Loans outstanding on such date of determination, plus (b) the aggregate
amount of principal of Senior Loans then scheduled to become due on the next
Principal Payment Date.
"Default" means an Event of Default or an event that with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
"Dollars" and "$" each means the lawful money of the United
States of America.
"EBITDA" means, for any period, the sum, for the Borrower
(determined in accordance with Canadian GAAP), of the following: net income for
such period less extraordinary gains for such period, less SUBTEL subsidies
during such period, less foreign exchange gains during such period, plus foreign
exchange losses during such period, plus extraordinary losses for such period,
plus taxes paid and provisions for taxes made during such period, plus Interest
Expense for such period, plus depreciation and amortization.
"EDC" has the meaning assigned to such term in the Preamble to
this Agreement.
"EDC Commitment" has the meaning assigned to the term
"Commitment" in the EDC Loan Agreement.
"EDC Custodian Agreement" means the Custodian Agreement dated
as of April 13, 1999 among the Borrower, EDC and the Custodian.
"EDC Loan Agreement" means the Amended and Restated Loan
Agreement dated as of the date hereof between the Borrower and EDC.
"EDC Notes" means any promissory note delivered by the
Borrower to EDC in connection with the EDC Loan Agreement.
"EHSM Plan" means the Borrower's Environmental, Health and
Safety Management Plan ("Plan de Gestion Ambiental, Salud y Seguridad") by
Ambiental Consultores Limitada dated December 6, 1999. The EHSM Plan shall
include all the actions necessary to comply with all Environmental Requirements
and shall include, without limitation, the following: (a) a detailed description
of all necessary environmental and social mitigation measures and monitoring
programs, which are, at a minimum, those measures and monitoring programs
defined in any environmental impact assessment and related Governmental
Approvals, (b) an estimated cost, time schedule and assigned responsibility for
implementation for each mitigation measure and monitoring program: (c) a
description of the specific project supervision methods to be implemented to
ensure that all measures and programs are completely and properly implemented by
all responsible parties: (d) a description of the planned environmental, health
and safety management system, including description of personnel and their
duties, training, and other related plans and procedures (e.g., contingency
plans, health and safety plans, etc.); and (e) a description of ongoing public
consultation and information disclosure activities.
DIRECT AGREEMENT
- 6 -
The EHSM Plan shall address the construction and operational phases of all
relevant Project components.
"ENTEL" means Empresa Nacional de Telecomunicaciones S.A., a
sociedad anonima duly organized and validly existing under the laws of Chile.
"ENTEL Conditional Assignment" means the Conditional
Assignment of Rights (Entel Interconnection Agreement (Long Distance)), to be
executed and delivered in form and substance satisfactory to the Senior Lenders
on or prior to the Closing Date, among ENTEL, the Borrower and the Senior
Lenders.
"ENTEL Interconnection Agreement (Long Distance)" means,
collectively, (a) the Interconnection Agreement for long distance telephone
calls dated as of June 25, 1998 between ENTEL and the Borrower, and (b) the
Service Agreement for long distance telephone calls dated as of May 25, 1998
between ENTEL and the Borrower.
"Environmental Laws" means any and all applicable Chilean
federal, provincial, municipal or local laws, rules, order, regulations,
statutes, ordinances, codes, decrees or requirements of any Chilean Governmental
Body, related to the environment, worker health and safety.
"Environmental Reports" means one or more reports prepared by
the Borrower (or a consulting firm on its behalf) related to environmental,
health or safety aspects of the Borrower's activities or assets or undertakings
to be executed by its Contractors for any applicable period including, without
limitation, the EHSM Plan, environmental impact assessments, environmental
management plans, safety management plans, emergency response or contingency
plans or similar studies.
"Environmental Requirements" means all environmental, social,
health and safety requirements, standards, protections, obligations and
performance required by (a) any Environmental Law, (b) any Governmental
Approval, (c) the IDB Environmental and Social Guidelines, (d) any Environmental
Reports, (e) any environmental, social, or health and safety representation and
warranty or affirmative covenant in the Common Agreement, and (f) any
Fundamental Principles and Rights at Work.
"Equity" means the sum, as at any date, for the Borrower
(determined in accordance with Canadian GAAP) of the following: (a) the amount
of cash equity invested in the Borrower, plus (b) the Subordinated Indebtedness
owing to SRT, plus (c) any in-kind investment, plus (d) any Indebtedness (other
than the Indebtedness created pursuant to this Agreement) of the Borrower
Guaranteed by SRT. plus (e) the Borrower's retained earnings less any retained
losses.
"Event of Default" has the meaning assigned to such term in
Section 9 to the Common Agreement.
"Financial Completion" has the meaning assigned to such term
in Section 8.20 of the Common Agreement.
DIRECT AGREEMENT
- 7 -
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of any Person.
"Financing Documents" means, collectively, this Agreement, the
Intercreditor Agreement, the IDB Notes, the IDB Loan Agreement, the EDC Notes,
the EDC Loan Agreement, the Custodian Agreements, the Project Account Agreement,
the Project Funds Agreement, the Transfer Restrictions Agreement, the
Performance Undertaking, the Common Agreement, the Collection Account Agreements
and the Security Documents.
"First Pledge Without Conveyance on Chattel Property" means
the pledge dated as of April 13, 1999 regulated by Ley # 18, 112 of Chile on
chattel property owned by the Borrower created by the Borrower in favour of EDC.
"Force Majeure Event" has the meaning assigned to such term in
Section 1.01 of the Performance Undertaking.
"Fundamental Principles and Rights at Work" include, without
limitation, (a) freedom of association and the effective recognition of the
right to collective bargaining; (b) prohibition of all forms of forced or
compulsory labor; (c) prohibition of child labor, including the prohibition of
children under 18 from working in hazardous conditions (which includes
construction activities) and young persons from working at night, and that young
persons under 18 be found fit to work via medical examinations; (d) elimination
of discrimination in respect of employment and occupation, where discrimination
is defined as any distinction, exclusion or preference based on race, color,
sex, religion, political opinion, national extraction, social origin, or any
other motive determined by any Governmental Body; (e) compliance with all
applicable labor laws, regulations, and standards; and (f) compliance with all
International Labor Organization conventions/treaties which have been accepted
by Chile.
"Governmental Approval" means any authorization, consent,
approval, license, ruling, permit, concession (including the Concessions),
certification, exemption, filing, variance, order, judgment, decree,
publication, notice to, declaration of or with or registration by or with (in
all cases other than with respect to the perfection of any security interest)
any Governmental Body.
"Governmental Body" means any national, state, county, city,
town, village, municipal or other local governmental department, commission,
board, bureau, agency, authority or instrumentality of Chile, Canada, or the
British Virgin Islands, or any political subdivision thereof, and any Person
(including, without limitation, the Central Bank of Chile) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to any of the foregoing entities, including, without limitation, all
commissions, boards, bureaus, arbitrators and arbitration panels, and any
authority or other Person controlled by any of the foregoing.
"Guarantee" means a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other
DIRECT AGREEMENT
- 8 -
distributions upon the stock or equity interests of any Person, or an agreement
to purchase, sell or lease (as lessee or lessor) Property, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make
payment of such debtor's obligations or an agreement to assure a creditor
against loss, and including, without limitation, causing a bank or other
financial institution to issue a letter of credit or other similar instrument
for the benefit of another Person, but excluding endorsements for collection or
deposits in the ordinary course of business. The terms "Guarantee" and
"Guaranteed" used as verbs have the correlative meanings.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"IDB" has the meaning assigned to such term in the Preamble of
this Agreement.
"IDB Commitment" has the meaning assigned to the term
"Commitment" in the IDB Loan Agreement.
"IDB Custodian Agreement" means the Custodian Agreement, to be
executed and delivered in form and substance satisfactory to the Senior Lenders
on or prior to the Closing Date, among the Borrower, IDB and the Custodian.
"IDB Environmental and Social Guidelines" means the applicable
environmental and social IDB policies and guidelines, including, without
limitation, guidance on environmental impact assessments, resettlement policy
and disclosure of information policy.
"IDB Loan Agreement" means the Loan Agreement dated as of the
date hereof between the Borrower and IDB.
"IDB Notes" means any promissory note delivered by the
Borrower to IDB in connection with the IDB Loan Agreement.
"Indebtedness" means, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations or operating lease obligations of such Person; and (f)
Indebtedness of others Guaranteed by such Person.
"Independent Engineer" means Ingenieros y Economistas
Consultores Ltda. of Santiago, Chile or such other Person appointed by the
Senior Lenders from time to time with the consent of the Borrower, which consent
shall not be unreasonably withheld.
DIRECT AGREEMENT
- 9 -
"Initial Equity Investment" means SRT's equity investment in
the Borrower in an aggregate amount not less than $52,000,000, in the form of
any combination of the following: cash equity, Intercompany Loans or in-kind
investment.
"Intercompany Loans" means any loan made by SRT to the
Borrower, together with any intercompany receivables between the Borrower and
SRT relating to the Borrower's purchase of equipment or services for the
Project.
"Interconnection Agreements" means, collectively, (a) the
ENTEL Interconnection Agreement (Long Distance), (b) the Telsur Interconnection
Agreement, (c) the CTC Interconnection Agreement, and (d) any other
interconnection agreements entered into after the date hereof between the
Borrower and any other telephone services operator in Chile, in form and
substance satisfactory to the Senior Lenders.
"Intercreditor Agreement" means the Intercreditor Agreement to
be executed and delivered in form and substance satisfactory to the Senior
Lenders on or prior to the Closing Date between EDC and IDB.
"Interest Expense" means, for any period, the sum, for the
Borrower (determined in accordance with Canadian GAAP), of the following: (a)
all interest in respect of Indebtedness (including, without limitation, the
interest component of any payments in respect of Capital Lease Obligations)
accrued or capitalized during such period (whether or not actually paid during
such period) plus (b) the net amount payable (or minus the net amount
receivable) under Hedging Agreements relating to interest during such period
(whether or not actually paid or received during such period).
"Interest Payment Date" means November 15th and May 15th of
each calendar year occurring during the term of this Agreement; or, if any such
date is not a Business Day, the succeeding Business Day.
"Judgment Currency" has the meaning assigned to such term in
Section 9(o) of this Direct Agreement.
"Lien" means, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this Agreement and the other Financing Documents,
a Person shall be deemed to own subject to a Lien any Property 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 agreement
(other than an operating lease) relating to such Property.
"London Business Day" means any day on which dealings on
Dollar deposits are conducted in the London interbank market.
"New York Business Day" means any date on which commercial
banks are not authorized or required to close in New York City.
"Operating Account" has the meaning assigned to such term in
Section 4.01(b)(i) of the Common Agreement.
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"Operating Contracts" means, collectively, any agreements
relating to the operation of the Project entered into between the Borrower and
another Person
"Performance Undertaking" means the Amended and Restated
Performance Undertaking dated as of the date hereof between SRT and the Senior
Lenders.
"Permitted Indebtedness" has the meaning assigned to such term
in Section 8.07 of the Common Agreement.
"Permitted Investments" means, collectively:
(a) all financial instruments and investments that comply with
all of the following:
(i) fixed income; and
(ii) issued by: (A) the Central Bank of Chile, (B)
the Tesoreria General de la Republica, (C) Canada or the
United States or any agency thereof as a direct obligation, or
obligations guaranteed by Canada or the United States or any
agency thereof; or (D) financial institutions and companies
(other than SRT or any company affiliated, by way of
ownership, with SRT or the Borrower) having a rating, as
reported to the Superintendencia de Valores y Seguros, in the
two highest rating categories as existing at the time of the
Closing Date and from time to time or a rating equivalent
thereto; and
(b) any repurchase agreement in respect of any of the
instruments referred to in clause (a) of this definition; and
(c) time deposits in commercial banks acceptable to the Senior
Lenders and short-term marketable securities, acquired solely to give
temporary employment to the Borrower's idle resources;
provided, in each case, that such Permitted Investment matures within one year
from the date of acquisition thereof by the Borrower.
"Person" means any individual, corporation, company, voluntary
association, partnership, limited liability company, joint venture, trust,
unincorporated organization or government (or any agency, instrumentality or
political subdivision thereof).
"Pledges Without Conveyance on Chattel Property" means,
collectively, the First Pledge Without Conveyance on Chattel Property, the
Second Pledge Without Conveyance on Chattel Property and the Senior Lenders'
Pledge Without Conveyance on Chattel Property.
"Process Agents" has the meaning assigned to such term in
Section 9(j).
"Project" means the design, construction, installation and
operation of a rural telecommunications network in nine primary zones of Chile
as more specifically described in the Agreed Financial Model and Business Plan.
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"Project Account Agreement" means the Project Account
Agreement to be executed and delivered in form and substance satisfactory to the
Senior Lenders on or prior to the Closing Date among the Borrower, the Senior
Lenders and the Account Bank, which regulates (a) the opening, operation and
maintenance of the Accounts and the use of the funds deposited therein; and (b)
certain aspects of the operation of the Borrower Accounts.
"Project Documents" means, collectively, the Concessions, the
Interconnection Agreements, the Tariff Agreements, the Technical Services
Agreement, the Operating Contracts, the Service Contracts, the Agreed Financial
Model, the Business Plan, the SUBTEL Letter, and every other contract or
agreement entered into by, or on behalf of the Borrower and any other Person in
effect on the date hereof or entered into after the date hereof relating to the
Project.
"Project Funds Agreement" means the Amended and Restated
Project Funds Agreement dated as of the date hereof among SRT, the Borrower and
the Senior Lenders.
"Promise to Execute Conditional Assignment of Rights" means
the Borrower's agreement, to be executed and delivered in form and substance
satisfactory to the Senior Lenders on or prior to the Closing Date, to execute
conditional assignments of the Borrower's rights and obligations under any
relevant Project Document governed by the laws of Chile created by the Borrower
in favour of the Senior Lenders.
"Promise to Grant a Commercial Pledge on Concessions of
Telecommunications" means the Borrower's agreement, to be executed and delivered
in form and substance satisfactory to the Senior Lenders on or prior to the
Closing Date, to create a pledge regulated by articles 813 and following of the
Commerce Code of Chile on the concessions of telecommunications granted to the
Borrower after the date hereof, created by the Borrower in favour of the Senior
Lenders.
"Promise to Grant a Pledge Without Conveyance on Chattel
Property" means the Borrower's agreement, to be executed and delivered in form
and substance satisfactory to the Senior Lenders on or prior to the Closing
Date, to create a pledge regulated by Ley # 18, 112 of Chile on chattel property
to be owned by the Borrower after the date hereof, created by the Borrower in
favour of the Senior Lenders.
"Property" means any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Restricted Subsidiary" means a Subsidiary of SRT which is 50%
or more owned by SRT or a Restricted Subsidiary other than an Unrestricted
Subsidiary and includes all of the Subsidiaries of SRT existing as of the date
hereof other than the Borrower. The board of directors of SRT may designate any
Unrestricted Subsidiary or any Person that is to become a Subsidiary as a
Restricted Subsidiary if immediately after giving effect to such action (and
treating any acquired Indebtedness as having been incurred at the time of such
action), SRT could have incurred at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.2.1 of the Debentures;
"Second Pledge Without Conveyance on Chattel Property" means
the pledge, to be executed and delivered in form and substance satisfactory to
the Senior Lenders on or prior to
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the Closing Date, regulated by Ley # 18, 112 of Chile on chattel property owned
by the Borrower created by the Borrower in favour of IDB.
"Security Documents" means, collectively, the SR (BV) Holdings
Pledge Agreement, each Chilean Security Document and all filings required by
the Security Documents to be filed in Chile, the British Virgin Islands or
Canada with respect to the security interests in Property created pursuant to
the Security Documents.
"Senior Lenders" means, collectively, EDC and IDB.
"Senior Lenders' Pledge Without Conveyance on Chattel
Property" means the pledge, to be executed and delivered in form and substance
satisfactory to the Senior Lenders on or prior to the Closing Date, regulated by
Ley # 18, 112 of Chile on chattel property owned by the Borrower created by the
Borrower in favour of IDB and EDC.
"Senior Loans" means, collectively, the IDB Loan and the EDC
Loans.
"Senior Loan Agreements" means, collectively, the EDC Loan
Agreement and the IDB Loan Agreement.
"Service Contracts" means, collectively, any agreement
providing for certain installation and maintenance services entered into between
the Borrower and any Person.
"Shareholders Pledge Agreements" means, collectively, (a) that
certain Pledge of Shares dated as of April 13, 1999, created by Chilean Holdco
in favour of EDC, (b) that certain Pledge of Shares dated as of April 13, 1999,
created by BVI Holdco in favour of EDC and (c) that certain Pledge of Shares, to
be executed and delivered in form and substance satisfactory to the Senior
Lenders on or prior to the Closing Date, created by Chilean Holdco in favour of
IDB, in each case, in the capital stock of the Borrower and regulated by
articles 813 and following of the Commerce Code of Chile.
"SR (BV) Holdings" means SR (BV) Holdings Limited, a limited
liability company duly organized and validly existing under the laws of the
British Virgin Islands.
"SR (BV) Holdings Pledge Agreement" means the share pledge
agreement, to be executed and delivered in form and substance satisfactory to
the Senior Lenders on or prior to the Closing Date, created by SR (BV) Holdings
in favour of the Senior Lenders in the capital stock of BVI Holdco.
"SRT" has the meaning assigned to such term in the Preamble of
this Agreement.
"SRT Conditional Assignment" means the Conditional Assignment
of Rights (Technical Services Agreement), to be executed and delivered in form
and substance satisfactory to the Senior Lenders on or prior to the Closing
Date, among SRT, the Borrower and the Senior Lenders.
"SRT Material Adverse Effect" means a material adverse effect
on (a) the Property, business, operations, financial condition, liabilities or
capitalization of SRT or (b) the
DIRECT AGREEMENT
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ability of SRT to perform its obligations under any of the Transaction Documents
to which it is a party.
"Subordinated Indebtedness" means, collectively, all
Intercompany Loans (but in any event not including payments under the Technical
Services Agreement that are permitted under the Direct Agreement or the payment
of Project Costs owing to SRT which are permitted under Section 8.13(a)(ii) of
the Common Agreement) and any other Indebtedness (a) for which the Borrower is
directly and primarily liable and (b) that is unsecured and subordinated to the
obligations of the Borrower to pay principal of and interest on the Senior Loans
and the Senior Notes on terms and conditions substantially in the form of
Exhibit C to the Common Agreement.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership or other entity of which at
least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
limited liability company, partnership or other entity (irrespective of whether
or not at the time securities or other ownership interests of any other class or
classes of such corporation, limited liability company, partnership or other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.
"SUBTEL" means Subsecretaria de Telecomunicaciones, an agency
of the Chilean government.
"SUBTEL Letter" means the letter dated as of March 23, 1999
from SUBTEL addressed to the Borrower and identified as ORD No. 32092.
"Tariff Agreements" means, collectively, any tariff agreements
entered into after the date hereof between the Borrower and any telephone
services operator in Chile, in form and substance satisfactory to the Senior
Lenders.
"Technical Services Agreement" means the Procurement of
Service Agreement dated as of March 31, 1999 between SRT and the Borrower.
"Telsur" means Compania Nacional de Telefonos, Telefonica del
Sur S.A., a sociedad anonima duly organized and validly existing under the laws
of Chile.
"Telsur Conditional Assignment" means the Conditional
Assignment of Rights (Telsur Interconnection Agreement), to be executed and
delivered in form and substance satisfactory to the Senior Lenders on or prior
to the Closing Date, among Telsur, the Borrower and the Senior Lenders.
"Telsur Interconnection Agreement" means the Interconnection
Agreement dated as of July 13, 1998 between Telsur and the Borrower.
"Transaction Documents" means, collectively, the Financing
Documents and the Project Documents.
DIRECT AGREEMENT
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"Transfer" has the meaning assigned to such term in Section
2.01 of the Transfer Restrictions Agreement.
"Transfer Restrictions Agreement" means the Amended and
Restated Transfer Restrictions Agreement dated as of the date hereof among SRT,
SR (BV) Holdings, BVI Holdco, Chilean Holdco and the Senior Lenders.
"Unrestricted Subsidiary" means (a) any Subsidiary which is
50% or more owned by an Unrestricted Subsidiary and (b) any Subsidiary of SRT
which is or has been classified after the date hereof as an Unrestricted
Subsidiary by a resolution adopted by the board of directors of SRT provided
that a Subsidiary organized or acquired after the date hereof may be so
classified as an Unrestricted Subsidiary only if such classification is in
compliance with the covenant set forth under "Limitation on Restricted Payments"
of the Debenture. The Senior Lenders shall be given prompt notice by SRT of each
resolution adopted by the board of directors of SRT under this provision,
together with a copy of each such resolution adopted. SRT has elected to
designate the Borrower as an Unrestricted Subsidiary.
"US Process Agent" has the meaning assigned to such term in
Section 9(j) of this Direct Agreement.
"Year 2000 Compliance" of an entity means that all computer
systems and programs (including but not limited to any technology reliant on an
embedded computer chip) of such entity material to such entity's business and
operations are (a) designed to be used prior to, during and after the calendar
year 2000 AD without error; (b) capable of operating without error relating to
the production of date data which represents or refers to different centuries or
more than one century; (c) designed so that all date data fields, date data
storage, date-related user interfaces, and other interfaces include an
unambiguous explicit or implicit (derived by algorithm or inferencing)
indication of century; and (d) shall recognize that the calendar year 2000 AD is
a leap year, and "Year 2000 Compliant" shall have a corresponding meaning.
DIRECT AGREEMENT
