Exhibit 10.5
US$81,066,666.67
SECOND AMENDED AND RESTATED
FINANCING AGREEMENT
DATED AS OF JULY 29, 2005
BY AND AMONG
IMPSAT COMUNICACOES LTDA.
AS BORROWER,
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS ADMINISTRATIVE AGENT,
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS COLLATERAL AGENT
AND
THE LENDERS PARTY HERETO FROM TIME TO TIME
AS LENDERS
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS........................................................6
SECTION 1.1 DEFINED TERMS.........................................6
SECTION 1.2 OTHER DEFINITIONS....................................21
SECTION 1.3 INTERPRETATION.......................................22
SECTION 1.4 ACCOUNTING PRINCIPLES AND TERMS......................22
SECTION 2. THE CREDIT FACILITY...............................................23
SECTION 2.1 LOANS................................................23
SECTION 2.2 NOTES................................................23
SECTION 3. PAYMENT OF PRINCIPAL, INTEREST AND FEES...........................24
SECTION 3.1 REPAYMENT OF PRINCIPAL...............................24
SECTION 3.2 PREPAYMENTS..........................................24
SECTION 3.3 INTEREST.............................................26
SECTION 3.4 AGENT'S FEES.........................................27
SECTION 3.5 NATURE OF PAYMENTS...................................27
SECTION 3.6 PAYMENT PROCEDURES...................................27
SECTION 3.7 ADMINISTRATIVE AGENT'S DETERMINATION.................28
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SECTION 3.8 PAYMENTS PRO RATA....................................28
SECTION 3.9 GOVERNMENTAL APPROVALS...............................28
SECTION 3.10 CHANGE OF CONTROL....................................29
SECTION 4. PAYMENT IN DOLLARS; EVENT OF SOVEREIGN RISK.......................29
SECTION 4.1 OBLIGATION TO PAY IN DOLLARS; JUDGMENT CURRENCY......29
SECTION 4.2 EVENT OF SOVEREIGN RISK..............................30
SECTION 5. FUNDING AND YIELD PROTECTION......................................30
SECTION 5.1 TAXES................................................30
SECTION 5.2 ILLEGALITY...........................................31
SECTION 5.3 INCREASED COSTS AND YIELD PROTECTION.................32
SECTION 6. DELIVERIES; CONDITIONS PRECEDENT..................................32
SECTION 6.1 CLOSING DOCUMENTS....................................32
SECTION 6.2 PAYMENTS.............................................34
SECTION 6.3 SECURITY DOCUMENTS...................................34
SECTION 6.4 REPRESENTATIONS AND WARRANTIES.......................34
SECTION 6.5 COVENANTS............................................34
SECTION 6.6 LITIGATION...........................................35
SECTION 6.7 NO DEFAULTS..........................................35
SECTION 6.8 MATERIAL ADVERSE CHANGE..............................35
SECTION 6.9 ENGLISH LANGUAGE.....................................35
SECTION 7. REPRESENTATIONS AND WARRANTIES....................................35
SECTION 7.1 CORPORATE STATUS.....................................35
SECTION 7.2 CORPORATE POWER......................................35
SECTION 7.3 GOVERNMENTAL APPROVALS...............................36
SECTION 7.4 NO VIOLATION.........................................36
SECTION 7.5 PROCEEDINGS..........................................37
SECTION 7.6 TAXES................................................37
SECTION 7.7 FINANCIAL STATEMENTS.................................37
SECTION 7.8 THE PROJECT..........................................38
SECTION 7.9 ENVIRONMENTAL MATTERS................................38
SECTION 7.10 TRANSACTIONS WITH AFFILIATES.........................38
SECTION 7.11 INDEBTEDNESS.........................................38
SECTION 7.12 PROPERTIES...........................................39
SECTION 7.13 INTELLECTUAL PROPERTY................................39
SECTION 7.14 BOOKS AND RECORDS....................................39
SECTION 7.15 THE LICENSES.........................................39
SECTION 7.16 NO MATERIAL ADVERSE CHANGE...........................40
SECTION 7.17 INSURANCE............................................40
SECTION 7.18 COLLATERAL...........................................40
SECTION 7.19 INVESTMENT COMPANY; PUBLIC UTILITY HOLDING
COMPANY..............................................40
SECTION 7.20 IMMUNITY.............................................40
SECTION 7.21 MARGIN STOCK; REGULATION U...........................40
SECTION 7.22 SOLVENCY.............................................41
SECTION 7.23 NO EVENT OF DEFAULT; COMPLIANCE WITH MATERIAL
AGREEMENTS...........................................41
SECTION 7.24 FEES OR COMPENSATION.................................41
SECTION 7.25 TRUE AND COMPLETE DISCLOSURE.........................41
SECTION 8. COVENANTS.........................................................41
SECTION 8.1 AFFIRMATIVE COVENANTS................................41
SECTION 8.2 NEGATIVE COVENANTS...................................50
SECTION 8.3 FINANCIAL COVENANTS..................................52
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SECTION 9. SECURITY..........................................................56
SECTION 9.1 GRANT OF SECURITY INTEREST...........................56
SECTION 9.2 ESCROW ACCOUNTS......................................57
SECTION 9.3 RELEASE OF COLLATERAL................................57
SECTION 9.4 FURTHER IDENTIFICATION OF THE COLLATERAL.............57
SECTION 9.5 FURTHER ASSURANCES...................................57
SECTION 10. EVENTS OF DEFAULT................................................58
SECTION 10.1 EVENTS OF DEFAULT....................................58
SECTION 10.2 CUMULATIVE RIGHTS....................................63
SECTION 11. EXPENSES AND INDEMNIFICATION.....................................64
SECTION 11.1 EXPENSES.............................................64
SECTION 11.2 INDEMNIFICATION......................................64
SECTION 12. ASSIGNMENT AND PARTICIPATION.....................................65
SECTION 12.1 ASSIGNMENT...........................................65
SECTION 12.2 PARTICIPATION........................................66
SECTION 12.3 INFORMATION..........................................66
SECTION 13. OPTION...........................................................67
SECTION 13.1 OPTION...............................................67
SECTION 13.2 NONTRANSFERABILITY OF THE OPTION.....................67
SECTION 14. GOVERNING LAW AND JURISDICTION...................................67
SECTION 14.1 GOVERNING LAW........................................67
SECTION 14.2 WAIVER OF JURY TRIAL.................................68
SECTION 14.3 JURISDICTION; VENUE FOR SUIT.........................68
SECTION 14.4 WAIVER OF IMMUNITY...................................68
SECTION 14.5 PROCESS AGENT........................................68
SECTION 14.6 LEGAL PROCESS IN OTHER JURISDICTIONS.................69
SECTION 15. THE AGENTS.......................................................69
SECTION 15.1 AUTHORIZATION AND ACTION.............................69
SECTION 15.2 AGENT'S RELIANCE.....................................70
SECTION 15.3 LENDER CREDIT DECISION...............................71
SECTION 15.4 LENDER INDEMNIFICATION...............................71
SECTION 15.5 SUCCESSOR AGENTS.....................................71
SECTION 16. GENERAL PROVISIONS...............................................72
SECTION 16.1 NOTICES..............................................72
SECTION 16.2 SEVERABILITY OF PROVISIONS...........................73
SECTION 16.3 BINDING EFFECT; SUCCESSORS AND ASSIGNS...............73
SECTION 16.4 AMENDMENT; WAIVER....................................73
SECTION 16.5 ENTIRE AGREEMENT.....................................73
SECTION 16.6 RIGHT OF SET-OFF.....................................73
SECTION 16.7 RELEASE AND WAIVER...................................74
SECTION 16.8 FURTHER ASSURANCES...................................74
SECTION 16.9 TERM OF AGREEMENT; SURVIVAL..........................74
SECTION 16.10 HEADINGS.............................................74
SECTION 16.11 COUNTERPARTS.........................................74
SECTION 16.12 GUARANTEE IN FULL FORCE AND EFFECT...................74
SECTION 16.13 CONFIDENTIALITY......................................74
SECTION 16.14 THIRD PARTY BENEFICIARY..............................75
SECTION 16.15 COOPERATION..........................................75
SECTION 16.16 NO NOVATION..........................................75
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SECOND AMENDED AND RESTATED FINANCING AGREEMENT
THIS SECOND AMENDED AND RESTATED FINANCING AGREEMENT (this "AGREEMENT"),
dated as of July 29, 2005, by and among IMPSAT COMUNICACOES LTDA., a company
(sociedade limitada) organized pursuant to the laws of Brazil (the "BORROWER");
XXXXXX XXXXXXX SENIOR FUNDING, INC. ("MSSF") and the lenders party hereto from
time to time, as lenders (collectively, the "LENDERS"), DEUTSCHE BANK TRUST
COMPANY AMERICAS, as administrative agent (the "ADMINISTRATIVE AGENT"); and
DEUTSCHE BANK TRUST COMPANY AMERICAS, as collateral agent (the "COLLATERAL
AGENT").
W I T N E S S E T H:
WHEREAS, Nortel Networks Corporation, a corporation organized pursuant to
the laws of the Province of Ontario, Canada ("NORTEL") and the Borrower were
each party to a Financing Agreement dated October 25, 1999 (as the same was
further amended, supplemented or otherwise modified through March 25, 2003, the
"ORIGINAL FINANCING AGREEMENT");
WHEREAS, the Lenders made available to the Borrower under the terms and
conditions of the Original Financing Agreement a credit facility in the original
maximum principal amount of One Hundred Twenty-seven Million, One Hundred
Twenty-nine Thousand, Five Hundred Forty-Six Dollars (US$127,129,546) to assist
in financing the purchase by the Borrower or its Affiliates of
telecommunications equipment and services manufactured or supplied by Nortel or
its Affiliates related to the design, procurement, installation, commissioning,
and operation of a broadband telecommunications network in Brazil under (i) a
Turnkey Project Agreement by and among the Borrower, Nortel and Nortel's
Affiliate, Northern Telecom do Brasil Comercio e Servicos Ltda. ("NORTEL
BRAZIL") dated as of September 6, 1999, (as amended and supplemented or
otherwise modified from time to time, the "TURNKEY CONTRACT")and (ii) a Supply
Contract by and among the Borrower, Nortel Brazil, Nortel and certain Affiliates
of Nortel and the Borrower dated as of November 5, 1999 (as amended and restated
as of May 30, 2002, the "SUPPLY AGREEMENT") (the Turnkey Contract and the Supply
Agreement, collectively, the "NORTEL CONTRACTS");
WHEREAS, Nortel and the Borrower were each party to an Amended and Restated
Financing Agreement dated March 25, 2003, which amended and restated the
Original Financing Agreement (as the same may have been further amended,
supplemented or otherwise modified, the "EXISTING FINANCING AGREEMENT");
WHEREAS, the Borrower is a Subsidiary of IMPSAT Fiber Networks, Inc., a
corporation organized pursuant to the laws of the State of Delaware, U.S.A.
("IMPSAT");
WHEREAS, pursuant to the terms of a certain Guarantee Agreement dated as of
March 25, 2003 executed by IMPSAT in favor of the Lenders (as the same may have
been amended, supplemented or otherwise modified, the "GUARANTEE") IMPSAT
guaranteed the payment and performance of all liabilities, obligations and
indebtedness of the Borrower arising under, pursuant to or in connection with
the Existing Financing Agreement;
WHEREAS, on December 15, 2004, Nortel sold and assigned all of its right,
title and interest in and to the Existing Financing Agreement and the Guarantee
to MSSF (collectively, the "ASSIGNED INDEBTEDNESS"), and simultaneously with
such assignment, WRH Partners Global Securities, L.P.
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and X.X. Xxxx Asset Management Co., L.L.C. (as discretionary investment managers
for and on behalf of certain entities), and certain of their affiliates
(collectively, the "PARTICIPANT" and together with MSSF, the "ORIGINAL HOLDERS")
acquired from MSSF a 50% participation interest in the Assigned Indebtedness
(without becoming a party to any Financing Document and pursuant to the terms
set forth in Section 12.2 hereof);
WHEREAS, immediately prior to the execution and delivery of this Agreement,
the total outstanding principal amount of indebtedness owed by the Borrower to
MSSF under the Existing Financing Agreement is US$81,066,666.67;
WHEREAS, the Borrower, the Lenders, the Administrative Agent and the
Collateral Agent have agreed to amend the Existing Financing Agreement to
provide for certain amendments to the Existing Financing Agreement on the terms
set forth in this Agreement, which Agreement shall become effective upon
satisfaction of the conditions precedent set forth herein;
WHEREAS, it is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities under the Existing
Financing Agreement or the Assigned Indebtedness or evidence payment of all or
any of such obligations or liabilities, that this Agreement amend and restate in
its entirety the Existing Financing Agreement, and that from and after the
Closing Date the Existing Financing Agreement be of no further force or effect
except as to evidence the incurrence of the obligations of the Borrower and
IMPSAT thereunder and the representations and warranties made thereunder;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the Parties
agree as follows:
SECTION 1. DEFINITIONS
SECTION 1.1 DEFINED TERMS.
The following capitalized terms shall have the meanings set forth in this
Section 1.1 when used in this Agreement, including its preamble and recitals:
"ACCOUNTS PAYABLE FINANCING AGREEMENT" means the financing agreement
entered into by and between IMPSAT Argentina, as borrower, and Nortel as lender,
dated as of March 25, 2003, with an aggregate original principal amount of
US$10,287,919.
"AFFILIATE" means, as to any Person (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or
other fiduciary, five percent (5%) or more of the Voting Stock of such Person,
(b) each Person that controls, is controlled by or is under common control with,
such Person and (c) in the case of individuals, the immediate family members,
spouses and lineal descendants of individuals who are Affiliates of the Borrower
or IMPSAT. For purposes of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of Voting
Stock, by contract, by virtue of being an executive officer or a director or
otherwise.
"AGENTS" means the Administrative Agent and the Collateral Agent.
"ANATEL" means the Brazilian National Telecommunications Agency (Agencia
Nacional de Telecomunicacoes).
"APPLICABLE LAW" means any statute, law, regulation, ordinance, rule,
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judgment, writ, rule of common law, common law duty, code, order, decree,
governmental approval, administrative order, directed duty, request, license,
authorization, permit, approval, concession, grant, franchise, directive,
guideline, policy, requirement, or other governmental restriction, or any
similar form of decision of, determination by, agreement with, or requirements
of (or any interpretation or administration of any of the foregoing by) any
Governmental Authority, whether in effect as of the date hereof or thereafter
(including any Environmental Laws).
"ARGENTINA" means the Republic of Argentina.
"ARGENTINA AGREEMENTS" means, collectively, the Financing Documents as
defined in the Argentina Financing Agreement.
"ARGENTINA FINANCING AGREEMENT" means the Second Amended and Restated
Financing Agreement dated as of the date hereof, by and among IMPSAT Argentina,
MSSF and IMPSAT.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means an assignment and assumption
agreement between a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, substantially in the form of Exhibit A.
"AUTHORIZED OFFICER" means, with respect to any Person, each of the
following officers of such Person: (a) the Chief Executive Officer; (b) the
Chief Financial Officer or (c) any other Person having substantially similar
responsibilities and authority.
"BBVA FINANCING AGREEMENT" means the financing agreement entered into
between IMPSAT Argentina, as borrower, and BBVA Banco Frances S.A (acting in its
capacity as trustee to the Guaranty Trust Agreement dated October 25, 2002,
entered into among Sirti Argentina, S.A, BBVA Banco Frances S.A., and Sirti
S.p.A.) as lender, dated as of March 25, 2003, with an aggregate original
principal amount of US$2,635,000.
"BORROWER ANNUAL OPERATING BUDGET" means, with respect to each fiscal year
of the Borrower beginning with its fiscal year ending on December 31, 2005, an
annual operating budget delivered to the Lenders pursuant to Section 8.1(b)(6),
with respect to such fiscal year.
"BORROWER BUSINESS PLAN" Unless and until the Borrower shall have delivered
to the Lenders a revised or updated business plan in accordance with Sections
8.1(b)(2) or (5), means the four-year consolidated Business Plan of the Borrower
dated July 19, 2005, and not including any subsequent amendments, supplements or
replacements thereof.
"BORROWER CAPITAL MARKETS TRANSACTION" means any public offering or private
placement of debt or equity securities of the Borrower or any of its
Subsidiaries.
"BORROWER'S NET DEBT" means, on any date, (a) the Borrower's Total Debt
outstanding on such date (excluding all Indebtedness of others guaranteed by the
Borrower); minus (b) the amount of the Intercompany Indebtedness of the Borrower
evidenced by Subordinated Intercompany Notes outstanding on such date; minus (c)
the aggregate amount of cash and Temporary Cash Investments of the Borrower and
its Subsidiaries that are subject to a Lien in favor of the Lenders pursuant to
the Security Documents.
"BRAZIL" means the Federative Republic of Brazil.
"BRAZILIAN GAAP" means generally accepted accounting principles in Brazil
as established from time to time by the Conselho Nacional de Contabilidade.
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"BUSINESS DAY" means a day other than a Saturday, Sunday, or any other day
on which commercial banks in New York City, United States of America, or the
City of Sao Paulo, Brazil are authorized or required by Applicable Law to close.
"BUSINESS PLANS" means, collectively, the Borrower Business Plan, the
Borrower Annual Operating Budget and the IMPSAT Business Plan.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other Applicable Law,
whether or not having the force of law, in each case of general applicability
regarding capital adequacy of banks and branches thereof or corporations
controlling banks.
"CAPITAL EXPENDITURES" means, with respect to any Person for any period,
the additions to property, plant and equipment and other capital expenditures of
such Person and its Subsidiaries for such period, as the same are or would be
set forth in a consolidated statement of cash flows of such Person and its
Subsidiaries for such period.
"CAPITAL LEASE" means, with respect to any Person, any lease of (or other
indebtedness arrangement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee that, in accordance with U.S. GAAP,
would be required to be classified and accounted for as a capital lease or a
liability on the balance sheet of such Person.
"CAPITAL STOCK" means, with respect to any Person, all shares, quotas,
interests, rights to purchase, warrants, options, or other equivalents of or
interests in the common or preferred equity of such Person.
"CENTRAL BANK" means the Banco Central do Brasil.
"CHANGE OF CONTROL" means an event or circumstance as a result of which:
(i) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Exchange Act), other than a Permitted Investor or any Existing
Securityholder or its Affiliates, becomes the ultimate "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of Voting Stock representing more
than thirty percent (30%) of the total voting power of the Voting Stock of
IMPSAT on a fully diluted, as converted basis and such ownership represents a
greater percentage of the total voting power of the Voting Stock of IMPSAT, on a
fully diluted, as converted basis, than is held by the Existing Securityholders
and their Affiliates on such date; (ii) individuals who on the date hereof
constitute the board of directors of IMPSAT (together with any new directors
whose election by the board of directors or whose nomination for election by
IMPSAT's stockholders was either approved by a vote of at least two-thirds of
the members of the board of directors of IMPSAT then in office who either were
members of the board of directors of IMPSAT on the date hereof or whose election
or nomination for election was previously so approved or whose nomination for
election is made pursuant to Section 5(a)(ii) or 5(b)(i) of IMPSAT's certificate
of incorporation as in effect on the date hereof) cease for any reason to
constitute a majority of the members of the board of directors of IMPSAT then in
office; or (iii) IMPSAT is the "beneficial owner" of less than fifty percent
(50%) of the Voting Stock of the Borrower.
"CHARTER DOCUMENTS" means, with respect to any Person (other than an
individual), its founding act, charter, certificate of incorporation, by-laws,
memorandum and articles of association, contrato social, estatuto social and
other similar documents regarding its organization or constitution.
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"CLOSING DATE" means the date on which all conditions set forth in Section
6 herein have been satisfied.
"CONTROL" means: (a) the beneficial ownership of more than fifty percent
(50%) of the total Voting Stock then outstanding of a Person; or (b) even if
less than such percentage of outstanding Voting Stock is owned, the power to
direct the management and policies of such Person, directly or through one or
more intermediaries, whether through the ownership of voting securities, by
contract, or otherwise.
"CONVERSION RATE" means, for purposes of calculating the Dollar equivalent
of any amount in Reais, the rate published by the Central Bank in the SISBACEN
(Sistema de Informacoes do Banco Central) electronic system, transaction
PTAX800, option 5, offered rate, on the day on which the relevant calculation is
to be made.
"CURRENT ASSETS" means, at any time, the total assets of the Borrower and
its Subsidiaries which would be shown as current assets on a balance sheet of
the Borrower and its Subsidiaries prepared in accordance with U.S. GAAP at such
time, provided that in determining such current assets (a) notes and accounts
receivable shall be included only if good and collectible and payable on demand
or within one year from such date (and not by their terms or by the terms of any
instrument or agreement relating thereto directly or indirectly renewable or
extendible at the option of the obligor beyond such year) and shall be valued at
their face value less reserves or accruals for uncollectible accounts determined
to be sufficient in accordance with U.S. GAAP, and (b) life insurance policies
(other than the cash surrender value of any unencumbered policies that is
properly classified as a current asset in accordance with U.S. GAAP) shall be
excluded.
"CURRENT LIABILITIES" means, at any time, the total liabilities of the
Borrower and its Subsidiaries which would be shown as current liabilities,
including the current portion of long term Indebtedness, minus the current
portion of deferred Revenue on a balance sheet of the Borrower and its
Subsidiaries prepared in accordance with U.S. GAAP.
"DEBT RESTRUCTURING" shall mean the transactions described in this
Agreement and the Argentina Financing Agreement.
"DEBT SERVICE" means, with respect to any Person for any period, the sum of
(i) the total Interest Expense of such Person and its Subsidiaries during such
period (excluding any original issue discount, interest paid in kind or
amortized debt discount, to the extent included in determining Interest
Expense), plus (ii) all amounts of principal and premium, if any, paid or
required to be paid during such period in respect of Total Debt (excluding
Indebtedness in respect of guarantees except to the extent paid by such Person
during such period) of such Person and its Subsidiaries; provided, however, that
with respect to the determination of Excess Cash Flow, amounts of principal
which are paid under revolving credit or similar facilities shall be counted,
but only to the extent that any amounts so paid may not, by the terms of such
revolving credit or similar facilities, be reborrowed or redrawn (or in the case
of term indebtedness with contractual rights of extension or roll-over to the
extent that such extension or roll-over would be prohibited pursuant to the
terms of this Agreement); and provided, further, that with respect to the
calculation of the Debt Service Coverage Ratio contained in Section 8.3(b),
amounts of principal which are paid under revolving credit or similar facilities
and then reborrowed during the same calendar quarter shall be counted without
duplication.
"DEFAULT" means any event, occurrence, factual or legal condition which, if
continued uncured or unchanged would, with the passage of time or
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the giving of notice or both, become or constitute an Event of Default.
"DEFAULT INTEREST RATE" means an interest rate per annum equal to sixteen
percent (16%); provided, however, that at any time that the proviso in Section
3.3(a) shall be applicable, the Default Interest Rate shall be seventeen and
one-half percent (17 1/2%) per annum.
"DISPOSAL" means, with respect to any property (including, without
limitation, all tangible and intangible assets and rights to payment) of the
Borrower or any Subsidiary thereof, any direct or indirect sale, conveyance,
transfer, alienation, lease, IRU, loan, sale-and-repurchase, sale-leaseback or
other transaction or arrangement as a result of which the Borrower or Subsidiary
party to such transaction or arrangement relinquishes all or substantially all
marketable rights in and to such property; and the verb "DISPOSE OF" has a
corresponding meaning.
"DOLLARS AND US$" means the lawful currency of the United States of
America.
"EBITDA" means, with respect to any Person for any period, the Net Income
of such Person and its Subsidiaries for such period after (a) restoring thereto
amounts deducted in determining Net Income for such period including, without
duplication, (1) Interest Expense for such period, (2) taxes based upon net
income, (3) depreciation and amortization, and (4) other non-cash charges and
(b) deducting therefrom (1) non-cash income or losses to the extent included in
determining Net Income and (2) deferred Revenues attributable to IRUs recognized
as Revenues during such period.
"ELIGIBLE ASSIGNEES" means, prior to the occurrence of an Event of Default,
any Person so long as such Person is not a direct competitor of the Borrower,
and after the occurrence of an Event of Default, any Person.
"ENVIRONMENTAL LAWS" means any and all applicable statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments, orders, decrees, codes,
injunctions, permits, concessions, grants, franchises, licenses, agreements, and
other governmental restrictions relating to the environment or the effect of the
environment on human health or to emissions, discharges or release of
pollutants, contaminants, Hazardous Substances, or wastes into the environment,
including (without limitation) ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, Hazardous Substances, or wastes or the clean-up or other
remediation thereof.
"ENVIRONMENTAL LIABILITIES" means all liabilities in connection with, or
relating to, the business, assets, presently or previously owned or leased
property, activities (including, without limitation, off-site disposal) or
operations of the Borrower or any of its Subsidiaries, whether vested or
unvested, contingent or fixed, actual or potential, known or unknown, which
arise under or relate to matters covered by the Environmental Laws.
"EQUIPMENT" means (i) all equipment, hardware, materials, and other items
of property together with all embedded firmware and hardwired logic, software
(including computer programs contained on a magnetic or optical storage medium,
in a semiconductor device, or in another memory device, or system memory or
supplied on any other storage medium) used in the construction or operation of
the Network, and (ii) any building infrastructure with respect to any facility
necessary to house or hold any of the items referenced in the immediately
preceding clause (i) (including grounding, air-conditioning systems (both
general and special), fire alarm and extinguisher systems, elevators, water and
sewer systems,
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uninterruptible power supply, main power boards, power distribution boards,
towers and transformers, power generators, electrical rectifiers and batteries,
cable and equipment ladders, trays and racks, technical floors, security systems
and all other infrastructure subsystems required for the proper function of the
Network) in each case purchased from Nortel and its Affiliates with the proceeds
of the Original Financing Agreement (which was amended and restated by the
Existing Financing Agreement) together with all replacements, components, parts,
improvements and upgrades installed thereon or affixed thereto.
"EQUIPMENT PLEDGE AGREEMENT" means (i) the equipment pledge agreement dated
September 20, 2000, as amended December 12, 2000, January 3, 2001, February 7,
2001, June 4, 2001, July 16, 2001, July 30, 2001 and March 25, 2003 and from
time to time thereafter, among the Borrower, Nortel, as collateral agent, and
Xx. Xxxxxxx Xxxxx Xxxxx (the "EXISTING EQUIPMENT PLEDGE AGREEMENT"); and (ii)
any other equipment pledge agreement substantially in the form of the Existing
Equipment Pledge Agreement among the Borrower, the collateral agent and the
depository party thereto, pursuant to which the Borrower shall pledge Equipment
to the Secured Parties, as security for the Term Loans.
"EQUITY" means, with respect to any Person at any date, the consolidated
stockholders' equity of such Person and its Subsidiaries as of such date,
determined in accordance with U.S. GAAP.
"ERICSSON INDEBTEDNESS" means the Indebtedness in the aggregate outstanding
principal amount of US$7,563,000 under those certain promissory notes dated
August 29, 2001 and originally payable to Compania Ericsson S.A.C.I.
"EVENT OF SOVEREIGN RISK" means (a) failure by the Central Bank to exchange
or to approve or permit the exchange of Reais for Dollars, the unavailability of
Dollars in any legal exchange market in Brazil in accordance with normal
commercial practice, or any other action of any Brazilian Governmental Authority
that has the effect of restricting such exchange or the transfer of Reais for
Dollars outside Brazil and (b) a declaration of a banking moratorium or any
suspension of payments by banks in Brazil, or the imposition by any Brazilian
Governmental Authority of any moratorium on the required rescheduling of or
required approval of the payment of any indebtedness in Brazil.
"EXCESS CASH FLOW" means, with respect to any Person, for any period: (a)
such Person's EBITDA for such period; minus (b) the sum of the following items,
determined for such Person and its Subsidiaries on a consolidated basis: (i)
Debt Service paid for such period, (ii) cash Capital Expenditures (net of any
financing proceeds used to fund such Capital Expenditures) for such period (but
by the Borrower only to the extent that the Borrower is in compliance with the
covenant contained in Section 8.3(e)), (iii) the net increase (or minus any net
decrease) in working capital, excluding cash included therein, from the opening
of business on the first day, to the close of business on the last day, of such
period and (iv) taxes based upon net income payable with respect to such period
paid in cash.
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as amended.
"EXISTING SECURITYHOLDERS" means each Person holding IMPSAT's Capital Stock
or securities of IMPSAT convertible into or exchangeable for IMPSAT's Capital
Stock, in each case, representing five percent (5%) or more of IMPSAT's total
Capital Stock on a fully diluted, as converted basis as of March 25, 2003.
Page 11
"EXPROPRIATION EVENT" means: (i) any taking by condemnation,
nationalization, seizure, expropriation or other appropriation by any
Governmental Authority of all or any material portion of the Collateral, (ii)
any assumption by any Governmental Authority of control of all or any material
portion of the Collateral or the business operations of the Borrower or any of
its Subsidiaries or any of any such Person's share capital, (iii) any taking of
any action by a Governmental Authority which results in the involuntary
dissolution or disestablishment of the Borrower or any of its Subsidiaries, or
(iv) any taking of any action by any Governmental Authority that prevents the
Borrower and its Subsidiaries, taken as a whole, from carrying on their business
or operations or a material part thereof.
"FINANCING DOCUMENTS" means this Agreement, the Notes, the Security
Documents, the IMPSAT Guarantee, and any other instruments, documents and
agreements executed by or on behalf of the Borrower or for the benefit of the
Lenders in connection with the Term Loans.
"GOVERNMENTAL APPROVALS" means any authorization, consent, license
(including, but not limited to, the Licenses), approval, grant, franchise,
concession, identification number, lease, ruling, certification, exemption,
action, filing, registration, permit, order, decree, sanction, or other
authorization of any nature to be granted by any Governmental Authority, as now
or hereafter necessary under any Applicable Law.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof (including, but not limited to, federal, national,
state, provincial, regional and municipal) and any entity exercising executive,
legislative, judicial, regulatory, or administrative authority or functions of,
or pertaining to, government or any court or arbitrator.
"HAZARDOUS SUBSTANCE" means any substance, materials or waste subject to
regulation, or that forms the basis of liability, under Environmental Laws
because of its toxic, radioactive, caustic or otherwise dangerous or hazardous
qualities.
"IMPSAT ARGENTINA" means IMPSAT, S.A., a company organized pursuant to the
laws of Argentina.
"IMPSAT BUSINESS PLAN" means the four-year consolidated business plan of
IMPSAT and its Subsidiaries dated July 19, 2005, and not including any
subsequent amendments, supplements or replacements thereof.
"IMPSAT CAPITAL MARKETS TRANSACTION" means (i) any public offering or
private placement of debt or equity securities of IMPSAT or (ii) any public
offering or private placement of debt securities of any Subsidiary of IMPSAT
(other than the Borrower or IMPSAT Argentina) which is guaranteed by IMPSAT;
provided, however; that any such offering described in clause (i) or (ii) above,
one hundred percent (100%) of the net proceeds of which are used to refinance
Indebtedness of a Subsidiary of IMPSAT in existence on March 25, 2003, shall not
constitute an IMPSAT Capital Markets Transaction.
"IMPSAT CONVERTIBLE NOTES" means the Series A Convertible Notes and the
Series B Convertible Notes.
"IMPSAT GUARANTEE" means the Guarantee Agreement dated as of March 25,
2003, executed by IMPSAT in favor of the Lenders, a copy of which is attached
hereto as Exhibit B.
"INDEBTEDNESS" means, with respect to any Person at any time and from time
to time, the sum, without duplication, of the following: (a) all obligations of
such Person for money borrowed (whether by loan, the
Page 12
issuance of debt securities or otherwise); (b) the available amount at such time
of all letters of credit issued for the account of such Person and all
outstanding reimbursement obligations with respect thereto; (c) all liabilities
or obligations secured by any Lien on any property owned by such Person; (d) all
capitalized lease obligations; (e) all Indebtedness of others guaranteed by such
Person; (f) all obligations of such Person to pay the deferred purchase price or
acquisition price of property or services, other than (1) Trade Payables and
accrued expenses incurred owing by the Borrower to IMPSAT or any of its
Subsidiaries and (2) any other Trade Payables and accrued expenses incurred,
that are not past due by more than sixty (60) days; (g) all obligations of such
Person under trade or bankers' acceptances or under agreements providing for
swaps, ceiling rates, ceiling and floor rates, or contingent participation or
other hedging mechanisms with respect to the payment of interest; and (h) all
indebtedness, liabilities and obligations of such Person to redeem or retire
shares of Capital Stock of such Person.
"INDEPENDENT AUDITOR" means with respect to IMPSAT, Deloitte & Touche LLP,
and with respect to the Borrower, Deloitte & Touche Brazil or such other
internationally recognized firm of certified public accountants as may be
approved by the Administrative Agent.
"INITIAL PAYDOWN" means the sum of (i) Eighteen Million, Three Hundred
Thirty Thousand, Two Hundred Twenty-Two Dollars and 22/100 (US$18,330,222.22) at
Closing, and (ii) at Closing, or as promptly as practicable thereafter, an
amount equal to Three Million Dollars (US$3,000,000) less the out-of-pocket
costs and expenses incurred by IMPSAT, the Borrower and IMPSAT Argentina in
connection with the Debt Restructuring (including, without limitation,
professional fees and expenses incurred by the Borrower, IMPSAT Argentina,
IMPSAT, the special committee of the board of directors of IMPSAT and the
Lenders and any costs and expenses reasonably expected to be incurred in
connection with the exercise of the Option); provided, however, that in no event
shall the Initial Paydown be less than the amount in clause (i). The Initial
Paydown shall be paid and applied, as follows: (i) first, to satisfy all
outstanding obligations of IMPSAT Argentina under the BBVA Financing Agreement
and the Accounts Payable Financing Agreement, and (ii) thereafter, the remainder
shall be applied to reduce the outstanding principal amount of Term Loans under
this Agreement.
"INTERCOMPANY INDEBTEDNESS" means all Indebtedness of the Borrower for
money borrowed from IMPSAT, or any of IMPSAT's Subsidiaries, or any indebtedness
of any of the Borrower's Subsidiaries for money borrowed from IMPSAT or any of
IMPSAT's Subsidiaries, including the Borrower.
"INTERCOMPANY SUBORDINATION AGREEMENT" means any subordination agreement
executed by the Borrower or any of its Subsidiaries and in substantially the
form of Exhibit C.
"INTEREST EXPENSE" means, with respect to any Person for any period,
interest expense, both expensed and capitalized, of such Person and its
Subsidiaries scheduled to be paid or actually paid for such period, including
the interest component of capital lease obligations, all commissions, discounts,
fees and charges (excluding interest expense in respect of guarantees except to
the extent paid by such Person during such period); provided, however, that for
the purposes of determining compliance with Section 8.3(g) hereof, accrued and
unpaid interest on the Ericsson Indebtedness, and any interest paid in kind
prior to the date hereof, shall be excluded from the calculation of Interest
Expense.
"INTEREST PAYMENT DATE" means, initially, September 25, 2005 and each
successive date that is six (6) calendar months thereafter (being the same day
of the calendar month) until the Maturity Date.
Page 13
"INVESTMENT" means the acquisition of any Capital Stock, partnership or
other equity interests, evidence of Indebtedness, securities (including any
option, warrant or other right to acquire any of the foregoing) of, the making
of any loans or advances to, the guaranteeing of any obligations of any Person,
or the purchase or other acquisition (in one transaction or a series of
transactions) of any assets constituting a business unit.
"IRU" means the creation of an indefeasible right of use of any portion of
the Borrower's telecommunications network by the Borrower or any Subsidiary
thereof, including, but not limited to, an usufruto under Brazilian law which
provides for either (a) a Lien or a real property interest in favor of the
grantee or customer thereof or (b) payment to the Borrower or any Subsidiary of
the Borrower in a form other than periodic payments at quarterly or more
frequent intervals and is for a term of more than five years.
"IRU COST" means: (i) for any Permitted IRU granted in respect of any duct,
the number of kilometers of duct subject to the IRU, multiplied by (A) in the
case of a Long Haul IRU, Eight Thousand Five Hundred Forty Two and 93/100
Dollars (US$8,542.93) and (B) in the case of Metropolitan IRU, Twenty Three
Thousand Three Hundred Fourteen and 67/100 Dollars (US$23,314.67); and (ii) for
any Permitted IRU granted in respect of fiber optic cable, the number of
kilometers of fiber optic cable subject to the IRU multiplied by (A) in the case
of a Long Haul IRU, the product of One Hundred Eighteen and 65/100 Dollars
(US$118.65) and the number of strands of fiber optic cable over which the IRU is
granted and (B) in the case of a Metropolitan IRU, the product of One Hundred
Sixty-One and 91/100 Dollars (US$161.91) and the number of strands of fiber
optic cable over which the IRU is granted.
"LENDING OFFICE" means, with respect to any Lender, the office of that
Lender designated as its Lending Office by notice to the Administrative Agent
and the Borrower.
"LICENSES" means the Spectrum Authorization and the other licenses listed
in Schedule 7.15 and such other licenses, concessions, authorizations, permits,
or the like (including any additions or amendments thereto) issued or granted by
ANATEL or any other Governmental Authority from time to time in favor of the
Borrower or any of its Subsidiaries and required for the operation of the
Network and the conduct of the Telecommunications Business.
"LIEN" means, with respect to any Person, any security interest, lien,
pledge, mortgage, charge, or encumbrance (including any agreement to give any of
the foregoing), title retention agreement, finance lease or trust receipt, or a
consignment or bailment for security purposes, or other security arrangement or
any other arrangement on or with respect to any asset or revenue of such Person.
"LONG HAUL IRU" means an IRU which is not a Metropolitan IRU.
"MATERIAL ADVERSE CHANGE" means an event, circumstance or development of
whatever nature that has had or could reasonably be expected to have a Material
Adverse Effect.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, results of operations, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries, taken as a whole, or IMPSAT; (b)
the rights and remedies of the Lenders or the Agents under the Financing
Documents; (c) the validity or enforceability of this Agreement; or (d) the
Licenses or the rights of the Borrower and its Subsidiaries thereunder.
Page 14
"MATERIAL AGREEMENTS" means, with respect to any Person, each contract to
which such Person is a party involving aggregate consideration payable to or by
such Person of US$2,500,000.00 or more in any 12-month period or otherwise
material to the business, condition (financial or otherwise), operations,
performance, properties or prospect of such Person.
"MATERIAL SUBSIDIARY" means, with respect to any Person, any Subsidiary of
such Person that, together with its Subsidiaries, (i) for the most recent fiscal
year of such Person, accounted for more than 10% of the consolidated revenues of
such Person or (ii) as of the end of such fiscal year, was the owner of more
than 10% of the consolidated assets of such Person, all as set forth on the most
recently available consolidated financial statements of such Person for such
fiscal year.
"MATURITY DATE" means March 25, 2009.
"METROPOLITAN IRU" means an IRU granted in respect of a portion of the
Network which is located within one of the metropolitan areas of Sao Paulo, Rio
de Janeiro, Belo Horizonte and Curitiba.
"MORTGAGE DEEDS" means (i) the mortgage deeds listed on Exhibit D (the
"EXISTING MORTGAGE DEED(S)"); and (ii) any other deed or deeds, substantially in
the form of the Existing Mortgage Deed(s), pursuant to which the Borrower or its
Subsidiaries shall grant mortgages from time to time in favor of the Secured
Parties to secure the repayment of the Term Loans.
"NET INCOME" means, for any period, the net income (loss) of a Person and
its Subsidiaries, determined on a consolidated basis, for such period in
accordance with U.S. GAAP.
"NET PROCEEDS" means, with respect to any event (a) the proceeds received
in respect of such event in the form of cash and Temporary Cash Investments,
including (i) any cash received in respect of any non-cash proceeds, but only as
and when received, (ii) in the case of an insured casualty event, insurance
proceeds, and (iii) in the case of an Expropriation Event or similar event,
expropriation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by the Borrower and its
Subsidiaries to third parties other than IMPSAT or its Subsidiaries in
connection with such event, (ii) in the case of a Disposal, the amount of all
payments required to be made by the Borrower and its Subsidiaries as a result of
such event to repay Indebtedness (other than Indebtedness secured under the
Security Documents) secured by the asset or property Disposed of or otherwise
subject to mandatory prepayment as a result of such event, (iii) the amount of
all taxes paid (or reasonably estimated to be payable) by the Borrower and its
Subsidiaries as a direct result of any gain recognized in connection with such
event, and (iv) the amount of any reserves established by the Borrower and its
Subsidiaries to fund contingent liabilities reasonably estimated to be payable,
in each case during the year that such event occurred or the next succeeding
year and that are directly attributable to such event (as determined reasonably
and in good faith by the chief financial officer of the Borrower in conformity
with U.S. GAAP); provided, however, that evidence with respect to (b)(i) through
(iv) is provided to the Administrative Agent in form and substance reasonably
satisfactory to the Lenders.
"NET PROCEEDS ACCOUNT" means the net proceeds account to be established by
the Collateral Agent for the purpose of holding Net Proceeds in the
circumstances contemplated in Section 3.2(a)(2) and Section 8.1(d)(3). The Net
Proceeds Account shall be a segregated account established in the name of the
Collateral Agent for the benefit of the Lenders.
Page 15
"NETWORK" means the broadband telecommunications network in Brazil operated
by the Borrower and certain of its Affiliates that was constructed by Nortel and
its Affiliates.
"NORTEL ARGENTINA" means Nortel Networks de Argentina S.A.
"NOTE" means a promissory note of the Borrower, substantially in the form
of Exhibit E.
"OBLIGATIONS" means all present and future obligations, liabilities and
other amounts, whether or not contingent, owing to any Lender pursuant to this
Agreement or any other Financing Document, including principal, accrued interest
and fees.
"PAID IN CAPITAL" means, with respect to any Person, at any time, the
aggregate amount of capital contributed to such Person in the form of cash or
capitalized Indebtedness; provided, that in the case of the Borrower, "Paid in
Capital" means the sum of (x) Two Hundred Sixteen Million, Nine Hundred
Sixty-Three Thousand Dollars (US$216,963,000) plus (y) the aggregate amount of
capital contributed to the Borrower in the form of cash or capitalized
Indebtedness after the Closing Date.
"PARTY" means the Borrower, each Lender, the Administrative Agent and the
Collateral Agent, individually, and "PARTIES" means two (2) or more of them.
"PERMITTED DISPOSALS" means, with respect to the Borrower or any Subsidiary
thereof (a) any Disposal in the ordinary course of business of assets which are
obsolete or which are replaced in the ordinary course of business; (b) any
Disposal of the assets of a Subsidiary of the Borrower to the Borrower or
another Subsidiary of the Borrower, or any Disposal of the assets of the
Borrower to one of its Subsidiaries, provided, that any such assets that are
subject to a security interest in favor of the Administrative Agent on behalf of
the Lenders must remain subject to such security interest after such Disposal;
(c) any Disposal of inventory in the ordinary course of business; (d) the
Disposals listed on Schedule 1.1(b); (e) Permitted IRUs; (f) any Disposals of
assets (other than IRUs) not constituting Collateral for their fair market value
as determined in good faith by the Borrower, the aggregate proceeds of which do
not exceed US$2,000,000; and (g) any IRU of the type referred to in clause (a)
of the definition of "IRU" with respect to assets not constituting Collateral
for fair market value as determined in good faith by the Borrower, the aggregate
proceeds of which do not exceed US$2,000,000 for each such IRU.
"PERMITTED INDEBTEDNESS" means (a) Indebtedness pursuant to the Financing
Documents; (b) Intercompany Indebtedness, provided, that such Intercompany
Indebtedness is evidenced by a Subordinated Intercompany Note; (c) contingent
Indebtedness in respect of bonds or letters of credit provided to guarantee bids
or performance under contracts in the ordinary course of business; (d)
Indebtedness of the Borrower which is in existence on the Closing Date and set
forth on Schedule 7.11; (e) purchase money Indebtedness and Capital Lease
obligations in an amount not greater than US$2,000,000 in the aggregate
outstanding at any one time; (f) purchase money Indebtedness and Capital Lease
obligations in an amount not greater than the result of (i) US$8,000,000 less
(ii) any outstanding Indebtedness incurred pursuant to clause (e) above, in the
aggregate outstanding at any one time; provided that such Indebtedness has a
final maturity date equal to or later than the final maturity date of, and has
an average life to maturity equal to or greater than the average life to
maturity of, the Indebtedness pursuant to the Financing Documents; (g) purchase
money Indebtedness and Capital Lease obligations in an amount not greater than
Page 16
thirty million Dollars (US$30,000,000) in the aggregate outstanding at any one
time from official export credit agencies; provided that such Indebtedness has a
final maturity date equal to or later than the final maturity date of, and has
an average life to maturity equal to or greater than the average life to
maturity of, the Indebtedness pursuant to the Financing Documents; (h) unsecured
Indebtedness incurred for the operation and maintenance of such Person's
Telecommunications Business, including, without limitation, for working capital
purposes, in an amount outstanding at any time not greater than eight million
Dollars (US$8,000,000) in the aggregate; (i) Indebtedness of the Borrower for
money borrowed from financial institutions which Indebtedness is either fully
collateralized by cash deposits of IMPSAT or fully funded by IMPSAT through the
acquisition of one hundred percent (100%) participation in such Indebtedness
from such financial institution, provided that such Indebtedness is either (i)
non-recourse with respect to the Borrower or any of its assets or (ii)
subordinated to the Obligations pursuant to a subordination agreement in form
and substance satisfactory to the Required Lenders; and (j) Indebtedness
incurred and applied to refinance Indebtedness permitted by each of clauses (a)
and (d) above; provided, however, that with respect to any such refinancing
Indebtedness, (1) the principal amount of such refinancing Indebtedness does not
exceed the principal amount of the Indebtedness so refinanced; (2) such
refinancing Indebtedness has a final maturity date equal to or later than the
final maturity date of, and has an average life to maturity equal to or greater
than the average life to maturity of, the Indebtedness being refinanced; and (3)
such Indebtedness is incurred and/or guaranteed by the Borrower and any
Subsidiary which has incurred or guaranteed, as the case may be, the
Indebtedness to be refinanced.
"PERMITTED INVESTMENTS" means: (a) Investments which are in existence on
the Closing Date and set forth on Schedule 1.1(a); (b) Temporary Cash
Investments; (c) Investments in the form of Intercompany Indebtedness which
constitutes Permitted Indebtedness; (d) accounts receivable owing to the
Borrower or any Subsidiary thereof if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary trade
terms; (e) payroll, travel and similar advances and advances to suppliers to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business and in the aggregate do not at any time exceed US$1,000,000;
and (f) stock, obligations or securities received in satisfaction of judgments,
work-outs, assignments for the benefit of creditors or other similar judicial
proceedings.
"PERMITTED INVESTOR" means (a) any Person that is in the Telecommunications
Business and (x) for its last four consecutive fiscal quarters has generated
revenues of at least one billion Dollars (US$1,000,000,000) or earnings before
interest, income taxes, depreciation and amortization of at least one hundred
eighty million Dollars (US$180,000,000), or (y) on the date of determination has
an equity market capitalization of at least three billion Dollars
(US$3,000,000,000), or (b) any Subsidiary of such Person.
"PERMITTED IRU" means: (a) any IRU of the type contained in clause (b) of
the definition of IRU or (b) an IRU of the type referred to in clause (a) of the
definition of "IRU", with respect to any portion of the Network with an IRU Cost
of two million Dollars (US$2,000,000) or less for each such IRU; provided,
however, that the maximum number of ducts that may be subject to Permitted IRUs
shall be three (3) in the case of Long Haul IRUs, and four (4) in the case of
Metropolitan IRUs.
"PERMITTED LIENS" means:
(a) Liens under the Financing Documents;
Page 17
(b) Liens securing taxes not yet due or being contested in good faith by
appropriate proceedings diligently conducted for which adequate cash reserves
determined in accordance with Brazilian GAAP have been established (and as to
which the property subject to any such Lien is not yet subject to foreclosure,
seizure, arrest, sale, collection, levy or loss on account thereof) and so long
as (x) the contesting of, or failure to comply with, such requirements does not
in any material way jeopardize such Person's ability or authority to operate all
or any part of its business or value or continuing priority of the security
interests in favor of the Administrative Agent on behalf of the Lenders in the
Collateral and (y) all such contests of, and failures to comply with, such
requirements would not in the aggregate have an Material Adverse Effect;
(c) nonconsensual statutory Liens which are imposed by Applicable Law
arising in the ordinary course of business and securing obligations which are
not yet due and payable or which are being contested in good faith by
appropriate proceedings diligently conducted for which adequate cash reserves
determined in accordance with Brazilian GAAP have been established (and as to
which the property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof) and so long as (x) the contesting of, or
failure to comply with, such requirements does not in any material way
jeopardize such Person's ability or authority to operate all or any part of its
business or value or continuing priority of the security interests in favor of
the Administrative Agent on behalf of the Lenders in the Collateral and (y) all
such contests of, and failures to comply with, such requirements, would not in
the aggregate have an Material Adverse Effect;
(d) pledges or deposits made in the ordinary course of business to secure
payment of worker's compensation insurance, unemployment insurance, pensions or
social security programs;
(e) easements, rights-of-way, restrictions and other similar encumbrances
on real property which, in the aggregate, are not substantial in amount and
which do not in any case materially detract from the value of the property to
the Borrower or materially interfere with the ordinary conduct of the business
of the Borrower or a Subsidiary;
(f) Liens arising by virtue of any Applicable Law in favor of banks or
other financial institutions on cash or rights of setoff or similar rights as to
deposit accounts or other funds maintained with a creditor depository
institution;
(g) Liens on goods (and the documents of title relating thereto) the
purchase price, shipment or storage of which is financed by a documentary letter
credit issued for the account of the Borrower or a Subsidiary thereof in the
ordinary course of business, provided that such Lien secures only the
obligations of the Borrower or such Subsidiary in respect of such letter of
credit;
(h) Liens created pursuant to Capital Leases;
(i) Liens in favor of customs and revenue authorities arising as a matter
of Applicable Law to secure payment of customs duties in connection with the
importation of goods in the ordinary course of business (and as to which the
property subject to any such Lien is not yet subject to foreclosure, seizure,
arrest, sale, collection, levy or loss on account thereof);
(j) Liens incurred or deposits made to secure the performance of tenders,
bids, leases, statutory or regulatory obligations, bankers' acceptances, surety
and appeal bonds, contracts (other than for
Page 18
Indebtedness), performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money);
(k) Liens (including extensions and renewals thereof) upon real or personal
property, in each case other than in respect of the Network, provided that (i)
such Lien is created solely for the purpose of securing Indebtedness incurred to
finance the cost (including the cost of design, development, acquisition,
construction, installation, improvement, transportation or integration) of the
item of property or assets subject thereto and such Lien is created prior to, at
the time of or within one hundred eighty (180) days after the later of the
acquisition, the completion of construction or the commencement of full
operation of such property, (ii) the principal amount of the Indebtedness
secured by such Lien does not exceed one hundred percent (100%) of such cost and
(iii) any such Lien shall not extend to or cover any property or assets other
than such item of property or assets and any improvements on such item;
(l) Liens arising from the rendering of a final judgment or order against
the Borrower or any of its Subsidiaries that does not give rise to an Event of
Default;
(m) Liens in respect of (i) Permitted IRUs referred to in clause (b) of the
definition of "Permitted IRU" and (ii) Permitted Disposals referred to in clause
(g) of the definition of "Permitted Disposals";
(n) Liens securing Indebtedness with an aggregate principal amount not in
excess of US$5,000,000 at any time outstanding; and
(o) Liens existing on the Closing Date and listed on Schedule 7.12(a).
"PERSON" means an individual, a partnership, a joint venture, a corporation, a
trust, a limited liability company, an unincorporated organization or a
Governmental Authority.
"PREPAYMENT EVENT" means (a) any Disposal by the Borrower or any of its
Subsidiaries of any of such Person's properties or assets, whether tangible or
intangible, other than a Permitted Disposal or any other Disposal permitted to
be made under Section 8.2(j); (b) any Expropriation Event; and (c) any casualty
or other insured damage to any material asset of the Borrower or any Subsidiary
thereof.
"PRINCIPAL REPAYMENT DATE" means, initially, March 25, 2006 and each
successive date September 25 and March 25 through the Maturity Date.
"REAIS" means the lawful currency of Brazil.
"REGISTRATION BUSINESS DAY" means, with respect to the amendments to the
Equipment Pledge Agreement and the Mortgage Deeds entered into in connection
with the Debt Restructuring, any day on which the relevant Registro de Titulos e
Documentos or Registro de Imoveis, respectively, is open for business in the
ordinary course.
"REQUIRED LENDERS" means, at any time, Lenders holding more than fifty
percent (50%) in aggregate principal amount of the Term Loans then outstanding.
"REVENUES" means, with respect to any Person for any period, the
consolidated revenues of such Person and its Subsidiaries.
"SECURED PARTIES" means, collectively, the Agents and the Lenders, and each
a "SECURED PARTY".
Page 19
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SECURITY DOCUMENTS" means the Mortgage Deeds, the Equipment Pledge
Agreements, and any other agreements entered into pursuant to Section 9.
"SERIES A CONVERTIBLE NOTES" means the Series A 6% Senior Guaranteed
Convertible Notes due 2011 issued by IMPSAT.
"SERIES B CONVERTIBLE NOTES" means the Series B 6% Senior Guaranteed
Convertible Notes due 2011 issued by IMPSAT.
"SOLVENT" means with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person's property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guarantees and pension plan liabilities) at any time shall be
computed as the amount which, in light of all facts and circumstances existing
at the time, represents the amount which can reasonably be expected to become an
actual or matured liability.
"SPECTRUM AUTHORIZATION" means the authorization granted by ANATEL,
revocable in nature, to use the radioelectric spectrum in accordance with
applicable Brazilian law.
"SUBORDINATED INTERCOMPANY NOTE" means a promissory note of the Borrower,
or any Subsidiary of the Borrower, in form and substance satisfactory to the
Lenders, evidencing Intercompany Indebtedness of the Borrower for money borrowed
from IMPSAT or any of the Borrower's Subsidiaries, or evidencing Indebtedness of
any of the Borrower's Subsidiaries for money borrowed from the Borrower, any
other Subsidiary of the Borrower or IMPSAT, which is subordinated pursuant to an
Intercompany Subordination Agreement.
"SUBSIDIARY" means, with respect to any Person, any other Person that is
directly or indirectly Controlled by the first Person.
"TELECOMMUNICATIONS BUSINESS" means telecommunications services, value
added telecommunications services, radio paging, mobile telecommunications,
personal telecommunications services, trunking, transport of broadcasting
signals, information technology, Internet services and related and ancillary
services in Brazil in which the Borrower or any of its Subsidiaries is from time
to time engaged.
"TEMPORARY CASH INVESTMENT" means any of the following: (a) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof; (b) time deposit accounts, certificates of deposit and money
market deposits maturing within one year of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of two hundred fifty million
Dollars (US$250,000,000) (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one
Page 20
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act) or any money market fund sponsored by a registered
broker dealer or mutual fund distributor; (c) repurchase obligations with a term
of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with a bank meeting the
qualifications described in clause (b) above; (d) commercial paper, maturing not
more than ninety (90) days after the date of acquisition, issued by a
corporation (other than an Affiliate of the Borrower) organized and in existence
under the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America with a rating the time as of
which any investment therein is made of "P-1" (or higher) according to Xxxxx'x
Investor Service, Inc. ("Moody's") or "A-1" (or higher) according to Standard &
Poor's Ratings Services ("S&P") ; (e) securities with maturities of six (6)
months or less from the date of acquisition issued or fully and unconditionally
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or Moody's, and (f) certificates of deposit maturing not
more than one (1) year after the acquisition thereof by the Borrower or a
Subsidiary thereof and issued by Banco Itau S.A., Banco Sudameris S.A. or any of
the ten (10) largest banks (based on assets as the last December 31) organized
under the laws of Brazil, provided, however, that such bank is not under
intervention, receivership or any similar arrangement at the time of the
acquisition of such certificate of deposit.
"TOTAL DEBT" means, with respect to any Person at any time and from time to
time, the aggregate amount of any and all Indebtedness of such Person and its
Subsidiaries then outstanding; provided, however, that for the purposes of
determining compliance with Section 8.3(f) hereof, the outstanding principal
amount of the Ericsson Indebtedness shall be excluded from the calculation of
Total Debt.
"TRADE PAYABLES" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services and required to be paid within one year.
"U.S. GAAP" means generally accepted accounting principles as promulgated
or adopted by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants and its predecessors, consistently applied.
"VOTING STOCK" means, with respect to any Person, Capital Stock ordinarily
having the power to vote for the election of directors, managers or other voting
members of the governing body of such Person.
SECTION 1.2 OTHER DEFINITIONS.
The following terms shall have the meaning given to them in the Section
indicated below:
TERM SECTION
---- -------
Administrative Agent Preamble
Advanced Fee 15.5
Agreement Preamble
Amendment 8.2(e)
Assigned Indebtedness Sixth Recital
Bankruptcy Code 10.1(g)
Borrower Preamble
Collateral 9.1
Collateral Agent Preamble
Page 21
Deferred Payment Date 4.2(c)
Deposit Account 3.6(a)
Event of Default 10.1
Excluded Taxes 5.1(a)
Existing Financing Agreement Third Recital
Guarantee Fifth Recital
IMPSAT Fourth Recital
Indemnitees 11.2
Information 16.13
Lenders Preamble
Nortel First Recital
Note(s) 2.2(a)
Option 13.1
Option Consents 13.1
Option Indebtedness 13.1
Original Financing Agreement First Recital
Original Holders Sixth Recital
Participant Sixth Recital
Placement Agent 16.15
Preceding Fiscal Quarter 8.2(c)(2)
Prepayment 3.2(a)
Register 2.1(b)
Release 9.3(b)
Release Instruments 9.3(b)
Released Collateral 9.3(b)
Repayment Fee 3.2(b)
Second Currency 4.1
Specified Place of Payment 4.1
Syndication Agents 16.13
Taxes 5.1(a)
Term Loan(s) 2.1(a)
SECTION 1.3 INTERPRETATION.
In this Agreement: (a) the singular includes the plural and the plural the
singular; (b) words importing any gender include the other gender; (c)
references to statutes or regulations are to be construed as including all
statutory or regulatory provisions consolidating, amending or replacing the
statute or regulation referred thereto; (d) references to "writing" include
printing, typing, lithography and other means of reproducing words in a tangible
visible form; (e) references to articles, sections (or subdivisions of
sections), exhibits, annexes or schedules are to this Agreement unless otherwise
indicated; (f) references to agreements and other contractual instruments shall
be deemed to include all schedules and exhibits to such agreements and all
subsequent amendments and other modifications to such agreements and contractual
instruments, but only to the extent such amendments and other modifications are
not prohibited by the terms hereof; (g) references to Persons include their
respective permitted successors and assigns and, in the case of Governmental
Authorities, Persons succeeding to their respective functions and capacities;
and (h) the terms "date of this Agreement" and "date hereof" mean July 29, 2005.
SECTION 1.4 ACCOUNTING PRINCIPLES AND TERMS.
Except as otherwise provided in this Agreement: (a) all computations and
determinations as to financial matters, and all financial statements to be
delivered under this Agreement, shall be made or prepared in accordance with
U.S. GAAP applied on a consistent basis; (b) with respect to accounting terms or
financial information defined or described in reference to a Person and its
Subsidiaries, all such terms and information shall be construed as applying to
such Person and its Subsidiaries on a consolidated
Page 22
basis in accordance with U.S. GAAP; (c) all accounting terms used in this
Agreement shall have the meanings respectively ascribed to such terms by U.S.
GAAP; and (d) whenever it is necessary to convert any amounts in Reais into
Dollars such conversion shall be made at the applicable Conversion Rate.
SECTION 2. THE CREDIT FACILITY
SECTION 2.1 LOANS
(a) LOANS. Each Lender severally agrees, upon the terms and conditions set
forth herein, on the Closing Date to maintain a term loan (each a "TERM LOAN"
and collectively the "TERM LOANS") in an aggregate principal amount equal to
Eighty-One Million, Sixty-Six Thousand, Six Hundred Sixty-Six and 67/100 Dollars
(US$81,066,666.67) representing the Assigned Indebtedness. Any amounts that are
repaid or prepaid may not be reborrowed. The aggregate principal amount of all
Term Loans shall not at any time exceed the maximum amount of the Assigned
Indebtedness. Each Lender's pro rata percentage of the Assigned Indebtedness is
as set forth on Schedule 2.1.
(b) REGISTER. The Administrative Agent shall maintain at its address a
register (the "REGISTER") on which it shall record, from time to time, the names
and addresses of the Lenders, the amount of the Term Loans made by each Lender
and each repayment and prepayment in respect of the Term Loans of each Lender.
The entries made on the Register shall, to the extent permitted by Applicable
Law, be prima facie evidence of the existence and amounts of the Obligations
therein recorded, and the Borrower, the Agents and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of a Term Loan or
Note hereunder as the owner thereof for all purposes of this Agreement,
notwithstanding any notice to the contrary; provided, however, that the failure
of the Administrative Agent to maintain the Register or any error therein shall
not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Term Loans of such Lender in accordance with the terms
of this Agreement. The Register shall be available for inspection by the
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
SECTION 2.2 NOTES.
(a) EXECUTION AND DELIVERY. The Borrower's obligation to pay the principal
of, and interest on, each Term Loan made by each Lender shall be evidenced by a
Note duly executed and delivered by the Borrower to the Administrative Agent and
payable to the order of the relevant Lender. Each Note shall be entitled to the
benefits of this Agreement and the other Financing Documents and (subject to
variations in form approved by the Agents as provided in the definition of
"NOTE" contained herein) shall (1) be dated the date hereof; (2) be in a stated
principal amount equal to such Lender's pro rata share of the Term Loans as set
forth on Schedule 2.2; (3) be payable in installments as provided in Section
3.1; and (4) bear interest as provided in Section 3.3. The Administrative Agent
shall deliver to each Lender each Note payable to such Lender.
(b) RELEASE. Each Note shall be surrendered to the Borrower against final
payment thereof on the Maturity Date or such earlier date as the Term Loans are
paid in full.
(c) INTERPRETATION. In the event of any inconsistencies between this
Agreement and any Note, the terms of this Agreement shall control; provided,
however, that nothing in this clause (c) shall limit the rights of any Lender to
bring any action or enforce its rights or remedies under any Note.
Page 23
SECTION 3. PAYMENT OF PRINCIPAL, INTEREST AND FEES
SECTION 3.1 REPAYMENT OF PRINCIPAL.
After taking into effect the Initial Paydown, the Term Loans shall be
repaid by the Borrower in seven (7) installments on the Principal Repayment
Dates set forth below as follows:
------------------------------------------------------------------
DATE AMOUNT
---- ------
------------------------------------------------------------------
March 25, 2006 US$2,500,000
------------------------------------------------------------------
September 25, 2006 US$2,500,000
------------------------------------------------------------------
March 25, 2007 US$10,000,000
------------------------------------------------------------------
September 25, 2007 US$10,000,000
------------------------------------------------------------------
March 25, 2008 US$7,965,900
------------------------------------------------------------------
September 25, 2008 US$7,965,900
------------------------------------------------------------------
March 25, 2009 US$27,447,311
------------------------------------------------------------------
The final installment shall be in the amount sufficient to pay all
outstanding principal, accrued and unpaid interest thereon, all fees and other
amounts owed hereunder and all other Obligations of the Borrower then
outstanding and shall be payable on the Maturity Date.
SECTION 3.2 PREPAYMENTS.
(a) Mandatory Prepayments.
The Borrower shall prepay the principal amount of the Term Loans, in whole
or in part, together with interest accrued thereon to the date of prepayment
(each such prepayment, a "PREPAYMENT") upon the occurrence of any of the
following events, as follows:
(1) ILLEGALITY. The Borrower shall make Prepayments on the dates and
in the amounts specified in Section 5.2(a) if so required pursuant to such
Section.
(2) PREPAYMENT EVENTS. The Borrower shall make Prepayments under this
Subsection 3.2(a)(2) upon the receipt of Net Proceeds in respect of any
Prepayment Event in an amount equal to such Net Proceeds; provided, however,
that in the case of a Prepayment Event consisting of a casualty or other insured
damage, the Borrower shall not be subject to such prepayment obligation if no
Default or Event of Default has occurred and is continuing and (i) if the
property that was the subject of such casualty or damage is subject to a Lien
permitted under paragraph (l) of the definition of "Permitted Liens" and the
Person secured by such Lien is named as the loss payee of the insurance proceeds
payable with respect to such casualty or damage, or (ii) if within the period of
thirty (30) days following the receipt of such Net Proceeds the Borrower (A)
notifies the Administrative Agent that it intends to reinvest such Net Proceeds
within the six (6) months thereafter in the payment of the costs of repairing,
restoring, rebuilding or replacing the portion of the property that was the
subject of such casualty or damage; and (B) certifies that such repair,
restoration, rebuilding or replacement will be completed within a period of six
(6)
Page 24
months from the occurrence of the relevant casualty event; and provided further,
that if the Net Proceeds from such a casualty event or damage exceed five
million Dollars (US$5,000,000), the full amount thereof, shall be paid to the
Collateral Agent to be held by the Collateral Agent in the Net Proceeds Account
and shall be released by the Collateral Agent to or at the direction of the
Borrower as and when required for payment of such costs of repair, restoration,
rebuilding or replacement.
(3) PREPAYMENT UNDER IMPSAT CONVERTIBLE NOTES. Concurrently with the
making of any voluntary or mandatory prepayment in respect of the securities
issued pursuant to any of the IMPSAT Convertible Notes (not including any
voluntary or mandatory prepayment made in connection with the refinancing of the
aggregate principal and interest due under such securities), the Borrower shall
make a Prepayment in an amount which bears to the aggregate principal amount of
the Term Loans then outstanding the same ratio as the amount of the prepayment
of the relevant securities bears to the aggregate principal amount of such
securities then outstanding.
(4) EXCESS CASH FLOW OF THE BORROWER. Within fifteen (15) Business
Days after the Borrower shall have submitted to the Administrative Agent its
annual financial statements pursuant to Section 8.1(a) in respect of any fiscal
year of the Borrower, the Borrower shall make a Prepayment under this Subsection
3.2(a)(4) in an aggregate amount equal to fifty percent (50%) of the Borrower's
Excess Cash Flow for such fiscal year.
(5) BORROWER CAPITAL MARKETS TRANSACTIONS. The Borrower shall, or
shall cause its Subsidiaries to, make a Prepayment upon the receipt by the
Borrower or any of its Subsidiaries of the Net Proceeds of any Borrower Capital
Markets Transaction. With respect to such Net Proceeds, the amount of aggregate
Prepayment required by this Subsection 3.2(a)(5), shall be equal to fifty
percent (50%) of such Net Proceeds.
(6) IMPSAT CAPITAL MARKETS TRANSACTIONS. The Borrower shall, or shall
cause its Subsidiaries or IMPSAT (as applicable) to, make a Prepayment upon the
receipt by the Borrower or any of its Subsidiaries or IMPSAT of the Net Proceeds
of any IMPSAT Capital Markets Transaction. With respect to such Net Proceeds,
the amount of aggregate Prepayment required by this Subsection 3.2(a)(6) and
Subsection 3.2(a)(6) of the Argentina Financing Agreement shall be equal to
fifty percent (50%) of such Net Proceeds, which Prepayment shall be applied
among this Subsection 3.2(a)(6) and Subsection 3.2(a)(6) of the Argentina
Financing Agreement pro rata based on (y) the then outstanding balance of the
Term Loans, and (z) the then outstanding balance of the term loans under the
Argentina Financing Agreement.
(7) IRUS. Promptly after the Borrower's receipt of the Net Proceeds of
each Permitted IRU referred to in clause (b) of the definition of "Permitted
IRU" (or, in the case of any Permitted IRU payable in more than one payment,
after the receipt of the first payment), the Borrower shall make a Prepayment in
an amount equal to the greater of (a) 125% of the IRU Cost of such Permitted
IRU, or (b) fifty percent (50%) of such Net Proceeds; provided, however, that
the Prepayment under this Subsection 3.2(a)(7) shall not exceed one hundred
percent (100%) of the Net Cash Proceeds received by the Borrower in respect of
any sale of a Permitted IRU.
(8) PREPAYMENTS UNDER ARGENTINA FINANCING AGREEMENT. At any time that
the Argentina Financing Agreement shall have been amended and restated to
provide for the assumption by IMPSAT as the borrower and IMPSAT Argentina as the
guarantor with respect to the term loans thereunder as provided for in Section
13.1 thereof but this Agreement shall not have been amended and restated to
provide for the assumption by IMPSAT as Borrower and the Borrower as guarantor
with respect to the Term Loans as provided
Page 25
for in Section 13.1 hereof, in the event that (i) IMPSAT Argentina shall make
any optional prepayment of the term loans under the Argentina Financing
Agreement, the Borrower shall make a Prepayment hereunder in an amount which
bears to the aggregate principal amount of the Term Loans then outstanding the
same ratio as the amount of the optional prepayment of the principal amount
under the Argentina Financing Agreement bears to the aggregate principal amount
of Argentina Financing Agreement outstanding immediately prior to such voluntary
prepayment and (ii) IMPSAT Argentina shall make any mandatory prepayment of the
term loans under Subsection (2), (4), (5) or (7) of Section 3.2 of the Argentina
Financing Agreement (which provides that in certain circumstances, the mandatory
prepayment to be made by IMPSAT Argentina is reduced by one half), the Borrower
shall make a Prepayment hereunder of the Term Loans in an amount equal to such
mandatory prepayment under the Argentina Financing Agreement.
All amounts required to be prepaid under this Section 3.2(a) shall be paid
to the Administrative Agent promptly (but in any case within ten (10) Business
Days except as otherwise provided in Subsection 3.2(a)(4)) after the receipt by
the Borrower and/or its Affiliates of such amount.
(b) OPTIONAL PREPAYMENTS. Upon not less than seven (7) Business Days prior
written notice to the Administrative Agent, the Borrower may make a Prepayment
on any Business Day, subject to the limitations imposed by Applicable Law, (i)
at any time between the Closing Date and the first anniversary of the Closing
Date, at 100% of the principal amount thereof plus accrued and unpaid interest
to the date of such Prepayment, provided that in such event, a fee of 1% of the
principal amount of the Term Loans being repaid shall be immediately due and
payable by the Borrower to the Lenders (the "REPAYMENT FEE"), and (ii) at any
time after the first anniversary of Closing, at 100% of principal amount
thereof, plus accrued and unpaid interest thereon to the date of such
Prepayment. Notwithstanding the forgoing, in the event that the Borrower and
IMPSAT Argentina notify the Administrative Agent of the Prepayment of the entire
principal amount of the Term Loans then outstanding, together with the entire
principal amount of the term loans then outstanding under the Argentina
Financing Agreement, during the period between the Closing Date and the date 90
days thereafter, with the proceeds of a new issue of Indebtedness the terms of
which are at least as favorable to the Borrower, IMPSAT Argentina and IMPSAT as
this Agreement and the Argentina Financing Agreement, the Borrower may make such
Prepayment at 100% of the principal amount thereof plus accrued and unpaid
interest to the date of such Prepayment, and the Repayment Fee shall not apply.
Other than an optional Prepayment in accordance with the preceding sentence
(which requires the Prepayment of the entire principal amount of the Term
Loans), any Prepayment under this Section 3.2(b) shall only be allowed if the
amount thereof is equal to one million Dollars (US$1,000,000) or an integral
multiple thereof, except that if the aggregate principal amount then outstanding
is less than one million Dollars (US$1,000,000), the Borrower may prepay such
aggregate principal amount. Upon receipt of such notice by the Administrative
Agent, the Borrower's obligation to make such Prepayment shall be irrevocable
and binding.
(c) ORDER OF APPLICATION. All Prepayments under this Section 3.2 shall be
applied in inverse order of scheduled future installment repayments of the Term
Loans.
SECTION 3.3 INTEREST.
(a) INTEREST RATE. On the Closing Date, accrued and unpaid interest at a
rate per annum equal to ten percent (10%) from (and including) March 25, 2005 to
(but excluding) the Closing Date on the outstanding principal amount of the
Assigned Indebtedness shall be paid along with the Initial Paydown. Thereafter,
interest shall accrue on the outstanding principal
Page 26
balance of the Term Loans at a rate of twelve percent (12.0%) per annum, payable
semi-annually in arrears in cash, commencing on September 25, 2005, and
continuing on each Interest Payment Date thereafter until such Term Loan is paid
in full; provided, however, that at the time and for the period that the
Argentina Financing Agreement shall have been amended and restated to provide
for the assumption by IMPSAT as the borrower and IMPSAT Argentina as the
guarantor with respect to the term loans thereunder as provided for in Section
13.1 thereof but this Agreement shall not have been amended and restated to
provide for the assumption by IMPSAT as Borrower and the Borrower as guarantor
with respect to the Term Loans as provided for in Section 13.1 hereof, interest
with respect to the Term Loans shall accrue and be payable at a rate per annum
equal to thirteen and one-half percent (13 1/2%) on the outstanding principal
amount of the Term Loans.
(b) DEFAULT INTEREST. Notwithstanding the provisions of Section 3.3(a), (i)
upon the occurrence and during the continuance of any Event of Default the
Borrower shall pay to the Lenders on demand interest at the Default Interest
Rate on the unpaid principal balance of each Term Loan and (ii) with respect to
the amount of any interest, fee or any other amount payable by the Borrower
hereunder or under the Notes, which has not been paid in full when due (whether
at stated maturity, by acceleration, prepayment or otherwise), for the period
from and including the due date thereof to and including the date the same is
paid in full (both before and after judgment), whether or not any notice of
default in the payment thereof has been delivered, the Borrower shall pay to the
Lenders interest thereon, to the extent permitted by Applicable Law, in arrears
on the date such amount shall be paid in full at the Default Interest Rate.
Interest payable under this Section 3.3(b)(ii) shall be compounded on any
overdue amount at three (3) month intervals commencing on the date on which the
default occurred.
(c) COMPUTATION. Interest on all Term Loans shall be computed on the basis
of three hundred sixty (360) days and actual days elapsed (including the first
day but excluding the last) occurring in the period for which payable.
SECTION 3.4 AGENT'S FEES.
The Borrower shall pay (i) in the event that at any time after the Closing
Date there shall be an Administrative Agent unrelated to any Lender, to the
Administrative Agent an annual fee in an amount as shall be agreed between the
Borrower and such Administrative Agent, not to exceed sixty thousand Dollars
(US$60,000), payable in advance, and (ii) to the Collateral Agent the reasonable
and customary fee charged by the Collateral Agent for acting in such capacity as
shall be agreed between the Borrower and the Collateral Agent; it being
expressly understood and agreed that the Borrower shall pay all fees and
expenses related to that certain Letter Agreement, dated as of the date hereof,
which provides for the acceptance of Deutsche Bank Trust Company Americas to act
as both Administrative Agent and Collateral Agent under each of this Agreement
and the Argentina Financing Agreement.
SECTION 3.5 NATURE OF PAYMENTS.
All payments under this Agreement and under the Notes shall be paid on the
dates when due without presentment, demand, protest, or notice of any kind, all
of which are hereby expressly waived. Such payments shall be made in Dollars and
in immediately available funds, without setoff, recoupment, counterclaim, or any
other deduction of any nature.
SECTION 3.6 PAYMENT PROCEDURES.
(a) DEPOSIT ACCOUNT. All payments hereunder and under the Notes shall
Page 27
be made to the Administrative Agent for the ratable account of each Lender
entitled thereto, in Dollars by wire transfer of immediately available funds to
the Administrative Agent's account indicated below, or such other account as the
Administrative Agent may designate to the Borrower in writing (the "DEPOSIT
ACCOUNT"), not later than 1:00 P.M. New York time on the date when due.
Administrative Agent's Deposit Account:
Deustche Bank Trusty Company Americas
ABA #000000000
Account No.: 00000000
Account Name: Corporate Trust
Reference: IMPSAT Deposit A/C #48034
Attention: Xxxxx Xxxx
Any payments under this Agreement that are made later than 1:00 p.m. (New
York time) shall be deemed to have been made on the next succeeding Business
Day.
(b) BUSINESS DAYS. Whenever any payment to be made hereunder or under any
Note shall be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day, provided, that should
such next succeeding Business Day fall in the next calendar month, such due date
shall be the immediately preceding Business Day.
SECTION 3.7 ADMINISTRATIVE AGENT'S DETERMINATION.
Any determination made by the Administrative Agent as to the interest rate,
the Default Interest Rate, and the amounts of interest, principal and other
amounts due hereunder shall be conclusive in the absence of manifest error.
SECTION 3.8 PAYMENTS PRO RATA.
(a) PRO RATA. The Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of the Borrower in respect of any
amount due and payable by the Borrower hereunder, except as otherwise expressly
provided herein, it shall distribute such payment to the Lenders pro rata based
upon their respective shares, if any, of the Obligations with respect to which
such payment was received.
(b) EXCESS PAYMENTS. Each of the Lenders agrees that, if it should receive
any payment hereunder (either by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, or otherwise), which is applicable to the payment
of the principal of or interest on the Term Loans or the fees, with the result
that such Lender receives a greater proportion of the amount then due to it
hereunder than any other Lender receives in respect of the amount due to such
other Lender hereunder, then such Lender receiving such excess payment shall
purchase for cash without recourse or warranty from the other Lenders an
interest in the Obligations of the Borrower to such other Lenders in such amount
as shall result in a proportional participation by all the Lenders in such
payment; provided, however, that if all or any portion of such excess amount is
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, without interest.
SECTION 3.9 GOVERNMENTAL APPROVALS.
(a) BORROWER TO OBTAIN. The Borrower shall obtain all necessary
Governmental Approvals (including, but not limited to, approvals from the
Central Bank) in connection with the performance of any of its obligations
hereunder and with any payment under this Agreement and the other Financing
Page 28
Documents, and provide copies thereof to the Administrative Agent promptly after
the Borrower's receipt thereof. Without limitation of the foregoing, the
Borrower shall use its best efforts to obtain the prior approval of the Central
Bank, on or before the Closing Date, of all of the terms and conditions of this
Agreement which the Central Bank is competent to approve, including without
limitation, interest rates, payments at original maturity and payments under
Section 5.
(b) COOPERATION. The Lenders shall cooperate with the Borrower and exercise
all commercially reasonable efforts to assist the Borrower in obtaining the
Governmental Approvals required for the payments required under the Financing
Documents.
(c) FORBEARANCE. If the Borrower, having used its best efforts, is unable
to obtain the required approval or instruction of the Central Bank in order to
make a Prepayment under Section 3.2 or any payment required under Section 5, and
notifies the Administrative Agent of its election, for such reason, not to make
the respective Prepayment or payment, but IMPSAT makes the corresponding
Prepayment or payment within ten (10) days after the Administrative Agent's
demand, and there does not then exist any other Default or Event of Default, the
Administrative Agent shall not exercise, on behalf of the Lenders, the right
under Section 10.2(a)(1) to declare all of the Term Loans to be due and payable.
SECTION 3.10 CHANGE OF CONTROL.
Within 30 days following the occurrence of a Change of Control, the
Borrower shall commence an offer to purchase the Assigned Indebtedness then
outstanding, at a purchase price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest thereon to the date of such purchase. The
Borrower shall notify the Administrative Agent and each Lender at the address
for such Lender maintained in the Register, of the offer to purchase, the
purchase price and date of purchase (which shall be a Business Day no earlier
than 30 and no later than 60 days from the date such notice is mailed). Any
Lender electing to accept such offer to purchase shall notify the Borrower in
writing no later than 15 days from the date of receipt of such notice, and any
failure to so notify the Borrower shall constitute a waiver of such Lender's
right to cause the repurchase of its Assigned Indebtedness pursuant to this
Section 3.10. A fee of 1% of the principal amount of the Term Loans that is held
by the Lenders that have elected to accept such offer to purchase shall be
immediately due and payable by the Borrower to such Lenders. Notwithstanding
anything to the contrary herein (including Section 3.8 of this Agreement), any
Lender that does not elect to accept such offer to purchase shall not be
entitled to a pro rata distribution of the proceeds of such offer.
SECTION 4. PAYMENT IN DOLLARS; EVENT OF SOVEREIGN RISK
SECTION 4.1 OBLIGATION TO PAY IN DOLLARS; JUDGMENT CURRENCY.
This is an international transaction in which the specification of Dollars
and payment in the place specified pursuant to this Agreement (the "SPECIFIED
PLACE OF PAYMENT"), is of the essence, and Dollars shall be the currency of
account in all events. The Obligations of the Borrower shall not be discharged
by an amount paid in another currency or in another place, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid on conversion to
Dollars and transferred to the Specified Place of Payment under normal banking
procedures does not yield the amount of Dollars in the Specified Place of
Payment due hereunder. If for the purpose of obtaining judgment in any court it
is necessary to convert a sum due hereunder in Dollars into another currency
(the "SECOND CURRENCY"), the rate of exchange which shall be applied shall be
that at which in
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accordance with normal banking procedures the Lenders could purchase Dollars
with the Second Currency on the Business Day next preceding that on which
judgment is rendered. The obligation of the Borrower in respect of any such sum
due to the Lenders hereunder or under the Notes 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 Lenders of any sum
adjudged to be due hereunder or under the Notes in the Second Currency, the
Lenders may in accordance with normal banking procedures purchase and transfer
to the Specified Place of Payment Dollars with the amount of the Second Currency
so adjudged to be due; and the Borrower hereby, as a separate obligation and
notwithstanding any such judgment, agrees to indemnify the Lenders against, and
to pay the Lenders on demand in Dollars, any difference between the sum
originally due to the Lenders in Dollars and the amount of Dollars so purchased
and transferred (including, without limitation, all costs and expenses of the
Lenders incurred in connection therewith, such as transfer taxes, commissions
and fees).
SECTION 4.2 EVENT OF SOVEREIGN RISK.
Without prejudice to Section 4.1, in the event that on the date any payment
is due hereunder any Lender notifies the Administrative Agent that an Event of
Sovereign Risk has occurred and is continuing (regardless of when such Event of
Sovereign Risk occurred), the Administrative Agent shall notify the Borrower and
each Lender of the occurrence of such event and, at each Lender's sole
discretion, the Administrative Agent shall instruct the Borrower to make the
payment then payable to such Lender in Reais to an account to be held by the
Administrative Agent in Brazil, provided, however, that the Borrower shall only
be discharged of its obligations assumed under this Agreement upon receipt by
the Lenders of the amounts due under this Agreement in Dollars.
SECTION 5. FUNDING AND YIELD PROTECTION
SECTION 5.1 TAXES.
(a) PAYMENT NET OF TAXES. Any and all payments by the Borrower in respect
of amounts due under this Agreement, the Notes and any other Financing Document
shall be made free and clear of, and without withholding or deduction for or on
account of, any present or future taxes (including, without limitation, income
taxes, value added taxes, sales taxes, use taxes, stamp or documenting taxes,
excise taxes, property taxes and asset taxes), duties, levies, fees, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
of whatever nature now or hereafter imposed, assessed or levied (including
interest, penalties or additions thereto) by any Brazilian Governmental
Authority or by any other Governmental Authority from or through which any
payment is made hereunder or under the other Financing Documents ("TAXES"),
except taxes imposed on (or assessed on the basis of) the overall net income of
or franchise taxes imposed on any Lender by the laws of the jurisdiction,
whether federal, state or local, in which it is resident or organized ("EXCLUDED
TAXES"). If any Taxes, other than any Excluded Taxes, are required by Applicable
Law to be withheld or deducted from or in respect of any sum payable under this
Agreement, the Notes or any other Financing Document:
(1) the Borrower shall pay such additional amount as may be necessary
to ensure that after reduction for all required withholdings or deductions for
Taxes, other than Excluded Taxes (including withholdings or deductions
applicable to additional sums payable under this Section 5.1), the net amount
actually received by the Lenders free and clear of such withholding or deduction
is equal to the amount the Lenders would have received had no such withholdings
or deductions been made;
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(2) the Borrower shall make such withholdings or deductions; and
(3) the Borrower shall pay the full amount withheld or deducted to the
relevant Governmental Authorities in accordance with the Applicable Laws and
prior to the date on which penalties attach thereto.
(b) INDEMNITY. The Borrower shall indemnify and hold the Agents and the
Lenders harmless from and against, and shall reimburse the Lenders and the
Agents on demand for, the full amount of Taxes (including, without limitation,
any Taxes imposed on amounts payable under this Section 5.1) paid by the Lenders
or the Agents other than Excluded Taxes, and for any loss, liability, claim or
expense (including penalties, interest, and legal fees) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted, and which the Agents or the Lenders may incur at any time arising out
of, or in connection with, any failure of the Borrower to make any payment of
such Taxes when due.
(c) OTHER TAXES. The Borrower shall pay all Taxes (including notary public
and filing fees), other than Excluded Taxes, associated with the execution,
delivery, filing, recording, or registration of, or foreclosure with respect to,
this Agreement, the Notes and the other Financing Documents, and shall indemnify
and hold the Agents and the Lenders harmless from and against any and all
liabilities with respect to, or resulting from, any failure or delay in paying
such Taxes.
(d) SURVIVAL. Without prejudice to the survival of any other agreement of
the Borrower hereunder, the Obligations of the Borrower under this Section 5.1
shall survive the payment in full of all principal and interest hereunder and
under the Notes.
(e) TAX RECEIPTS. Within thirty (30) days after the date of any payment of
Taxes required to be made under this Section 5.1, the Borrower shall furnish to
the Administrative Agent a copy of any official tax receipts evidencing such
payment.
SECTION 5.2 ILLEGALITY.
(a) PREPAYMENT. If the introduction of any Applicable Law, or any change in
any Applicable Law, or any change in the interpretation or administration of any
Applicable Law, makes or has made it unlawful for a Lender or its applicable
Lending Office to maintain any Term Loan, the Borrower shall, upon receipt of
notice of such determination and demand from such Lender (with a copy to the
Administrative Agent), prepay in full the Term Loan of such Lender then
outstanding, together with any accrued and unpaid interest thereon and any fees
required to be paid under Section 3.4, on the next Interest Payment Date for
such Term Loan following the date the notice is given; provided, however, that
if such Lender notifies the Borrower that earlier Prepayment is necessary in
order to enable such Lender to comply with such Applicable Law or change and
specifies an earlier date for the Prepayment, the Borrower shall make the
Prepayment on the date so specified.
(b) LENDER'S DUTY TO MITIGATE. Before giving notice to the
Administrative Agent under this Section 5.2, the affected Lender shall
endeavor to designate a different Lending Office with respect to its Term
Loan or endeavor in good faith to provide another structure for its Term
Loan if such designation or alternative structure will avoid the need for
giving such notice or making such demand and will not, in the Lender's sole
determination, be illegal or cause such Lender to suffer any economic,
legal, regulatory or other disadvantage.
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SECTION 5.3 INCREASED COSTS AND YIELD PROTECTION
(a) NOTICE; ADDITIONAL PAYMENTS. If due to either (1) the introduction of,
any change in, or any change in the interpretation or administration by any
competent authority of, any Applicable Law, or (2) the compliance by a Lender
with any guideline or request from any central bank or any other Governmental
Authority (whether or not having the force of law), in each case, made
subsequent to the date of this Agreement, there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or maintaining its
Term Loan, then such Lender shall notify the Administrative Agent and the
Borrower accordingly, and upon receipt from such Lender (through the
Administrative Agent) of a demand for payment of additional amounts, the
Borrower shall pay to the Administrative Agent for the account of such Lender,
such additional amounts as are sufficient to compensate such Lender for such
increased costs; provided that any such additional amounts shall not duplicate
any amounts payable by the Borrower under Section 5.2.
(b) CAPITAL ADEQUACY REGULATIONS. If (1) the effectiveness of any Capital
Adequacy Regulation, (2) any change in any Capital Adequacy Regulation, (3) any
change in the interpretation or administration of any Capital Adequacy
Regulation by any competent authority, including with respect to compliance by a
Lender (or its Lending Office) or any corporation controlling the Lender with
any Capital Adequacy Regulation, in each case, made subsequent to the date of
this Agreement, affects the amount of capital reserves or other funds required
or expected to be maintained by such Lender (or its Lending Office) or any
corporation controlling such Lender and, after taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy and
otherwise anticipated return on capital, such Lender determines that the amount
of such capital reserves or other funds is increased as a consequence of its
Term Loans and other obligations under this Agreement, then the Borrower, upon
receipt from such Lender (through the Administrative Agent) of a demand for
payment of additional amounts, shall pay to such Lender additional amounts
sufficient to compensate such Lender, the Lending Office or the corporation for
the increased cost to such Lender, Lending Office or other corporation or the
reduction in the rate of return to such Lender, Lending Office or other
corporation on its capital caused by its compliance with such Capital Adequacy
Regulation, provided, however, that any such additional amounts shall not
duplicate any amounts payable by the Borrower under Section 5.3(a).
(c) LENDER'S DUTY TO MITIGATE. Before giving notice to the Administrative
Agent under this Section 5.3, the affected Lender shall endeavor to designate a
different Lending Office with respect to its Term Loan if such designation will
avoid the need for giving such notice or making such demand and will not, in the
Lender's sole determination, be illegal or cause such Lender to suffer any
economic, legal, regulatory or other disadvantage.
SECTION 6. DELIVERIES; CONDITIONS PRECEDENT.
On the Closing Date, the following conditions shall have been satisfied:
SECTION 6.1 CLOSING DOCUMENTS.
The Borrower shall have delivered, or caused to be delivered to the
Administrative Agent and the Lenders the following documents, each in form and
substance satisfactory to the Administrative Agent and the Lenders and their
respective counsel:
(a) NOTE. The original Note or Notes duly executed by the Borrower.
(b) OTHER FINANCING DOCUMENTS. In addition to the Note pursuant to
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clause (a) above, each of the Financing Documents duly executed by the
respective parties thereto.
(c) CHARTER DOCUMENTS. (1) true copies of IMPSAT's and the Borrower's
respective Charter Documents in effect on the Closing Date certified by
Authorized Officers of each of the Borrower and IMPSAT respectively and; (2)
true copies of all corporate action taken by IMPSAT and the Borrower
respectively relative to the Financing Documents which have been properly
adopted and have not been modified or amended, certified by Authorized Officers
of each of the Borrower and IMPSAT respectively;
(d) OFFICER'S CERTIFICATES. Certificates, dated the Closing Date, signed by
an Authorized Officer of IMPSAT and the Borrower, respectively, and certifying
(1) the name, true signatures and incumbency of the Authorized Officers of each
of IMPSAT and the Borrower authorized to execute and deliver this Agreement and
the other Financing Documents to which each is a party; (2) no Default or Event
of Default exists under this Agreement; (3) the accuracy as of the Closing Date
of the matters set forth in Section 6.6; (4) a Certificate of Good Standing (or
equivalent certificate) for IMPSAT duly issued by the Secretary of State of
Delaware; and (5) that each of the Borrower and IMPSAT is Solvent following the
consummation of the transactions contemplated herein on the Closing Date.
(e) LICENSES. Documents which evidence, to the satisfaction of the Lenders,
the Borrower's ownership of the Licenses and that the Licenses are in full force
and effect.
(f) OPINIONS OF COUNSEL. A favorable written legal opinion addressed to the
Administrative Agent, the Collateral Agent and each of the Lenders and dated the
Closing Date as to such matters as shall be required by the Administrative
Agent, any Lender or their respective counsel, from each of:
(1) Xxxxxx & Xxxxxx LLP, in its capacity as special U.S. Counsel to
the Borrower and in its capacity as U.S. Counsel to IMPSAT, and
(2) Xxxxxxxx Neto Advogados, Brazilian Counsel to the Borrower.
(g) GOVERNMENTAL APPROVALS. Evidence that the following Governmental
Approvals have been obtained and are in full force and effect, and all
registrations, applications, tariffs, reports and other documents in connection
therewith required to be filed and/or registered with any Person have been filed
and registered:
(1) All Governmental Approvals, if any, then necessary in connection
with the execution, delivery or performance by the Borrower of this Agreement
and any other Financing Documents to which the Borrower is a party;
(2) All Governmental Approvals, if any, then necessary in connection
with the exercise by the Administrative Agent, the Collateral Agent or any
Lender of its rights or remedies under this Agreement or any other Financing
Documents; and
(3) All material Governmental Approvals, if any, then necessary in
connection with the continuing operation of the Telecommunications Business by
the Borrower and its Subsidiaries.
(h) FAIRNESS OPINION. An opinion from Xxxxxx Brothers Inc. addressed to the
Board of Directors of IMPSAT and the Borrower as to the fairness of the
financial terms of the Debt Restructuring to the Borrower, IMPSAT Argentina and
IMPSAT from a financial point of view.
(i) BUSINESS PLANS. Copies of the Business Plans together with a
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certificate of the chief or principal accounting or financial officer of IMPSAT,
dated as of the Closing Date, certifying as to the reasonableness of the
assumptions and expectations contained therein and that there are presently no
facts known to such Person that would make either Business Plan misleading in
any material respect.
SECTION 6.2 PAYMENTS.
The Borrower, IMPSAT Argentina and/or IMPSAT shall have paid in full: (a)
the Initial Paydown; (b) all obligations existing under the Accounts Payable
Financing Agreement and the BBVA Financing Agreement; (c) all accrued and unpaid
interest due under Section 3.3(a) of this Agreement and Section 3.3(a) of the
Argentina Financing Agreement; and (d) all amounts to be paid under Section 11.1
of this Agreement and Section 11.1 of the Argentina Financing Agreement.
SECTION 6.3 SECURITY DOCUMENTS.
All Security Documents theretofore executed and delivered in connection
with the Original Financing Agreement and the Existing Financing Agreement and
together with any amendments, supplements or modifications thereto and any other
Security Documents executed and delivered in connection with the Term Loans
shall be sufficient to create in favor of the Collateral Agent and the Lenders a
legal, valid and enforceable first priority security interest (except for
Permitted Liens under Subsections (e) and (m) of the definition of Permitted
Liens) in and to the Collateral. All filings, recordings and deliveries of
instructions and other actions necessary or desirable in the opinion of the
Collateral Agent, the Lenders or their respective counsel in order to protect,
preserve and perfect the Liens provided in such Security Documents and/or the
rights of the Secured Parties thereunder (except the entering into of amendments
to each of the Security Documents that reflect the terms of the Debt
Restructuring set forth in this Agreement, which shall be completed in
accordance with Section 8.1(q) of this Agreement) shall have been duly executed
by the Borrower and its Subsidiaries, as applicable, and registered, or filed
for registration and a certified copy of the registered agreement or deed or of
the official receipt or other document evidencing such registration or filing,
as the case may be, shall have been delivered to the Collateral Agent. Except as
contemplated by Section 8.1(t) of this Agreement, all fees, taxes, expenses and
other costs related to the filing and/or registration and/or recording of such
Security Documents shall have been paid in full by the Borrower, and certified
copies of the receipts thereof shall have been delivered to the Administrative
Agent; provided, however, that the Borrower shall not be responsible for any
such fees, taxes, expenses or other costs in connection with the filing of any
Security Documents as a result of the assignment of the Assigned Indebtedness
from Nortel to MSSF; provided further, however, that the Borrower shall be
responsible for any such fees, taxes, expenses or other costs in connection with
the filing of any Security Documents as a result of the change of the collateral
agent from Nortel to the Collateral Agent.
SECTION 6.4 REPRESENTATIONS AND WARRANTIES.
All representations and warranties made by the Borrower, any Subsidiary
thereof or IMPSAT in the Financing Documents shall be true and correct in all
material respects.
SECTION 6.5 COVENANTS.
The Borrower shall be in compliance with all covenants contained in
Section 8.
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SECTION 6.6 LITIGATION.
No litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority shall be pending, or to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues which challenges the validity
or legality of this Agreement or any of the transactions contemplated hereby or
thereby.
SECTION 6.7 NO DEFAULTS.
No Default or Event of Default shall exist hereunder and no default or
event of default shall exist under any of the Argentina Agreements (regardless
of whether or not there has been a notice of default or acceleration
thereunder).
SECTION 6.8 MATERIAL ADVERSE CHANGE.
Since December 31, 2004, no Material Adverse Change shall have occurred and
be continuing.
SECTION 6.9 ENGLISH LANGUAGE.
All Charter Documents and other documents, notices, certificates and
resolutions required to be delivered pursuant to this Agreement shall, if not in
English, and if the Administrative Agent so requests, be accompanied by an
English translation (which, if the Administrative Agent so requests, shall be a
certified translation prepared by an Brazilian certified translator) which the
Administrative Agent shall have the right to rely upon, and shall be fully
protected for acting or refraining from acting upon any such translation, for
all purposes hereof. All costs of translation shall be payable by the Borrower.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to each Agent and each Lender
that the statements contained in this Section 7 are true, correct and complete
as of the date hereof.
SECTION 7.1 CORPORATE STATUS.
(a) Each of the Borrower and its Subsidiaries and IMPSAT (i) is a sociedade
limitada or corporation, as the case may be, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
and (ii) has the power and authority to own its property and assets, to carry on
its business in each jurisdiction in which it operates, and to incur
Indebtedness and to create or suffer to exist Liens on its properties created
under the Security Documents. IMPSAT is the holder, directly or indirectly, of
at least ninety nine point nine hundred and twenty five percent (99.925%) of the
Capital Stock of the Borrower. Set forth on Schedule 7.1(a) hereto is a complete
list of the Subsidiaries of IMPSAT and the Borrower, the jurisdiction of
organization of each such Subsidiary and the amount and percentage of Capital
Stock of each such Subsidiary owned by IMPSAT and the Borrower.
(b) Except as set forth on Schedule 7.1(b) hereto, neither the Borrower,
its Subsidiaries or IMPSAT conducts business under any assumed names or trade
names, or has conducted business under any other names, or any assumed names or
trade names at any time prior to the date hereof.
SECTION 7.2 CORPORATE POWER.
(a) AUTHORITY. Each of the Borrower and IMPSAT and their respective
Subsidiaries has full power and authority to enter into the Financing
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Documents to which it is a party or, when executed and delivered, it will become
a party, all of which have been duly authorized by all proper and necessary
corporate action, and has duly executed and delivered each such Financing
Document which has been entered into as of the date hereof.
(b) VALIDITY AND ENFORCEABILITY. Assuming due execution and delivery
thereof by the other parties thereto, each such Financing Document constitutes,
or when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower, IMPSAT and their respective Subsidiaries, as the
case may be, enforceable against them in accordance with its terms, except, in
each case, to the extent such enforceability may be restricted by bankruptcy,
insolvency or similar Applicable Laws affecting the enforcement of creditors'
rights generally or by general principles of equity.
SECTION 7.3 GOVERNMENTAL APPROVALS.
(a) FINANCING DOCUMENTS. Except for the Registry of Financial Operations
(Registro de Operacoes Financeiras - ROF) and the Schedule of Payments (Esquema
de Pagamentos) to be issued by the Central Bank in connection with the prior
approval for each payment in Dollars to be made hereunder, all Governmental
Approvals that are required by the Borrower, its Subsidiaries or IMPSAT in
connection with the execution, delivery or performance by, or enforcement
against, the Borrower, its Subsidiaries and IMPSAT of this Agreement and all
other Financing Documents to which the Borrower, its Subsidiaries or IMPSAT is a
party or, when executed and delivered, will become a party, have been obtained,
are in full force and effect, and the Borrower, its Subsidiaries and IMPSAT are
in compliance in all material respects with such Governmental Approvals.
(b) OPERATIONS. All Governmental Approvals that are required by the
Borrower, its Subsidiaries or IMPSAT in connection with the business, operations
and activities of the Borrower and its Subsidiaries as now conducted or as
contemplated by the Borrower Business Plan have been obtained.
(c) NO PROCEEDINGS. There is no proceeding pending or, to the knowledge of
the Borrower or any of its Subsidiaries, threatened against the Borrower, its
Subsidiaries or IMPSAT that seeks to rescind, terminate, suspend, modify or
otherwise affect any Governmental Approvals, in each case that would have a
Material Adverse Effect.
SECTION 7.4 NO VIOLATION.
Neither the execution, delivery or performance by the Borrower, IMPSAT or
any of their respective Subsidiaries of any Financing Agreement to which it is a
party, nor the use by the Borrower of the proceeds of the loans made under the
Original Financing Agreement as restructured by the Existing Financing Agreement
and this Agreement:
(a) will violate or conflict with any term or condition of any License or
other Governmental Approvals obtained by the Borrower or any of its
Subsidiaries;
(b) will contravene any material provision of any Applicable Law binding on
the Borrower, IMPSAT or any of their respective Subsidiaries or any of their
assets;
(c) will conflict with, or be inconsistent with, or result in any breach
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (other than Permitted Liens)
upon any of the properties or assets of the Borrower, IMPSAT or any of their
respective Subsidiaries pursuant to the terms of any
Page 36
indenture, mortgage, credit agreement, loan agreement or any other agreement,
contract or instrument to which the Borrower, IMPSAT or any such Subsidiary is a
party or by which each such Person or any of its respective properties or assets
are bound or to which they may be subject; or
(d) will violate any provision of the Charter Documents of the Borrower,
IMPSAT or any of their respective Subsidiaries;
except to the extent that any of the violations contained in clauses (c) and (d)
above could not reasonably be expected to have a Material Adverse Effect.
SECTION 7.5 PROCEEDINGS.
(a) NO PROCEEDINGS. Except as set forth in Schedule 7.5 there is no
litigation, investigation or proceeding pending or, to the knowledge of the
Borrower or IMPSAT after reasonable inquiry, threatened before any arbitrator or
Governmental Authority against the Borrower, IMPSAT or any of their respective
Subsidiaries, nor, to the knowledge of the Borrower after reasonable inquiry,
any circumstances or conditions that might give rise to any such proceedings,
which could reasonably be expected to have a Material Adverse Effect.
(b) NO ORDERS. No injunction, writ, temporary restraining order or any
order of any nature has been issued by any court or Governmental Authority (1)
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any other Financing Documents, or (2) which could reasonably be
expected to have a Material Adverse Effect.
SECTION 7.6 TAXES.
The Borrower, IMPSAT and their respective Subsidiaries have (a) timely
filed all required tax returns, reports and declarations; (b) paid all
applicable taxes and governmental assessments and charges shown thereon or
determined to be due and payable except for such taxes, if any, as are being
contested in good faith by appropriate proceedings diligently conducted and as
to which (i) adequate cash reserves have been established in accordance with
U.S. or Brazilian GAAP, as applicable, on the books of the Borrower, IMPSAT and
such Subsidiaries, as the case may be, or (ii) the aggregate amount of such
unpaid taxes, assessments and charges is less than one hundred thousand Dollars
(US$100,000) (and as to which it or its property is not yet subject to
foreclosure, seizure, arrest, sale, collection, levy or loss on account
thereof); and (c) set aside on its books provisions reasonably adequate for
payment of all taxes for all elapsed periods.
SECTION 7.7 FINANCIAL STATEMENTS.
(a) BALANCE SHEETS, ETC. The consolidated balance sheet of the Borrower and
its Subsidiaries and the consolidated balance sheet of IMPSAT and its
Subsidiaries as of December 31, 2004, and the related consolidated statements of
income or operations, retained earnings and changes in financial position (or of
cash flow, as the case may be) of each of the Borrower and IMPSAT for the period
then ended, were correct as of their respective dates and fairly presented the
financial condition of the Borrower or IMPSAT and their respective Subsidiaries
as of such dates, as the case may be; and results of operations for the period
covered thereby. The financial statements to be delivered pursuant to Section
8.1 hereof shall be correct and shall fairly present in all such cases the
financial condition of the Borrower or IMPSAT, as the case may be, as of the
dates thereof and the results of its operations for the periods ended on said
dates, and all are or shall be prepared in accordance with U.S. GAAP.
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(b) NO LIABILITIES. Neither the Borrower nor IMPSAT had or will have on the
dates of the financial statements referred to in Section 7.7(a) any material
contingent liabilities, liabilities for taxes, or material losses from any
commitments, except as specifically referred to, or reflected, or provided for,
in said financial statements as at said dates.
SECTION 7.8 THE PROJECT.
(a) BUSINESS PLANS. The Business Plans accurately state in all material
respects all costs and expenses incurred and to be incurred in connection with
the business of the Borrower and IMPSAT as applicable. All projections and
budgets furnished or to be furnished to the Lenders by or on behalf of the
Borrower and IMPSAT and the summaries of significant assumptions related
thereto, including (without limitation) all information in the Business Plans:
(1) have been and will be prepared with due care; (2) fairly present, and will
fairly present, in all material respects, the expectations of the Borrower and
IMPSAT as to the matters covered thereby, and (3) are based on, and will be
based on, reasonable assumptions as to all factual and legal matters relative to
the estimates therein.
(b) MATERIAL INFORMATION. There are no statements or conclusions in any of
the projections or budgets furnished to the Administrative Agent or the Lenders
which are based upon or include information known to the Borrower or IMPSAT to
be misleading or which fail to take into account material information regarding
the matters reported therein.
SECTION 7.9 ENVIRONMENTAL MATTERS.
Each of the Borrower, its Subsidiaries and IMPSAT has duly complied with,
and its business, operations, assets, equipment, property, leaseholds, and other
facilities are in compliance with, all applicable Environmental Laws. None of
the Borrower, its Subsidiaries or IMPSAT has, nor to the knowledge of the
Borrower or IMPSAT after reasonable inquiry, has any other Person, released,
discharged, generated, manufactured, produced, stored, or disposed of in, on,
under, or about any sites of the Borrower, or transported thereto or therefrom,
any hazardous material or Hazardous Substance that could reasonably be expected
to subject the Lenders to any liability or the Borrower, its Subsidiaries or
IMPSAT to any liability that could have a Material Adverse Effect. There is no
proceeding pending against the Borrower, its Subsidiaries or IMPSAT, and to the
best knowledge of the Borrower or IMPSAT after reasonable inquiry, no
investigation or inquiry by any Governmental Authority is threatened or
contemplated, with respect to the presence or release of hazardous materials or
Hazardous Substances in, on, from, or to the sites of the Borrower.
SECTION 7.10 TRANSACTIONS WITH AFFILIATES.
Except as disclosed in Schedule 7.10, none of the Borrower, IMPSAT or any
of their respective Subsidiaries are parties to any contract, agreement or
arrangement (whether or not in the ordinary course of business) with the
Borrower, IMPSAT, another Subsidiary of the Borrower or IMPSAT or any of their
respective Affiliates that is not on an arms-length basis.
SECTION 7.11 INDEBTEDNESS.
As of the date hereof, none of the Borrower, IMPSAT or their respective
Subsidiaries is a party to or bound by any note or agreement with respect to
Indebtedness other than the Indebtedness arising under this Agreement and the
Indebtedness set forth in Schedule 7.11, which is a complete and accurate list
of all Indebtedness of the Borrower, IMPSAT and their respective Subsidiaries,
showing as of such date the outstanding principal amount thereof and, except as
set forth on Schedule 7.11, with
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respect to which none of the Borrower, IMPSAT or their respective Subsidiaries
have any ability to borrow or reborrow any additional amounts thereunder.
SECTION 7.12 PROPERTIES.
(a) TITLE. The Borrower or a Subsidiary of the Borrower (1) has good record
and marketable title in fee simple (or the Brazilian equivalent thereof) or
valid leasehold interests in or rights of use with respect to, all real property
used in the ordinary conduct of the Telecommunications Business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to interfere with the Borrower's ability to conduct such business as
currently or expected or projected to be conducted or to utilize such properties
for their intended purposes; and (2) is the sole owner of the Collateral. The
assets of the Borrower, its Subsidiaries and IMPSAT reflected in the most recent
balance sheet referred to in Section 7.7 are not subject to any Liens other than
Permitted Liens (including those described on Schedule 7.12(a)), and each has
good and legal title thereto. The Borrower and the Subsidiaries have not created
and are not contractually obligated to create any Lien, other than Permitted
Liens or Liens to be created or permitted to be created under the Financing
Documents to which they are a party, on or with respect to any of their assets,
rights or revenues.
(b) CONDITION. All assets material to the Telecommunications Business are
in good repair, working order and condition (ordinary wear and tear excepted).
(c) BANK ACCOUNTS. Each of IMPSAT, the Borrower and its Subsidiaries has
full right and title to each of its bank or other financial accounts (including
any disbursement, deposit, operating, payroll, securities and commodity
accounts), and each such bank or other financial account is not subject to any
Lien other than (1) banker's liens, rights of setoff or similar rights as to
such deposit accounts or other funds maintained with such creditor depository
institution or (2) Permitted Liens.
SECTION 7.13 INTELLECTUAL PROPERTY.
The Borrower or IMPSAT owns all of the patents, trademarks, permits,
service marks, trade names, copyrights, franchises and formulas, or rights with
respect to the foregoing, used in the marketing of any of the Borrower's and its
Subsidiaries' services (a list of which is attached as Schedule 7.13, as updated
from time to time by notice to the Administrative Agent) and the Borrower owns
or has obtained assignments of all such and other rights of whatever nature
necessary for the present conduct of the Telecommunications Business or as
presently contemplated to be conducted, without any known conflict with the
rights of others other than as set forth in Schedule 7.13 and except as could
not reasonably be expected to have a Material Adverse Effect.
SECTION 7.14 BOOKS AND RECORDS.
Each of IMPSAT, the Borrower and its Subsidiaries maintains its books and
records (including appropriate copies, backups and archives of such books and
records) in accordance with standard industry practice, Applicable Law and U.S.
GAAP or Brazilian GAAP, as applicable.
SECTION 7.15 THE LICENSES.
Schedule 7.15 contains a true and complete list of all Licenses owned by or
granted to the Borrower or its Subsidiaries. Each License is legally valid, in
full force and effect, duly registered, not subject to any administrative review
or appeal, or subject to any proceeding the outcome
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of which could result in the revocation, in whole or in part, for any reason not
within the control of the Borrower or IMPSAT. The Borrower has paid when due all
amounts required to be paid and otherwise has complied with all conditions the
compliance with which is required in order to preserve its rights under the
Licenses. No Licenses other than those listed in Schedule 7.15 are required in
order for the Borrower and its Subsidiaries to install, exploit and operate the
Network and to engage in the Telecommunications Business as it is currently
conducted by them, and as contemplated by the Borrower Business Plan.
SECTION 7.16 NO MATERIAL ADVERSE CHANGE.
There has been no Material Adverse Change since December 31, 2004.
SECTION 7.17 INSURANCE.
The insurance policies and coverage required by Section 8.1(d) are in full
force and effect, all premiums and other payments required thereunder have been
timely paid and such policies and coverage are otherwise not subject to
cancellation by the insurer during the respective terms thereof, except for
nonpayment of premiums, in which case at least fifteen (15) days prior written
notice of termination must be given to the Administrative Agent.
SECTION 7.18 COLLATERAL.
All actions necessary for the establishment and perfection of the Secured
Parties' Lien on the Collateral, including any required consents,
acknowledgments, filings, registration, notarization or recordation thereof, and
the payment of all related fees, taxes and expenses have been completed, and the
Secured Parties have an effective, valid, legally binding and enforceable Lien
on the Collateral, which Lien is superior and prior to the Liens of all third
parties (other than the Permitted Liens under Subsections (e) and (m) of the
definition of Permitted Liens).
SECTION 7.19 INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY.
None of the Borrower, IMPSAT or any of their respective Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or, directly or indirectly, "controlled" by or acting on behalf of
any Person that is an "investment company", within the meaning of said Act, or a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
SECTION 7.20 IMMUNITY.
The execution, delivery, and performance of the Financing Documents
constitute private and commercial acts rather than governmental or public acts.
Under Applicable Law, neither the Borrower, IMPSAT, nor any of their respective
Subsidiaries nor any of their respective revenues or properties has any right of
immunity from suit, court jurisdiction, attachment prior to judgment, attachment
in aid of execution of a judgment, execution of a judgment or from set-off,
Liens, counterclaim or any other legal process or remedy with respect to its
obligations under the Financing Documents.
SECTION 7.21 MARGIN STOCK; REGULATION U.
None of the Borrower, IMPSAT or any of their respective Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock. The
making of the Term Loans and the use of the proceeds
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thereof has not and will not violate Regulation U or X of the Board of Governors
of the Federal Reserve System.
SECTION 7.22 SOLVENCY.
After giving effect to the Debt Restructuring, each of the Borrower and
IMPSAT is Solvent.
SECTION 7.23 NO EVENT OF DEFAULT; COMPLIANCE WITH MATERIAL AGREEMENTS.
After giving effect to the transactions contemplated by this Agreement, no
event has occurred and is continuing and no condition exists which constitutes a
Default or an Event of Default. After giving effect to the transactions
contemplated by this Agreement, neither the Borrower nor IMPSAT is in violation
of any term of any Material Agreement to which it is respectively a party or by
which it or its respective properties are bound, except for such violations that
in the aggregate would not have a Material Adverse Effect.
SECTION 7.24 FEES OR COMPENSATION.
Except as set forth on Schedule 7.24, no fee or other compensation has been
paid or will be payable by the Borrower or IMPSAT in connection with the
transactions contemplated by this Agreement or the Argentina Financing
Agreement.
SECTION 7.25 TRUE AND COMPLETE DISCLOSURE.
All information heretofore or hereafter furnished by or on behalf of the
Borrower or IMPSAT or any of their respective Subsidiaries to the Agents or the
Lenders, and all representations and warranties made herein, are true and
correct in all material respects, and do not contain any material misstatement
of fact or omit to state a material fact necessary to make the statements
contained herein and therein not misleading at such time.
SECTION 8. COVENANTS.
SECTION 8.1 AFFIRMATIVE COVENANTS.
Until payment in full of the Obligations and so long as this Agreement
remains in effect, the Borrower shall, and shall cause its Subsidiaries to,
comply with each of the following covenants and agreements:
(a) ANNUAL AND QUARTERLY REPORTING REQUIREMENTS. The Borrower shall
deliver, or cause to be delivered, to the Administrative Agent:
(1) as to the Borrower:
(i) as soon as practicable, but in no event later than one
hundred twenty (120) days (with respect to financial statements prepared in
accordance with Brazilian GAAP) or ninety (90) days (with respect to financial
statements prepared in accordance with US GAAP) after the end of each fiscal
year of the Borrower, a copy of the consolidated annual financial statements of
the Borrower and its Subsidiaries (including its consolidated balance sheet as
at the close of such calendar year, consolidated statements of income, retained
earnings and changes in financial position or of cash flow, as the case may be,
for such fiscal year with related notes specifying significant accounting
practices and their impact on such financial statements and with related
schedules), and accompanied by an opinion thereon of the Independent Auditor,
which opinion shall state, subject to no qualifications, that said financial
statements fairly present the financial condition and results of operations of
the
Page 41
Borrower and its Subsidiaries, as at the end of, and for, such fiscal year and
that said financial statements have been prepared in accordance with Brazilian
GAAP or U.S. GAAP. Such annual financial statements: (A) shall be in the English
language; (B) in the case that such financial statements have been prepared in
accordance with Brazilian GAAP, shall be accompanied by a reconciliation to U.S.
GAAP of the Borrower's net income and shareholders' equity and convenience
translations to Dollars; and (C) shall be accompanied by a statement, for each
of the calendar quarters of the fiscal year, of each new entry of deferred
Revenues and the current sum of all deferred Revenues for the past four
consecutive calendar quarters. From time to time, at the request of the
Administrative Agent, the Borrower shall deliver to the Administrative Agent
such additional financial infornlation as the Administrative Agent may
reasonably request; and
(ii) as soon as practicable, but in any event no later than
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Borrower, the unaudited consolidated financial
statements of the Borrower and its Subsidiaries (including its consolidated
balance sheet as at the close of such quarter, consolidated statements of
income, retained earnings and changes in financial position or of cash flow, as
the case may be, for such quarter and with related schedules) for such period
and for the period from the beginning of the respective fiscal year to the end
of such quarterly period and the related balance sheets at the end of such
period, setting forth in each case in comparative form the corresponding figures
for the corresponding period in the preceding fiscal year accompanied by a
certificate of the Chief Financial Officer of the Borrower, which certificate
shall state that such financial statements fairly present the financial
condition and results of operations, as the case may be, of the Borrower in
accordance with Brazilian GAAP or U.S. GAAP, as at the end of, and for, such
period (subject to normal year end audit adjustments), and, in the case that
such financial statements have been prepared in accordance with Brazilian GAAP,
by a reconciliation to U.S. GAAP of the Borrower's net income and shareholders'
equity and convenience translations to Dollars. Such quarterly financial
statements shall be accompanied by a statement, for each of the past four
consecutive calendar quarters, of each new entry of deferred Revenues and the
current sum of all deferred Revenues for the past four consecutive calendar
quarters.
(2) as to IMPSAT:
(i) as soon as practicable, but in any event no later than ninety
(90) days after the end of each fiscal year of IMPSAT, a copy of the annual
consolidated and consolidating financial statements of IMPSAT and its
Subsidiaries (including its consolidated and consolidating balance sheet as at
the close of such calendar year, consolidated and consolidating statements of
income, retained earnings and changes in financial position or of cash flow, as
the case may be, for such fiscal year with related notes specifying significant
accounting practices and their impact on such financial statements and with
related schedules), and accompanied by an opinion thereon of the Independent
Auditor, which opinion shall state, subject to no qualifications, that said
financial statements fairly present the financial condition and results of
operations of IMPSAT and its Subsidiaries, as at the end of, and for, such
fiscal year and that said financial statements have been prepared in accordance
with U.S. GAAP. Such annual financial statements shall be in the English
language. From time to time, at the request of the Administrative Agent, IMPSAT
shall deliver to the Administrative Agent such additional financial information
as the Administrative Agent may reasonably request; and
(ii) as soon as practicable, but in any event no later than
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of IMPSAT, the consolidated unaudited financial
Page 42
statements of IMPSAT and its Subsidiaries (including its consolidated balance
sheet as at the close of such quarter, consolidated statements of income,
retained earnings and changes in financial position or of cash flow, as the case
may be, for such quarter and with related schedules) for such period and for the
period from the beginning of the respective fiscal year to the end of such
quarterly period and the related balance sheets at the end of such period,
setting forth in each case in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year accompanied by a certificate
of the Chief Financial Officer of IMPSAT which certificate shall state that such
financial statements fairly present the financial condition and results of
operations, as the case may be, of IMPSAT and its Subsidiaries in accordance
with U.S. GAAP, as at the end of, and for, such period (subject to normal year
end audit adjustments).
(3) Simultaneously with the delivery of the Financial Statements
referred to in clauses (1) and (2) above, a statement certified by the chief or
principal financial or accounting officer of the Borrower or IMPSAT, as the case
may be:
(i) setting forth in reasonable detail computations evidencing
compliance with the covenants set forth in Section 8.3 herein;
(ii) stating that as of the date thereof no Default or Event of
Default has occurred and is continuing or exists, or if a Default or Event of
Default has occurred and is continuing or exists, specifying in detail the
nature and period of existence thereof and any action with respect thereto taken
or contemplated to be taken by the Borrower or IMPSAT as applicable; and
(iii) stating that the signer has personally reviewed this
Agreement and that such certificate is based on an examination made by or under
the direct supervision of the signer sufficient to assure that such certificate
is accurate.
(4) Within fifteen days (15) days after the delivery of the Financial
Statements reference to in clause (1)(i) above, a report that includes
calculations showing in reasonable detail the Borrower's Excess Cash Flow for
such fiscal year, if any, certified as correct by the Borrower's chief or
principal accounting or financial officer.
(b) ADDITIONAL REPORTING REQUIREMENTS.
(1) Promptly upon the completion thereof and in no event later than
thirty (30) days thereafter, the Borrower shall provide the Administrative Agent
with a copy of any material amendment, addition or revised version of each of
the Business Plans.
(2) Promptly upon the execution and delivery thereof, the Borrower
shall provide the Administrative Agent with copies of all agreements regarding
leases and similar transactions contemplated by Section 8.2(m); provided,
however, that the Administrative Agent shall maintain the confidentiality of the
parties, terms and conditions of such agreements subject to the exceptions
contained in the first paragraph of Section 16.13.
(3) The Borrower shall, and shall cause IMPSAT to, provide to the
Administrative Agent and the Lenders copies of any proposed public announcement
referencing the Administrative Agent or any of the Lenders by name with respect
to any financial accommodation proposed or granted by the Administrative Agent
or such Lender before such announcement is made to the public. Subject to
Applicable Law, such announcement shall be subject to the prior approval of the
Administrative Agent or such Lender, such approval not to be unreasonably
withheld. To the extent that Applicable Law
Page 43
requires such public announcement to be filed with any Governmental Authority,
the Borrower shall, and shall cause IMPSAT to, provide copies of such public
announcement to the Administrative Agent and the Lenders at least two (2)
Business Days prior to filing such public announcement with such Governmental
Authority.
(4) If requested by the Administrative Agent, the Borrower shall
deliver or cause to be delivered to the Administrative Agent and the Lenders
within forty-five (45) days after the beginning of each fiscal year, updated
Borrower and IMPSAT Business Plans, quarterly projections of its and IMPSAT's
anticipated income, expenses, cash flow, assets and liabilities through the
Maturity Date prepared in good faith on assumptions believed by Borrower and
IMPSAT to be reasonable and in form and substance satisfactory to the
Administrative Agent.
(5) The Borrower shall deliver to the Administrative Agent and the
Lenders within forty-five (45) days after the beginning of each fiscal year, an
updated Borrower Annual Operating Budget including monthly projections of its
anticipated income, expenses, cash flow, assets and liabilities prepared in good
faith on assumptions believed by Borrower to be reasonable and in form and
substance satisfactory to the Administrative Agent.
(6) The Borrower shall, and shall cause IMPSAT to, provide prior
written notice of any board meeting of the Borrower or IMPSAT as applicable, as
well as copies of any materials distributed to the board members of each such
Person to the Administrative Agent.
(7) From time to time, the Borrower shall deliver to the
Administrative Agent such other information regarding the business of the
Borrower, its Subsidiaries, IMPSAT, the Network and the Telecommunications
Business as the Administrative Agent or any Lender may reasonably request.
(c) NOTICES. The Borrower shall promptly, but in no event later than three
(3) Business Days after (unless otherwise indicated below) the Borrower obtains
knowledge of the occurrence of the following events, give written notice to the
Administrative Agent of the occurrence of any of the following:
(1) a Default or an Event of Default;
(2) except to the extent that it could not reasonably be expected to
have a Material Adverse Effect, any (i) (A) commencement or Material Adverse
Change in respect of any litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority; or (B) any material litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority which, to the knowledge of the Borrower is threatened by or against
the Borrower, IMPSAT, any of their respective Subsidiaries, or against any of
their properties or revenues which purport to affect or pertain to this
Agreement or any of the transactions contemplated hereby, or which if determined
adversely, could reasonably be expected to have a Material Adverse Effect; (ii)
issuance by any Governmental Authority of an injunction, writ, temporary
restraining order or any order of any nature purporting to enjoin or restrain
the execution, delivery or performance of this Agreement or directing that the
transactions contemplated hereunder or thereunder not be consummated as herein
or therein provided; (iii) issuance by any Governmental Authority of any
injunction, order, decision or other restraint purporting to enjoin, restrain,
prohibit (or which would have the effect of prohibiting) the making of the Term
Loans, or invalidate (or which would have the effect of invalidating) any
provision of this Agreement, including provisions regarding the granting of
Liens on the Collateral or the priority of such Liens; or (iv) any other event,
circumstance or development that could be
Page 44
reasonably expected to cause or result in a Material Adverse Change.
(3) thirty (30) days prior to the movement of any Equipment or any
other Collateral outside of Brazil having, in the aggregate, at any time, a
replacement value in excess of five hundred thousand Dollars (US$500,000);
(4) thirty (30) days prior thereto in writing, the movement of the
principal place of business of the Borrower or IMPSAT to any location other than
as set forth in the Security Documents; and
(5) any material change in the business of the Borrower, any of its
Subsidiaries or IMPSAT.
The Administrative Agent and the Collateral Agent shall have the right to
request, with respect to any such notice, a statement of an Authorized Officer
of the Borrower setting forth reasonable details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
(d) INSURANCE. The Borrower shall:
(1) maintain or cause to be maintained in full force and effect at all
times on and after the date hereof and continuing until the Maturity Date, with
responsible insurance companies having a Best Insurance Reports rating of A or
better and a financial size category of "10" or higher (or other companies
reasonably acceptable to the Lenders) and in an amount not less than the amount
of all the Term Loans, and in any event, not less than the full replacement cost
of all Collateral:
(i) "all risk" property insurance, including earthquake,
windstorm and flood, with a limit of loss per occurrence acceptable to the
Lenders in their respective reasonable discretion from time to time;
(ii) equipment and machinery breakdown insurance covering
breakdown and resulting damage including rotating equipment such as generators
and electrical equipment (including transformers, switch gear and electrical
apparatus) for their full replacement value;
(iii) business interruption insurance covering risk of loss as a
result of the cessation or material interruption of the Telecommunications
Business resulting from an insured loss under the Borrower's property policy for
an indemnity period of six (6) months or any part thereof, the initial amount of
such insurance to provide for the payment during the six (6) months commencing
from the date hereof of not less than the gross revenues to be earned by the
Borrower for such six (6) month period, calculated based on the Business Plans
and to be adjusted by the Borrower semiannually from the date hereof thereafter,
less any non-continuing costs and expenses during the relevant indemnity period;
provided however, in no event shall the Borrower be required to obtain insurance
coverage greater than is customary for similarly situated businesses in the
Borrower's industry; and
(iv) third party liability insurance, including bodily injury and
property damage, with a limit of no less than two million Dollars (US$2,000,000)
per occurrence.
(2) within sixty (60) days after receipt by the Borrower of a written
request from the Administrative Agent, accompanied by a pro forma political risk
insurance policy which contains terms and conditions commercially reasonable
under then current market conditions, and the obtention of which will not
increase the "all-in" financing cost of the Term Loans to the Borrower, obtain
such a policy and maintain such
Page 45
political risk insurance in full force and effect until the Maturity Date.
(3) (i) deliver to the Administrative Agent not more than seven (7)
days after each policy anniversary, a copy of all insurance policies as in
effect on such date, (ii) certify that all premiums and other payments required
in respect of such insurance have been timely paid and that such insurance is
otherwise not subject to cancellation, modification or change in coverage by the
insurer during its term, except for nonpayment of premiums, in which case at
least fifteen (15) days prior written notice of termination must be given to the
Agents, and (iii) upon request, promptly furnish the Agents with evidence of
such insurance relating to the Collateral and all information relating to the
replacement cost and location of the same.
In each case, the insurance policies shall designate the Collateral Agent
as additional insured in respect of the liability insurance related to the
Equipment and the sole loss payee in respect of the property insurance related
to the Equipment. All amounts payable to the Collateral Agent according to the
foregoing under property insurance policies shall be paid to an account of the
Collateral Agent (i) upon the occurrence of an Event of Default; (ii) if the
insured loss materially impairs the Borrower's ongoing operations; or (iii) as
set forth in Section 3.2(a)(2) hereof. In such event, funds received by the
Collateral Agent under such property insurance policies shall be made available
to the Borrower for application to the costs of repairing, restoring, rebuilding
or replacing the portion of the Collateral with respect to which such proceeds
were obtained; provided that, subject to the provisions of Sections 3.2 and 9.1
hereof, such repaired, restored, rebuilt or replaced asset shall be or become a
part of the Collateral; and provided further that no such funds received by the
Collateral Agent shall be made available to the Borrower if a prepayment of the
Term Loans has to be made in accordance with Section 3.2(a)(2) hereof. The
Collateral Agent shall at the request of the Required Lenders pay any insurance
premiums directly, on Borrower's behalf, and Borrower shall reimburse Lenders
through the Collateral Agent promptly for any such payment made by Lenders,
provided, however, the Collateral Agent shall have no obligation to pay any such
insurance premiums.
The Administrative Agent and the Lenders reserve the right at any time upon
any material change in the risk profile of the Borrower or its Subsidiaries
(including any change in the business conducted by any such Person or any
Applicable Law affecting the potential liability of such Person) to require
additional forms and limits of insurance to, in the Administrative Agent's and
the Lenders' reasonable opinion, adequately protect both the Collateral Agent's
and the Lenders' interests in all or any portion of the Collateral and to ensure
that each of the Borrower and its Subsidiaries are protected by insurance in
amounts and coverage customary for its industry. If requested by the
Administrative Agent, which request shall not be made more frequently than once
in any calendar year, each of the Borrower and its Subsidiaries shall deliver to
the Administrative Agent from time to time a report of a reputable insurance
broker, satisfactory to the Administrative Agent, with respect to its insurance
polices.
(e) COMPLIANCE WITH APPLICABLE LAW AND CONTRACTS. The Borrower shall, and
shall cause its Subsidiaries, to comply in all material respects with:
(1) the requirements of all Applicable Law, including obtaining and
maintaining all Governmental Approvals. If any authorization, consent, approval,
permit or license from any Governmental Authority shall become necessary or
required in order to fulfill the obligations hereunder or under any of the other
Financing Documents, the Borrower shall immediately take or cause to be taken
all reasonable steps to obtain such authorization, consent, approval, permit or
license and furnish the Administrative Agent evidence thereof;
Page 46
(2) the provisions of its respective Charter Documents; and
(3) all Material Agreements to which it respectively is a party.
(f) OPERATION OF THE NETWORK. The Borrower shall operate and maintain the
Network, and retain and maintain the staff sufficient to operate and maintain
the Network, in accordance with the Business Plans, and otherwise comply in all
material respects with, and satisfy the requirements of, all Licenses and
Applicable Laws.
(g) TAXES, ETC. The Borrower shall pay, or arrange for payment, prior to
the date when due of all (1) taxes imposed on the Borrower and its Subsidiaries,
and (2) present and future claims, levies, or liabilities (including, without
limitation, claims for labor, service, materials and supplies) for sums which
have become due and payable and which, if unpaid, might by law become a Lien or
otherwise have a Material Adverse Effect, except for any such tax, claim, levy
or liability the payment of which is being contested in good faith by proper
proceedings diligently conducted for which adequate cash reserves determined in
accordance with Brazilian GAAP have been established and are being maintained,
(and as to which it or its property is not yet subject to foreclosure, seizure,
arrest, sale, collection, levy or loss on account thereof). The Borrower shall
make timely and accurate filings of all tax returns and material governmental
reports required to be filed or submitted under any Applicable Laws, and shall
otherwise take such actions as are necessary to comply with Applicable Laws
relating to taxes.
(h) MAINTENANCE OF BOOKS AND RECORDS; ACCESS. The Borrower shall, and shall
cause each of its Subsidiaries to, keep adequate books and records of account,
in which complete and accurate entries will be made in accordance with Brazilian
GAAP, reflecting the financial condition of the Borrower and its Subsidiaries
and shall permit the Administrative Agent, the Lenders, and the Participant, and
any of their respective officers, employees and agents, at all reasonable times
and with prior notice to the Borrower, (i) to inspect, audit and make extracts
of the books and records of such Person; (ii) to inspect the properties and
facilities of such Person; (iii) to discuss such books and records with the
representatives, employees (including officers) and accountants of such Person
and with the Independent Auditor; and (iv) to inspect, review, evaluate and make
test verifications and counts of such Person's accounts, the Equipment, other
Collateral and assets; in each case at the Lender's or Participant's expense,
unless a Default or an Event of Default exists.
The Borrower shall promptly supply to the Administrative Agent copies of
any reports on its or its Subsidiaries' business and activities which are
publicly distributed as well as any other reports thereon and reports made to
any Governmental Authority as the Administrative Agent may from time to time
reasonably request.
The Borrower shall maintain an adequate billing, software and accounting
system, including books, accounts and records, and shall prepare all financial
statements required hereunder in accordance with Brazilian GAAP, consistently
applied, and in compliance with all Applicable Laws.
If a Default or Event of Default shall have occurred and be continuing each
of the Borrower and its Subsidiaries shall make available to the Administrative
Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records which the Administrative Agent may
reasonably request and deliver any document or instrument necessary for the
Administrative Agent, as it may from time to time reasonably request, to obtain
records from any service bureau or other
Page 47
Person which maintains records for the Borrower or its Subsidiaries.
(i) RANK OF DEBT. The Borrower shall take any and all action necessary to
ensure that the Term Loans at all times continue to be the direct and
unconditional obligation of the Borrower and rank at least pari passu (in
respect of priority of payment, security or otherwise) to all other secured or
unsecured Indebtedness of the Borrower, except that such ranking shall not apply
to the rights of secured Indebtedness over collateral subject to Permitted
Liens.
(j) PAYMENT OF OBLIGATIONS. The Borrower shall, and shall cause each of its
Subsidiaries to, pay or discharge
(1) on or prior to the date when due, all lawful claims which result
in the creation of a Lien upon any of such Person's property or assets;
(2) all other current liabilities so that none is overdue more than
sixty (60) days.
Notwithstanding the foregoing, the Borrower and its Subsidiaries shall not
be required to pay or discharge the obligations set forth in clauses (1) and (2)
above so long as: (i) the validity or amount thereof is being contested in good
faith by appropriate proceedings diligently conducted, (ii) adequate cash
reserves have been established with respect thereto in accordance with Brazilian
GAAP, (iii) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect and (iv)
proceedings to foreclose any Lien which may have attached as security for such
obligation have not commenced.
(k) ENVIRONMENTAL MATTERS. The Borrower shall promptly give to the
Administrative Agent notice in writing if the Borrower or any Subsidiary thereof
(1) receives any complaint, order, citation, notice of inquiry, proceeding,
investigation or action or other written communication from any Person with
respect to, or (2) otherwise acquires actual knowledge of (i) the existence or
alleged existence of any Environmental Liability or any actual or alleged
violation of any applicable Environmental Law arising at, upon, under, within or
in connection with any property now or previously owned, leased, operated or
used by the Borrower, IMPSAT or any of their respective past or present
Subsidiaries, or any part thereof, or due to the operations or activities of any
such Person, on or in connection with such property or any part thereof
(including receipt by the Borrower or its Affiliates of any notice of the
happening of any event involving the release of a reportable quantity of any
Hazardous Substance under any applicable Environmental Law or cleanup of any
Hazardous Substance), (ii) any release of any Hazardous Substance on such
property or any part thereof in a quantity that is reportable under any
applicable Environmental Law, (iii) the commencement of any cleanup pursuant to
or in accordance with any applicable Environmental Law of any Hazardous
Substances on or about such property or any part thereof, and (iv) any pending
or threatened proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law. The Borrower shall
obtain (at its sole cost and expense) and deliver to the Administrative Agent on
behalf of the Lenders such environmental site assessments, reports or studies
that the Administrative Agent shall reasonably require from time to time.
(l) LICENSES. The Borrower shall, and shall cause its Subsidiaries (1) to
maintain the Licenses in full force and effect, at all times on and after the
date hereof; (2) upon receipt of any notification from any Governmental
Authority that the Borrower is in breach of any License, or that any License is
subject of an inquiry, proceeding or investigation: (i) promptly notify the
Administrative Agent thereof, providing copies of all relevant documents,
correspondence and other information; and (ii) take
Page 48
prompt and adequate remedial action to remedy such breach, which action shall be
taken within the cure period, if any, set out in such notification and (3)
provide copies of all material notices and correspondence received from, or sent
to, any Governmental Authority relating to the Borrower, lMPSAT, the Licenses or
the Network.
(m) REGULATORY FILINGS. The Borrower shall, and shall cause its
Subsidiaries to, deliver to the Administrative Agent, promptly after the sending
or filing thereof, copies of all non-confidential reports filed by the Borrower,
any of its Subsidiaries or IMPSAT with ANATEL, the United States Securities and
Exchange Commission, the Central Bank, the Brazilian National Securities
Commission or the Sao Paulo Stock Exchange and all non-confidential reports
filed with any other Governmental Authority, except, in all such cases, reports
the failure of which to be filed could not reasonably be expected to have a
Material Adverse Effect.
(n) CONTINUANCE OF BUSINESS. The Borrower shall, and shall cause its
Subsidiaries to: (x) do or cause to be done all things necessary to maintain,
renew and keep in full force and effect (i) the Licenses and relevant
Governmental Approvals, (ii) their respective corporate existence and good
standing and (iii) all other rights and privileges and franchises related to
Telecommunications Business, except in the case of clauses (ii) and (iii) to the
extent that the failure to do so would not have a Material Adverse Effect, and
(y) continue to engage primarily in the business now conducted by it.
(o) MAINTENANCE OF ASSETS. The Borrower shall, and shall cause its
Subsidiaries to, do or cause to be done all things necessary to maintain all of
its assets material to the Telecommunications Business in good repair, working
order and condition (ordinary wear and tear excepted) and supplied with all
necessary equipment.
(p) FURTHER ASSURANCES. The Borrower shall, and shall cause its
Subsidiaries to, at such Person's expense and upon the request of the
Administrative Agent, duly execute and deliver, or cause to be duly executed and
delivered, to the Administrative Agent and the Lenders such further instruments
and do and cause to be done such further acts as may be necessary or proper in
the reasonable opinion of the Administrative Agent to carry out more effectively
the provisions and purposes of this Agreement or any other Financing Document.
(q) SECURITY DOCUMENTS. All filings, recordings and deliveries of
instructions and other actions necessary or desirable in the opinion of the
Collateral Agent, the Lenders or their respective counsel in order to protect
and preserve the Liens and rights of the Secured Parties under the Security
Documents (including, without limitation, the entering into of amendments to
each of the Security Documents that reflect the terms of the Debt Restructuring
set forth in this Agreement and/or the change of the collateral agent) shall be
duly executed by the Borrower and its Subsidiaries, as applicable, and
registered, or filed for registration as promptly as is practical after the
Closing Date, but in no event later than as required under Sections 10.1(q),
(r), and (s) of this Agreement. After any such registration or filing, Borrower
shall promptly deliver to the Collateral Agent a certified copy of the
registered agreement or deed or of the official receipt or other document
evidencing such registration or filing, as the case may be. All fees, taxes,
expenses and other costs related to the filing and/or registration and/or
recording of the amendments to the Security Documents in connection with the
Debt Restructuring (including notary and translation fees) shall be paid in full
by the Borrower, and certified copies of the receipts thereof shall be delivered
to the Collateral Agent.
Page 49
SECTION 8.2 NEGATIVE COVENANTS.
Until the Maturity Date, and so long as this Agreement remains in effect,
the Borrower shall comply in all respects with each of the following covenants
and agreements:
(a) FUNDAMENTAL CHANGES. The Borrower shall not, and shall not permit its
Subsidiaries to, dissolve, liquidate, merge with another Person or, except as
permitted by Section 8.2(k), create any new Subsidiary without the prior written
consent of the Administrative Agent on behalf of the Required Lenders.
(b) LIENS. The Borrower shall not, and shall not permit its Subsidiaries
to, create, incur, assume or suffer to exist, any Lien upon or with respect to
such Person's accounts receivable, the Collateral, any rights under the
Licenses, any Governmental Approvals or in or to the Network or any other
tangible or intangible property or assets, or any part thereof, of such Person
other than any Permitted Lien.
(c) RESTRICTED PAYMENTS. The Borrower agrees not to, and to cause its
Subsidiaries not to:
(1) reduce such Person's capital; or
(2) declare or pay any dividends or make any distributions or other
payments or delivery of property or cash in respect of: (i) the interest of such
Person's shareholders or other equity owners; or (ii) any Indebtedness which is
by its terms subordinate or junior in right of payment to the Term Loans, except
that the Borrower may pay dividends or make a distribution or other payment of
interest or principal of Intercompany Indebtedness owing to IMPSAT the purpose
of which is to assist IMPSAT to make interest payments as and when due under the
Series A and Series B Convertible Notes, but only if at the time of and after
giving effect to such distribution:
A. no Default or Event of Default shall have occurred and be
continuing;
B. the aggregate amount of all such distributions by the
Borrower during the fiscal year of the Borrower in which the date of such
distribution occurs shall not exceed the lesser of (x) (1) two times the
Borrower's EBITDA for the two consecutive fiscal quarters ending with the fiscal
quarter most recently ended prior to the date of such dividend, distribution or
payment (the "PRECEDING FISCAL QUARTER"), minus (2) the aggregate amount of Debt
Service payable by the Borrower and its Subsidiaries during the 12 calendar
months next following the Preceding Fiscal Quarter or (y) twenty-five percent
(25%) of the sum of IMPSAT's projected (1) Delaware state franchise taxes for
such fiscal year, (2) director and officer liability insurance premiums for such
fiscal year and (3) non-consolidated interest expenses for such fiscal year.
(d) GUARANTEES. The Borrower shall not, and shall not permit its
Subsidiaries to, enter into or become bound by any agreements guaranteeing the
Indebtedness of another Person, except as permitted by clauses (a), (c) and (d)
of the definition of "Permitted Indebtedness."
(e) DOCUMENT AMENDMENTS. The Borrower shall not, and shall not permit its
Subsidiaries to, agree to any modification, amendment, waiver, supplement,
rescission or termination (collectively "AMENDMENT") of any (i) License, (ii)
Governmental Approval (other than Licenses) or (iii) Material Agreement,
without, in each case, the prior written approval of the Administrative Agent on
behalf of the Required Lenders, except to the extent that such Amendment could
not reasonably be expected to have a Material Adverse Effect; provided, however,
that in the case of clause (i),
Page 50
the Borrower shall give the Administrative Agent no less than five (5) Business
Days prior written notice of such Person's proposed Amendment during which
period the Administrative Agent shall have the exclusive right (which it shall
not exercise unreasonably) to reject such Amendment.
(f) TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by this
Agreement, the Borrower shall not, and shall not permit its Subsidiaries to,
directly or indirectly, enter into any transaction with an Affiliate, except in
the ordinary course of and pursuant to the reasonable requirements of the
business of the Borrower and upon commercially reasonable terms no less
favorable to the Borrower than those that could be obtained on an arm's length
basis from a Person which is not an Affiliate.
(g) INDEBTEDNESS. The Borrower shall not, and shall not permit its
Subsidiaries to, incur, create, assume or suffer to exist, or permit to incur,
create, assume or suffer to exist, or become or remain liable, for or on account
of any Indebtedness except (1) Indebtedness hereunder, and (2) Permitted
Indebtedness.
(h) NON-RELATED ACTIVITIES. The Borrower shall not, and shall not permit
its Subsidiaries to, engage, directly or indirectly, in any activity, unless
such activity is, directly or indirectly, related to the Telecommunications
Business of each such Person as conducted and proposed to be conducted on the
date hereof, without the prior written consent of the Administrative Agent on
behalf of the Required Lenders.
(i) CORPORATE ACTIONS. The Borrower shall not, and shall not permit its
Subsidiaries to, (i) change or otherwise alter the end of such Person's fiscal
year or such Person's corporate purpose, or (ii) otherwise amend such Person's
Charter Documents in any manner without the prior written consent of the
Administrative Agent on behalf of the Required Lenders; except in the case of
clause (ii) as could not reasonably be expected to have a Material Adverse
Effect.
(j) DISPOSALS. The Borrower shall not, and shall not permit its
Subsidiaries to, (whether by a single transaction or a number of related or
unrelated transactions and whether at one time or over a period of time) Dispose
of the Collateral or, without the prior written consent of the Administrative
Agent on behalf of the Required Lenders, any such Person's other property or
assets, whether tangible or intangible, in each case other than Permitted
Disposals.
(k) INVESTMENTS. The Borrower shall not, and shall not permit any of its
Subsidiaries to make any Investment other than (i) Permitted Investments or (ii)
Investments in one or more Persons which will, upon the making of such
Investment, become a Subsidiary or be merged or consolidated with or into or
transfer or convey all or substantially all of its assets to, the Borrower or a
Subsidiary thereof; provided, however, that (1) such Person's primary business
is the Telecommunications Business, (2) the Borrower would have been in
compliance with the covenants contained in Section 8.3 of this Agreement as of
the end of the last four fiscal quarters, giving pro forma effect to such
Investment, and the projections for the Borrower, giving effect to such
Investment, would be in compliance with the covenants contained in Section 8.3
of this Agreement as of the end of the next four fiscal quarters, (3) no
Indebtedness is assumed or incurred in connection with the acquisition other
than Permitted Indebtedness, (4) such Person shall have executed and delivered a
guaranty of the Obligations to the Administrative Agent for the benefit of the
Lenders in form and substance satisfactory to the Administrative Agent on behalf
of the Lenders and (5) such Person (except where such Person is merged into the
Borrower or a Subsidiary thereof) agrees in writing to be bound by the terms of
the Financing Documents; and provided further that an Investment will not be
permitted under this clause (ii) if the sum of
Page 51
consideration to be paid in respect of such Investment plus the consideration
paid in respect of all previous Investments made under this clause (ii) exceeds
US$2,000,000 in the aggregate. For purposes of the foregoing clause,
"consideration" shall mean with respect to any acquisition all cash and non-cash
consideration actually paid or required to be paid by the Borrower or any of its
Subsidiaries, including the principal amount of any assumed Indebtedness and
deferred amounts in the nature of holdbacks (to the extent not distributed to
the Borrower or any of its Subsidiaries).
(l) CHANGE IN ACCOUNTING POLICIES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any change in accounting policies or
reporting practices (including changing its fiscal year) which, individually or
in the aggregate, materially affects any determination as to the Borrower's
compliance with its Obligations, including any financial covenants, without the
prior written consent of the Administrative Agent on behalf of the Required
Lenders; provided, that if such change is required by Brazilian GAAP, the
Borrower shall, prior to making such change, only be required to notify the
Administrative Agent of such change and the effect thereof.
(m) LEASES. The Borrower shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the Administrative Agent
on behalf of the Required Lenders, enter into any lease (including an IRU of the
type referred to in clause (b) of the definition of "IRU") or similar
transaction with any Person for the use of any part of the Network except leases
or similar transactions in the ordinary course of business in respect of which
the lessee acknowledges in writing, after the Lien on the property to be leased
has been perfected under the applicable Security Document, the existence of such
Lien and the right of the Collateral Agent, upon the occurrence of certain
events, to assume the rights of the Borrower under the lease, including the
right to receive payment thereunder.
(n) UNSCHEDULED PAYMENTS. The Borrower shall not, and shall not permit any
of its Subsidiaries to, make any voluntary or optional principal or unscheduled
interest payment on any Indebtedness other than (i) the Obligations or, (ii)
Indebtedness of the type referred to in clause (b) of the definition of
Permitted Indebtedness, so long as such payment is otherwise in compliance with
Section 8.2(c).
(o) EXTENSION OF ACCOUNTS. With respect to any accounts receivable of the
Borrower or its Subsidiaries, the Borrower shall not, and shall cause its
Subsidiaries not to, (i) grant any material extension of the time of payment of
any thereof, (ii) compromise, compound or settle for a material amount less than
the full amount thereof, (iii) release any Person liable for the payment thereof
or (iv) allow any credit or discounts whatsoever thereon, in each case which
extension, discounts, credits, releases, compromises, compounds or settlements
could reasonably be expected to have a Material Adverse Effect.
SECTION 8.3 FINANCIAL COVENANTS.
(a) BORROWER'S NET DEBT TO PAID IN CAPITAL RATIO. The Borrower shall not at
any time permit the ratio of (i) the Borrower's Net Debt outstanding on the last
day of any fiscal quarter to (ii) the Borrower's Paid in Capital on such date,
to exceed a ratio of 0.72 to 1.00.
(b) DEBT SERVICE COVERAGE RATIO. The Borrower shall not at any time permit
the ratio of (i) two times the Borrower's EBITDA for the two consecutive fiscal
quarters ending on the date set forth below to (ii) the Borrower's Debt Service
for the four (4) consecutive fiscal quarters ending on such date, to be less
than the ratio set forth opposite such date below:
Page 52
--------------------------------------------------------------------
FISCAL QUARTER RATIO
--------------------------------------------------------------------
Third quarter of 2005 0.20
--------------------------------------------------------------------
Fourth quarter of 2005 0.33
--------------------------------------------------------------------
First quarter of 2006 0.40
--------------------------------------------------------------------
Second quarter of 2006 0.40
--------------------------------------------------------------------
Third quarter of 2006 1.00
--------------------------------------------------------------------
Fourth quarter of 2006 1.10
--------------------------------------------------------------------
First quarter of 2007 0.75
--------------------------------------------------------------------
Second quarter of 2007 0.80
--------------------------------------------------------------------
Third quarter of 2007 0.75
--------------------------------------------------------------------
Fourth quarter of 2007 0.80
--------------------------------------------------------------------
First quarter of 2008 1.00
--------------------------------------------------------------------
Second quarter of 2008 1.10
--------------------------------------------------------------------
Third quarter of 2008 1.15
--------------------------------------------------------------------
Fourth quarter of 2008 1.15
--------------------------------------------------------------------
(c) INTEREST SERVICE COVERAGE RATIO. The Borrower shall not at any time
permit the ratio of (i) two times the Borrower's EBITDA for the two consecutive
fiscal quarters ending on the date set forth below to (ii) the Borrower's
Interest Expense for the four (4) consecutive fiscal quarters ending on such
date, to be less than ratio set forth opposite such date below:
-----------------------------------------------------------------------------
FISCAL QUARTER RATIO
-----------------------------------------------------------------------------
Third quarter of 2005 0.86
-----------------------------------------------------------------------------
Fourth quarter of 2005 1.01
-----------------------------------------------------------------------------
First quarter of 2006 0.73
-----------------------------------------------------------------------------
Second quarter of 2006 1.03
-----------------------------------------------------------------------------
Third quarter of 2006 1.05
-----------------------------------------------------------------------------
Fourth quarter of 2006 1.16
-----------------------------------------------------------------------------
First quarter of 2007 1.60
-----------------------------------------------------------------------------
Second quarter of 2007 1.75
-----------------------------------------------------------------------------
Third quarter of 2007 2.05
-----------------------------------------------------------------------------
Fourth quarter of 2007 2.30
-----------------------------------------------------------------------------
Page 53
First quarter of 2008 2.80
-----------------------------------------------------------------------------
Second quarter of 2008 2.95
-----------------------------------------------------------------------------
Third quarter of 2008 3.45
-----------------------------------------------------------------------------
Fourth quarter of 2008 3.60
-----------------------------------------------------------------------------
(d) CURRENT RATIO. The Borrower shall not at any time permit the ratio of
(i) the Borrower's Current Assets on the last day of any fiscal quarter set
forth below to (ii) the Borrower's Current Liabilities for the period ending on
such date, to be less than the ratio set forth opposite such date below:
-----------------------------------------------------------------------------
FISCAL QUARTER RATIO
-----------------------------------------------------------------------------
Third quarter of 2005 0.14
-----------------------------------------------------------------------------
Fourth quarter of 2005 0.14
-----------------------------------------------------------------------------
First quarter of 2006 0.16
-----------------------------------------------------------------------------
Second quarter of 2006 0.16
-----------------------------------------------------------------------------
Third quarter of 2006 0.16
-----------------------------------------------------------------------------
Fourth quarter of 2006 0.16
-----------------------------------------------------------------------------
First quarter of 2007 0.19
-----------------------------------------------------------------------------
Second quarter of 2007 0.19
-----------------------------------------------------------------------------
Third quarter of 2007 0.19
-----------------------------------------------------------------------------
Fourth quarter of 2007 0.19
-----------------------------------------------------------------------------
First quarter of 2008 0.24
-----------------------------------------------------------------------------
Second quarter of 2008 0.24
-----------------------------------------------------------------------------
Third quarter of 2008 0.24
-----------------------------------------------------------------------------
Fourth quarter of 2008 0.24
-----------------------------------------------------------------------------
(e) CAPITAL EXPENDITURES RATIO. The Borrower shall not at any time make
Capital Expenditures in a particular fiscal quarter to the extent that the
making of such Capital Expenditures would cause the ratio of (i) the Borrower's
Capital Expenditures for any fiscal quarter set forth below to (ii) Revenues
(excluding Revenues attributable to IRUs recognized as Revenues during such
period) for such fiscal quarter to exceed the ratio set forth opposite such
fiscal quarter below:
-----------------------------------------------------------------------------
FISCAL QUARTER RATIO
-----------------------------------------------------------------------------
Third quarter of 2005 0.30
-----------------------------------------------------------------------------
Fourth quarter of 2005 0.25
-----------------------------------------------------------------------------
First quarter of 2006 0.20
Page 54
-----------------------------------------------------------------------------
Second quarter of 2006 0.20
-----------------------------------------------------------------------------
Third quarter of 2006 0.20
-----------------------------------------------------------------------------
Fourth quarter of 2006 0.20
-----------------------------------------------------------------------------
First quarter of 2007 0.20
-----------------------------------------------------------------------------
Second quarter of 2007 0.20
-----------------------------------------------------------------------------
Third quarter of 2007 0.20
-----------------------------------------------------------------------------
Fourth quarter of 2007 0.20
-----------------------------------------------------------------------------
First quarter of 2008 0.20
-----------------------------------------------------------------------------
Second quarter of 2008 0.20
-----------------------------------------------------------------------------
Third quarter of 2008 0.20
-----------------------------------------------------------------------------
Fourth quarter of 2008 0.20
-----------------------------------------------------------------------------
(f) TOTAL DEBT TO EBITDA RATIO. The ratio of (i) IMPSAT's Total Debt as of
the end of the fiscal quarter ending on the date set forth below, to (ii)
IMPSAT's EBITDA for the four (4) consecutive fiscal quarters ending on the dates
set forth below, shall not be greater than the ratio set forth opposite such
date below:
-----------------------------------------------------------------------------
FISCAL QUARTER RATIO
-----------------------------------------------------------------------------
Third quarter of 2005 5.40
-----------------------------------------------------------------------------
Fourth quarter of 2005 5.25
----------------------------------------------------------------------------
First quarter of 2006 4.80
-----------------------------------------------------------------------------
Second quarter of 2006 4.60
-----------------------------------------------------------------------------
Third quarter of 2006 4.25
-----------------------------------------------------------------------------
Fourth quarter of 2006 4.00
-----------------------------------------------------------------------------
First quarter of 2007 3.75
-----------------------------------------------------------------------------
Second quarter of 2007 3.50
-----------------------------------------------------------------------------
Third quarter of 2007 3.25
-----------------------------------------------------------------------------
Fourth quarter of 2007 3.00
-----------------------------------------------------------------------------
First quarter of 2008 2.75
-----------------------------------------------------------------------------
Second quarter of 2008 2.50
-----------------------------------------------------------------------------
Third quarter of 2008 2.50
-----------------------------------------------------------------------------
Fourth quarter of 2008 2.50
-----------------------------------------------------------------------------
(g) INTEREST SERVICE COVERAGE RATIO. The ratio of (i) IMPSAT's EBITDA for
Page 55
the four (4) consecutive fiscal quarters ending on the date set forth below to
(ii) IMPSAT's Interest Expense for the four (4) consecutive fiscal quarters
ending on such date, shall be at least equal to the ratio set forth opposite
such date below:
-----------------------------------------------------------------------------
FISCAL QUARTER RATIO
-----------------------------------------------------------------------------
Third quarter of 2005 2.00
-----------------------------------------------------------------------------
Fourth quarter of 2005 2.00
-----------------------------------------------------------------------------
First quarter of 2006 1.50
-----------------------------------------------------------------------------
Second quarter of 2006 2.00
-----------------------------------------------------------------------------
Third quarter of 2006 2.00
-----------------------------------------------------------------------------
Fourth quarter of 2006 2.00
-----------------------------------------------------------------------------
First quarter of 2007 2.25
-----------------------------------------------------------------------------
Second quarter of 2007 2.50
-----------------------------------------------------------------------------
Third quarter of 2007 2.75
-----------------------------------------------------------------------------
Fourth quarter of 2007 3.00
-----------------------------------------------------------------------------
First quarter of 2008 3.25
-----------------------------------------------------------------------------
Second quarter of 2008 3.50
-----------------------------------------------------------------------------
Third quarter of 2008 3.75
-----------------------------------------------------------------------------
Fourth quarter of 2008 4.00
-----------------------------------------------------------------------------
SECTION 9. SECURITY
SECTION 9.1 GRANT OF SECURITY INTEREST.
To secure the prompt payment of the Obligations, and to secure the
performance of and compliance with all the agreements, covenants and provisions
of the Financing Documents, the Borrower shall and shall cause its Subsidiaries,
pursuant to the Security Documents, to grant, assign, pledge and convey to the
Collateral Agent for the benefit of each Secured Party a first-priority security
interest, subject only to Permitted Liens under Subsections (e) and (m) of the
definition of Permitted Liens, in (i) all Equipment and, (ii) real property and
other tangible and intangible property and rights previously acquired by the
Borrower and its Subsidiaries with the proceeds of the Original Financing
Agreement (which was amended and restated by the Existing Financing Agreement)
(all such property and rights, together with all proceeds of any thereof and any
cash and cash equivalents held from time to time in the Net Proceeds Account,
collectively, the "COLLATERAL"). The Borrower hereby confirms to the Secured
Parties that it shall, and shall cause each of its Subsidiaries to, take all
actions required by the Security Documents or otherwise deemed reasonably
necessary or reasonably desirable by the Collateral Agent in order to create,
perfect and maintain the perfection of the Secured Parties' first-priority Lien
in the Collateral, subject only to Permitted Liens under Subsections (e) and (m)
of the definition of Permitted Liens. The Borrower hereby ratifies, confirms and
reaffirms the validity and enforceability of the Security Documents executed and
delivered in
Page 56
connection with the Original Financing Agreement and the Existing Financing
Agreements and this Agreement as well as the Liens created pursuant to such
documents as valid, subsisting and continuing to secure the Obligations.
SECTION 9.2 ESCROW ACCOUNTS.
To secure the prompt payment of principal of and interest on the Term
Loans, the Borrower shall grant to the Collateral Agent for the benefit of the
Secured Parties a first-priority security interest in the Net Proceeds Account
and each other account, if any, and in all funds deposited therein.
SECTION 9.3 RELEASE OF COLLATERAL.
(a) SECURITY INTEREST. The Borrower hereby further agrees and confirms
that, except for any Collateral identified on Schedule 9.3 (which may be
released on notice by the Borrower) or released pursuant to Section 9.3(b), the
Secured Parties' security interest in the Collateral shall not be released until
and unless (1) the Borrower shall have paid in full all amounts due and payable
under this Agreement and under any Security Document and shall have performed
all of its Obligations or (2) the Required Lenders shall have consented to such
release, in their sole discretion.
(b) RELEASE INSTRUMENTS. In connection with any Disposal of Collateral
permitted by the terms hereof, the Borrower may request a release of such
Collateral (the "RELEASED COLLATERAL") by delivering to the Collateral Agent a
notice, which shall refer to this Section, describe in reasonable detail the
proposed Released Collateral and be accompanied by (1) an officer's certificate
of the Borrower certifying that no Event of Default has occurred and is
continuing and that the officers of the Borrower executing any and all documents
in connection with the release were duly authorized to do so and (2) the
proposed instrument of release (the "RELEASE") executed by all necessary parties
thereto other than the Collateral Agent (collectively, the "RELEASE
INSTRUMENTS").
(c) COUNTERPARTS. The Collateral Agent shall execute, acknowledge, if
applicable, and deliver to the Borrower counterparts of the documents described
in Sections 93(b)(1) and 9.3(b)(2) within five (5) Business Days of receipt by
the Collateral Agent of a Release provided that the conditions set forth in the
Release Instruments and herein with respect to dispositions of Collateral have
been satisfied. The Borrower at its own expense shall execute, deliver, obtain
and record such instruments as the Collateral Agent may reasonably require,
including, without limitation, amendments to the Security Documents or this
Agreement necessary to reflect such release. The Borrower shall reimburse the
Collateral Agent upon demand for all reasonable costs and expenses (including
reasonable attorneys' fees and expenses) incurred by the Collateral Agent in
connection with any actions taken by it pursuant to this Section.
SECTION 9.4 FURTHER IDENTIFICATION OF THE COLLATERAL.
The Borrower shall, and shall cause its Subsidiaries to, furnish the
Administrative Agent on behalf of the Lenders from time to time statements and
schedules further identifying and describing the Collateral and each location
thereof and such other reports in connection with the Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.
SECTION 9.5 FURTHER ASSURANCES.
At any time and from time to time, upon the written request of the
Administrative Agent, and the sole expense of the Borrower, the Borrower shall,
and shall cause its Subsidiaries to, promptly execute, deliver and
Page 57
record any documents, instruments, agreements and amendments, and take all such
further action, as the Administrative Agent may reasonably deem desirable in
obtaining the full benefits of the security interests granted by this Agreement
and the other Financing Documents.
SECTION 10. EVENTS OF DEFAULT
SECTION 10.1 EVENTS OF DEFAULT.
Each of the following events shall constitute an "EVENT OF DEFAULT"
hereunder:
(a) NON-PAYMENT. The Borrower shall fail to pay:
(1) any installment of the principal amount of any Term Loan as and
when the same becomes due and payable hereunder (whether at stated maturity, by
acceleration, mandatory prepayment or otherwise); or
(2) any interest on any Term Loan or any other amount payable
hereunder or under any Note, when and as the same shall become due and payable
(whether at stated maturity, by acceleration, mandatory prepayment or otherwise)
and such failure shall continue unremedied for three (3) Business Days.
(b) REPRESENTATIONS AND WARRANTIES. Any representation, warranty,
certification or statement made by or on behalf of the Borrower, any Subsidiary
thereof or IMPSAT in any Financing Document or any amendment thereof or in any
certificate, report, financial statements or opinion delivered pursuant to or
otherwise in connection with any Financing Document shall prove to have been
false, incorrect, or misleading in any material respect as of the time made,
delivered or deemed made or delivered.
(c) COVENANTS. The Borrower, any Subsidiary thereof or IMPSAT shall fail to
perform or observe any term, covenant, condition or agreement:
(1) contained in this Agreement (other than the covenants contained in
Section 8.1) or any other Financing Document and such default shall continue
beyond any cure or grace period specifically applicable thereto pursuant to the
terms of such Financing Document; or
(2) contained in Section 8.1 hereof and such default shall continue
unremedied for a period of ten (10) Business Days after the earlier of (i) the
date on which the Borrower obtains knowledge of such default or (ii) the date on
which notice thereof shall have been received by the Borrower from the
Administrative Agent (which notice will be given at the request of any Lender).
(d) IMPSAT CONVERTIBLE NOTES. IMPSAT or any of its Subsidiaries shall
default in:
(1) any payment of any Indebtedness under the IMPSAT Convertible
Notes; or
(2) the observance or performance of any agreement, covenant or
condition under the IMPSAT Convertible Notes or any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder of any IMPSAT Convertible Note to cause any such
Indebtedness to become due or subject to mandatory repurchase or repayment prior
to its stated maturity.
(e) ARGENTINA AGREEMENTS. An event of default shall have occurred under the
Argentina Financing Agreement.
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(f) DEFAULT UNDER OTHER INDEBTEDNESS.
(1) The Borrower, any Subsidiary thereof or IMPSAT shall default in
any payment of any Indebtedness (other than the Term Loans under this Agreement
or the loans under the Argentina Financing Agreement) aggregating in excess of
five million Dollars (US$5,000,000);
(2) The Borrower, any Subsidiary thereof or IMPSAT shall default in
the observance or performance of any agreement or condition relating to any
Indebtedness (other than the Financing Documents, the Argentina Financing
Agreement or the IMPSAT Convertible Notes) aggregating in excess of five million
Dollars (US$5,000,000), or contained in any instrument or agreement evidencing,
securing, or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause, or
to permit the holder of such Indebtedness to cause any such Indebtedness to
become due or subject to mandatory repurchase or repayment prior to its stated
maturity;
(3) Any Material Subsidiary of IMPSAT shall default in any payment of
any Indebtedness (other than the Term Loans, the Ericsson Indebtedness or the
loans under the Argentina Financing Agreement) aggregating in excess of five
million Dollars (US$5,000,000); or
(4) Any Material Subsidiary of IMPSAT shall default in the observance
or performance of any agreement or condition relating to any Indebtedness (other
than the Financing Documents, Argentina Financing Agreement, the Ericsson
Indebtedness or the IMPSAT Convertible Notes) aggregating in excess of five
million Dollars (US$5,000,000), or contained in any instrument or agreement
evidencing, securing, or relating thereto, or any other event shall occur or
condition exist, with respect to which default or other event or condition, the
holders of such Indebtedness have caused any such Indebtedness to become due or
subject to mandatory repurchase or repayment prior to its stated maturity.
(g) BANKRUPTCY. The Borrower, any Subsidiary thereof, IMPSAT or any
Material Subsidiary of IMPSAT shall commence a voluntary case concerning itself
under any bankruptcy law of Brazil (including, without limitation, Brazilian Law
No. 11101/05) or any other jurisdiction or Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto
(the "BANKRUPTCY CODE"); or an involuntary case is commenced against the
Borrower, any Subsidiary thereof, IMPSAT or any Material Subsidiary of IMPSAT
under any such laws, and the petition is not contested within 10 days, or is not
dismissed within thirty (30) days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of the Borrower, any Subsidiary
thereof, IMPSAT or any Material Subsidiary of IMPSAT or the Borrower, any
Subsidiary thereof, IMPSAT or any Material Subsidiary of IMPSAT commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower, any
Subsidiary thereof, IMPSAT or any Material Subsidiary of IMPSAT, or there is
commenced against the Borrower, any Subsidiary thereof, IMPSAT or any Material
Subsidiary of IMPSAT any such proceeding which remains undismissed for a period
of thirty
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(30) days; or the Borrower, any Subsidiary thereof, IMPSAT or any Material
Subsidiary of IMPSAT is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Borrower, any Subsidiary thereof, IMPSAT or any Material Subsidiary of IMPSAT
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of thirty
(30) days; or the Borrower, any Subsidiary thereof, IMPSAT or any Material
Subsidiary of IMPSAT makes a general assignment for the benefit of creditors; or
the Borrower, any Subsidiary thereof, IMPSAT or any Material Subsidiary of
IMPSAT shall generally not pay its debts as they become due or there shall
otherwise occur a judicial or extrajudicial recovery (within the meaning of
Brazilian Law No. 11101/05); or any corporate action is taken by the Borrower,
any Subsidiary thereof, IMPSAT or any Material Subsidiary of IMPSAT for the
purpose of effecting any of the foregoing.
(h) FINANCING DOCUMENTS. Any Financing Document shall cease to be in full
force and effect, or shall cease to give the Lenders the Liens and the material
rights, powers and privileges purported to be created thereby (including,
without limitation, a perfected security interest in, and Lien on, all of the
Collateral described therein in favor of the Lenders, superior to and prior to
the rights of all third Persons, and subject only to Permitted Liens under
Subsections (e) and (m) of the definition of Permitted Liens).
(i) LICENSES. Any Governmental Authority shall commence any proceeding to
cancel, revoke, suspend or substantially and adversely modify any License
necessary for the Project, which proceeding (i) could reasonably be expected to
have a Material Adverse Effect , and (ii) has not been stayed or enjoined within
five Business Days after the commencement of any such proceeding.
(j) GOVERNMENTAL ACTIONS.
(1) Any Governmental Authority shall have (A) condemned, nationalized,
seized, compulsorily acquired, or otherwise expropriated all or any material
part of the property or other assets of the Borrower or any of its Subsidiaries
or of any capital stock of the Borrower or any of its Subsidiaries, or (B)
assumed custody or control either of such property or other assets or of the
business or operations of the Borrower or any of its Subsidiaries or of their
capital stock, or shall have taken any action for the dissolution of the
Borrower or any of its Subsidiaries or any other action that would prevent the
Borrower or any of its Subsidiaries or their respective officers from carrying
on the business or operations of the Borrower or any such Subsidiary in all
material respects; provided, however, that this paragraph shall not apply to any
Subsidiary of the Borrower (i) the property or assets of which do not comprise
part of the Network or the Collateral, (ii) which is not a party to any of the
Financing Documents and (iii) the total Equity of which is less than one hundred
thousand Dollars (US$100,000), unless the Governmental Action in question is
reasonably likely to have a Material Adverse Effect.
(2) Any Governmental Approvals material for the operation or
maintenance of the Network shall cease to be in full force and effect. A
Governmental Approval shall be deemed to cease to be in full force and effect
(x) when an order revoking or terminating said Governmental Approval shall be
issued and such order is no longer subject to further administrative and
judicial review, or (y) when any Governmental Authority having jurisdiction over
any such Governmental Approval shall, prior to the termination thereof, decide
not to renew such Governmental Approval and such decision shall not be subject
to further administrative or judicial review.
(k) JUDGMENTS.
(1) A final judgment, award, decree, fine or penalty for the payment
of money in excess of one million dollars (US$1,000,000) individually or in the
aggregate shall be rendered by one or more courts, administrative tribunals or
other bodies having jurisdiction against the Borrower or any of its
Subsidiaries, and the same shall not be discharged
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(or provision satisfactory to the Administrative Agent shall not be made for
such discharge), or a stay of execution thereof shall not be procured, within
thirty (30) days from the date of entry thereof, and the Borrower, within such
thirty (30) day period or such longer period during which the execution of such
judgment or judgments shall have been stayed, shall not have appealed therefrom
and caused the execution thereof to be stayed during such appeal.
(2) A final judgment, award, decree, fine or penalty for the payment
of money in respect of the Ericsson Indebtedness in excess of five million
dollars (US$5,000,000) individually or in the aggregate shall be rendered by one
or more courts, administrative tribunals or other bodies having jurisdiction
against IMPSAT Argentina, and the same shall not be discharged (or provision
satisfactory to the Administrative Agent shall not be made for such discharge),
or a stay of execution thereof shall not be procured, within thirty (30) days
from the date of entry thereof, and IMPSAT Argentina, within such thirty (30)
day period or such longer period during which the execution of such judgment or
judgments shall have been stayed, shall not have appealed therefrom and caused
the execution thereof to be stayed during such appeal; provided, however, that
if both of the Original Holders have transferred or sold their respective
interests in the Assigned Indebtedness (other than the transfer of such
interests by an Original Holder to an Affiliate), this Section 10.1(k)(2) shall
be no further force and effect.
(3) Other than with respect to the Ericsson Indebtedness, a final
judgment, award, decree, fine or penalty for the payment of money in excess of
five million Dollars (US$5,000,000) individually or in the aggregate shall be
rendered by one or more courts, administrative tribunals or other bodies having
jurisdiction against IMPSAT or any of its Material Subsidiaries, and the same
shall not be discharged (or provision satisfactory to the Administrative Agent
shall not be made for such discharge), or a stay of execution thereof shall not
be procured, within thirty (30) days from the date of entry thereof, and IMPSAT,
within such thirty (30) day period or such longer period during which the
execution of such judgment or judgments shall have been stayed, shall not have
appealed therefrom and caused the execution thereof to be stayed during such
appeal.
(l) CURRENCY RESTRICTIONS. Brazil or any Governmental Authority thereof
shall impose restrictions on the free transferability of Dollars to or from
Brazil or Dollars shall, in the reasonable judgment of the Required Lenders, be
unavailable within Brazil at a commercially reasonable rate of exchange, and the
Borrower shall not, within ten (10) Business Days after notice from the
Administrative Agent, have demonstrated to the satisfaction of the
Administrative Agent that such restrictions will not have a Material Adverse
Effect on the ability of the Borrower to perform its Obligations or on the
availability of Dollars for purposes of paying any amounts required to be paid
pursuant to this Agreement or the other Financing Documents.
(m) IMPSAT GUARANTEE. IMPSAT shall breach any covenant or agreement in the
IMPSAT Guarantee.
(n) LEGAL EXISTENCE; TAXES. The Borrower or IMPSAT shall have failed to
maintain its legal existence or the Borrower, any Subsidiary thereof or IMPSAT
shall have failed to pay taxes as they come due.
(o) IMPAIRMENT OF COLLATERAL. The Secured Parties shall fail at any time to
have a valid and perfected Lien on, subject to no prior or equal Liens other
than Permitted Liens under Subsections (e) and (m) of the definition of
Permitted Liens, or any Security Document shall fail to be provided in respect
of, or shall fail to grant the interests required by Section 9 in any material
portion of the Collateral.
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(p) MATERIAL ADVERSE CHANGE. A Material Adverse Change shall have occurred.
(q) FAILURE TO EXECUTE AMENDMENTS. The Borrower shall fail to execute the
amendments to the Equipment Pledge Agreement and the Mortgage Deeds that are
necessary or desirable in the opinion of the Collateral Agent, the Lenders and
their respective counsel in order to reflect the terms of the Debt Restructuring
as set forth in this Agreement, within five (5) Registration Business Days after
execution of such amendment to the Equipment Pledge Agreement or amendment to a
Mortgage Deed by all other required parties.
(r) FAILURE TO DELIVER EVIDENCE OF FILING. The Borrower shall fail to
provide to the Collateral Agent, within twenty (20) Registration Business Days
after the date of execution of such amendments, a certificate of the chief
financial officer of the Borrower, to which are attached copies of the
amendments to the Equipment Pledge Agreement and the Mortgage Deeds entered into
in connection with the Debt Restructuring bearing the seal of, or a receipt
issued by, the 3(degree) Registro de Titulos e Documentos or Registro de
Imoveis, as applicable, corresponding to the locations of the assets subject to
the pledge and mortgage interests created thereunder, evidencing the filing for
registration thereof with each such entity.
(s) FAILURE TO DELIVER EVIDENCE OF REGISTRATION. The Borrower shall fail to
provide to the Collateral Agent, within forty five (45) Registration Business
Days after the date of execution of the relevant amendment, evidence that the
amendments to the Equipment Pledge Agreement and the Mortgage Deeds entered into
in connection with the Debt Restructuring have been properly registered with the
3(degree) Registro de Titulos e Documentos or Registro de Imoveis, as
applicable, corresponding to the locations of the assets subject to the pledge
and mortgage interests created thereunder, and that all other actions necessary
to obtain the registration have been taken; provided that it shall not be a
default under this Subsection (s) if (i) the Borrower complies with any and all
requests of the 3(degree) Registro de Titulos e Documentos or Registro de
Imoveis within five (5) Registration Business Days of receipt of such request or
shorter period if required, (ii) the Borrower uses its best efforts to obtain
the proper registration of such amendments, and (iii) the proper registration of
such amendments is not obtained for reasons exclusively attributable to the
relevant 3(degree) Registro de Titulos e Documentos or Registro de Imoveis.
(t) FAILURE TO DELIVER EVIDENCE OF PAYMENT OF TAXES, ETC. The Borrower
shall fail to provide to the Collateral Agent, within forty five (45)
Registration Business Days after the date hereof, evidence that it has paid all
taxes, fees and other charges payable in connection with the amendments to the
Equipment Pledge Agreement and the Mortgage Deeds entered into in connection
with the Debt Restructuring and the registration thereof.
SECTION 10.2. REMEDIES UPON EVENT OF DEFAULT.
(a) RIGHTS AND REMEDIES. If any Event of Default (other than the Event of
Default referred to in Section 10.1(g)) has occurred and is continuing, the
Administrative Agent shall, at the request of, or may, with the consent of the
Required Lenders (1) declare all of the Term Loans to be due and payable,
whereupon the Term Loans, together with interest accrued thereon and all other
amounts due under this Agreement and the Notes, shall immediately mature and
become due and payable, without presentment, demand, diligence, protest, notice
of acceleration, or other notice of any kind, all of which the Borrower hereby
expressly waives; and/or (2) exercise on behalf of itself and the Lenders all
other rights and remedies available to it and the Lenders under this Agreement
and the other Financing Documents. Upon the occurrence of any Event of Default,
the Lenders and the Agents
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shall have, in addition to any other rights and remedies contained in this
Agreement and the other Financing Documents, all of the rights and remedies of a
secured party under the laws of Brazil or other Applicable Laws, all of which
rights and remedies shall be cumulative and non-exclusive, to the extent
permitted by Applicable Law.
(b) BANKRUPTCY. Upon the occurrence of an Event of Default referred to in
Section 10.1 (g) of this Agreement:
(1) the obligations of the Lenders shall immediately terminate;
(2) the Term Loans, together with all interest accrued thereon and all
other amounts due under this Agreement and the Notes, shall immediately mature
and become due and payable, without any other presentment, demand, diligence,
protest, notice of acceleration, or other notice of any kind, all of which the
Borrower hereby expressly waives; and
(3) the Administrative Agent may, or at the request of the Required
Lenders shall, exercise (or shall direct the Collateral Agent to exercise) on
behalf of itself and the Lenders all other rights and remedies available to it
and the Lenders under this Agreement and the other Financing Documents.
(c) OTHER REMEDIES. In addition to such remedies as are provided for in
this Agreement and the other Financing Documents, the Lenders' remedies upon the
occurrence and during the continuance of an Event of Default shall include, to
the extent permitted by Applicable Law, (1) a right to apply or require the
Borrower to apply, for the benefit of the Lenders or a third party selected by
the Lenders, for any necessary orders, permits or licenses in connection with
the operation or abandonment of the Network, the Telecommunications Business or
any part thereof, and (2) a right to have a receiver appointed by a court of
competent jurisdiction in order to manage, protect and preserve the Network, the
Telecommunications Business and the Collateral and to continue the operation of
the Telecommunications Business, and to collect the revenues and profits thereof
and apply the same to the payment of all expenses and other charges of such
receivership until the sale or other final disposition of the Collateral.
(d) ACTIONS. In connection with the foregoing remedies, the Borrower shall
take such further actions and execute all such instruments as the Administrative
Agent or the Collateral Agent deems necessary. The Borrower agrees that the
Administrative Agent or the Collateral Agent may enforce any obligation of the
Borrower as set forth in this Agreement by an action for specific performance.
(e) ADVANCES. The Lenders may (but shall not be obligated to) make advances
from their own funds to preserve, protect or obtain any of the Collateral,
including amounts to pay Taxes, insurance and the like, and all such advances
shall become part of the Obligations and shall be repayable to the Lenders with
interest thereon from the date of such advances until paid at the Default
Interest Rate.
SECTION 10.2 CUMULATIVE RIGHTS.
No failure or delay on the part of the Lenders, the Administrative Agent or
the Collateral Agent in exercising any right, power, or remedy accruing to them
hereunder shall impair any such right, power, or remedy, nor shall such failure
or delay in exercising any right, power, or remedy with respect to any
particular occurrence of an Event of Default be construed as a waiver of any
such right, power, or remedy for any other or future occurrence of an Event of
Default, nor shall any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the exercise of any other
right or power hereunder. To the
Page 63
fullest extent permitted by Applicable Law, all remedies, either under this
Agreement or by Applicable Law otherwise afforded the Lenders, shall be
cumulative and not alternative.
SECTION 11. EXPENSES AND INDEMNIFICATION
SECTION 11.1 EXPENSES.
The Borrower and IMPSAT, jointly and severally, agree to pay on demand all
reasonable and documented out-of-pocket costs and expenses of the Agents, the
Lenders and the Participant, and all fees and taxes that may arise, in
connection with the negotiation, preparation, execution, delivery and
registration of the Debt Restructuring and any documents related thereto,
including without limitation, exercise and implementation of the Option,
including the reasonable and documented fees and expenses of counsel for the
Lenders and the Participant with respect thereto, stamp taxes and registration
fees, if any. In addition, the Borrower agrees to pay on demand (a) all
reasonable and documented costs and expenses of each of the Agents, including
the reasonable and documented fees and expenses of counsel for the Agents with
respect thereto, with respect to advising the Agents as to their rights and
responsibilities or the perfection, protection or preservation of their and the
Lenders' rights or interests under the Financing Documents, with respect to
negotiations with the Borrower, IMPSAT or with other creditors of the Borrower
or IMPSAT arising out of any Default or any events or circumstances that may
give rise to an Event of Default, and with respect to presenting claims in or
otherwise participating in or monitoring any bankruptcy, insolvency or other
similar proceeding involving creditors' rights generally and any proceeding
ancillary thereto or otherwise in the performance of any Financing Document, and
(b) all reasonable and documented costs and expenses of the Agents, the Lenders,
and the Participant in connection with the enforcement of the Financing
Documents, including in any action, suit or litigation, any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights (including,
without limitation, the reasonable and documented fees and expenses of counsel
for each Agent, the Lenders, and the Participant with respect thereto).
SECTION 11.2 INDEMNIFICATION.
Without regard to whether the Borrower or any other Person has disclosed
any fact to any Lender, the Participant, the Administrative Agent, or the
Collateral Agent, the Borrower hereby agrees to indemnify and hold harmless each
of the Agents, the Lenders, and the Participant, and each of their respective
affiliates, officers, directors, employees, consultants and advisors
(collectively, the "INDEMNITEES") from and against any and all actions, suits,
claims, damages, demands, judgments, losses, liabilities, costs or expenses
whatsoever, including reasonable attorneys' fees, which any Indemnitee may
sustain or incur (or which may be claimed against any Indemnitee by any Person
whatsoever) to the extent arising by reason of or in connection with:
(a) the Term Loans or the proposed use of the proceeds thereof,
(b) the payment or failure to pay the Obligations;
(c) the occurrence of an Event of Default;
(d) the pursuit by either Agent or any Lender of any legal remedy in
connection with an Event of Default;
(e) the entering into or performance of any Financing Document by either
Agent or any Lender, or enforcing their remedies hereunder or thereunder, or
otherwise arising under, or in connection with, the Debt
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Restructuring, including, but not limited to any fees, taxes, expenses or other
costs in connection therewith; or
(f) any Environmental Law as a result of the past, present or future
operations of the Borrower any of its Subsidiaries or IMPSAT (or any predecessor
in interest to any such Persons);
provided, however, that, the Borrower shall not be required to indemnify any
Indemnitee for any actions, suits, claims, damages, demands, judgments, losses,
liabilities, costs or expenses to the extent caused by such Indemnitee's willful
misconduct or gross negligence as conclusively determined by a final
non-appealable order of a court of competent jurisdiction.
SECTION 12. ASSIGNMENT AND PARTICIPATION
SECTION 12.1 ASSIGNMENT.
(a) REQUIREMENTS. Except as expressly set forth in Section 13.2, each
Lender may assign to one or more Eligible Assignees all or any portion of its
rights and obligations under this Agreement (including, without limitation, the
Term Loans owing to it and the Note or Notes held by it); provided, however,
that (1) each such assignment shall be of a uniform, and not a varying,
percentage of all rights and obligations under and in respect of this Agreement;
(2) except in the case of an assignment to a Person that, immediately prior to
such assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of any Term Loan proposed to be
assigned (determined as of the date of the Assignment and Assumption Agreement
with respect to such assignment) shall in no event be less than one million
Dollars (US$1,000,000); (3) the parties to each such assignment shall execute
and deliver an Assignment and Assumption Agreement; and (4) with respect to any
such Eligible Assignee that is not (a) a Lender or the Participant; (b) a
commercial bank or savings and loan association or savings bank organized under
the laws of the United States of America (or any State thereof) or Canada (or
any Province thereof), and having total assets in excess of one hundred million
Dollars (US$100,000,000); (c) a commercial bank organized under the laws of any
other country that is a member of the Basel Accord and the Organization of
Economic Cooperation and Development or has concluded special lending
arrangements with the International Monetary Fund associated with its general
arrangements to borrow, or a political subdivision of any such country, and
having total assets in excess of one hundred million Dollars (US$100,000,000),
so long as such bank is acting through a branch or agency located in a country
in which it is organized or another country that is described in this clause
(c); or (d) a finance company, insurance company or other financial institution
or fund (whether a corporation, partnership, trust or other entity) that is
principally engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business and having total assets in excess
of one hundred million Dollars (US$100,000,000) and for which the effective tax
rate of any Taxes, other than Excluded Taxes, required by Applicable Law to be
withheld or deducted from or in respect of any sum payable to such Eligible
Assignee under this Agreement or any other Financing Document shall exceed a
rate of 15.01%, the obligation of the Borrower in respect of Section 5.1(a)
shall be limited to the amount that would have been otherwise payable if such
effective tax rate was 15.01%; provided that Section 12.1(a)(4) of this
Agreement shall not be applicable so long as the Participant continues to have
an interest in the Obligations.
(b) NOTICE. Promptly following an assignment described in (a) above, the
parties to such assignment shall deliver the executed Assignment and Assumption
Agreement entered into between the assignor Lender and the assignee to the
Administrative Agent for its acknowledgment and recording
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in the Register together with a non-refundable processing and recordation fee of
three thousand five hundred Dollars (US$3,500). The assigning Lender shall also
deliver a notice to the Borrower in respect of such assignment (unless such
notice has already been given) and the assignee shall furnish the Administrative
Agent with a completed administrative details questionnaire.
(c) RECORDING. Upon its receipt of an Assignment and Assumption Agreement
executed by the assignor Lender and the assignee, the Administrative Agent shall
promptly acknowledge such Assignment and Assumption Agreement and record the
information contained therein in the Register in accordance with the provisions
of Section 2.1(c) and give notice of such acknowledgment and recordation to the
Lenders and the Borrower. Any assignment of any Term Loan or Note hereunder
shall become effective on the day when the relevant Assignment and Assumption
Agreement is recorded by the Administrative Agent in the Register.
(d) EXCHANGE OF NOTES. Concurrently with the delivery of an Assignment and
Assumption Agreement to the Administrative Agent pursuant to (c) above, or as
soon thereafter as practicable, the assignor Lender shall surrender the Note
evidencing the Term Loan being assigned thereunder for cancellation against
delivery to the assignor Lender and/or the assignee of one or more new Notes
executed by the Borrower in the same aggregate principal amount.
(e) RELEASE. From and after the date on which an Assignment and Assumption
Agreement is effective and solely to the extent of such assignment, the assignor
Lender shall be released of its commitments and obligations under this Agreement
and the assignee shall thereupon become a Party and shall have the same rights
and interest and assume the same obligations and liabilities as having been
assigned to it by the assignor Lender.
SECTION 12.2 PARTICIPATION.
Any Lender may sell participations to any Person in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Term Loans owing to it and the Note or Notes
held by it), provided, however, that (a) such Lender's obligations under this
Agreement shall remain unchanged, (b) such Lender shall remain solely
responsible to the other Parties for the performance of such obligations, (c)
such Lender shall remain the holder of any such Note for all purposes of this
Agreement, and (d) the Borrower, the Agents and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement.
SECTION 12.3 INFORMATION.
Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 12, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Borrower, the Borrower's Subsidiaries and IMPSAT furnished to
such Lender by or on behalf of any such Person; provided that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential information
received by it from such Lender.
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SECTION 13. OPTION.
SECTION 13.1 OPTION.
At the option (the "OPTION") of either (i) each of the Original Holders
(which may be exercised only upon the written consent of both Original Holders)
or (ii) the Borrower, exercised at any time before the first anniversary of the
closing of the Debt Restructuring, this Agreement may be amended and restated
such that IMPSAT shall be the borrower and the Borrower shall be the guarantor
(the "OPTION INDEBTEDNESS"); provided, however, that the Option may be exercised
only if (a) the amendment and restatement of Term Loans would not, in the
Original Holders' (in the case of an Option exercised by the Borrower) or the
Borrower's (in the case of an Option exercised by the Original Holders)
reasonable determination, be illegal, (b) the Borrower issues an unsubordinated
senior guarantee of the Term Loans on substantially the same terms and
conditions as the Guarantee (which will be valid, binding and enforceable under
Brazilian law), (c) all Collateral supporting the repayment by the Borrower of
the Term Loans continues to secure the guarantee obligations of the Borrower
after the exercise of the Option and the closing of all related transactions in
substantially the same manner and with the same priority as was the case
immediately prior to giving effect to the exercise of the Option and the closing
of such transactions (including, without limitation, the ability of the Lenders
to transfer abroad the proceeds from any foreclosure proceeding), (d) the
Borrower and IMPSAT obtain all necessary consents to the consummation of the
Option as determined by each of IMPSAT and the Original Holders in their
respective reasonable judgment (the "OPTION CONSENTS"), (e)(i) the Borrower
shall have received an opinion from an accounting, appraisal or investment
banking firm of national standing as to the fairness to the Borrower and IMPSAT
of the financial terms of the amendment and restatement of the Term Loans for
the Option Indebtedness from a financial point of view, and (ii) the Original
Holders shall have received an opinion from Brazilian legal counsel to the
Borrower as to the enforceability and legality of the transactions contemplated
by the Option under Brazilian law, including, without limitation, the security
interest on the Collateral, and confirmation that the Option and the Option
Indebtedness will not constitute or be deemed a novation of the Agreement, (f)
the Original Holders are satisfied, in their sole discretion, that the Borrower
will be permitted, under Central Bank regulations and all other applicable
Brazilian law, to satisfy its obligations under the guarantee set forth in (b)
above and the subordinated intercompany loan to be entered into between the
Borrower and IMPSAT upon the close of the amendment and restatement contemplated
by this Section after exercise of the Option and (g) the Original Holders are
satisfied, in their sole discretion, that the Option or the Option Indebtedness
shall not constitute or be deemed a novation of the Agreement under Brazilian
law. In the event that either the Original Holders or the Borrower exercises the
Option, the Borrower and the Original Holders will mutually agree upon any
modifications or amendments to the terms of this Agreement that are necessary or
appropriate to reflect the change in primary obligor under the Term Loans.
SECTION 13.2 NONTRANSFERABILITY OF THE OPTION.
To the extent that either of the Original Holders sells or otherwise
transfers all of its interests in (a) the Assigned Indebtedness and (b) the term
loans under the Argentina Financing Agreement, then the remaining Original
Holder will have the sole right to exercise the Option, and any Assignees and
participants of such indebtedness shall be bound by such exercise.
SECTION 14. GOVERNING LAW AND JURISDICTION
SECTION 14.1 GOVERNING LAW.
This Agreement and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York (not including such state's
conflict of laws provisions).
Page 67
SECTION 14.2 WAIVER OF JURY TRIAL.
Each of the Lenders, the Agents and the Borrower hereby knowingly,
voluntarily, and intentionally waives any right it may have to a trial by jury
of any claim, demand, or cause of action under, or in connection with, this
Agreement, the Notes or any other financing document. This provision is a
material inducement for the Lenders to enter into this Agreement and the other
financing documents.
SECTION 14.3 JURISDICTION; VENUE FOR SUIT.
Each of the Borrower, the Lenders and the Agents hereby expressly and
irrevocably (a) waives all right to object to jurisdiction or execution in any
legal action or proceeding relating to this Agreement, the Notes, or any other
Financing Document which such Person may now or hereafter have by reason of such
Person's domicile or by reason of any subsequent or other domicile and hereby
irrevocably consents that any legal action, suit, or proceeding arising out of,
or relating to, any of the Financing Documents and any other document or
instrument required to be executed in relation thereto may be instituted in or
removed to the United States District Court of the Southern District of New York
and the courts of the State of New York sitting in New York, Borough of
Manhattan; (b) submits to and accepts and consents with regard to any such
action or proceeding for itself and in respect of its properties and assets,
generally and unconditionally, the non-exclusive jurisdiction of any such court;
and (c) waives any objection it may now or hereafter have to the laying of the
venue of any such action, suit, or proceeding, and further waives any claim that
any such action, suit, or proceeding brought in any of the aforesaid courts has
been brought in any inconvenient forum.
SECTION 14.4 WAIVER OF IMMUNITY.
To the extent that the Borrower or any of its Subsidiaries or any of their
respective assets has, or hereafter may acquire, any right to immunity from
suit, set-off, legal proceedings generally, attachment prior to judgment,
attachment in aid of execution, or other attachment or execution of judgment on
the grounds of sovereignty or otherwise, the Borrower for itself, and its
Subsidiaries hereby irrevocably waives, to the fullest extent permitted by
Applicable Law, such rights to immunity in respect of Obligations.
SECTION 14.5 PROCESS AGENT.
The Borrower has appointed CT Corporation System with offices at 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and its successors as the Borrower's designee,
appointee, and agent to receive, accept and acknowledge, for and on behalf of
the Borrower, service of any and all legal process, summons, notices and
documents which may be served in such action, suit or proceeding relating to
this Agreement or the Notes or any other Financing Document in the case of the
courts of the United States District Court of the Southern District of New York
or of the courts of the State of New York sitting in New York, Borough of
Manhattan, which service may be made on any such designee, appointee, and agent
in accordance with legal procedures prescribed for such courts. So long as the
Borrower has any Obligations, the Borrower agrees to take any and all action
necessary to continue such designation in full force and effect and should such
designee, appointee, and agent become unavailable for this purpose for any
reason not attributable to the Borrower, the Borrower shall forthwith grant a
similar special irrevocable power of attorney to a new designee, appointee, and
agent with offices in New York, New York, which shall irrevocably agree to act
as such, with the powers and for purposes specified in this Section 14.5. The
Borrower further irrevocably consents
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and agrees to service of any and all legal process, summons, notices, and
documents out of any of the aforesaid courts in any such action, suit or
proceeding relating to this Agreement, the Notes, or any other Financing
Document delivered to the Borrower in accordance with this Section 14.5 or to
its then designee, appointee, or agent for service. If service is made upon such
designee, appointee, and agent, a copy of such process, summons, notice or
document shall also be provided to the Borrower, by registered or certified
mail, or overnight express air courier, provided that failure to provide such
copy to the Borrower shall not impair or affect in any way the validity of such
service or any judgment rendered in such action or proceedings. The Borrower
agrees that service upon the Borrower or any such designee, appointee, and agent
as provided for in this Section 14.5 shall constitute valid and effective
personal service upon the Borrower with respect to matters contemplated in this
Section 14.5 and that the failure of any such designee, appointee, and agent to
give any notice of such service to the Borrower shall not impair or affect in
any way the validity of such service or any judgment rendered in any action or
proceeding based thereon. Nothing herein shall limit or be construed to limit
the rights of the Lenders to commence proceedings against the Borrower in any
other venue where assets of the Borrower may be found.
SECTION 14.6 LEGAL PROCESS IN OTHER JURISDICTIONS.
Nothing in this Agreement shall affect the right of any Lender or Agent to
serve legal process in any other manner permitted by law or affect the right of
any Lender or any Agent to bring any action or proceeding against the Borrower
or its property in the courts of other competent jurisdictions, including,
without limitation, the courts sitting in the City of Sao Paulo, Brazil.
SECTION 15. THE AGENTS
SECTION 15.1 AUTHORIZATION AND ACTION.
The Lenders hereby appoint and authorize the Administrative Agent and the
Collateral Agent to exercise such powers and discretion under this Agreement and
the other Financing Documents, as are delegated to them, respectively, by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto; provided, however, that notwithstanding the
foregoing or anything else contained in any Financing Document to the contrary,
neither Agent shall be required to take any action or exercise any right or
power that (i) that exposes it to personal liability or that is contrary to this
Agreement or Applicable Law or (ii) would require it to expend or risk its funds
or risk any liability if it shall believe that repayment of such funds or
adequate indemnity against such risk is not reasonably assured to it. The Agents
shall not have any duties or obligations except those expressly set forth
herein. Without limiting the generality of the foregoing, (a) the Agents shall
not be subject to any fiduciary or other implied duties, regardless of whether a
Default or Event of Default has occurred and is continuing, (b) whenever
reference is made in this Agreement or any other Financing Document to any
action, determination, consent, opinion, approval, notice to be taken or given,
or omitted to be taken or given, by the Administrative Agent or the Collateral
Agent, it is understood that, in all cases, the Administrative Agent or the
Collateral Agent shall be acting, determining, consenting, opining, approving or
notifying, or omitting to act, determine, consent, approve or notify, as the
case may be, at the written direction of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in this Agreement), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Affiliates that is communicated to or obtained by the
bank serving as an
Page 69
Agent (or any of its affiliates in any capacity). The Administrative Agent shall
be deemed not to have knowledge of any Default or Event of Default unless and
until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents
of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Sections 6 or 8 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent. Any notice, documents, reports or other communication to
be provided by the Borrower or IMPSAT to the Administrative Agent or the
Collateral Agent hereunder shall be provided at the Borrower's sole expense to
the Lenders at the same time and in the same manner as provided to the
Administrative Agent or the Collateral Agent.
The Collateral Agent may hire a sub-agent with respect to the Collateral,
in which event such sub-agent shall be deemed an "Agent" under this Agreement,
and shall be entitled to the same rights and indemnities as the Collateral
Agent.
Notwithstanding anything contained in this Agreement to the contrary, any
and all notices, reports or other documents to be delivered to either of the
Agents under this Agreement (including, without limitation, under Section 8 of
this Agreement) shall be concurrently delivered to the Lenders and the
Participant.
SECTION 15.2 AGENT'S RELIANCE.
Neither Agent nor any of their respective affiliates, directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with the Financing Documents, except for
its or their own gross negligence or willful misconduct as conclusively
determined by a final non-appealable order of a court of competent jurisdiction.
Without limitation of the generality of the foregoing, the Agents: (a) may treat
the payee of any Note as the holder thereof until the Administrative Agent
receives and accepts an Assignment and Assumption Agreement entered into by the
payee of such Note, as assignor, and an Eligible Assignee; (b) may consult with
legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) make no warranty or
representation to the Lenders and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (d) shall not have any duty to inspect the
property (including the books and records) of the Borrower; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any Lien created or purported to be created under or in connection
with, this Agreement or any other instrument or document furnished pursuant
thereto; (f) shall be entitled to rely conclusively upon and shall incur no
liability under or in respect of this Agreement by relying or acting upon any
notice, consent, request, certificate, statement, document or other instrument
or writing (which may be by facsimile, electronic mail or telex) believed by it
to be genuine and signed or sent by the proper party or parties; and (g) shall
be entitled to rely conclusively upon and shall not incur any liability under or
in respect of this Agreement by relying or acting upon any statement made to
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it orally or by telephone and believed by it to be made by the proper party or
parties.
SECTION 15.3 LENDER CREDIT DECISION.
Each Lender acknowledges that it has, independently and without reliance
upon either Agent and based on the financial statements referred to in Section
7.7 of this Agreement and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.
SECTION 15.4 LENDER INDEMNIFICATION.
The Lenders agree to indemnify each Agent and each of their respective
affiliates, officers, directors, employees, consultants, advisors and agents
ratably according to the respective principal amount of the Notes then held by
the Lenders from and against any and all liabilities, obligations, losses,
claims, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against such Agent in any way relating to or arising out of this
Agreement, the Existing Financing Agreement or any of the other Financing
Documents or any action taken or omitted by such Agent under this Agreement, the
Existing Financing Agreement or any of the other Financing Documents (to the
extent not promptly reimbursed by the Borrower); provided, however, that the
Lenders shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent's gross negligence or willful
misconduct, as conclusively determined by a final non-appealable order of a
court of competent jurisdiction. Without limitation of the foregoing, the
Lenders agree to reimburse each Agent promptly upon demand for its ratable share
of any costs and expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrower under Sections 11.1 and 11.2, to the extent
that such Agent is not promptly reimbursed for such costs and expenses by the
Borrower.
SECTION 15.5 SUCCESSOR AGENTS.
Either Agent may resign at any time by giving written notice thereof to the
Lenders and the Borrower and may be removed at any time with or without cause by
the Required Lenders. If, and only if, an Agent voluntarily resigns, within 10
business days of resignation, such Agent shall repay to the Company an amount
equal to (i) the advanced annual fee that had been paid by the Borrower to such
Agent (the "Advanced Fee") less (ii)(a) the Advanced Fee multiplied by (b) the
number of days that have elapsed since such advance payment became due divided
by 365. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed, and shall have accepted such appointment, within thirty (30) days
after the retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, either (i) appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least one hundred
million Dollars (US$100,000,000) or (ii) apply to any court of competent
jurisdiction to appoint a successor Agent (which successor shall meet the
qualifications set forth in (i) above) to act until such time, if any, as a
successor Agent shall have accepted its appointment as provided above. Upon the
acceptance of any appointment as an Agent hereunder by a
Page 71
successor Agent and, in the case of a successor Collateral Agent, upon the
execution and filing or recording of such instruments or notices, as may be
necessary or desirable, or as the Required Lenders may request, in order to
continue the perfection of the security interests granted or purported to be
granted under the Security Documents, such successor Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as an Agent, the provisions of this Section 15 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement.
SECTION 16. GENERAL PROVISIONS
SECTION 16.1 NOTICES.
All communications and notices provided for hereunder shall be in writing
and shall be personally delivered, mailed by postage prepaid registered mail
(airmail if international), return receipt requested, or telefaxed (with a
confirmation copy by postage prepaid registered mail, return receipt requested):
If to the Borrower: IMPSAT Comunicacoes Ltda.
Rua Eid Xxxxxx 666
Parque Sao Xxxxx
Xxxxx, Sao Paulo, SP
CEP: 00000-000
Xxxxxx
Attention: President
Fax No.: 00 00 0000 0000
If to IMPSAT: IMPSAT Fiber Networks, Inc.
Xxxxxx Xxxxxx de Xxxxxxxxxx 000
Xxxx 0
X0000XXX, Xxxxxx Xxxxx, Xxxxxxxxx
Attention: Chief Financial Officer
Fax No.: (000) 00000-000-0000
If to the Lenders: Xxxxxx Xxxxxxx Senior Funding, Inc.
0 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Fax No. 000-000-0000
If to the Participant: WRH Partners Global Securities, L.P.
W.R. Xxxx Asset Management Co., L.L.C.
00 Xxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Fax No. (000) 000-0000
If to the Administrative Deutsche Bank Trust Company Americas
Agent: 00 Xxxx Xxxxxx, 00xx Xxxxx
Mail Stop: NYC60-2710
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxx, Project Finance Group
Fax No.: (000) 000-0000
If to the Collateral Agent: Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx, 00xx Xxxxx
Mail Stop: NYC60-2710
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxx, Project Finance Group
Fax No.: (000) 000-0000
Page 72
Except as otherwise specified herein, all notices shall be deemed duly given on
the date of actual receipt.
SECTION 16.2 SEVERABILITY OF PROVISIONS.
If any one or more of the provisions contained in this Agreement or any
documents executed in connection herewith shall be invalid, illegal, or
unenforceable in any respect, the validity, legality, and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired.
SECTION 16.3 BINDING EFFECT; SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the benefit of each
Party and its respective successors and assigns, provided that the Borrower
shall not assign or transfer any of its rights or Obligations hereunder except
with the prior written consent of the Administrative Agent and each Lender.
SECTION 16.4 AMENDMENT; WAIVER.
Neither this Agreement nor any Financing Document may be amended, waived,
discharged, or terminated unless such change, waiver, discharge, or termination
is in writing signed by the Required Lenders, the Administrative Agent or the
Collateral Agent, as applicable, and the Borrower, provided, however, that no
such change, waiver, discharge or termination shall, without the consent of each
Lender affected thereby, (a) extend the final maturity of any Loan or Note, or
reduce the rate or extend the time of payment of interest or fees thereon, or
reduce the principal amount hereof, (b) release any of the Collateral except as
shall otherwise be provided in any of the Financing Documents, (c) amend, modify
or waive any provision of this Section 16.4 or Sections 3, 4, 5, 11, 12, 15.4
and 16.6, (d) reduce the percentages specified in the definition of Required
Lenders, or (e) consent to the assignment of any of the rights and Obligations
of the Borrower under this Agreement or any Security Documents. The failure of
any party to enforce at any time any provision hereof or under any of the Notes
or Security Documents shall not be construed to be a waiver of such provisions
or of the right of such party thereafter to enforce any such provision or any
other provision hereof or thereof.
SECTION 16.5 ENTIRE AGREEMENT.
This Agreement and the other Financing Documents constitute the entire
agreement and understanding of the Parties with respect to the subject matter
hereof, and supersede all prior agreements, discussions, and understandings
between the Lenders and the Borrower with respect to the subject matter hereof.
SECTION 16.6 RIGHT OF SET-OFF.
The Borrower's Obligations shall be paid in full in accordance with their
respective terms, and may not be offset against any obligations that any Lender,
or any of their respective Affiliates may owe to the Borrower under any other
agreement. Each of the Lenders shall, to the fullest extent permitted by
Applicable Law, have the right to apply any and all amounts on deposit or on
account (general or special, time or demand, matured or unmatured, in whatever
currency) with it or with any of its branches, Subsidiaries, or Affiliates in
reduction of past due Obligations (whether such Obligations became due at
scheduled maturity, by acceleration or otherwise) of the Borrower hereunder.
Page 73
SECTION 16.7 RELEASE AND WAIVER.
The Borrower hereby releases the Lenders, the Participant and the Agents
and their officers, attorneys, agents, and employees from any liability, suit,
damage, claim, loss or expense of any kind or nature whether known or unknown,
at law or in equity, whatsoever and howsoever arising up to and including the
date hereof that the Borrower or any of its Subsidiaries ever had or now has
against any of them arising out of or relating to any Lender's, the
Participant's or any Agent's acts or omissions with respect to the Existing
Financing Agreement, or any other matters described or referred to herein or
therein. Without limiting the generality of the foregoing release, the Borrower
hereby acknowledges, confirms and agrees that it has no offsets, defenses or
counterclaims against any of the Lenders, the Participants or the Agents with
respect to any of the Obligations or other obligations due and owing to any of
the Lenders, the Participant or the Agents (including, without limitation, those
arising under, pursuant to, or in connection with, the Existing Financing
Agreement and related documents), and to the extent that the Borrower has or had
any such offsets, defenses or counterclaims, Borrower hereby specifically waives
any and all rights to such offsets, defenses and counterclaims and releases the
Lenders, the Participant, the Agents and their officers, attorneys, agents, and
employees from any liability arising on account thereof.
SECTION 16.8 FURTHER ASSURANCES.
The Borrower agrees upon the reasonable request of any Agent or Lender or
Participant promptly to take such actions as are necessary to carry out the
intent of this Agreement and the other Financing Documents.
SECTION 16.9 TERM OF AGREEMENT; SURVIVAL.
Each agreement, representation, warranty, and covenant contained in this
Agreement shall survive any investigation made at any time by or on behalf of
the Lenders. This Agreement shall continue to be in full force and effect and
binding upon the Parties until all of the Borrower's Obligations have been fully
and indefeasibly paid and performed, whereupon this Agreement shall terminate.
Notwithstanding the foregoing, all the indemnification provisions in this
Agreement shall survive and all other provisions which by their terms survive
termination shall so survive.
SECTION 16.10 HEADINGS.
The various headings in this Agreement are intended for convenience only,
and shall not affect the meaning or interpretation of this Agreement.
SECTION 16.11 COUNTERPARTS.
This Agreement may be executed in any number of counterparts (including
facsimile transmissions thereof), each of which when so executed shall be an
original but all of which together shall constitute one instrument.
SECTION 16.12 GUARANTEE IN FULL FORCE AND EFFECT.
IMPSAT reaffirms and confirms that all of its obligations and liabilities
under the Guarantee shall continue and be unimpaired by the effectiveness of
this Agreement and the Debt Restructuring.
SECTION 16.13 CONFIDENTIALITY.
Each of the Parties hereby agrees to maintain the confidentiality of
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the Information (as defined below), except that Information may be disclosed (a)
to its Affiliates, directors, officers, employees and professional advisors,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of and will
agree to be bound by this confidentiality provision), (b) to the extent
requested by any regulatory authority, (c) to the extent required by Applicable
Law including in connection with a public offering of equity or debt securities
of the Borrower or IMPSAT or by any subpoena or similar legal process, (d) to
any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to the execution and
delivery of an agreement containing provisions substantially the same as those
of this Section 16.14, to any assignee of or participant in, or any prospective
assignee of or participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the other Parties, or (h) to the extent such
Information (1) becomes publicly available other than as a result of a breach of
this Section 16.14 or (2) becomes available to such party on a non-confidential
basis from a source other than the other Parties.
For the purposes of this Section 16.14, "INFORMATION" means all information
received from any of the Parties relating to any of the Lenders or their
respective businesses, other than any such information that is available to the
Parties on a non-confidential basis prior to disclosure by any Party. Any Person
required to maintain the confidentiality of Information as provided in this
Section 16.14 shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential Information.
SECTION 16.14 THIRD PARTY BENEFICIARY.
It is acknowledged and agreed that the Participant is intended to be a
third party beneficiary of this Agreement and is entitled to receive the
benefits hereunder and to enforce this Agreement as if it were a party hereto.
SECTION 16.15 COOPERATION.
The Borrower will cooperate (i) with MSSF, the Administrative Agent, if
applicable, and the lead agents for syndication (such lead agents and the
Administrative Agent being referred to collectively as the "SYNDICATION AGENTS")
in the syndication of the Term Loans undertaken by the Syndication Agents, and
(ii) with MSSF and any underwriter or placement agent for the placement or
distribution of the Notes ("PLACEMENT AGENT") by: (a) upon reasonable notice
making senior officers of the Borrower available for a meeting with prospective
assignees and the Syndication Agents, the Placement Agent and their respective
consultants; and (b) providing such other assistance as may be reasonably
requested by the Syndication Agents and the Placement Agent, such as responding
to questions from prospective assignees with respect to the operations, business
plans, results and other matters relating to the Borrower, its Affiliates and
IMPSAT.
SECTION 16.16 NO NOVATION.
It is acknowledged and agreed that this Agreement does not constitute a
novation of the obligations and liabilities under the Existing Financing
Agreement or the Assigned Indebtedness or evidence payment of all or any of such
obligations or liabilities and that the Option, if and when exercised, will not
constitute a novation of this Agreement or the Assigned Indebtedness or evidence
payment of all or any of such obligations or liabilities.
[Signatures on following pages]
Page 75
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the date first written above.
BORROWER:
IMPSAT COMUNICACOES LTDA.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxx
----------------------------------
Its: Executive Officer
----------------------------------
By: /s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
----------------------------------
Its: Executive Officer
----------------------------------
GUARANTOR:
IMPSAT FIBER NETWORKS, INC.
By:
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
Page 76
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first written above.
BORROWER:
IMPSAT COMUNICACOES LTDA.
By:
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
By:
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
GUARANTOR:
IMPSAT FIBER NETWORKS, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Name: Xxxxxx Xxxxxx
Its: Executive Vice President and
Chief Financial Officer
Page 77
LENDERS:
XXXXXX XXXXXXX SENIOR FUNDING, INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
----------------------------------
Its: Authorized Signatory
----------------------------------
Page 78
ADMINISTRATIVE AGENT:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Its: Vice President
----------------------------------
Page 79
COLLATERAL AGENT:
DEUTSCHE BANK TRUST COMPANY AMERICAS
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS COLLATERAL AGENT
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
Page 80
[SCHEDULES
1.1(A) PERMITTED DISPOSALS
1.1(B) PERMITTED INVESTMENTS
2.2 TERM LOAN COMMITMENT
7.1(A) SUBSIDIARIES
7.1(B) ASSUMED NAMES/TRADE NAMES
7.5 PROCEEDINGS
7.10 TRANSACTIONS WITH AFFILIATES
7.11 INDEBTEDNESS
7.12(A) EXISTING LIENS
7.13 INTELLECTUAL PROPERTY
7.15 LICENSES
7.24 FEES PAYABLE IN CONNECTION WITH CONTEMPLATED TRANSACTIONS
9.3 RELEASED COLLATERAL
EXHIBITS
--------
A FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
B IMPSAT GUARANTEE
C FORM OF INTERCOMPANY SUBORDINATION AGREEMENT
D EXISTING MORTGAGE DEEDS
E FORM OF NOTE
Page 81
EXHIBIT A
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT
Reference is made to that certain Financing Agreement dated as of October
25, 1999 (as amended in September 2000, amended and restated as of June 11,
2001, amended October 25, 2001, amended November 24, 2001, amended and restated
as of March 25, 2003 and amended and restated as of July _____, 2005 and as such
agreement may be further assigned, amended, supplemented or otherwise modified,
renewed or replaced from time to time, the ("FINANCING AGREEMENT") among IMPSAT
Comunicacoes Ltda., a company (sociedade por quotas de responsabilidade
limitada) organized pursuant to the laws of Brazil, as Borrower, Nortel Xxxxxx
Xxxxxxx Senior Funding, Inc. ("MSSF") and Deutsche Bank Trust Company Americas
as Administrative Agent and as Collateral Agent; MSSF and the other lenders
party thereto from time to time, as Lenders. Terms defined in the Financing
Agreement are used herein as therein defined unless otherwise defined herein.
_______________ (the "ASSIGNOR") and _______________ (the "ASSIGNEE") hereby
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without recourse
and without representation or warranty (other than as expressly provided
herein), and the Assignee hereby purchases and assumes from the Assignor, as of
the Effective Date (as defined below), the amount of the outstanding Term Loans
of the Assignor, as specified in Annex A hereto, and all of the Assignor's
rights, interest and obligations related thereto under the Financing Agreement.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any liens or security interests; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statement, warranty or representation made in or in connection with the
Financing Agreement or the other Financing Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Financing
Agreement or the other Financing Documents or any other instrument or document
furnished pursuant thereto; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or its Subsidiaries, if any, or the performance or observance by the
Borrower or any of its Subsidiaries of any of their respective obligations under
the Financing Agreement or the other Financing Documents or any other instrument
or document furnished pursuant thereto; and (iv) attaches a copy or copies of
any Note or Notes held by the Assignor evidencing the amounts of the Term Loans
being assigned hereunder.
3. The Assignee (i) confirms that it has received a copy of the Financing
Agreement and the other Financing Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent
or the Collateral Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Financing
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Administrative Agent and the Collateral Agent to take such action
as agent on its behalf and to exercise such powers under the Financing Agreement
and the other Financing Documents as are delegated to the Administrative Agent
and the Collateral Agent, respectively, by the terms thereof, together with
Page 1
such powers as are reasonably incidental thereto; (v) agrees that it will be
bound by the provisions of the Financing Agreement and the other Financing
Documents and will perform in accordance with their terms all of the obligations
which by the terms of the Financing Agreement and the other Financing Documents
are required to be performed by it as a Lender; and (vi) represents and warrants
that it is duly authorized to enter into and perform the terms of this
Assignment and Assumption Agreement.
4. Following the execution of this Assignment and Assumption Agreement by
the Assignor and the Assignee, an executed original hereof (together with all
attachments) will be delivered to the Administrative Agent. The effective date
of this Assignment and Assumption Agreement shall be the date (the "EFFECTIVE
DATE") on which this Assignment and Assumption Agreement is recorded by the
Administrative Agent on the Register in accordance with the procedures set out
in Section 2.1(b) of the Financing Agreement.
5. After the delivery of a fully executed original hereof to the
Administrative Agent, as of the Effective Date, (i) the Assignee- shall be a
party to the Financing Agreement and, to the extent provided in this Assignment
and Assumption Agreement, have the rights and obligations of a Lender thereunder
and under the other Financing Documents and shall be bound by the provisions
thereof and (ii) the Assignor shall, to the extent provided in this Assignment
and Assumption Agreement, relinquish its rights and be released from its
obligations under the Financing Agreement and the other Financing Documents.
6. Concurrently with the delivery of this Assignment and Assumption
Agreement to the Administrative Agent pursuant to Section 12.1(d) of the
Financing Agreement, or as soon thereafter as practicable, the Assignor shall
surrender the Notes evidencing the Term Loans being assigned for cancellation
against delivery to the Assignor and/or the Assignee of one or more Notes
executed by the Borrower in the same amounts of the Term Loans owned
respectively by the Assignor and the Assignee as of the Effective Date.
7. The Assignor and Assignee agree that upon the Effective Date, the
Assignee shall be entitled to all interest on the assigned amount of the Term
Loans at the rates specified in Section 3.3 of the Financing Agreement, such
interest to be paid by the Administrative Agent directly to the Assignee. It is
further agreed that all payments on or after the Effective Date in respect of
the principal amount of the Term Loans being assigned hereunder shall be paid
directly by the Administrative Agent to the Assignee. On the Effective Date or
on any other date as may be agreed upon by the Assignor and the Assignee, the
Assignee shall pay to the Assignor an amount (net of any closing costs)
specified by the Assignor in writing which represents the principal amount of
the outstanding Term Loans of the Assignor being assigned hereunder. The
Assignor and the Assignee shall make all appropriate adjustments in payments
under the Financing Agreement for periods prior to the Effective Date directly
between themselves.
8. This Assignment and Assumption Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution also being made
on Annex A hereto.
Page 2
[NAME OF ASSIGNOR],
as Assignor
By
-------------------------
Name:
Title:
[NAME OF ASSIGNEE],
as Assignee
By
-------------------------
Name:
Title:
Acknowledged, as Administrative Agent:
By
-------------------------
Name:
Title:
Acknowledged, as Collateral Agent:
By
-------------------------
Name:
Title:
Page 3
ANNEX A TO ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Borrower: IMPSAT Comunicacoes Ltda.
2. Name and Date of the Financing Agreement:
Financing Agreement dated as of October 25, 1999 as amended in September
2000, amended and restated as of June 11, 2001, amended October 25, 2001,
amended November 24, 2001, amended and restated as of March 25, 2003, and
amended and restated as of July __, 2005, among IMPSAT Comunicacoes Ltda.,
a company (sociedade por quotas de responsabilidade limitada) organized
pursuant to the laws of Brazil, as Borrower; Xxxxxx Xxxxxxx Senior Funding
("MSSF"), and Deutsche Bank Trust Company Americas as Administrative Agent
and as Collateral Agent; MSSF and the other lenders party thereto from time
to time, as Lenders.
3. Effective Date (to be completed by the Administrative Agent):
4. Amounts (as of the Effective Date):
a. Aggregate amount for all Lenders:
OUTSTANDING TERM LOANS
----------------------
US$_______
b. Aggregate amount for assigning Lender:
OUTSTANDING TERM LOANS
----------------------
US$_______
c. Assigned percentage of the aggregate amount of outstanding Term Loans
of all Lenders:
OUTSTANDING LOANS
-----------------
_______%
d. Principal amount of Term Loans being assigned:
OUTSTANDING LOANS
-----------------
US$__________
5. Rate of Interest:
As set forth in Section 3.3 of the Financing Agreement.
Page 4
6. Notice:
ASSIGNOR:
----------------------
----------------------
----------------------
----------------------
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
----------------------
----------------------
----------------------
----------------------
Attention:
Telephone:
Telecopier:
Reference:
7. Payment Instructions:
ASSIGNOR:
----------------------
----------------------
----------------------
----------------------
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
----------------------
----------------------
----------------------
----------------------
Attention:
Telephone:
Accepted and Agreed:
[NAME OF ASSIGNEE]
By
-------------------------
Name:
Title:
[NAME OF ASSIGNOR]
By
-------------------------
Name:
Title:
Page 5
EXHIBIT B
Execution Copy
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT (thus "GUARANTEE") dated as of March 25,
2003, by IMPSAT Fiber Networks, Inc., a Delaware corporation (the "GUARANTOR"),
is in favor of the Lenders, (each, a "LENDER" and collectively the "LENDERS")
party to that certain Amended and Restated Financing Agreement, dated as of
March 25, 2003, by and among IMPSAT COMUNICACOES LTDA., a company (sociedade por
quotas de responsabilidade limitada) organized pursuant to the laws of Brazil
(the "BORROWER"), said Lenders and Nortel Networks Limited, as Administrative
Agent and Collateral Agent for the Lenders (the "AGENTS") (such agreement, as
the same may hereafter be assigned, amended, modified or restated, the
"FINANCING AGREEMENT"). Terms defined in the Financing Agreement and not
otherwise defined in this Guarantee are used herein as defined in the Financing
Agreement.
W I T N E S S E T H:
WHEREAS, the parties hereto are each party to a Guarantee Agreement
dated as of October 25, 1999 (as the same may have been assigned, amended,
supplemented or otherwise modified, the "EXISTING GUARANTEE") pursuant to which
the Guarantor guaranteed the payment and performance of all the obligations of
the Borrower under that certain Amended and Restated Financing Agreement dated
as of June 11, 2001 as amended pursuant to amendments dated as of October 25,
2001 and November 24, 2001 respectively (as the same may have been further
amended, supplemented or otherwise modified, the "EXISTING FINANCING
AGREEMENT");
WHEREAS, the Borrower and IMPSAT desire to restructure the outstanding
indebtedness under the Existing Financing Agreement (together with all accrued
and unpaid interest thereon, collectively, the "EXISTING DEBT");
WHEREAS, in order to implement a restructuring of the Existing Debt
and a restructuring of certain other obligations of IMPSAT, the Borrower and
other Subsidiaries of IMPSAT, IMPSAT filed (i) a voluntary petition for relief
under Chapter 11 of Title 1l of the United States Code on June 11, 2002 (the
"CHAPTER 11 PROCEEDINGS") and (ii) as part of such Chapter 11 Proceedings a
disclosure statement and plan of reorganization on September 4, 2002 (the
"PLAN") (which was confirmed by the United States Bankruptcy Court for the
Southern District of New York on December 11, 2002);
WHEREAS, thirty-four million Dollars (US$34,000,000) of the principal
amount of the Existing Debt has been assigned to, and assumed by, the Guarantor
immediately prior hereto;
WHEREAS, the Lenders have agreed to restructure the remaining balance
of the Existing Debt (the "EXISTING DEBT BALANCE") in the aggregate principal
amount of ninety-one million two hundred thousand Dollars (US$91,200,000)
pursuant to the terms of the Financing Agreement;
WHEREAS, the Existing Guarantee is to be terminated in accordance with
the Plan, and
WHEREAS, the Guarantor is the corporate parent of the Borrower and,
accordingly, the Guarantor has a direct financial interest in inducing the
Lenders to restructure the Existing Debt Balance as set forth above,
NOW, THEREFORE, in consideration of the foregoing promises and to
induce the Lenders to enter into the Financing Agreement and to restructure the
Existing Debt Balance in accordance with the terms and conditions of the
Financing Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Guarantor, for the benefit
of the Lenders hereby agrees as follows:
Section 1. Guarantee. The Guarantor hereby unconditionally and
irrevocably guarantees to the Lenders and the Agents the punctual payment and
performance when due, whether at stated maturity or by acceleration or
otherwise, of the Obligations. The Guarantor agrees that this Guarantee is a
present and continuing guarantee of payment and not of collectibility, and that
the Lenders and the Agents shall not be required to prosecute collection,
enforcement or other remedies against the Borrower or any other Person, or to
enforce any other rights or remedies pertaining thereto, including with respect
to the Collateral, before requiring payment from the Guarantor.
Page 6
Section 2. Guarantee Absolute.
------------------
(a) Primary Obligation of the Guarantor. The obligations of the
Guarantor hereunder are those of a primary obligor, and not merely a surety, and
are independent of the Obligations. A separate action or actions may be brought
against the Guarantor whether or not an action is brought against the Borrower,
any other guarantor or other obligor in respect of the Obligations or whether
the Borrower, any other guarantor or any other obligor in respect of the
Obligations are joined in any such action or actions.
(b) Guarantee of Payment. The Guarantor guarantees that the
Obligations will be paid and performed strictly in accordance with the terms of
the Financing Agreement and the other Financing Documents regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Lenders or the Agents with respect thereto.
The liability of the Guarantor under this Guarantee shall be absolute and
unconditional irrespective of:
(i) any lack of genuineness, validity, legality or
enforceability of the Financing Agreement, any other Financing Document or any
other document, agreement or instrument relating thereto or any assignment or
transfer thereof;
(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations, or any waiver,
indulgence, compromise, renewal, extension, amendment, modification of, or
addition, consent, supplement to, or consent to departure from, or any other
action or inaction under or in respect of, the Financing Agreement or any other
Financing Document or any document, instrument or agreement relating to the
Obligations or any other instrument or agreement referred to therein or any
assignment or transfer of any thereof;
(iii) any release or partial release of any other guarantor
or outer obligor in respect of the Obligations;
(iv) any exchange, release or non-perfection of the
Collateral or any release, or amendment or waiver of, or consent to departure
from, any guarantee or security, for all or any of the Obligations;
(v) any furnishing of any additional security by the
Borrower or any other obligor or guarantor for any of the Obligations;
(vi) the liquidation, bankruptcy, insolvency or
reorganization of the Borrower, any other guarantor or other obligor in respect
of the Obligations or any action taken with respect to this Guarantee by any
trustee or receiver, or by any court, in any such proceeding;
(vii) any modification or termination of any intercreditor
or subordination agreement pursuant to which the claims of other creditors of
the Borrower or the Guarantor are subordinated to those of the Lenders; or
(viii) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge of, the
Borrower or any guarantor.
Page 7
(c) Insolvency, etc. This Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment or
performance of the Obligations, or any part thereof, is, upon the insolvency,
bankruptcy or reorganization of the Borrower or any guarantor or otherwise
pursuant to applicable law, rescinded or reduced in amount or must otherwise be
restored or returned by the Lenders, all as though such payment or performance
had not been made.
(d) Acceleration. If an event permitting the acceleration of any
of the Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency against
the Borrower of a case or proceeding under any bankruptcy or insolvency law, the
Guarantor agrees that, for purposes of this Guarantee and its obligations
hereunder, the Obligations shall be deemed to have been accelerated and the
Guarantor shall forthwith pay such Obligations (including, without limitation,
interest which but for the filing of a petition in bankruptcy with respect to
the Borrower, would accrue on such Obligations), and the other obligations
hereunder, without any further notice or demand.
Section 3. Continuing Guarantee. This Guarantee is a continuing
guarantee and shall (a) remain in full force and effect until the indefeasible
payment in full of the Obligations and all other amounts payable under this
Guaranty; (b) be binding upon the Guarantor, its successors and assigns; and (c)
inure to the benefit of the Lenders and the Agents and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), the Lenders and the Agents may assign or otherwise
transfer their rights and obligations under the Financing Agreement to any
Eligible Assignees and successor Agents in accordance with the terms of the
Financing Agreement, and such Eligible Assignees and successor Agents shall
thereupon become vested with all the benefits in respect thereof granted to the
Lenders and the Agents herein or otherwise.
Section 4. Waivers. The Guarantor hereby waives promptness, diligence,
notice of intention to accelerate, notice of acceleration, notice of acceptance
and any and all other notices with respect to any of the Obligations and this
Guarantee and any requirement that the Lenders or the Agents protect, secure,
perfect or insure any security interest in, or any lien on, any property subject
thereto or exhaust any right or take any action against the Borrower, any other
guarantor or any other Person or any collateral or security or any balance of
any deposit accounts or credit on the books of the Lenders or the Agents in
favor of the Borrower or any other guarantors.
Sections 5. Subrogation.
-----------
(a) Right Not Exercisable Before Obligations Fully Satisfied. The
Guarantor agrees that it will not exercise any rights of subrogation,
reimbursement and contribution, contractual, statutory or otherwise which it may
acquire by way of subrogation under this Guarantee, by any payment hereunder or
otherwise, nor shall the Guarantor seek contribution from any other guarantor
until all of the Obligations of the Borrower have been paid in full in cash and
all Financing Documents have terminated.
(b) Consent to Actions. If, in the exercise of any of their
rights and remedies, the Lenders or the Agents shall forfeit any of such rights
or remedies, including their right to enter a deficiency judgment against the
Borrower or any other Person, whether because of any applicable laws pertaining
to "election of remedies" or the like, the Guarantor hereby consents to such
action by any of the Lenders and the Agents and waives any claim based upon such
action, even if such action shall result in a full or
Page 8
partial loss of any rights of subrogation which the Guarantor might otherwise
have had but for such action by any of the Lenders or the Agents. Any election
of remedies which results in the denial or impairment of the right of the
Lenders the Agents to seek a deficiency judgment against the Borrower shall not
impair the Guarantor's obligation to pay the full amount of the Obligations.
Section 6. Payments.
--------
(a) Payment in Full in Dollars. All payments to be made by the
Guarantor under this Guarantee shall be made by the Guarantor in U.S. Dollars in
full without any deduction for or on account of any set-off or counterclaim.
(b) Application of Payments. Any payment received by any of the
Lenders or the Agents from the Guarantor under this Agreement shall be applied
as follows:
First, to the payment of costs and expenses of collection
and all expenses (including, without limitation, attorney fees),
liabilities and advances made or incured by the Lenders or the Agents
in connection therewith;
Next, to the Administrative Agent for the account of the
Lenders to be applied against the then-outstanding amount of the
Obligations owed; and
Finally, after payment in full of all Obligations, any
surplus remaining shall be paid to the Guarantor, or its successors
and assigns, or to whomsoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
(c) Taxes. All payments by the Guarantor under this Guarantee
shall be made free and clear of, and without withholding or deduction or for, or
on account of any Taxes (other than Excluded Taxes). If any Taxes (other than
Excluded Taxes) are required by Applicable Law to be withheld or deducted from
or in respect of any sum payable under this Guarantee, (i) the Guarantor shall
pay such additional amount as may be necessary to ensure that after reduction
for all required withholdings or deductions for such Taxes (including
withholdings or deductions applicable to additional sums payable under this
Subsection (6(c)), the net amount actually received by the Lenders free and
clear of such withholding or deduction is equal to the amount the Lenders would
have received had no such withholdings or deductions been made; (ii) the
Guarantor shall make such withholdings or deductions; and (iii) the Guarantor
shall pay the full amount withheld or deducted to the relevant Governmental
Authority in accordance with Applicable Law and prior to the date on which
penalties attach thereto.
(d) Tax Indemnification. The Guarantor shall indemnify and hold
the Lenders harmless from and against, and shall reimburse the Lenders on demand
for, the full amount of Taxes (including, without limitation, any Taxes imposed
on amounts payable under this Section 6) paid by the Lenders (other than
Excluded Taxes), and for any loss, liability, claim or expense (including
penalties, interest, and legal fees) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted and which the
Lenders may incur at any time arising out of, or in connection with, any failure
of the Guarantor to make any payment of such Taxes when due.
Page 9
Section 7. Further Assurances. The Guarantor agrees that at any time
and from time to time, at the expense of the Guarantor, the Guarantor will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that the Lenders or the
Agents may reasonably request, to enable the Lenders and the Agents to protect
and to exercise and enforce their rights and remedies hereunder.
Section 8. Right to Set-off. Upon the occurrence and during the
continuance of any Event of Default under the Financing Agreement, each of the
Lenders and the Agents is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender or Agents to or for
the credit or the account of the Guarantor against any and all of the
Obligations, irrespective of whether or not such Lender or Agents shall have
made any demand under this Guarantee and although such Obligations may be
contingent and unmatured. Any Lender or Agents which sets off pursuant to this
Section 8 shall give prompt notice to the Guarantor following the occurrence
thereof; provided that the failure to give such notice shall not affect the
validity of the set-off.
Section 9. Decisions Relating to Exercise of Remedies. Notwithstanding
anything in this Guarantee to the contrary, the Lenders and the Agents may
exercise all rights and remedies provided for herein and provided by law.
Section 10. Representations and Warranties. The Guarantor makes the
same representations and warranties to the Lenders and the Agents as those made
by the Borrower in the Financing Agreement, which are incorporated herein in
their entirety.
Section 11. Additional Covenants of Guarantor.
---------------------------------
(a) Definitions. As used in this Section 11, the following
terms shall have the meanings given them below.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person
existing at the time such Person becomes a Restricted Subsidiary or assumed in
connection with an Asset Acquisition by a Restricted Subsidiary and not Incurred
in connection with, or in anticipation of, such Person becoming a Restricted
Subsidiary or such Asset Acquisition.
"ADJUSTED CONSOLIDATED NET INCOME" means for any
period, the aggregate net income (or loss) of the Guarantor and its Restricted
Subsidiaries, for such period determined in conformity with U.S. GAAP; provided
that the following items shall be excluded in computing Adjusted Consolidated
Net Income (without duplication); (i) the net income (or loss) of any Person
that is not a Restricted Subsidiary, except (x) with respect to net income, to
the extent of the amount of dividends or other distributions actually paid to
the Guarantor or any of its Restricted Subsidiaries by such Person during such
period and (y) with respect to net losses, to the extent of the amount of
Guarantor Investments made by the Guarantor or any Restricted Subsidiary in such
Person during such period; (ii) solely for the purposes of calculating the
amount of Restricted Payments that may be made pursuant to Clause (C) of the
first paragraph of Subsection 11(b)(2) (and in such case, except to the extent
includable pursuant to clause (i) above), the net income (or loss) of any Person
accused prior to the date it becomes a Restricted Subsidiary or is merged into
or consolidated with the Guarantor or any of its Restricted Subsidiaries or all
or substantially all of the property and assets of such Person are acquired by
the Guarantor or any of its Restricted Subsidiaries; (iii) the net income of any
Restricted Subsidiary (other than the Borrower)
Page 10
(A) to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income is not at the
time permitted by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary and (B) equal to the portion, if any,
thereof that would be required to be withheld for taxes with respect to the
payment of dividends or distributions on the Capital Stock of such Restricted
Subsidiary during the relevant period if such net income were to be declared and
distributed to the shareholders of such Restricted Subsidiary; (iv) any gains or
losses (on an after-tax basis) attributable to Asset Sales or other dispositions
not effected in the ordinary course of business; (v) any extraordinary gains and
losses (on an after-tax basis); and (vii) any gains and losses from a cumulative
change in accounting policy.
"ASSET ACQUISITION" means (i) an investment by the
Guarantor or any of its Restricted Subsidiaries in any other Person pursuant to
which such Person shall become a Restricted Subsidiary or shall be merged into
or consolidated with the Guarantor or any of its Restricted Subsidiaries;
provided that such Person's primary business is related, ancillary or
complementary to the businesses of the Guarantor and its Restricted Subsidiaries
on the Closing Date or (ii) an acquisition by the Guarantor or any of its
Restricted Subsidiaries of the property and assets of any Person other than the
Guarantor or any of its Restricted Subsidiaries that constitute substantially
all of a division or line of business of such Person; provided that the property
and assets acquired are related, ancillary or complementary to the businesses of
the Guarantor and its Restricted Subsidiaries on the Closing Date.
"ASSET DISPOSITION" means the sale or other disposition
by the Guarantor or any of its Restricted Subsidiaries (other than to the
Guarantor or another Restricted Subsidiary) or (i) all or substantially all of
the Capital Stock of any Restricted Subsidiary or (ii) all or substantially all
of the assets that constitute a division or line of business of the Guarantor or
any of its Restricted Subsidiaries.
"ASSET SALE" means any sale, transfer or other
disposition (including by way of merger, consolidation or sale-leaseback
transaction) in one transaction or a series of related transactions by the
Guarantor or any of its Restricted Subsidiaries to any Person other than the
Guarantor or any of its Restricted Subsidiaries of (i) any shares of the Capital
Stock of any Restricted Subsidiary, (ii) all or substantially all of the
property and assets of an operating unit or business of the Guarantor or any of
its Restricted Subsidiaries or (iii) any other property and assets of the
Guarantor or any of its Restricted Subsidiaries outside the ordinary course of
business of the Guarantor or such Restricted Subsidiary; provided that "Asset
Sale" shall not include (a) sales or other dispositions of equipment that has
become obsolete or no longer useful in the business of the Guarantor or its
Restricted Subsidiaries or inventory, receivables and other current assets; (b)
sales, transfers or other dispositions of assets constituting a Restricted
Payment permitted to be made under Subsection 11(b)(2); (c) sales, transfers or
other dispositions of assets with a fair market value (as certified in an
Officers' Certificate) not in excess of $1.0 million in any transaction or
series of related transactions; (d) sales or other dispositions of assets for
consideration at least equal to the fair market value of the assets sold or
disposed of, if the consideration received consists solely of property or assets
of the kind described in clause (B) of Subsection 11(b)(9), (e) any long-term
assignment of capacity on the Guarantor's telecommunications network in an
amount between $1.0 million and $5.0 million pursuant to any transaction or
series of related transactions that has been approved by an affirmative vote of
the Board of Directors of the Guarantor, (f) any long-term assignment of
capacity on the Guarantor's telecommunications
Page 11
network in an amount in excess of $5.0 million pursuant to any transaction or
series of related transactions that has been approved by an affirmative vote of
at least two-thirds of the Board of Directors of the Guarantor, or (g) issuances
and sales of Common Stock of Restricted Subsidiaries in accordance with clauses
(i), (iii) or (v) of Subsection 11(b)(4).
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
U.S. GAAP.
"AVERAGE LIFE" means, at any date of determination with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the products of (a) the number of years from such date of determination to the
dates of each successive scheduled principal payment of such debt security and
(b) the amount of such principal payment by (ii) the sum of all such principal
payments.
"BOARD OF DIRECTORS" means the Board of Directors of
the Guarantor or any committee of such Board of Directors duly authorized to act
with respect to this Guarantee.
"CAPITAL STOCK" means, with respect to any Person, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) in equity of such Person, whether
outstanding on the Closing Date or issued thereafter, including, without
limitation, all Common Stock and Preferred Stock.
"CAPITALIZED LEASE" means, as applied to any Person,
any lease of any property (whether real, personal or mixed) of which the
discounted present value of the rental obligations of such Person as lessee, in
conformity with U.S. GAAP, is required to be capitalized on the balance sheet of
such Person.
"CAPITALIZED LEASE OBLIGATIONS" means the discounted
present value of the rental obligations under a Capitalized Lease.
"COMMON STOCK" means, with respect to any Person, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person's common stock, whether
now outstanding or issued after the date hereof, including, without limitation,
all series and classes of such common stock.
"CONSOLIDATED EBITDA" means, for any period, Adjusted
Consolidated Net Income for such period plus (without duplication), to the
extent such amount was deducted in calculating such Adjusted Consolidated Net
Income, (i) Consolidated Interest Expense; (ii) income taxes (other than income
taxes (either positive or negative) attributable to extraordinary and
non-recurring gains or losses or sales of assets) and any minimum net asset
taxes payable by any Restricted Subsidiary in a foreign jurisdiction as a result
of generating income before taxes, (iii) depreciation expense, (iv) amortization
expense (excluding amortization expense attributable to a prepaid cash item that
was paid in a prior period), and (v) all other non-cash items reducing Adjusted
Consolidated Net Income (other than items that will require cash payments and
for which an accrual or reserve is, or is required by U.S. GAAP to be, made and
other amortization expense attributable to a prepaid cash item that was paid in
a prior period), less all non-cash items
Page 12
increasing Adjusted Consolidated Net Income, and all as determined on a
consolidated basis for the Guarantor and its Restricted Subsidiaries in
conformity with U.S. GAAP; provided that, if any Restricted Subsidiary is not a
Wholly-Owned Restricted Subsidiary (other than the Borrower), Consolidated
EBITDA shall be reduced (to the extent not otherwise reduced in accordance with
U.S. GAAP) by an amount equal to (A) the amount of the Adjusted Consolidated Net
Income attributable to such Restricted Subsidiary multiplied by (B) the
percentage ownership interest in the income of such Restricted Subsidiary not
owned on the last day of such period by the Guarantor or any of its Restricted
Subsidiaries.
"CONSOLIDATED FIXED CHARGES" means, with respect to the
Guarantor and its Restricted Subsidiaries for any period, the sum, without
duplication, of (1) Consolidated Interest Expense, plus (2) the product of (x)
the amount of all dividend payments on any series of Preferred Stock of the
Guarantor and its Restricted Subsidiaries (other than dividends paid in Capital
Stock of the Guarantor (excluding Disqualified Stock) and other than dividends
paid to the Guarantor or to a Wholly-Owned Restricted Subsidiary of the
Guarantors) paid, accrued or scheduled to be paid or accrued during such period
times (y) a fraction, the numerator of which is one and the denominator of which
is one minus the then current effective consolidated federal, state and local
tax rate of such Person, expressed as a decimal.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to
any period, the aggregate of the interest expense of the Guarantor and its
Restricted Subsidiaries for such period determined in accordance with U.S. GAAP,
plus (to the extent not included in such aggregate interest expense, and to the
extent incurred by the Guarantor or its Restricted Subsidiaries), without
duplication, (a) amortization of debt discount and amortization of write-off of
deferred financing costs; (b) the interest portion of any deferred payment
obligation, calculated in accordance with the effective interest method of
accounting; (c) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing; (d) the net
costs associated with Interest Rate Agreements; (e) interest paid or accrued (by
any Person) on Indebtedness that is Guaranteed or secured by such Person or any
of its Restricted Subsidiaries); and (f) all but the principal component of
rentals in respect of Capitalized Lease Obligations paid, accrued or scheduled
to be paid or to be accrued by the Guarantor and its Restricted Subsidiaries
during such period all as determined on a consolidated basis for the Guarantor
and its Restricted Subsidiaries in conformity with U.S. GAAP; excluding,
however, any amount of such interest of any Restricted Subsidiary if the net
income of such Restricted Subsidiary is excluded in the calculation of Adjusted
Consolidated Net Income pursuant to clause (iii) of the definition thereof (but
only in the same proportion as the net income of such Restricted Subsidiary is
excluded from the calculation of Adjusted Consolidated Net Income pursuant to
clause (iii) of the definition thereof).
"CURRENCY AGREEMENT" means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement.
"DISQUALIFIED STOCK" means any class or series of
Capital Stock of any Person that by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable at the option of
the holder) or upon the happening of any event or otherwise is (i) required to
be redeemed prior to the Maturity Date, (ii) redeemable at the option of the
holder of such class or series of Capital Stock at any time prior to the
Maturity Date or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Maturity Date;
Page 13
provided that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of a "change of
control" occurring prior to the Maturity Date shall not constitute Disqualified
Stock if the "change of control" provisions applicable to such Capital Stock are
no more favorable to the holders of such Capital Stock than the provisions in
favor of the Lenders that are contained in the Financing Agreement.
"FAIR MARKET VALUE" means the price that would be paid
in an arms'-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors, whose determination shall
be conclusive if evidenced by a resolution of the Board of Directors.
"FIXED CHARGE COVERAGE RATIO" means, with respect to
the Guarantor and its Restricted Subsidiaries, on any Transaction Date, the
ratio of Consolidated EBITDA to Consolidated Fixed Charges for the then most
recent four fiscal quarters for which financial statements of the Guarantor have
been provided to the Administrative Agent pursuant to Section 8.1(a)(2) of the
Financing Agreement (such four fiscal quarter period being the "Four Quarter
Period"); provided that, in making the foregoing calculation, (A) pro forma
effect shall be given to Asset Sales and other dispositions not effected in the
ordinary course of business and Asset Acquisitions (including giving pro forma
effect to the application of proceeds of any Asset Sales and other dispositions
not effected in the ordinary course of business) that occur from the beginning
of the Four Quarter Period through the Transaction Date (the "Reference
Period"), as if they had occurred and such proceeds had been applied on the
first day of such Reference Period; (B) pro forma effect shall be given to asset
dispositions and asset acquisitions (including giving pro forma effect to the
application of proceeds of any asset disposition) that have been made by any
Person that has become a Restricted Subsidiary or has been merged with or into
the Guarantor or any Restricted Subsidiary during such Reference Period that
would have required adjustment under clause (A) had such transactions occurred
when such Person was a Restricted Subsidiary as if such asset dispositions or
asset acquisitions had occurred on the first day of such Reference Period; and
(C) pro forma effect shall be given to any Incurrence, assumption, guarantee,
repayment, repurchase or redemption of any Indebtedness (other than the
Incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities) or issuance,
repurchase or redemption of Preferred Stock by the Guarantor or any of its
Restricted Subsidiaries during the Reference Period, as if the same had occurred
on the first day of such Reference Period. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Fixed Charge Coverage Ratio" (1) interest on
outstanding Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the average rate of interest on
such Indebtedness in effect on the 30 business days preceding the Transaction
Date; (2) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; and (3) notwithstanding clause
(1) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by any Interest Rate Agreement, shall be deemed
to accrue at the rate per annum resulting after giving effect to the operation
of such agreement.
Page 14
"GUARANTEE" means any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services (unless such purchase
arrangements are on arm's-length terms and are entered into in the ordinary
course of business), to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"GUARANTOR INVESTMENT" in any Person means any direct
or indirect advance, loan or other extension of credit (including, without
limitation, by way of Guarantee or similar arrangement; but excluding advances
to customers (other than Unrestricted Subsidiaries of the Guarantor) and
accounts payable to suppliers in the ordinary course of business that are, in
conformity with U.S. GAAP recorded as accounts receivable or accounts payable,
as the case may be, on the balance sheet of the Guarantor or its Restricted
Subsidiaries and Trade Payables) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, bonds, notes, debentures or other similar instruments issued by,
such Person and shall include (i) the designation of a Restricted Subsidiary as
an Unrestricted Subsidiary and (ii) the fair market value of the Capital Stock
(or any other Guarantor Investment), held by the Guarantor or any of its
Restricted Subsidiaries, of (or in) any Person that has ceased to be a
Restricted Subsidiary, including without limitation, by reason of any
transaction permitted by clause (iii) of Subsection 11(b)(4). For purposes of
the definition of "Unrestricted Subsidiary" and Subsection 11(b)(4), (i)
"Guarantor Investment" shall include the fair market value of the assets (net of
liabilities, other than liabilities to the Guarantor or any of its Restricted
Subsidiaries) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities, other than liabilities to the Guarantor or
any of its Restricted Subsidiaries) of any Unrestricted Subsidiary at the time
that such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Guarantor Investments and (iii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer.
"INCUR" means, with respect to any Indebtedness, to
incur, create, issue, assume, Guarantee or otherwise become liable for or with
respect to, or become responsible for, the payment of, contingently or
otherwise, such Indebtedness, including, with respect to the Guarantor and its
Restricted Subsidiaries, an "Incurrence" of Acquired Indebtedness; provided that
neither the accrual of interest nor the accretion of original issue discount
shall be considered an Incurrence of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person at any
date of determination (without duplication), (i) all indebtedness of such Person
for borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect
Page 15
thereto, but excluding obligations with respect to letters of credit (including
trade letters of credit) securing obligations (other than obligations described
in (i) or (ii) above or (v), (vi) or (vii) below) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later
than the third Business Day following such drawing), (iv) all obligations of
such Person to pay the deferred and unpaid purchase price of property or
services, all obligations of such Person under any title retention agreement and
all conditional sale obligations of such Person, except Trade Payables, (v) all
Capitalized Lease Obligations of such Person and all Attributable Debt in
respect of sale leaseback transactions entered into by such Person, (vi) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; provided that the
amount of such Indebtedness shall be the lesser of (A) the fair market value of
such asset at such date of determination and (B) the amount of such
Indebtedness, (vii) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock, (viii)
all Indebtedness of other Persons Guaranteed by such Person to the extent such
Indebtedness is Guaranteed by such Person and (ix) to the extent not otherwise
included in this definition, obligations under Currency Agreements and Interest
Rate Agreements. The amount of Indebtedness of any Person at any date shall be
(without duplication) the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations, the
maximum liability upon the occurrence of the contingency giving rise to the
obligation, provided (A) that the amount outstanding at any time of any
Indebtedness issued with original issue discount is the original issue price of
such Indebtedness and (B) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
"INDENTURES" means the Series A Indenture and the
Series B Indenture.
"INTEREST RATE AGREEMENT" means any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest cap agreement, interest rate
collar agreement, interest rate hedge agreement, option or future contract or
other similar agreement or arrangement.
"NET CASH PROCEEDS" means (a) with respect to any Asset
Sale of an asset or property not constituting Capital Stock, the proceeds of
such Asset Sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Guarantor or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) actually
incurred related to such Asset Sale, (ii) provisions for all taxes paid or are
payable as a result of such Asset Sale, (iii) payments made to repay
Indebtedness outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold in such Asset Sale or (B) is
required to be paid as a result of such Asset Sale and (iv) appropriate amounts
to be provided by the Guarantor or any Restricted Subsidiary as a reserve
against any liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in conformity
with U.S. GAAP and (b) with respect to any issuance or sale of
Page 16
Capital Stock, the proceeds of such issuance or sale, in the form of cash or
cash equivalents, including payments in respect of deferred payment obligations
(to the extent corresponding to the principal, but not interest, component
thereof) when received in the form of cash or cash equivalents (except to the
extent such obligations are financed or sold with recourse to the Guarantor or
any Restricted Subsidiary) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of items of the type
referred to in clauses (a)(i) and (ii) above.
"OFFICER" means, with respect to any Person, (i) the
Chairman of the Board, the Vice Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, and (ii) the Treasurer or any Assistant
Treasurer, or the Secretary or any Assistant Secretary.
"OFFICERS' CERTIFICATE" means a certificate signed by
one Officer listed in clause (i) of the definition thereof and one Officer
listed in clause (ii) of the definition thereof, provided, however, that any
such certificate may be signed by any two of the Officers listed in clause (i)
of the definition thereof in lieu of being signed by one Officer listed in
clause (i) of the definition thereof and one Officer listed in clause (ii) of
the definition thereof.
"PERMITTED GUARANTOR INVESTMENT" means (i) a Guarantor
Investment in the Guarantor or a Restricted Subsidiary or a Person that will,
upon the making of such Guarantor Investment, become a Restricted Subsidiary or
be merged or consolidated with or into or transfer or convey all or
substantially all its assets to, the Guarantor or a Restricted Subsidiary;
provided that such Person's primary business is related, ancillary or
complementary to the businesses of the Guarantor and its Restricted Subsidiaries
on the Closing Date; (ii) Temporary Cash Investments; (iii) payroll, travel and
similar advances made in the ordinary course of business to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with U.S. GAAP; (iv) loans or advances to employees made in the
ordinary course of business in accordance with past practice of the Guarantor or
its Restricted Subsidiaries and that do not in the aggregate exceed $1 million
at any time outstanding; (v) stock, obligations or securities received in
satisfaction of judgments, work-outs or similar arrangements; and (vi)
participations in Indebtedness of any Restricted Subsidiary permitted to be
Incurred by clause (x) of the second paragraph of Subsection 11 (b)(1).
"PERMITTED GUARANTOR LIENS" mans (i) Liens for taxes,
assessments, governmental charges or claims that are being contested in good
faith by appropriate legal proceedings promptly instituted and diligently
conducted and for which a reserve or other appropriate provision, if any, as
shall be required in conformity with U.S. GAAP shall have been made; (ii)
statutory and common law Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other similar Liens arising in
the ordinary course of business and with respect to amounts not yet delinquent
or being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other appropriate
provision, if any, as shall be required in conformity with U.S. GAAP shall have
been made; (iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security; (iv) Liens incurred or deposits made to secure
the performance of tenders, bids, leases, statutory or regulatory obligations,
bankers' acceptances, surety and appeal bonds, contracts (other than for
Indebtedness), performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money) and any bank's unexercised right
of setoff with respect to deposits made in the ordinary
Page 17
course of business of the Guarantor or any Restricted Subsidiary; (v) easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
detract from the value of the property so encumbered; (vi) Liens (including
extensions and renewals thereof) to finance the acquisition of real or personal
property acquired after the Closing Date; provided that (a) such Lien is created
solely for the purpose of securing Indebtedness Incurred, in accordance with
Subsection 11(b)(1), (1) to finance the cost (including the cost (other than the
internal costs of the Guarantor or any of its Subsidiaries) of design,
development, acquisition, construction, installation, improvement,
transportation or integration) of acquiring the item of property or assets
subject thereto and such Lien is created prior to, at the time of or within six
months after the later of the acquisition, the completion of construction or the
commencement of full operation of such property or (2) to refinance any
Indebtedness previously so secured, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such cost and (c) any such Lien
shall not extend to or cover any property or assets other than such item of
property or assets and any improvements on such item; (vii) leases or subleases
granted to others in the ordinary course of business that do not materially
interfere with the ordinary course of business of the Guarantor and its
Restricted Subsidiaries, taken as a whole; (viii) Liens encumbering property or
assets under construction arising from progress or partial payments by a
customer of the Guarantor or its Restricted Subsidiaries relating to such
property or assets; (ix) any interest or title of a lessor in the property
subject to any Capitalized Lease or operating lease; (x) Liens arising from
filing by a lessor of Uniform Commercial Code financing statements regarding the
related lease; (xi) Liens on property of, or on shares of Capital Stock or
Indebtedness of, any Person existing at the time such Person becomes, or becomes
a part of, any Restricted Subsidiary; provided that (A) such Liens do not extend
to or cover any property or assets of the Guarantor or any Restricted Subsidiary
other than the property or assets acquired and (B) the Indebtedness secured by
such Liens is permitted to be Incurred under clause (viii) of the second
paragraph of Subsection 11(b)(1); (xii) Liens in favor of the Guarantor or any
Restricted Subsidiary; (xiii) Liens arising from the rendering of a final
judgment or order against the Guarantor or any Restricted Subsidiary that does
not give rise to an Event of Default; (xiv) Liens securing reimbursement
obligations with respect to letters of credit that encumber documents and other
property relating to such letters of credit and the products and proceeds
thereof; (xv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods in the ordinary course of business; (xvi) Liens encumbering
customary initial deposits and margin deposits, and other Liens that are within
the general parameters customary in the industry and incurred in the ordinary
course of business, in each case, securing Indebtedness under Interest Rate
Agreements, Currency Agreements and forward contracts, options, future
contracts, futures options or similar agreements or arrangements designed solely
to protect the Guarantor or any of its Restricted Subsidiaries from fluctuations
in interest rates, currencies or the price of commodities; (xvii) Liens arising
out of conditional sale, title retention, consignment or similar arrangements
for the sale of goods entered into by the Guarantor or any of its Restricted
Subsidiaries in the ordinary course of business in accordance with the past
practices of the Guarantor and its Restricted Subsidiaries prior to the Closing
Date; (xviii) Liens securing Indebtedness permitted to be Incurred pursuant to
clause (vii) of the second paragraph of Subsection 11(b)(1); and (xix) Liens
that secure Indebtedness with an aggregate principal amount not in excess of $5
million at any time outstanding.
"PERSON" means an individual, a corporation, a
partnership, a limited liability company, an association, a trust or any other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Page 18
"PREFERRED STOCK." means, with respect to any Person,
any and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person's preferred or
preference stock, whether now outstanding or issued after the date hereof,
including, without limitation, all series and classes of such preferred or
preference stock.
"RESTRICTED PAYMENTS" has the meaning provided in
Subsection 11(b)(2).
"RESTRICTED SUBSIDIARY" means any Subsidiary of the
Guarantor other than an Unrestricted Subsidiary.
"SECURITIES" means any of the securities issued under
the Series A Indenture or the Series B Indenture.
"SERIES A INDENTURE" means the Indenture dated as of
March 25, 2003 among the Guarantor as Issuer, the Borrower as Guarantor and The
Bank of New York, as Trustee, relating to the Series A 6% Senior Guaranteed
Convertible Notes due 2010 of the Guarantor.
"SERIES B INDENTURE" means the Indenture dated as of
March 25, 2003 among the Guarantor as Issuer, the Borrower as Guarantor and The
Bank of New York, as Trustee, relating to the Series B 6% Senior Guaranteed
Convertible Notes due 2010 of the Guarantor.
"SIGNIFICANT SUBSIDIARY" means, at any date of
determination, any Restricted Subsidiary that, together with its Subsidiaries,
(i) for the most recent fiscal year of the Guarantor, accounted for more than
10% of the consolidated revenues of the Guarantor and its Restricted
Subsidiaries or (ii) as of the end of such fiscal year, was the owner of more
than 10% of the consolidated assets of the Guarantor and its Restricted
Subsidiaries, all as set forth on the consolidated financial statements of the
Guarantor for the fiscal year most recently sent to the Administrative Agent
pursuant to Section 8.01(a)(2) of the Financing Agreement.
"STATED MATURITY" means (i) with respect to any debt
security, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable and
(ii) with respect to any scheduled installment of principal of or interest on
any debt security, the date specified in such debt security as the fixed date on
which such installment is due and payable.
"SUBSIDIARY" means, with respect to any Person, any
corporation, association or other business entity of which Voting Stock
representing more than 50% of the total voting power of the outstanding Voting
Stock is owned, directly or indirectly, by such Person and one or more other
Subsidiaries of such Person.
"TRADE PAYABLES" means, with respect to any Person, any
accounts payable or any other indebtedness or monetary obligation to trade
creditors created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection with the
acquisition of goods or services and required to be paid within one year.
"TRANSACTION DATE" means, with respect to the
Incurrence of any Indebtedness by the Guarantor or any of its Restricted
Subsidiaries, the date such Indebtedness is to be Incurred and, with respect to
any Restricted Payment, the date such Restricted Payment is to be made.
Page 19
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of
the Guarantor that at the time of determination shall be designated an
Unrestricted Subsidiary by the Board of Directors in the manner provided below;
and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors
may designate any Restricted Subsidiary (including any newly acquired or newly
formed Subsidiary of the Guarantor) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, the Guarantor or any Restricted Subsidiary; provided that (A) any Guarantee
by the Guarantor or any Restricted Subsidiary of any Indebtedness of the
Subsidiary being so designated shall be deemed an "Incurrence" of such
Indebtedness by the Guarantor or such Restricted Subsidiary (or both, if
applicable) at the time of such designation; (B) either (I) the Subsidiary to be
so designated has total assets of $1,000 or less or (II) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under Subsection
11(b)(2); and (C) if applicable, the Incurrence of Indebtedness would be
permitted under this Guarantee. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately
after giving effect to such designation (x) the Guarantor could Incur $1.00 of
additional Indebtedness under the first paragraph of Subsection 11(b)(1) and (y)
no Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Administrative
Agent by promptly filing with the Administrative Agent a copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
Notwithstanding anything herein contained to the contrary, neither the Borrower
nor IMPSAT Brazil may be designated as an Unrestricted Subsidiary.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United Sates
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof at any time
prior to the Stated Maturity of the Term Loans, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt; provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
"WHOLLY-OWNED" means, with respect to any Subsidiary of
any Person, the ownership of all of the outstanding Capital Stock of such
Subsidiary (other than any director's qualifying shares or investments by
foreign nationals mandated by applicable law) by such Person or one or more
Wholly-Owned Subsidiaries of such Person.
(b) Covenants.
---------
(1) Limitation on Indebtedness. The Guarantor shall
not, and shall not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the Term Loans and Indebtedness existing on the date
hereof); provided that the Guarantor may Incur Indebtedness if,
Page 20
after giving effect to the Incurrence of such Indebtedness and the receipt and
application of the proceeds therefrom, the Fixed Charge Coverage Ratio would be
at least 2.0 to 1.0.
Notwithstanding the foregoing, the Guarantor and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness in an aggregate principal amount not to exceed $150 million, or
in the event that the Guarantor or any Restricted Subsidiary incurs any
Indebtedness permitted under clause (vii) of this paragraph, the difference
between $150 million less the amount of any such Indebtedness incurred pursuant
to said clause (vii); provided that no more than 25% of the Indebtedness
Incurred under this clause (i) may be used for purposes other than capital
expenditures; (ii) Indebtedness owed (A) to the Guarantor evidenced by a
promissory note or (B) to any Restricted Subsidiary; provided that any event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to the
Guarantor or another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of which are used
to refinance or refund, then outstanding Indebtedness (other than Indebtedness
Incurred under clause (ii), (vi), (vii) or (x) of this paragraph) and any
refinancings thereof in an amount not to exceed the amount so refinanced or
refunded (plus premiums, accrued interest, fees and expenses); (iv) Indebtedness
(A) in respect of performance, surety or appeal bonds provided in the ordinary
course of business, (B) under Currency Agreements and Interest Rate Agreements;
provided that such agreements (a) are designed solely to protect the Guarantor
or its Restricted Subsidiaries against fluctuations in foreign currency exchange
rates or interest rates and (b) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Guarantor or any of its Restricted Subsidiaries pursuant to
such agreements, in any case Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition), in a
principal amount not to exceed the gross proceeds actually received by the
Guarantor or any Restricted Subsidiary in connection with such disposition; (v)
Indebtedness of the Guarantor, to the extent the net proceeds thereof are
promptly (A) used to purchase Securities tendered in an offer to purchase
Securities under either of the Indentures made as a result of a Change in
Control (as defined in the respective Indenture) or (B) deposited to defease the
Securities pursuant to either or both of the Indentures; (vi) Guarantees of the
Securities and Guarantees of Indebtedness of the Guarantor by any Restricted
Subsidiary provided the Guarantee of such Indebtedness is permitted by and made
in accordance with Subsection 11(b)(5); (vii) Indebtedness outstanding at any
time in the aggregate principal amount not to exceed $50 million from official,
regional and multilateral development agencies; (viii) Acquired Indebtedness (I)
to the extent Incurred in connection with an Asset Acquisition in which the
consideration paid by the Guarantor or any of its Restricted Subsidiaries
consists solely of Capital Stock (other than Disqualified Stock) of the
Guarantor, without any limitations as to amount or (II) to the extent Incurred
in connection with an Asset Acquisition in which the consideration paid by the
Guarantor or any, of its Restricted Subsidiaries consists of cash or other
property, so long as the aggregate amount of such consideration paid by the
Guarantor or any of its Restricted Subsidiaries does not exceed $15 million;
(ix) Series A Convertible Notes and Series B
Page 21
Convertible Notes issued (1) pursuant to the Plan or (2) to holders of
Indebtedness existing as of the Closing Date in respect of which such holders
did not vote affirmatively to accept the Plan so long as the amount of Series B
Convertible Notes issued to any such holder does not exceed the amount of such
Indebtedness that such holder would have been entitled to receive had it voted
affirmatively to accept the Plan, (x) Indebtedness of any Restricted Subsidiary,
to the extent that the extent that the Guarantor is the beneficial owner of such
Indebtedness and such Indebtedness is evidenced by a promissory note or
participation certificate issued to the Guarantor by the record holder of such
Indebtedness; and (xi) Indebtedness of the Guarantor (in addition to
Indebtedness permitted under clauses (i) through (ix) above) in an aggregate
principal amount outstanding at any time not to exceed $100 million, less any
amount of such Indebtedness permanently repaid as provided under Subsection
11(b)(9); provided, however, that (i) such Indebtedness is expressly made
subordinate in right of payment to this Guarantee, the terms of such
subordinated Indebtedness expressly provide that (A) the holders of such
Indebtedness shall not be entitled to receive any payments during such time as a
Default or Event of Default has occurred and is continuing under the Financing
Agreement or accelerate such Indebtedness until such time as a declaration of
acceleration under the Financing Agreement has occurred pursuant to a Default or
Event of Default and (B) in the event that a declaration of acceleration of the
Obligations under the Financing Agreement has been rescinded and annulled, the
event giving rise to the acceleration of such Indebtedness incurred pursuant to
this clause (ix) shall be deemed cured and such acceleration shall be deemed
rescinded and annulled without any further action, and (ii) such Indebtedness
does not mature prior to the Maturity Date.
Notwithstanding any other provision of this Subsection
11(b)(1), the maximum amount of Indebtedness that the Guarantor or a Restricted
Subsidiary may Incur pursuant to this Subsection 11(b)(1) shall not be deemed to
be exceeded, with respect to any outstanding Indebtedness due solely to the
result of fluctuations in the exchange rates of currencies.
For purposes of determining any particular amount of
Indebtedness under this Subsection 11(b)(1), (1) Guarantees, Liens or
obligations with respect to letters of credit supporting Indebtedness otherwise
included in the determination of such particular amount shall not be included
and (2) any Liens granted pursuant to the equal and ratable provisions referred
to in Subsection 11(b)(7) shall not be treated as Indebtedness. For purposes of
determining compliance with this Subsection 11(b)(1), in the event that an item
of Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses, the Guarantor, in its sole discretion, shall
classify, and from time to time may reclassify, such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
such clauses.
(2) Limitation on Restricted Payments. The Guarantor will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or make any distribution on or with respect to
its Capital Stock held by Persons other than the Guarantor or any Restricted
Subsidiary (other than (x) dividends or distributions payable solely in shares
of its or such Restricted Subsidiary's Capital Stock (other than Disqualified
Stock) or in options, warrants or other rights to acquire shares of such Capital
Stock and (y) pro rata dividends or distributions on Common Stock of Restricted
Subsidiaries; provided that such payments made to Persons other than the
Guarantor or a Restricted Subsidiary shall be included in calculating whether
the conditions of clause (C) of this first paragraph of Subsection 11(b)(2) have
been met), (ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of the Guarantor (including options, warrants or other
rights
Page 22
to acquire such shares of Capital Stock) held by Persons other than the
Guarantor or any of its Wholly-Owned Restricted Subsidiaries, (iii) make any
voluntary or optional principal payment, or voluntary or optional redemption,
repurchase, defeasance, or other acquisition or retirement for value, of
Indebtedness of the Guarantor that is subordinated in right of payment to the
Securities or (iv) make any Guarantor Investment, other than a Permitted
Guarantor Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "RESTRICTED
PAYMENTS") if, at the time of, and after giving effect to, the proposed
Restricted Payment: (A) a Default or Event of Default shall have occurred and be
continuing, (B) the Guarantor could not Incur at least $1.00 of Indebtedness
under the first paragraph of Subsection 11(b)(1) or (C) the aggregate amount of
all Restricted Payments (the amount, if other than in cash, to be determined in
good faith by the Board of Directors, whose determination shall be evidenced by
a Board Resolution) made after the Closing Date shall exceed the sum of (1) 50%
of the aggregate amount of the Adjusted Consolidated Net Income (or, if the
Adjusted Consolidated Net Income is a loss, minus 100% of the amount of such
loss) (determined by excluding income resulting from transfers of assets by the
Guarantor or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period) beginning on
the first day of the fiscal quarter commencing after the Closing Date and ending
on the last day of the last fiscal quarter preceding the Transaction Date for
which reports have been sent to the Administrative Agent pursuant to Section
8.1(a)(2) of the Financing Agreement plus (2) the aggregate Net Cash Proceeds
received by the Guarantor after the Closing Date as a capital contribution or
from the issuance and sale of its Capital Stock (other than Disqualified Stock)
to a Person who is not a Subsidiary of the Guarantor, including an issuance or
sale permitted by this Guarantee of Indebtedness of the Guarantor for cash
subsequent to the Closing Date upon the conversion of such Indebtedness into
Capital Stock (other than Disqualified Stock) of the Guarantor, or from the
issuance to a Person who is not a Subsidiary of the Guarantor of any options,
warrants or other rights to acquire Capital Stock of the Guarantor (in each
case, exclusive of any convertible indebtedness, Disqualified Stock or any
options, warrants or other rights that are redeemable at the option of the
holder, or are required to be redeemed, prior to the Maturity Date), in each
case except to the extent such Net Cash Proceeds are used to Incur Indebtedness
pursuant to clause (viii) of the second paragraph under Subsection 11(b)(1),
plus (3) an amount equal to the net reduction in Guarantor Investments made
pursuant to this first paragraph of this Subsection 11(b)(2) in any Person
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to the Guarantor
or any Restricted Subsidiary or from the Net Cash Proceeds from the sale of any
such Guarantor Investment (except, in each case, to the extent any such payment
or proceeds are included in the calculation of Adjusted Consolidated Net
Income), or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of "GUARANTOR
INVESTMENTS"), not to exceed, in each case, the amount of Guarantor Investments
previously made and treated as Restricted Payments by the Guarantor or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of: (i) the
payment of any dividend within 60 days after the date of declaration thereof if,
at said date of declaration, such payment would comply with the foregoing
paragraph; (ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of payment to
the Securities including premium, if any, and accrued and unpaid interest, with
the proceeds of, or in exchange for, Indebtedness Incurred under clause (iii) of
the second paragraph of part (a) of Subsection 11(b)(1); (iii) the repurchase,
redemption or other acquisition
Page 23
of Capital Stock of the Guarantor or any Restricted Subsidiary (or options,
warrants or other rights to acquire such Capital Stock) in exchange for, or out
of the Net Cash Proceeds of a capital contribution or a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified Stock) of the
Guarantor (or options, warrants or other rights to acquire such Capital Stock);
provided, however, that the Net Cash proceeds from such sale or such capital
contribution (to the extent so used for such Restricted Payment) shall be
excluded from the calculation of the amounts under clause (2) of the previous
paragraph; (iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Guarantor that is subordinated in right of payment to the
Term Loans in exchange for, or out of the Net Cash Proceeds of a capital
contribution or a substantially concurrent offering of, shares of the Capital
Stock (other than Disqualified Stock) of the Guarantor (or options, warrants or
other rights to acquire such Capital Stock); provided, however, that the Net
Cash Proceeds from such sale or such capital contribution (to the extent so used
for such Restricted Payment) shall be excluded from the calculation of the
amounts under clause (2) of the previous paragraph; (v) payments or
distributions, to dissenting stockholders pursuant to Applicable Law, pursuant
to or in connection with a consolidation, merger or transfer of assets that
complies with Article Five of either of the Indentures; (vi) Guarantor
Investments in Unrestrict5ed Subsidiaries not to exceed, at any one time
outstanding, $5 million; or (vii) Guarantor Investments acquired in exchange for
Capital Stock (other than Disqualified Stock) of the Guarantor or with the Net
Cash Proceeds of such Capital Stock; provided that such proceeds are so applied
within 90 days of receipt thereof; provided that the Net Cash Proceeds from such
sale or such capital contribution (to the extent so used for such Restricted
Payments) shall be excluded from the calculation of the amounts under clause (2)
of the previous paragraph; (viii) the payment of cash to (A) the holders of
warrants issued pursuant to the Plan upon exercise of such warrants and (B) the
holders of Securities upon conversion of the Securities in lieu of fractional
shares of the Guarantor's Common Stock and (ix) other Restricted Payments in an
aggregate amount not to exceed $10 million; provided that, except in the case of
clause (i), no Default or Event of Default shall have occurred and be continuing
or occur as a consequence of the actions or payments set forth therein. The
value of any Restricted Payment made other than in cash shall be the fair market
value thereof. The amount of any Guarantor Investment "outstanding" at any time
shall be deemed to be equal to the amount of such Guarantor Investment on the
date made, less the return of capital to the Guarantor and its Restricted
Subsidiaries with respect to such Guarantor Investment (up to the amount of such
Guarantor Investment).
Each Restricted Payment permitted pursuant to the preceding
paragraph (other than the Restricted Payment referred to in clause (ii) thereof,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iv) thereof and an Guarantor Investment referred to in Clause (vi)
thereof), and the Net Cash Proceeds from any capital contribution or any
issuance of Capital Stock referred to in clauses (iv) and (vii), shall be
included in calculating whether the conditions of clause (C) of the first
paragraph of this Subsection 11(b)(2) have been met with respect to any
subsequent Restricted Payments. If the proceeds of an issuance of Capital Stock
of the Guarantor are used for the prepayment of the Term Loans, the redemption,
repurchase or other acquisition of the Securities, or Indebtedness that is pari
passu with the Securities, then the Net Cash Proceeds of such issuance shall be
included in clause (C) of the first paragraph of this Subsection 11(b)(2) only
to the extent such proceeds are not used for such redemption, repurchase or
other acquisition of Indebtedness. For purposes of determining compliance with
this Subsection 11(b)(2), in the event that a Restricted Payment meets the
criteria of more than one of the types of Restricted Payments described
Page 24
in clauses (i) through (x) of the preceding paragraph, the Guarantor, in its
sole discretion, shall classify such Restricted Payment and only be required to
include the amount and type of such Restricted Payment in one of such clauses.
(3) Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Guarantor will not, and will not permit
any Restricted Subsidiary to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (i) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Restricted Subsidiary owned by the Guarantor or any other Restricted Subsidiary,
(ii) pay any Indebtedness owed to the Guarantor or any other Restricted
Subsidiary, make loans or advances to the Guarantor or any other Restricted
Subsidiary or (iv) transfer any of its property or assets to the Guarantor or
any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date or any other agreements in effect
on the Closing Date, and any extensions, refinancings, renewals or replacements
of such agreements; provided that the encumbrances and restrictions in any such
extensions, refinancings, renewals or replacements are no less favorable in any
material respect to the Lenders than those encumbrances or restrictions that are
then in effect and that are being extended, refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law; (iii) existing with respect
to any Person or the property or assets of such Person acquired by the Guarantor
or any Restricted Subsidiary, existing at the time of such acquisition and not
incurred in contemplation thereof, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person other than such
Person or the property or assets of such Person so acquired; (iv) in the case of
clause (iv) of the first paragraph of this Subsection 11(b)(3) (A) that restrict
in a customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset, (B) existing by virtue of any transfer of, agreement to transfer, option
or right with respect to, or Lien on, any property or assets of the Guarantor or
any Restricted Subsidiary not otherwise prohibited by this Guarantee or (C)
arising or agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract from
the value of property or assets of the Guarantor or any Restricted Subsidiary in
any manner material to the Guarantor or any Restricted Subsidiary; (v) with
respect to a Restricted Subsidiary and imposed pursuant to an agreement that has
been entered into for the sale or disposition of all or substantially all of the
Capital Stock of, or property and assets of, such Restricted Subsidiary during
the period between the execution of such agreement and the closing thereunder;
or (vi) contained in the terms of any Indebtedness or any agreement pursuant to
which such Indebtedness was issued if (A) the encumbrance or restriction applies
only in the event of a payment default or a default with respect to a financial
covenant contained in such Indebtedness or agreement, (B) the encumbrance or
restriction is not more disadvantageous to the Lenders than is customary in
comparable financings (as determined in good faith by the Board of Directors)
and (C) the Board of Directors determines that any such encumbrance or
restriction will not adversely affect the Guarantor's financial ability to make
principal or interest payments on the Term Loans when due. Nothing contained in
this Subsection 11(b)(3) shall prevent the Guarantor or any Restricted
Subsidiary from (1) creating, incurring, assuming or suffering to exist any
Liens otherwise permitted in Subsection 11(b)(7) or (2) restricting the sale or
other disposition of property or assets of the Guarantor or any of its
Restricted Subsidiaries that secure, in a manner permitted by this Guarantee,
Indebtedness of the Guarantor, or any of its Restricted Subsidiaries.
Page 25
(4) Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries. The Guarantor shall not sell, and shall not permit any
Restricted Subsidiary directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary directly or indirectly, to issue or
sell, any shares of Capital Stock of a Restricted Subsidiary (including options,
warrants or other rights to purchase shares of such Capital stock) except (i) to
the Guarantor or a Wholly-Owned Restricted subsidiary; (ii) issuances of
director's qualifying shares or sales to foreign nationals of shares of Capital
Stock of foreign Restricted Subsidiaries, to the extent required by applicable
law; (iii) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any
Guarantor Investment in such Person remaining after giving effect to such
issuance or sale would have been permitted to be made under Subsection 11(b)(2)
if made on the date of such issuance or sale; (iv) the sale of Common Stock of
Restricted Subsidiaries, if the proceeds of such issuance or sale are applied in
accordance with clause (A) or (B) of the first paragraph of Subsection 11(b)(9)
or (v) the transfer of up to 3% of the Common Stock of ConeXia S.A. to employees
of ConeXia S.A. in connection with such employment.
(5) Limitation on Issuances of Guarantees by Restricted
Subsidiaries. The Guarantor shall not permit any Restricted Subsidiary, directly
or indirectly, to Guarantee any Indebtedness of the Guarantor, except, for so
long as there are Securities outstanding under either of the Indentures, to the
extent permitted by the Indentures.
(6) Limitation on Transactions with Shareholders and
Affiliates. The Guarantor will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into, renew or extend any
transaction (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any holder
(or any Affiliate of such holder) of 5% or more of any class of Capital Stock of
the Guarantor or with any Affiliate of the Guarantor or any Restricted
Subsidiary, unless (A) the transaction is upon fair and reasonable terms no less
favorable to the Guarantor or such Restricted Subsidiary than could be obtained,
at the time of such transaction or, if such transaction is pursuant to a written
agreement, at the time of the execution of the agreement providing therefor, in
a comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate; and (b) the Guarantor delivers to the Administrative Agent (1)
with respect to any such transaction or series of related transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such transaction
complies with this covenant and that such transaction has been approved by a
majority of the disinterested members of the Board of Directors; and (2) with
respect to any such transaction or series of related transactions involving
aggregate consideration in excess of $20.0 million, an opinion as to the
fairness to the Guarantor or such Subsidiary of the financial terms of such
transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The foregoing limitation does not limit, and shall not apply
to (i) any transaction solely between the Guarantor and any of its Wholly-Owned
Restricted Subsidiaries or solely between Wholly-Owned Restricted Subsidiaries;
(ii) the payment of reasonable and customary regular fees to directors of the
Guarantor who are not employees of the Guarantor; (iii) any payments or other
transactions pursuant to any tax-sharing agreement between the Guarantor and any
other Person with which the Guarantor files a consolidated tax return or with
which the Guarantor is part of a consolidated group for tax purposes; or (iv)
any Restricted Payments not prohibited by Subsection 11(b)(2).
Page 26
(7) Limitation on Liens. The Guarantor will not, and will
not permit any Restricted Subsidiary to, create, incur, assume or suffer to
exist any Lien on any of its assets or properties of any character (including,
without limitation, licenses), or any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary, without making effective provision for all of the
Obligations and all other amounts due under this Guarantee to be directly
secured equally and ratably with (or, if the obligation or liability to be
secured by such Lien is subordinated in right of payment to the Securities,
prior to) the obligation or liability secured by such Lien.
The foregoing limitation does not apply to (i) Liens
existing on the Closing Date; (ii) Liens granted after the Closing Date on any
assets or Capital Stock of the Guarantor or its Restricted Subsidiaries created
in favor of the Lenders; (iii) Liens with respect to the assets of a Restricted
Subsidiary granted by such Restricted Subsidiary to the Guarantor or a
Wholly-Owned Restricted Subsidiary to secure Indebtedness owing to the Guarantor
or such other Restricted Subsidiary; (iv) Liens securing Indebtedness that is
Incurred to refinance secured Indebtedness permitted to be Incurred under clause
(iii) of the second paragraph of Subsection 11(b)(1); provided that such Liens
do not extend to or cover any property or assets of the Guarantor or any
Restricted Subsidiary other than the property or assets securing the
Indebtedness being refinanced; (v) Permitted Guarantor Liens.
(8) Limitation on Sale-Leaseback Transactions. The Guarantor
will not, and will not permit any Restricted Subsidiary to, enter into any
sale-leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby the Guarantor or a Restricted Subsidiary
sells or transfers such assets or properties and then or thereafter leases such
assets or properties or any part thereof or any other assets or properties that
the Guarantor or such Restricted Subsidiary, as the case may be, intends to use
for substantially the same purpose or purposes as the assets or properties sold
or transferred, unless:
(1) the Guarantor or that Restricted Subsidiary, as applicable, could
have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction
permitted under the caption "Limitation on Indebtedness" and (b)
incurred a Lien to secure such Indebtedness pursuant to the
covenant described above under the caption "Limitation on Liens;"
(2) the gross cash proceeds of that sale and leaseback transaction
are at least equal to the fair market value (in the case of gross
cash proceeds in excess of $5.0 million as determined in good
faith by the Board of Directors and set forth in an Officers'
Certificate delivered to the Administrative Agent), of the
property that is the subject of that sale and leaseback
transaction; and
(3) the transfer of assets in that sale and leaseback transaction is
permitted by, and the Guarantor applies the proceeds of such
transaction in compliance with, the covenant described below
under the caption "Limitation on Asset Sales."
The foregoing restriction does not apply to any
sale-leaseback transaction if the transaction is solely between the Guarantor
and any Wholly-Owned Restricted Subsidiary or solely between Wholly-Owned
Restricted Subsidiaries.
Page 27
(9) Limitation on Asset Sales. The Guarantor will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(i) the consideration received by the Guarantor or such Restricted Subsidiary is
at least equal to the fair market value of the assets sold or disposed of and
(ii) at least 85% of the consideration received consists of cash or Temporary
Cash Investments. Within 365 days after the receipt any Net Cash Proceeds from
any Asset Sale, the Guarantor shall or shall cause the relevant Restricted
Subsidiary to (A) apply an amount equal to the Net Cash Proceeds to permanently
repay unsubordinated Indebtedness of the Guarantor or of any other Restricted
Subsidiary, in each case owing to a Person other than the Guarantor or any of
its Restricted Subsidiaries or (B) invest an equal amount, or the amount not so
applied pursuant to clause (A) (or enter into a definitive agreement committing
to so invest within 12 months after the date of such agreement), in property or
assets (other than current assets) of a nature or type or that are used in a
business (or in a company having property and assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, the Guarantor and its Restricted Subsidiaries
existing on the date of such investment (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and evidenced by a
Board Resolution).
(10) Existence. The Guarantor will do or cause to be done
all things necessary to preserve and keep in full force and effect its existence
and the existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of the Guarantor and each such Subsidiary
and the rights (whether pursuant to charter, partnership certificate, agreement,
statute or otherwise), material licenses and franchises of the Guarantor and
each such Subsidiary; provided that the Guarantor shall not be required to
preserve any such right, license or franchise, or the existence of any
Restricted Subsidiary (other than itself and each Guarantor), if the maintenance
or preservation thereof is no longer desirable in the conduct of the business of
the Guarantor and its Restricted Subsidiaries taken as a whole.
(11) Payment of Taxes and Other Claims. The Guarantor shall
pay or discharge and shall cause each of its Subsidiaries to pay or discharge,
or cause to be paid or discharged, before the same shall become delinquent (i)
all material taxes, assessments and governmental charges levied or imposed upon
(a) the Guarantor or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Guarantor or any
such Subsidiary and (ii) all material lawful claims for labor, materials and
supplies that, if unpaid, might by law become a Lien upon the property of the
Guarantor or any such Subsidiary; provided that the Guarantor shall not be
required to pay or discharge, or cause to be paid or discharged, any such tax,
assessment, charge or claim the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established.
(12) Maintenance of Properties and Insurance. The Guarantor
shall cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Guarantor
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, provided that nothing in
this Subsection 11(b)(12) shall prevent the Guarantor or any such Restricted
Subsidiary from discontinuing the use, operation or maintenance of any of such
properties or disposing on any of them, if such discontinuance or disposal is,
in the judgment of the Guarantor, desirable in the conduct of
Page 28
the business of the Guarantor or such Restricted Subsidiary.
The Guarantor shall provide or cause to be provided, for
itself and its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties including, but not
limited to, products liability insurance and public liability insurance, with
reputable insurers or with the government of the United States of America, or an
agency or instrumentality thereof, in such amounts, with such deductibles and by
such methods as shall be customary for corporations similarly situated in the
industry in which the Guarantor or such Restricted Subsidiary, as the case may
be, is then conducting business.
(13) Notice of Defaults. In the event that the Guarantor
becomes aware of any Default or Event of Default, the Guarantor, promptly after
it becomes aware thereof, shall give written notice thereof to the
Administrative Agent.
(14) Compliance Certificates.
-----------------------
(A) The Guarantor shall deliver to the Administrative
Agent, within 90 days after the end of the Guarantor's fiscal year, an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that occurred during such fiscal year. Such certificates shall contain a
certification from the principal executive officer, principal financial officer
or principal accounting officer of the Guarantor that a review has been
conducted of the activities of the Guarantor and the Restricted Subsidiaries and
the Guarantor's and the Restricted Subsidiaries' performance under this
Guarantee and that, to the best knowledge of such officer, the Guarantor has
complied with all conditions and covenants under this Guarantee. For purposes of
this Subsection 11(b)(14), such compliance shall be determined without regard to
any period of grace or requirement of notice. If any such officer knows of such
a Default or Event of Default, the certificate shall describe any such Default
or Event of Default and its status.
(B) The Guarantor shall deliver to the Administrative
Agent, within 90 days after the end of its fiscal year, a certificate signed by
the Guarantor's independent certified public accountants stating (i) that their
audit examination has included a review of the terms of this Guarantee as they
relate to accounting matters, (ii) that they have read the most recent Officers'
Certificate delivered to the Administrative Agent pursuant to paragraph (a) of
this Subsection 11(b)(14) and (iii) whether, in connection with their audit
examination, anything came to their attention that caused them to believe that
the Guarantor was not in compliance with any of the terms, covenants, provisions
or conditions of this Subsection 11(b)(14) as they pertain to accounting matters
and, if any Default or Event of Default has come to their attention, specifying
the nature and period of existence thereof; provided that such independent
certified public accountants shall not be liable in respect of such statement by
reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing standards in effect at
the date of such examination.
(C) Within 90 days of the end of each of the
Guarantor's fiscal years, the Guarantor shall deliver to the Administrative
Agent a list of all Significant Subsidiaries.
Section 12. Amendment: Waiver. This Guarantee may not be amended,
waived, discharged, or terminated unless such change, waiver, discharge, or
Page 29
termination is in writing signed by the Lenders, the Administrative Agent, the
Collateral Agent, and the Guarantor. The failure of any party to enforce at any
time any provision hereof shall not be construed to be a waiver of such
provisions or of the right of such party thereafter to enforce any such
provision or any other provision hereof or thereof.
Section 13. Severability. If any one or more of the provisions
contained in this Guarantee shall be invalid, illegal, or unenforceable in any
respect, the validity, legality, and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired.
Section 14. Notices. All communications and notices provided for
hereunder shall be in writing and shall be personally delivered, mailed by
postage prepaid registered mail (airmail if international), return receipt
requested, or telefaxed (with a confirmation copy by postage prepaid registered
mail, return receipt requested):
If to the Guarantor. IMPSAT Fiber Networks, Inc.
c/o IMPSAT USA, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxx Xxxxxx, Xxxxxxx 00000
Attention: President
Fax No. (000) 000-0000
If to the Lenders: Nortel Networks Limited
c/o Nortel (CALA) Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Attention: Vice President
and General Counsel
Fax No. (000) 000-0000
With a copy to: Xxxxx Xxxxxxx LLP
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Fax No. (000) 000-0000
If to the Administrative Agent: Nortel Networks Limited
c/o Nortel (CALA) Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Attention: Vice President and
General Counsel
Fax No. (000) 000-0000
If to the Collateral Agent: Nortel Networks Limited
c/o Nortel (CALA) Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Attention: Vice President and
General Counsel
Fax No. (000) 000-0000
Except as otherwise specified herein, all notices shall be deemed duly
given on the date of actual receipt.
Section 15. Governing Law and Jurisdiction.
------------------------------
(a) Governing Law. This Guarantee shall be governed by, and
construed in accordance with, the laws of the State of New York (not including
such state's conflicts of laws provisions).
Page 30
(b) Waiver of Jury Trial. The Guarantor hereby knowingly,
voluntarily, and intentionally waives any right it may have to a trial by jury
of any claim, demand, or cause of action under, or in connection with, this
Guarantee. This provision is a material inducement for the Lenders to accept
this Guarantee and to enter into the other Financing Documents.
(c) Jurisdiction: Venue for Suit. The Guarantor hereby
expressly and irrevocably (a) waives all right to object to jurisdiction or
execution in any legal action or proceeding relating to this Guarantee which the
Guarantor may now or hereafter have by reason of its domicile or by reason of
any subsequent or other domicile and hereby irrevocably consents that any legal
action, suit, or proceeding arising out of, or relating to, this Guarantee and
any other document or instrument required to be executed in relation thereto may
be instituted in or removed to the United States District Court of the Southern
District of New York and the courts of the State of New York sitting in New
York, Borough of Manhattan; (b) submits to and accepts and consents with regard
to any such action or proceeding for itself and in respect of its properties and
assets, generally and unconditionally, the non-exclusive jurisdiction of any
such court; and (c) waives any objection it may now or hereafter have to the
laying of the venue of any such action, suit, or proceeding, and further waives
any claim that any such action, suit, or proceeding brought in any of the
aforesaid courts has been brought in any inconvenient forum.
(d) Waiver of Immunity. To the extent that the Guarantor or
any of its Subsidiaries or any of their respective assets has, or hereafter may
acquire, any right to immunity from suit, set-off, legal proceedings generally,
attachment prior to judgment, attachment in aid of execution, or other
attachment or execution of judgment on the grounds of sovereignty or otherwise,
the Guarantor for itself, and its Subsidiaries hereby irrevocably waives such
rights to immunity in respect of the Obligations. In addition, the Guarantor
hereby irrevocably waives, to the fullest extent it may effectively do so, the
right to demand that either Agent or any Lender post a performance bond or
guarantee (excepcion de arraigo) in any action or proceeding against the
Guarantor or its property in Argentina.
(e) Process Agent. The Guarantor has granted a special
irrevocable power of attorney to CT Corporation with offices at 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and its successors as the Guarantor's designee,
appointee, and agent to receive, accept and acknowledge, for and on behalf of
the Guarantor, service of any and all legal process, summons, notices and
documents which may be served in such action, suit, or proceeding relating to
this Guarantee in the courts of the United States District Court of the Southern
District of New York or in the courts of the State of New York sitting in New
York, Borough of Manhattan, which service may be made on any such designee,
appointee, and agent in accordance with legal procedures prescribed for such
courts. So long as the Borrower has any Obligations, the Guarantor agrees to
take any and all action necessary to continue such designation in full force and
effect and should such designee, appointee, and agent become unavailable for
this purpose for any reason not attributable to the Guarantor, the Guarantor
shall forthwith grant a similar special irrevocable power of attorney to a new
designee, appointee, and agent with offices in New York, New York, which shall
irrevocably agree to act as such, with the powers and for purposes specified in
this Subsection 15(e). The Guarantor further irrevocably consents and agrees to
service of any and all legal process, summons, notices, and documents out of any
of the aforesaid courts which is delivered to the Guarantor in accordance with
this Subsection 15(e) or its then designee, appointee, or agent for service in
connection with any such action, suit or proceeding relating to this Guarantee.
If service is made
Page 31
upon such designee, appointee, and agent, a copy of such process, summons,
notice or document shall also be provided to the Guarantor, by registered or
certified mail, or overnight express air courier, provided that failure to
provide such copy to the Guarantor shall not impair or affect in any way the
validity of such service or any judgment rendered in such action or proceedings.
The Guarantor agrees that service upon the Guarantor or any such designee,
appointee, and agent as provided for in this Subsection 15(e) shall constitute
valid and effective personal service upon the Guarantor with respect to matters
contemplated in this Subsection 15(e) and that the failure of any such designee,
appointee, and agent to give any notice of such service to the Guarantor shall
not impair or affect in any way the validity of such service or any judgment
rendered in any action or proceeding based thereon. Nothing herein shall limit
or be construed to limit the rights of the Lenders to commence proceedings
against the Guarantor in any other venue where assets of the Guarantor may be
found.
(f) Legal Process in Other Jurisdictions. Nothing in
Subsection 15(c) or in Subsection 15(e) shall affect the right of any Lender or
Agent to serve legal process in any other manner permitted by law or affect the
right of any Lender or Agent to bring any action or proceeding against the
Guarantor or its property in the courts of other jurisdictions, including,
without limitation, the courts sitting in the city of Buenos Aires, Argentina.
Section 16. Entire Agreement. This Guarantee and the other financing
Documents constitute the entire agreement and understanding of the Parties with
respect to the subject matter hereof, and supersede all prior agreements,
discussions, and understandings between the Lenders and the guarantor with
respect to the subject matter hereof.
[Signature on following page]
Page 32
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed and delivered by its officer thereunto duty authorized as of the date
first above written.
IMPSAT FIBER NETWORKS, INC.
By: /s/ Xxxxxxxxx Xxxxx
--------------------------
Name:
--------------------------
Title:
--------------------------
Page 33
EXHIBIT C
FORM OF INTERCOMPANY SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (as it may be amended, supplemented or
otherwise modified from time to time, this "AGREEMENT"), dated as of
[________],[____], is made by IMPSAT Comunicacoes Lita (the "BORROWER") and
IMPSAT Fiber Networks, Inc. (the "CREDITOR"), in favor Deutsche Bank Trust
Company Americas, in its capacity as the administrative agent (or any successor
administrative agent appointed pursuant to Section 15.5 of the Financing
Agreement, the "ADMINISTRATIVE AGENT") under the Second Amended and Restated
Financing Agreement, dated as of July __, 2005 among IMPSAT Comunicacoes Ltda.,
Xxxxxx Xxxxxxx Senior Funding, Inc. ("MSSF") and the lenders party thereto from
time to time, as lenders (collectively, the "LENDERS"), the Administrative Agent
and Nortel Networks Limited in its capacity as the Collateral Agent (the
"FINANCING AGREEMENT"). Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed to them in the Financing Agreement.
RECITALS
A. It is a condition precedent to the making of the Term Loans under the
Financing Agreement that the Creditor shall have executed this Agreement.
B. The Creditor will derive substantial direct and indirect benefit from
the Financing Agreement and the making of the Term Loans thereunder.
C. The Creditor acknowledges that the Administrative Agent and the Lenders
are relying on this Agreement in entering into and agreeing to make the Term
Loans and that the Administrative Agent and the Lenders would not enter into the
Financing Agreement without the execution and delivery of this Agreement.
D. The Borrower may be indebted to the Creditor up to the aggregate
principal amount of $[________] pursuant to a promissory note, dated __________
(the "SUBORDINATED NOTE").
In consideration of the premises, the agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and in order to induce the Administrative Agent and the Lenders
(collectively, the "SECURED CREDITORS") to enter into the Financing Agreement
and make the Term Loans, the Creditor hereby agrees with the Administrative
Agent for its benefit and the benefit of the Lenders as follows:
1. All indebtedness and other obligations, whether for principal, interest,
premium, fees, costs, expenses or other amounts in respect of the Subordinated
Note or any other obligations now or hereafter owing by the Borrower to the
Creditor, in each case, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising (collectively, the
"SUBORDINATED DEBT"), shall be subordinate, junior, and subject in right of
payment, to the extent and in the manner hereinafter set forth, to the prior
payment in full in cash of all indebtedness of and all other amounts owing by
the Borrower arising under or in respect of the Financing Agreement and the
other Financing Documents to any Person who may become a holder or participant
in any such indebtedness, whether by amendment, modification or assignment of
all or a portion of such agreements, including without limitation, principal,
premium, if any, interest (including interest after the commencement of a
liquidation or the dissolution of the Borrower or in a bankruptcy,
reorganization, insolvency, receivership or a similar proceeding relating to the
Borrower or its property or in an assignment for the benefit of creditors or any
marshalling of the assets and liabilities of the Borrower at the rate specified
in the applicable Senior Debt (as defined below), whether or not such holder is
otherwise entitled to recover such interest from the Borrower in such
proceeding), fees, costs and expenses, of the Borrower to the Administrative
Agent or any such holder or participant, in each case whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising under or in respect of such
Page 34
agreements (all such indebtedness and other amounts being herein referred to as
the "SENIOR DEBT").
2. Until the Senior Debt shall have been indefeasibly repaid in full in
cash, the Borrower shall not, directly or indirectly, make any payment of any
kind of principal of or interest on or any other amount on account of any
portion of the Subordinated Debt, except as expressly permitted under the
Financing Documents (solely with respect to Subordinated Debt that constitutes
Intercompany Indebtedness), and the Creditor shall not demand, xxx for, or
accept from the Borrower or from any other Person any portion of the
Subordinated Debt, accelerate the maturity of the Subordinated Debt or take any
other action to enforce or collect upon any such payment, or to enforce its
rights with respect to the Subordinated Debt, or repurchase, redeem or otherwise
acquire any of the Subordinated Debt, nor cancel, rescind, set off or otherwise
discharge any part of the Subordinated Debt.
3. (a) Each instrument evidencing Subordinated Debt shall bear a legend
providing that payment of principal thereof, interest thereon, premium, if any,
owed thereon and all other amounts owed with respect thereto has been
subordinated to prior payment in full in cash of the Senior Debt in the manner
and to the extent set forth in this Agreement and a copy of this Agreement shall
be attached to each such instrument.
(b) The Subordinated Debt shall provide that no amortization thereof
or principal payment thereon will be permitted until after the later of (i) the
later of the Maturity Date under the Financing Agreement or (ii) the
indefeasible payment in full in cash of the Obligations of the Borrower under
the Financing Documents, except to the extent permitted under the Financing
Documents with respect to Subordinated Debt which constitutes Intercompany
Indebtedness. Interest on Subordinated Debt may be paid solely to the extent
permitted under the Financing Documents. No other payments or obligations with
respect to the Subordinated Debt (whether consisting of interest, principal,
fees, premium, indemnities or otherwise) shall be made or permitted.
4. Neither the Creditor nor any other holder of the Subordinated Debt shall
commence or join with any other creditor or creditors of the Borrower in
commencing any bankruptcy, reorganization or insolvency proceedings against the
Borrower. At any meeting of creditors of the Borrower or in the event of any
proceeding, voluntary or involuntary, for the reorganization, distribution,
division or application of all or part of the assets of the Borrower or the
proceeds thereof, whether such proceeding be for the reorganization,
liquidation, dissolution or winding up of the Borrower or its business, a
receivership, insolvency, reorganization proceeding or bankruptcy proceeding,
assignment for the benefit of creditors or a proceeding by or against the
Borrower for relief under any bankruptcy, indebtedness, reorganization,
arrangement, composition, extension or statute or otherwise, if all of the
Obligations of the Borrower under the Financing Documents have not been
indefeasibly paid in full in cash at the time, (i) only the Administrative Agent
may demand and collect any amount from the Borrower or from any other Person,
and neither the Creditor nor any other holder of Subordinated Debt may set off
or otherwise discharge any part of the Subordinated Debt; and (ii) the
Administrative Agent is hereby irrevocably authorized on behalf of the holders
of the Subordinated Debt at any such meeting or in any such proceeding: (A) to
collect any assets of the Borrower distributed, divided or applied by way of
dividend or payment, or any such securities issued, on account of the
Subordinated Debt and apply the same, or the proceeds of any realization upon
the same, to Senior Debt in such manner as the Administrative Agent may specify
until all such Senior Debt shall have been indefeasibly paid in full in cash,
rendering any surplus then remaining to the Creditor or its representative, as
the Creditor shall direct in writing; (B) to vote claims comprising
Page 35
Subordinated Debt to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition or extension or election
of a trustee; and (C) to take generally any action in connection with any such
meeting or proceeding which the holders of the Subordinated Debt might otherwise
take including, without limitation, the filing of proofs of claim. The Creditor
hereby irrevocably appoints the Administrative Agent as its attorney in fact
with full authority in the place and stead of the Creditor and in the name of
the Creditor or otherwise, from time to time, in the Administrative Agent's
discretion, to take any action and to execute any instrument which the holders
of Senior Debt may deem necessary or advisable to accomplish the purposes of
this paragraph. The power of attorney granted herein is coupled with an interest
and shall be irrevocable until the Obligations of the Borrower under the
Financing Documents are indefeasibly paid in cash.
5. If any payment on account of any part of the Subordinated Debt is
received by the Creditor or any other holder of the Subordinated Debt in
violation of this Agreement, such payment shall be delivered forthwith to the
Administrative Agent by the recipient for application to the Senior Debt,
subject to the terms of the Intercreditor Agreement, in the form received except
for the addition of any endorsement or assignment necessary to effect the
transfer of all rights therein to the Administrative Agent. The Administrative
Agent is irrevocably authorized to supply any required endorsement or assignment
which may have been omitted. Until so delivered, any such payment or collateral
shall be held by the recipient in trust for the Administrative Agent and shall
not be commingled with other funds or property of the recipient.
6. The Creditor represents that no part of the Subordinated Debt is
evidenced by any instrument, security or other writing which does not bear the
legend required by paragraph 3 hereof. The Creditor is the lawful owner of its
Subordinated Debt, no participations have been granted therein, and, except for
the subordination of the Subordinated Debt to the Existing Debt, no part thereof
has been assigned to or subordinated or subjected to any other security interest
in favor of anyone other than the Administrative Agent. The Creditor and the
Borrower agree that prior to payment in full in cash of the Senior Debt, the
Borrower and the Creditor shall not amend, modify or change in any manner
whatsoever the terms or provisions of the Subordinated Note. Until all Senior
Debt has been indefeasibly paid in full in cash, the Borrower shall not issue
any instrument or security other than the Subordinated Note, evidencing or
relating to any part of the Subordinated Debt except at the request of and in
the manner requested by the Administrative Agent and, except as provided in the
immediately preceding two sentences, the Creditor shall not assign, grant
participations in, or otherwise transfer or subordinate any part of the
Subordinated Debt or any evidence thereof unless the party to whom such
participation is granted or to whom any part of the Subordinated Debt is so
transferred or subordinated acknowledges, in a form satisfactory to the
Administrative Agent, its agreement to be bound by all of the terms and
conditions of this Agreement as to the part of the Subordinated Debt so
participated. For purposes of this Agreement, the term the "CREDITOR" shall
refer to any holder of the Subordinated Debt.
7. The Administrative Agent is hereby authorized to demand specific
performance of this Agreement, whether or not the Borrower shall have complied
with the provisions hereof applicable to them, at any time when the Creditor
shall have failed to comply with any provision hereof applicable to it. The
Creditor hereby irrevocably waives any defense based on the adequacy of a remedy
at law which might be asserted as a bar to the remedy of specific performance
hereof in any action brought therefor by the Administrative Agent. The Creditor
further waives presentment, notice and protest in connection with all negotiable
instruments evidencing Senior Debt or Subordinated Debt to which it may be a
party, notice of the
Page 36
acceptance of this Agreement by the Administrative Agent, notice of any loan
made, extension granted or other action taken in reliance hereon and, except as
provided in this Agreement, all demands and notices of every kind in connection
with this Agreement or Senior Debt; assent to any renewal, extension or
postponement of the time of payment of Senior Debt or any other indulgence with
respect thereto to any substitution, exchange or release of collateral therefor
and to the addition or release of any Person primarily or secondarily liable
thereon; and agrees to the provisions of any instrument, security or other
writing evidencing Senior Debt. This Agreement on the part of the Creditor shall
be and remain absolute and unconditional under any and all circumstances, and no
act or omission on the part of the Administrative Agent shall affect or impair
the agreements of the Creditor hereunder, unless the Administrative Agent shall
otherwise consent in writing.
8. The Borrower and the Creditor shall execute and deliver to the
Administrative Agent such further instruments and shall take such further action
as the Administrative Agent may at any time or times reasonably request in order
to carry out the provisions and intent of this Agreement.
9. In the event of a breach of the Borrower or the Creditor in the
performance of any of the terms hereof, the Administrative Agent may, in
accordance with the applicable Credit Agreement, declare all Senior Debt to be
forthwith due and payable, without presentment, demand, protest, or notice of
any kind, notwithstanding any time or credit otherwise allowed.
10. The provisions hereof and the rights granted to the Administrative
Agent hereunder are for the protection of the Secured Creditors and any other
Person who may become a holder of or participant in any of the Senior Debt,
whether by amendment to or assignment of all or a portion of the Financing
Documents or otherwise, and not for the protection or benefit of the Borrower.
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof. The Creditor, the Administrative Agent and
the Borrower further agree that the provisions of this Agreement may not be
amended or modified orally or by a course of conduct but may be waived only by
an instrument in writing signed by the party against whom such waiver or
amendment is sought to be enforced. Nothing contained in this Agreement shall
impose on the Administrative Agent any duties with respect to any property of
the Borrower or the Creditor received hereunder beyond reasonable care in its
custody and preservation while in the Administrative Agent's possession. The
Administrative Agent shall not have any duty to preserve rights against prior
parties in any instrument or chattel paper received hereunder.
11. After all Senior Debt has been indefeasibly repaid in full in cash, and
until all Subordinated Debt is paid in full, the Creditor shall be subrogated to
the rights of the Secured Creditors to receive distributions applicable to
Senior Debt to the extent distributions otherwise payable to the Creditor have
been applied to payment of the Senior Debt. The provisions hereof as to
subordination are solely for the purpose of defining the relative rights of the
parties hereto, and none of such provisions shall impair or affect the
obligations of the Borrower to the Creditor, which are unconditional and
absolute, to pay to the Creditor all of the Subordinated Debt in accordance with
the terms of the Subordinated Note.
12. This Agreement may be executed in any number of counterparts, but all
of such counterparts shall together constitute but one agreement. In making
proof of this Agreement, it shall not be necessary to produce or account for
more than one counterpart signed by each of the parties hereto.
13. The Creditor agrees with the Administrative Agent that the Creditor
will not enter into any amendment of the terms of any agreement,
Page 37
document or instrument evidencing or relating to the Subordinated Debt without
the prior written consent of the Administrative Agent.
14. Any notice or other communication in connection with this Agreement
shall be in writing (including telegraphic telecopy, or cable communication) and
telegraphed, telecopied, cabled or delivered to the telecopy number below, and
in the case of a letter, either mailed first class, postage prepaid, in the
United States mail, to the address set forth below:
If to the Borrower:
-------------------
Telephone:
Facsimile:
with a copy to:
--------------
Telephone:
Facsimile:
If to the Administrative Agent:
-------------------------------
Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx, 00xx Xxxxx
Mail Stop: NYC60-2710
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxx, Project Finance Group
Fax No. (000) 000-0000
If to the Creditor:
-------------------
Telephone:
Facsimile:
with a copy to:
--------------
Telephone:
Facsimile:
or in any case, at such other address or telecopy number for notice as shall
have last been furnished in writing to the party giving notice.
15. This Agreement is intended to take effect as a sealed instrument, shall
be binding upon the Borrower, the Creditor, their respective executors,
administrators, other legal representatives, successors and assigns, shall inure
to the benefit of the Secured Creditors, the Agents, and their successors and
assigns, including, without limitation, any other Person who becomes participant
in or a holder of any of the obligations comprising the Senior Debt, by
amendment to or assignment of all or a portion of the Financing Documents, or
otherwise. In the event of an assignment of all or any portion of the Notes, or
Term Loans to an assignee in accordance with the Financing Documents, upon such
assignee becoming a Secured Creditor, such Secured Creditor shall be entitled to
all of the benefits provided for in this Subordination Agreement.
Page 38
16. This Agreement shall be governed by and construed under the internal
laws of the State of New York.
17. In exercising any rights or giving any instructions hereunder, the
Administrative Agent shall be required to act only in accordance with
instructions delivered to it as provided in the Financing Documents.
18. The Borrower agrees to indemnify and hold harmless, the Secured
Creditors, the Administrative Agent, the respective affiliates of the Secured
Creditors and the Administrative Agent, and their respective officers,
directors, employees, agents (including, without limitation, each of their
counsel), and controlling persons of the Secured Creditors and the
Administrative Agent (each, an "INDEMNIFIED PARTY") from and against any and all
claims, actions and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages and costs and expenses (including,
without limitation, the reasonable fees and disbursements of counsel and with
respect to the Administrative Agent, the reasonable allocated costs and expenses
of outside counsel, in-house counsel and legal staff) of every nature and
character arising out of or in connection with any actual or threatened claim,
litigation, investigation or proceeding relating to the Financing Documents,
this Agreement or any of the other Financing Documents or the transactions
contemplated hereby excluding, however, any such actions or expenses resulting
from the gross negligence or willful misconduct of a Secured Creditor, in each
case including, without limitation, the reasonable fees and disbursements of
counsel and allocated costs of internal counsel incurred in connection with any
such investigation, litigation or other proceeding whether or not such
Indemnified Party is a party thereto, and the Borrower agrees to reimburse each
Indemnified Party, upon demand, for all out-of-pocket costs and expenses
(including, without limitation, the reasonable fees and disbursements of counsel
and with respect to the Administrative Agent, the reasonable allocated costs and
expenses of outside counsel, in-house counsel and legal staff) incurred in
connection with any of the foregoing. In litigation, or the preparation
therefor, the Secured Creditors and the Agents shall be entitled to select their
own counsel and, in addition to the foregoing indemnity, the Borrower agrees to
pay promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower under this Section 18 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law.
The Borrower shall not make any claim against any Indemnified Party for any
special, indirect or consequential damages in respect of any breach or wrongful
conduct (whether the claim therefor is based in contract, tort or duty imposed
by law) in connection with, arising out of or in any way related to the
transactions contemplated by, and the relationship established by, the Financing
Documents, or any act, omission or event occurring in connection therewith, and
the Borrower hereby waives, releases and agrees not to xxx upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in the Borrower's favor.
The covenants contained in this Section 18 shall survive payment or
satisfaction in full of all of the Obligations.
Page 39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on and as of the date first above written.
BORROWER:
By:
------------------------
Name:
Title:
Page 40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on and as of the date first above written.
CREDITOR:
By:
------------------------
Name:
Title:
Page 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on and as of the date first above written.
ADMINISTRATIVE AGENT:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By:
------------------------
Name:
Title:
Page 42
NOTE
Amount: US$68,379,111.11 Date: July 29, 2005
FOR VALUE RECEIVED, the undersigned, IMPSAT Comunicacoes Ltda., a company
(sociedade limitada) organized pursuant to the laws of Brazil (the "BORROWER"),
promises to pay to the order of Xxxxxx Xxxxxxx Senior Funding, Inc. or its
registered assignees (collectively, the "LENDER") or its successors or assigns,
the principal sum of sixty-eight million three hundred seventy-nine thousand one
hundred eleven and 11/100 Dollars (US$68,379,111.11), or, if less, the aggregate
unpaid principal amount of the advances made by Lender to the Borrower, together
with interest on the entire principal balance from time to time outstanding
hereunder. This Promissory Note (this "NOTE") is issued pursuant to, and subject
to, that certain Second Amended and Restated Financing Agreement (the "FINANCING
AGREEMENT") dated as of July 29, 2005, by and among Lender, Deutsche Bank Trust
Company Americas (as Administrative Agent and as Collateral Agent), Borrower,
and the certain lenders party thereto from time to time. Capitalized terms not
defined in this Note shall have the meanings assigned to such terms in the
Financing Agreement.
Interest shall accrue on the outstanding balance of the Term Loans and be
paid on each Interest Payment Date in accordance with the terms of the Financing
Agreement. The principal amount of each Term Loan shall be paid in seven (7)
consecutive semi-annual installments, on the Principal Repayment Dates and the
Maturity Date as provided in the Financing Agreement. All payments shall be made
in the manner and at the time and subject to acceleration, Prepayment, Taxes and
all other terms and conditions of the Financing Agreement.
The Lender shall record on its books or records or on the schedule to this
Note, which is a part hereof, the principal amount of the Term Loans made by the
Lender to the Borrower under the Financing Agreement, all payments and
prepayments of principal and interest, the principal balance from time to time
outstanding and the respective dates thereof. The record thereof, whether shown
on such books or records or on the schedule to this Note, shall be prima facie
evidence as to all amounts owing under this Note; provided, however, that the
failure of the Lender to record any of the foregoing or any error in such
notation shall not limit or otherwise affect the obligation of the Borrower to
repay all advances under the Financing Agreement together with accrued interest
thereon.
This Note is one of the Notes referred to in, and issued under, the
Financing Agreement, and Lender is entitled to all of the benefits provided for
therein; reference is hereby made to the Financing Agreement for a statement of
all such benefits. This Note is transferable by the Lender in accordance with
the provisions of the Financing Agreement. If an Event of Default shall occur
and be continuing under the Financing Agreement, the principal of and interest
accrued under this Note may be declared to be due and payable in the manner and
with the effect provided in the Financing Agreement. The Borrower agrees to
reimburse upon demand, in like manner and funds, all losses, costs and
reasonable expenses of the Lender, if any, incurred in connection with the
enforcement of this Note (including, without limitation, all reasonable legal
costs and expenses).
Any and all payments to be made by the Borrower hereunder shall be made in
Dollars free and clear of and without deduction for Taxes (other than Excluded
Taxes) and without set-off, counterclaim or deduction of any nature or for any
cause whatsoever. In such event all the amounts due hereunder shall be increased
so that after the deductions or withholdings are made, the Lender shall receive
the amounts as if such deductions or withholdings would not have been made.
Page 1
The Borrower hereby waives presentment for payment, notice of nonpayment,
protest, and notice of protest, and agrees to all extensions and renewals of
this Note, without notice.
No delay or omission on the part of the Lender in exercising any right
under this Note shall operate as a waiver of the right or of any other right
under this Note. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.
This Note shall be governed by, and construed in accordance with the laws
of the State of New York, (not including such state's conflict of laws
provisions). The Borrower hereby incorporates by reference the waivers and
submissions contained in Section 14 of the Financing Agreement and agrees that
they shall apply to this Note.
IMPSAT COMMUNICACOES LTDA.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxx
--------------------------
Title: Executive Officer
--------------------------
By: /s/ Xxxxxx Xxxxx
--------------------------
Name: Xxxxxx Xxxxx
--------------------------
Title: Executive Officer
--------------------------
Page 2
