EXHIBIT 4.25
(Free Translation)
COMMON TERMS AGREEMENT
This Common Terms Agreement ("the Agreement") shall be executed, in accordance
with the law, by the following parties ("The Parties"):
(a) the financial institutions listed and qualified in "Annex 1" to this
Instrument ("Creditor Institutions"); and
(b) the companies listed and identified in "Annex 2" to this Agreement,
("Net Group Companies"), represented herein in the terms of their respective
By-Laws, as per the case.
WHEREAS
(1) certain Net Group Companies were originally debtors with regard to a
series of loans contracted within Brazil and outside it ("the Original
Loans"), which were not paid in accordance with the terms of their
respective instruments;
(2) the Net Group Companies, collectively represented by Net Servicos de
Comunicacao S.A. ("Net Servicos"), the direct and indirect holding for the
capital stock of the Net Group Companies, have negotiated a restructuring
plan with their creditors ("the Creditors") for the financial indebtedness
of the Net Group Companies (the "Restructuring Plan"), which was the
object of a material fact disseminated by Net Servicos on June 28, 2004;
(3) as part of the Restructuring Plan, Net Servicos has, on its own behalf and
in the name of certain Net Group Companies, executed with each of the
Creditor Institutions, the Instruments of Debt Confession and/or loan
agreements listed and identified in "Annex 3" to this Agreement
("Instruments of Debt Confession"), which are governed not only by their
own terms and conditions, but also by the terms and conditions of this
Agreement;
(4) the terms beginning with capital letters mentioned in this Agreement that
have not been otherwise defined herein, shall have the same meanings
attributed to them as that in the Instruments of Debt Confession or in the
Glossary forming a part of this Agreement in the form of its "Annex 4";
GIVEN THE ABOVE, and considering the mutual covenants contained in this
Agreement and other firm and valid mutual obligations, whose existence and
sufficiency are recognized herein, the Parties hereby resolve and agree on the
following:
CLAUSE 1 APPLICATION AND EFFECTIVENESS OF THE AGREEMENT
This Agreement shall apply to the Instruments of Debt Confession as if it were
an integral
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part of the same Instruments. This Agreement shall become valid from the date of
its signing, and as authorized by Law 10,406/02 (the "New Brazilian Civil
Code"), shall only enter into effect from the Date of Effectiveness, as defined
in each of the Instruments of Debt Confession.
CLAUSE 2 OBLIGATIONS OF NET GROUP COMPANIES
Starting from the current date until the date on which the entire Confessed Debt
has been entirely and unequivocally paid, the Net Group Companies undertake to
comply with the obligations listed below. The references and obligations
attributed to Net Servicos shall be considered as references and obligations for
all Net Group Companies, jointly and severally and without benefit of order.
2.1 UNSCHEDULED OBLIGATORY AMORTIZATION
2.1.1. The Net Group Companies undertake, in accordance with the terms and
conditions of the Intercreditor Agreement, to carry out an early partial
amortization of the Unit Nominal Value in same proportion for all the
Debentures, without this implying the payment of any penalty or premium by Net
Servicos, in the events described in items (I) to (V) below. Such amortizations
shall be accompanied by Remuneratory Interest due at the time and calculated pro
rata temporis. Any Unscheduled Obligatory Amortization shall be carried out
considering at all times the inverse order of maturity of the installments of
the Principal Value.
(I) "EXCESS CASH FLOW"
On June 15, 2006 and on June 15, for each successive year, Net Servicos shall
amortize the Principal Value for an amount equal to the product of (i) the
Prepayment Percentage and the (ii) amount relating to the Excess Cash Flow
Prepayment Amount of the previous fiscal year, if any.
(II) PREPAYMENT OF SENIOR SECURED INDEBTEDNESS
At most 5 (five) business days prior to the voluntary prepayment, voluntary
redemption, repurchase or voluntary purchase of any Senior Secured Indebtedness,
or any other Indebtedness of Net Servicos in existence on the date of signing of
this agreement, Net Servicos shall notify the Creditor Institutions with regard
to the prepayment of the Principal Value for an amount equal to the product of
i) the Voluntary Prepayment Percentage and (ii) the principal amount of the same
prepayment, redemption, repurchase or purchase.
(III) NEW DEBT
Within at most 5 (five) business days of the date on which Net Servicos incurs
new Indebtedness (that is not Permitted Indebtedness, except in the case of
Indebtedness for Refinancing, incurred for the first time by Net Servicos with
regard to the Senior Secured
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Indebtedness), Net Servicos shall notify the Creditor Institutions with regard
to the prepayment of the Principal Value for an amount equal to the product of
i) 80% (eighty per cent) of (ii) the product of (a) the Prepayment Percentage
and (b) the Cash Proceeds arising from the Indebtedness incurred or issued by
Net Servicos and its Restricted Subsidiaries.
(IV) ISSUANCE OF SHARES
(a) Within at most 5 (five) business days of the effective receipt by Net
Servicos of the proceeds of the full payment or sale of all the shares issued by
the same Net Servicos for the purpose of implementing its Restructuring
("Issuance of Restructuring Shares"), and in the event that the average price of
these shares is greater than R$ 0.35 (thirty five centavos) per share, Net
Servicos shall notify the Creditor Institutions with regard to the prepayment of
the Principal Value for an amount equivalent to the product of i) the Prepayment
Percentage and (ii) the Excess Proceeds of the Closing Equity Issuance. The
proceeds of the Issuance of Restructuring Shares that are not applied, or
required to be applied, to prepay the securities under this clause 2.1.1(IV)(i)
may be applied by the Issuer for any purpose, including, without limitation, to
the repayment of the Bridge Loan.
(b) Within at most 5 (five) business days of the issue of any Equity Interest by
Net Servicos (excepting the Issuance of Restructuring Shares), the same Net
Servicos shall notify the Creditor Institutions with regard to the prepayment of
the Principal Value for an amount equal to the product of i) 70% (seventy per
cent) of (ii) the Prepayment Percentage applicable to the Cash Proceeds arising
from the issue of an Equity Interest by Net Servicos (excepting the Issuance of
Restructuring Shares). In the event that, on the date immediately prior to the
issue date of the Equity Interest, the cash and Cash Equivalents of Net Servicos
and its Restricted Subsidiaries are less than the Minimum Cash Balances, the Net
Proceeds arising from the same issue of the Equity Interest shall be considered
as having been reduced by an amount equivalent to the difference between (i) the
Minimum Cash Balance and (ii) the cash and Cash Equivalents of Net Servicos and
its Restricted Subsidiaries, on the same date:
(V) ASSET SALES
Net Servicos shall not carry out nor shall it permit its Restricted Subsidiaries
to carry out Asset Sales, except where:
(i) Net Servicos or a Restricted Subsidiary, as per the case, receives payment
which, on the date of Sale of the Assets, is at least equivalent to the Fair
Market Value of the assets in question, or the Equity Interest issued or sold,
disposed of, ceded or otherwise transferred;
(ii) at least 80% (eighty per cent) of the payment received by Net Servicos or
any one of its Restricted Subsidiaries is in cash. For the purposes of this
Clause, each one of the items below shall be considered as a cash payment:
(a) Cash Equivalents;
(b) Titles and securities received by Net Servicos or any of its
Restricted Subsidiaries that are converted into cash by Net Servicos
or any of its Restricted Subsidiaries immediately or within at most
30 (thirty) days.
Within 60 (sixty) days of any Asset Sale, Net Servicos shall notify the Creditor
Institutions with regard to the prepayment of the Principal Value for an amount
equivalent to the product of i) the Prepayment Percentage and (ii) the lesser of
(a) 80% (eighty per cent) of
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the Net Proceeds from the Asset Sale and (b) the greater of (I) 50% (fifty per
cent) of the Net Proceeds from the Asset Sale and (II) the same Net Proceeds
from the Asset Sale minus any portion/installment that shall be assigned to
Capital Expenditures.
For the Purposes of this Clause and of Clause 2.1.4, at most 50% (fifty per
cent) of the Net Proceeds of the respective Asset Sale may be used for Capital
Expenditures.
2.2. NOTIFICATION OF PREPAYMENT
2.2.1. Any notification to be sent by Net Servicos to the Creditor Institutions
with regard to prepayments to be realized in accordance with Clause 2.1 of this
Agreement must specify the date on which the relevant prepayment is made.
Notwithstanding the above, this date of prepayment may not occur less than 5
(five) business days nor more than 30 (thirty) business days after the delivery
date for the corresponding notification to the Creditor Institutions, except in
the event described in Clause 2.1.1 IV (a), in which Net Servicos may carry out
the prepayment independently of any notification.
2.3. OBLIGATORY AMORTIZATION DUE TO CHANGE IN CONTROL
2.3.1. In the event of a Change in Control of Net Servicos, as described in
this Agreement or in the Debt Instruments, Net Servicos undertakes to
amortize the entire Principal Value outstanding with regard to the
Instruments of Debt Confession held by Creditor Institutions that,
individually, express their interest in amortizing part or all (at the
discretion of the relevant Creditor Institution) of the Principal Value
of the Instruments of Debt Confession held by the same institutions,
for an amount equal to the relevant corrected Principal Value, plus
applicable Interest until the payment date, calculated pro rata
temporis.
2.3.1.1. For the purposes of Clauses 2.3.1 of this Agreement, it will not be
considered a Change of Control Event the transfer of Control to: (i)
Globo Comunicacoes e Participacoes S.A. or its Affiliates; or (ii)
Telefonos de Mexico S.A. or its Affiliates.
2.3.2. For the purposes of the above, Net Servicos shall notify the Creditor
Institutions of the occurrence of a Change in Control within at most 5
(five) business days calculated from the occurrence of the Change of
Control.
2.3.3. The Creditor Institutions that wish to amortize the Principal Value due
to them shall, within 15 (fifteen) calendar days of receipt of
notification from Net Servicos, express this interest in amortizing the
relevant Principal Value in writing.
2.3.4. Net Servicos must amortize the Principal Value within 30 (thirty)
calendar days of the date of receipt of notification, in writing, from
the Creditor Institutions, informing the same party of their interest
in amortizing the relevant Principal Value.
2.3.5. Net Servicos shall not be obliged to carry out the amortization
mentioned in Clause 2.3.1 in the event that a third party carries out
the same amortization, on behalf of and by order of Net Servicos, in
accordance with the terms and conditions described in Clauses 2.3.1. to
2.3.4 above. In such an event, the same third party shall subrogate the
rights relating to the credits that it amortizes.
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2.4. LOCATION AND FORM OF PAYMENT
2.4.1. The payments to which the Creditor Institutions are entitled by virtue of
the terms of this Agreement shall be carried out in the same location and in the
same form as the payments of the Principal Value and Interest established in the
Instruments of Debt Confession.
2.5. EXTENSION OF DEADLINES
2.5.1. Deadlines for the payment of any obligation established in or
arising from this Agreement shall be considered to be automatically
extended until the first subsequent business day, without any increase in
interest or any other overdue charge to the values to be paid, whenever
the payment date coincides with a national holiday, a Saturday or Sunday
or a bank holiday in the city of Sao Paulo.
2.6. MAINTENANCE OF NET SERVICOS AND ITS RESTRICTED SUBSIDIARIES
2.6.1. Net Servicos undertakes to maintain and to ensure that its
Restricted Subsidiaries maintain: (i) its companies validly open with all
necessary registers; and (ii) the rights, licenses, concessions,
privileges, titles to property and franchises necessary for the normal
conduct of its respective business activities, except in the case that a
failure to maintain such licenses of concessions has no adverse impact on
the capacity of Net Group Companies to comply with the obligations
assumed herein and does not affect the risk of the Creditor Institutions
with regard to the receipt of the payment obligations of Net Group
Companies. This limitation shall not prevent the events expressly
established in this Instrument regarding (a) the sale, disposal, transfer
or other form of assignment of its Restricted Subsidiaries or any one of
its assets, in accordance with the terms of this Agreement, (b) the
liquidation, dissolution or division of the Restricted Subsidiaries
listed in `Annex 6' to this Agreement, provided that, in the event of a
division, the divided company and the separated portion remain under the
control of Net Servicos or its Restricted Subsidiaries, or (c) an
incorporation or merger between Restricted Subsidiaries.
2.6.2. Net Servicos undertakes to maintain, and to ensure that its
Restricted Subsidiaries obtain and maintain, all the authorizations and
licenses required for the compliance with all the obligations established
in this Agreement and in the Pledge Agreements
2.7. MAINTENANCE OF ASSETS
2.7.1. Net Servicos undertakes to maintain, and to ensure that its Restricted
Subsidiaries maintain in good conditions of use, their assets that are necessary
for the normal conduct of their respective business activities, excepting cases
of depreciation or natural wear and tear of the assets in question, unless the
failure to maintain the same in good conditions of use does not adversely affect
in any way, the capacity of Net Group Companies to comply with
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the obligations assumed herein and does not adversely affect the risk of the
Creditor Institutions with regard to the receipt of the payment obligations from
Net Group Companies.
2.8. MAINTENANCE OF INSURANCE POLICIES
2.8.1. Net Servicos undertakes to maintain and ensure that its Restricted
Subsidiaries maintain, their principal assets insured in accordance with
current market practices for the business area of Net Servicos.
2.9. RESTRICTION ON NEW LIENS
2.9.1. Net Servicos is prohibited from creating, incurring or assuming
any Lien (excepting the Permitted Liens) on any of its goods and assets,
or any funds arising from the same goods and assets, in order to
guarantee any Debt, unless the same Lien is intended to guarantee the
Principal Value due to each Creditor Institution in the same proportion,
whether previously or concomitantly, to the Indebtedness in question,
with Net Servicos undertaking to ensure that its Restricted Subsidiaries
observe the bar contained herein.
2.10. RESTRICTION ON NEW INDEBTEDNESS
2.10.1 Net Servicos shall maintain, on the last day of each fiscal quarter, in
accordance with the table below, a Consolidated Interest Expense Ratio that is
greater than the index indicated below for the relevant date:
PERIOD INDEX
------------------------------------ -----
October 31, 2004 - December 31, 2004 1.10
January 1, 2005 - December 31, 2005 1.25
January 1, 2006 - December 31, 2006 1.35
January 1, 2007 - December 31, 2007 1.90
January 1, 2008 - December 31, 2008 2.70
After January 1, 2009 4.80
2.10.2. Net Servicos shall maintain, on the last day of each fiscal quarter, in
accordance with the table below, a Consolidated Leverage Ratio that is less than
the index indicated below for the relevant date:
PERIOD INDEX
------------------------------------ -----
October 31, 2004 - December 31, 2004 3.2
January 1, 2005 - December 31, 2005 3.0
January 1, 2006 - December 31, 2006 2.5
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January 1, 2007 - December 31, 2007 2.0
After January 1, 2008 1.5
2.10.3. Net Servicos is prohibited from Contracting, directly or indirectly, new
Indebtedness, with the same party undertaking to ensure that its Restricted
Subsidiaries observe the bar contained herein. At the same time, Net Servicos
and its Restricted Subsidiaries may contract new Indebtedness in the event that,
on the date of incurring the Indebtedness in question:
(a) The "Consolidated Interest Expense Ratio" is greater than the index
indicated below for the relevant date:
PERIOD INDEX
------------------------------------ -----
October 31, 2004 - December 31, 2004 1.10
January 1, 2005 - December 31, 2005 1.25
January 1, 2006 - December 31, 2006 1.35
January 1, 2007 - December 31, 2007 1.90
January 1, 2008 - December 31, 2008 2.70
After January 1, 2009 4.80
(b) the "Consolidated Leverage Ratio" is less than the index indicated below for
the relevant date:
PERIOD INDEX
------------------------------------ -----
October 31, 2004 - December 31, 2004 3.2
January 1, 2005 - December 31, 2005 3.0
January 1, 2006 - December 31, 2006 2.5
January 1, 2007 - December 31, 2007 2.0
After January 1, 2008 1.5
2.10.4. Providing that the above conditions are observed, Net Servicos and its
Restricted Subsidiaries may, at any time, incur the following Indebtedness
(collectively termed "Permitted Debt"):
(i) (a) Senior Secured Indebtedness, (b) any Indebtedness in existence
on the date of signing of this Agreement (including, without
limitation, the Bridge Loan), and (c) any Refinancing Indebtedness
of any of the obligations described in subitems (a) and (b);
(ii) Indebtedness of Net Servicos with any one of its Restricted
Subsidiaries, as well as any of the Restricted Subsidiaries with Net
Servicos or with any other Restricted Subsidiary;
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(iii) Indebtedness arising from any Lien created or whose existence is
permitted in accordance with the terms of Clause 2.9 above;
(iv) Indebtedness relating to (a) letters of credit or other instruments
and similar obligations issued with regard to operations arising in
its normal course of business; (b) surety bonds, performance bonds
and other similar instruments incurred during its normal course of
business, or (c) Hedging operations realized during the normal
course of its business for non-speculative purposes;
(v) Purchase obligations, capitalized lease obligations and any
Refinancing Indebtedness related to the same, whose total aggregate
principal amount at no time exceeds the Fair Market Value on the
date of acquisition of the goods or assets acquired in conjunction
with the agreements in question, and whose global principal amount
outstanding does not, at any time, exceed R$ 30,000,000.00 (thirty
million Brazilian reais) corrected by the IGP-M Adjustment on
January 1 of each fiscal year subsequent to January 1, 2004;
(vi) Indebtedness arising from checks, bills of exchange or other
similar instruments issued or drawn on without the corresponding
provision of funds, provided that the same Indebtedness is
extinguished within 5 (five) business days of its occurrence;
(vii) Indebtedness of any Restricted Subsidiary in existence on the date
on which the same Restricted Subsidiary was acquired by Net
Servicos, or the Indebtedness of another Person that was assumed by
the Restricted Subsidiary as the result of the eventual acquisition
of assets owned by the same Person by the Restricted Subsidiary (in
any case, other than the Indebtedness Incurred through the
acquisition), as well as any Refinancing Indebtedness related to
such operations, provided that Net Servicos is qualified to incur
at least the amount in Brazilian reais equivalent to US$ 1.00 (one
U.S. dollar) of additional Indebtedness after the conclusion of the
same acquisition, in accordance with the terms of Clause 2.10;
(viii) Indebtedness whose aggregate principal amount does not exceed, at
any time, R$ 10,000,000.00 (ten million Brazilian reais) corrected
by the IGP-M Adjustment on January 1 of each fiscal year subsequent
to January 1, 2004
(ix) Guarantees of the Principal Values and guarantees of the
Indebtedness that are not prohibited by this Agreement.
2.10.5. For the purposes of compliance with this Clause, as well as the
determination of the outstanding principal value of any Indebtedness incurred in
accordance with this Clause 2.10.3:
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(a) any obligation of the principal debtor within the context of the
Indebtedness (or of any third-party that may have Incurred the same Indebtedness
in accordance with the terms of Clause 2.10.3), arising from any guarantee, lien
or surety letter guaranteeing the same Indebtedness, shall be disregarded to the
degree that the same guarantee, lien or surety letter guarantees the principal
value of the same Debt;
(b) in the event that the Indebtedness satisfies the criterion of more
than one type of Permitted Debt, Net Servicos may, at its sole discretion,
classify the same kind of Indebtedness and shall only be obliged to include the
value and type of indebtedness in one of the classifications of Permitted Debt;
(c) the value of Indebtedness issued at a discount shall be equivalent
to its book value, in accordance with Brazilian GAAP.
2.11. RESTRICTIONS ON THE REALIZATION OF CERTAIN PAYMENTS
2.11.1. Net Servicos shall not declare or pay, or allow its Restricted
Subsidiaries, whether directly or indirectly, to declare or pay dividends or
interest on their own shareholders' funds or on any other participation in
profits to holders of an Equity Interest in Net Servicos or any of its
Restricted Subsidiaries (including, but not limited to, any payment relating to
mergers, acquisitions or incorporations involving Net Servicos and/or its
Restricted Subsidiaries), until the final amortization of the Principal Value,
excepting dividends and other payments that are made with regard to Equity
Interests in Net Servicos and/or its Restricted Subsidiaries that do not carry
any obligation binding on Net Servicos and/or its Restricted Subsidiaries to
repurchase or redeem the same.
2.11.2. Net Servicos is barred from carrying out any operation entailing the
acquisition, amortization, redemption or repurchase (including, but not limited
to, mergers, acquisitions or incorporations involving Net Servicos) of Equity
Interests, as per the case (with the exception of those related to the Equity
Interests held by Net Servicos or by its Restricted Subsidiaries), with Net
Servicos undertaking to ensure that its Restricted Subsidiaries respect the bar
contained herein (all payments and provisions established in Clauses 2.11.1 and
2.11.2 shall, collectively, be termed, "Restricted Payments").
2.11.3. Net Servicos is barred from realizing any Investment that is not a
Permitted Investment, undertaking to ensure that its Restricted Subsidiaries
respect the bar contained herein.
2.11.4. Notwithstanding the prohibitions listed in Clauses 2.11.1 to 2.11.3
above, Net Servicos and its Restricted Subsidiaries may, henceforth, without any
restriction or limitation, make the following payments and take the following
provisions (each one of which is termed a "Permitted Payment"):
(a) any payment, distribution, amortization, redemption, acquisition or
repurchase (1) that constitutes interest on shareholders' funds and that is
capitalized
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immediately and in full in the Restricted Subsidiaries; (2) that is
required of Net Servicos or any of its Restricted Subsidiaries by law or as a
provision of its By-Laws in force on date of signing of this Agreement;
(b) the payment of any dividend, distribution or any other form of
payment by a Restricted Subsidiary to Net Servicos or to the holders of Equity
Interests, provided that the holders of the same Equity Interests are under the
control of Net Servicos and the payment is made in pro rata form;
(c) any payment, distribution, amortization, redemption, acquisition or
repurchase of an Equity Interest by Net Servicos or by any person under its
direct or indirect control to the Management Investors, provided that the
aggregate amount paid with regard to the same payment, distribution,
amortization, redemption, acquisition or repurchase of an Equity Interest does
not exceed R$ 2,000,000.00 (two million Brazilian reais) in any 12 (twelve)
month period;
(d) the repurchase, redemption or any other form of acquisition of any
Equity Interest in CMA Participacoes S.A. up to an amount of R$ 500,000.00 (five
hundred thousand Brazilian reais), held by Persons other than Net Servicos and
its Restricted and Unrestricted Subsidiaries.
2.12. RESTRICTION ON THE MODIFICATION OF DIVIDEND PAYMENT POLICY
2.12.1. Net Servicos is barred from voting in favor of any changes in policy
relating to the dividends of the Unrestricted Subsidiaries that may increase
their respective distributions of dividends, with Net Servicos undertaking to
ensure that its Restricted Subsidiaries respect the prohibition contained
herein.
2.13. RESTRICTION ON OPERATIONS WITH AFFILIATES
2.13.1. Net Servicos is barred from executing or implementing any transaction or
contract with any Affiliates, unless this operation with Affiliates, directors,
board members or administrators ("Operation with Affiliates") is carried out
under market conditions and serves the interests of Net Servicos and its
Restricted Subsidiaries, with Net Servicos undertaking to ensure that its
Restricted Subsidiaries respect the bar contained herein.
2.13.1.1. This provision shall not apply to:
(a) any Restricted Payment or Permitted Payment authorized in accordance
with Clause 2.11 above, any Permitted Investment, or any other transaction
specifically excluded from the definition of the term `Restricted Payment'.
(b) the execution, maintenance and compliance with any work agreement,
collective labor agreement, benefit plan, program or any other similar agreement
executed
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in the normal course of its business, including vacations, insurance policies,
health and retirement plans;
(c) payment, in the normal course of its business, of remuneration,
premiums, bonuses or indemnities or any issue or grant of shares, options or
other securities to employees, directors or board members;
(d) any operation between Net Servicos and a Restricted Subsidiary or
between Restricted Subsidiaries;
(e) any operation arising from agreements in existence on the date of
signing of this Agreement.
2.14 RESTRICTION ON CAPITAL EXPENDITURES
2.14.1. Unless otherwise permitted within this Agreement, Net Servicos is barred
from realizing any Capital Expenditure, and undertakes to ensure that its
Restricted Subsidiaries respect the same bar, (excepting any Capital Expenditure
that constitutes a Permitted Investment or that is carried out using the
proceeds from Asset Sales, in accordance with the terms of Clause 2.1.1. (V)),
where the same investment:
(i) exceeds:
(a) for the fiscal year ended December 31, 2004, an amount in
Brazilian reais equivalent to US$ 50,000,000.00 (fifty million
U.S. dollars), and
(b) in the case of any year subsequent to 2004, the amount
resulting from the updating of the value in Brazilian reais
equivalent to US$ 50,000,000.00 (fifty million U.S. dollars),
corrected by the U.S. consumer price index from December 31,
2003 until the last day of the fiscal year immediately prior
to that of the Capital Expenditure;
(ii) during any fiscal quarter, exceeds 50% (fifty per cent) of the maximum
applicable limit for the respective fiscal year that includes the same quarter,
with the proviso, however, with regard to items (i) and (ii) above, in the event
that in any fiscal year the amount of Capital Expenditures permitted by this
Clause exceeds the amount of Capital Expenditures effectively realized by Net
Servicos and its Restricted Subsidiaries (this excess amount termed the "Excess
Amount"), the same Net Servicos and its Restricted Subsidiaries shall be
entitled to make additional Capital Expenditures in the fiscal year immediately
following, equal to that permitted in accordance with subitem (i) of this
Clause, plus the lesser of (x) the Excess Amount and (y) 20% (twenty per cent)
of the amount of Capital Expenditures that would be permitted with regard to the
previous fiscal year.
2.14.2. The limitation on Capital Expenditures established above shall
immediately cease as and when the Financial Leverage Index, determined at the
end of 4 (four) consecutive fiscal quarters and prior to the date of the same
Capital Expenditure, is equal to or less than 1 to 1. For the purposes of
calculating the Capital Expenditure realized in any given fiscal
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year, any value for Capital Expenditures arising in the preceding fiscal year
whose use is permitted shall be considered as having been used primarily in that
fiscal year.
2.14.3. For the purposes of calculating the value of the Capital Expenditure,
the amount in other currencies equivalent to the value in U.S. dollars
defined in Clause 2.14.1 (i.a), shall be calculated on the basis of the
average Exchange Rate (as defined in the Instruments of Debt Confession)
for the month in which the Capital Expenditure was realized or
contracted.
2.15. RESTRICTION ON THE DESIGNATION OF RESTRICTED OR UNRESTRICTED SUBSIDIARIES
2.15.1.On the date of signing of this Agreement, all of the subsidiaries of Net
Servicos shall be considered to be Restricted Subsidiaries, with the exception
of Televisao Cabo Criciuma Ltda. and TV Cabo e Comunicacoes de Jundiai S.A. Net
Servicos shall not designate any subsidiary as Unrestricted. However, any Person
that is not a subsidiary of Net Servicos on the date of signing of this
Agreement may be designated as an Unrestricted Subsidiary by resolution of the
Meeting of the Board of Directors at the time of its acquisition or creation,
provided that:
(a) at the time of the designation in question, the same subsidiary is
not the owner, whether directly or indirectly, of (i) any share or quota
representing the capital stock, equity interests, partner's rights,
participation certificates or any other titles that carry the right to a share
in the profits or Indebtedness of any Restricted Subsidiary that is not
simultaneously designated as an Unrestricted Subsidiary or (ii) any share or
quota representing the capital stock or Indebtedness of Net Servicos;
(b) the Investment in the same subsidiary is permitted at the time of
its designation in accordance with the terms of Clause 2.11 above;
(c) the same subsidiary does not hold any applicable license, permit or
authorization to exploit any Permitted Business on the date of signing of this
Agreement;
(d) considering that all the transactions or agreements between each
subsidiary and Net Servicos or any Restricted Subsidiary were executed at the
time of the designation, such transactions and agreements would be permitted in
accordance with the provisions of Clause 2.13; and
(e) immediately after the same designation becomes effective, no event
shall be in progress that is an Early Maturity Event or that, through
notification or with the passage of time, becomes an Early Maturity Event..
2.15.3. The Board of Directors may redesignate any Unrestricted Subsidiary as a
Restricted Subsidiary, if, immediately after the same redesignation takes
effect, (a) there is no Early Maturity Event; and (b) Net Servicos may incur
additional Debt, for an amount in Brazilian reais equivalent to US$ 1.00 (one
U.S. dollar), in accordance with the terms of
- 13 -
Clause 2.10.3.
2.15.4. Net Servicos undertakes to ensure that each and any Restricted
Subsidiary is a joint and several debtor, in accordance with the terms and
conditions of this Agreement and the Pledge Agreements, also undertaking to
ensure that all the documents required to formalize this condition of a joint
and several debtor are duly signed.
2.16. RESTRICTIONS ON MERGERS, INCORPORATIONS AND ASSET SALES
2.16.1. Net Servicos is barred, whether by means of an isolated operation or a
series of operations, from merging with any Person, disposing of, transferring,
leasing or disposing in any other way of all or a substantial part of its assets
to any Person or Persons, or executing any operation with a similar result; Net
Servicos further undertakes to guarantee that its Restricted Subsidiaries are
not a party to any operation or series of operations that may, cumulatively,
result in the sale, transfer, leasing or disposal of all or a substantial part
of the assets of Net Servicos and its Restricted Subsidiaries, considered in
consolidated form, to any Person or Persons (excepting the Restricted
Subsidiaries listed in "Annex 2", which shall observe the terms of Clause 2.6),
unless, cumulatively:
(a) Net Servicos or an eventual Restricted Subsidiary, as per the case,
is the surviving Person after the operation, or the Person arising from the
merger, or with which Net Servicos or an eventual Restricted Subsidiary has
merged, or that has acquired or leased the assets owned by Net Servicos or any
Restricted Subsidiary (in any of these cases, the "Surviving Person"), is a
company organized and validly in existence under the laws of the Federal
Government of Brazil or of any state of the United States of America, and the
Surviving Person expressly assumes (jointly and severally with Net Servicos or
the Restricted Subsidiary in question, if any, unless these Persons cease to
exist as the result of a merger or incorporation), by means of an amendment to
the Agreement, all the obligations contracted by Net Servicos or any Restricted
Subsidiary, as per the case, by virtue of this Agreement;
(b) immediately after executing the same operation, Net Servicos, the
Restricted Subsidiary, if any, or the Surviving Person, as the case may be, has
the authority to incur additional Indebtedness for a minimum amount of Brazilian
reais equivalent to US$ 1.00 (one U.S. dollar), in accordance with the terms of
Clause 2.10.3;
(c) immediately after executing the same operation or series of
operations, in a pro forma manner, the implementation of the same has not caused
an Early Maturity Event;
(d) each Net Group Company has submitted to the Creditor Institutions an
instrument in writing, ratifying the guarantees it has granted; and
(e) Net Servicos, its Restricted Subsidiary in question or the Surviving
Person, as per the case, has submitted to the Creditor Institutions a
certificate signed by a Director
- 14 -
of Net Servicos, the Restricted Subsidiary in question or the Surviving Person
and a legal opinion acceptable to the Creditor Institutions, declaring that the
same operation, as well as the Agreement, as amended, are in accordance with
this Clause, and that all of the requirements of the Agreement with regard to
the operation have been satisfied, provided that (i) the attorney responsible
for the opinion is convinced of the veracity of the certificate issued by the
Directors of Net Servicos or any one of its Restricted Subsidiaries, with regard
to matters of fact, as per the case, and (ii) no legal opinion shall be required
for a merger, incorporation, disposal, assignment, leasing or any other type of
disposal established in Clause 2.16.2.
2.16.2. Notwithstanding the terms of items (b) and (c) above, the Restricted
Subsidiaries may participate in merger, acquisition and incorporation operations
that have as exclusive counterparty, Net Servicos and any Restricted Subsidiary,
as well as in operations whose object is the disposal, assignment, transfer,
leasing or other form of disposal between each other of all or part of the
relevant party's assets.
2.16.3. In the event of any merger, incorporation or corporate reorganization
operation involving a Net Group Company, this Net Group Company or the Person
that results from the same operation must expressly assume all of the
obligations assumed by the Net Group Company as a result of the guarantees given
in the Pledge Agreements and in the respective Instruments of Debt Confession,
through an instrument that has been duly signed and registered and that shall be
immediately delivered to the Creditor Institutions.
2.17. MAINTENANCE OF BOOKS AND REGISTERS
2.17.1. Net Servicos shall maintain and ensure that its Restricted Subsidiaries
maintain books, accounts and registers in accordance with Brazilian GAAP and all
other applicable Brazilian laws.
2.18. CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
2.18.1. Net Servicos shall, at all times, hold an equity interest of not less
than the majority of shares or quotas representing the capital stock, equity
interests, partner's rights, participation certificates or any other securities
that confer the right to participate in the results of each of its Restricted
Subsidiaries.
2.19. BUSINESS OF NET SERVICOS AND RESTRICTIONS ON THE TRANSFER OF EXISTING
BUSINESSES
2.19.1. Net Servicos shall not dedicate itself predominantly, nor shall it
permit its Restricted Subsidiaries to dedicate themselves predominantly to any
businesses or activities distinct from a Permitted Business. Furthermore, Net
Servicos shall not transfer, nor shall it allow any of its Restricted
Subsidiaries to transfer, whether directly or indirectly, to any Unrestricted
Subsidiary (i) any of the licenses, permits or authorizations used in a
Permitted Business on the date of signing of this Agreement, or (ii) any fixed
asset (as defined in the Consolidated Financial Statements of Net Servicos) of
Net Servicos
- 15 -
or its Restricted Subsidiaries, if the same are used in the licensed service
areas of Net Servicos and its Restricted Subsidiaries, in the form existing on
the date of signing of this Agreement. Net Servicos and its Restricted
Subsidiaries shall nevertheless have the option of carrying out Asset Sales,
provided that these are in accordance with the terms of Clause 2.1.1 (V) above,
as well as to pledge goods and assets, provided that this is permitted by Clause
2.9 above.
2.20. ALTERATION OF BY-LAWS
2.20.1. Net Servicos shall not make or permit its Restricted Subsidiaries to
make any alterations or modifications to its/their By-Laws or agree to
alterations or modifications in the By-Laws or other documents of incorporation
of Net Servicos or any Restricted Subsidiaries, as the case may be, unless the
same alterations or modifications are without adverse effect on the capacity of
Net Servicos or its Restricted Subsidiaries to liquidate the principal and
accessory obligations assumed by Net Servicos and its Restricted Subsidiaries
under the terms of this Agreement.
2.21. OPERATIONS OF A SPECULATIVE NATURE
2.21.1. Net Servicos shall not execute or permit its Restricted Subsidiaries to
execute Currency Agreements, Interest Rate Agreements or futures agreements,
except in the case that such instruments are celebrated in the normal course of
business and for non-speculative purposes.
2.22. COMPLIANCE WITH RELEVANT AGREEMENTS
2.22.1. Net Servicos shall comply with and ensure that its Restricted
Subsidiaries comply with all of the obligations of each Relevant
Agreement to which they are parties, except in the events that default,
if any, does not entail a relevant adverse effect for Net Servicos and
its Restricted Subsidiaries, considered on a consolidated basis, nor
does it entail a relevant adverse effect on the rights and funds of the
Creditor Institutions.
2.23 ADDITIONAL OBLIGATIONS
2.23.1. Net Servicos shall also be obliged:
(a) to submit to the Creditor Institutions
a.1) (i) its annual consolidated and audited financial
statements, devised in accordance with Brazilian GAAP, within
120 (one hundred and twenty) days of the last day of the
relevant fiscal year, and (ii) its consolidated and unaudited
quarterly financial statements, devised in accordance with
Brazilian GAAP, within 60 (sixty) days of the last day of each
of the three first quarters of the fiscal year;
- 16 -
a.2) simultaneously with the submission of the financial
statements, a certificate from Net Servicos, certifying that
the same Net Servicos and its Restricted Subsidiaries have
complied with the obligations arising from this Agreement. The
obligations of a financial nature shall be verified in
accordance with Brazilian GAAP;
a.3) immediately (but in any case, no later than 10 (ten)
business days calculated from the date on which any
administrator of Net Servicos or of any Restricted Subsidiary
becomes aware of the occurrence of the event), a notification
with regard to the occurrence of (i) an Early Maturity Event
established in this Agreement; (ii) any act carried out by a
creditor of any Senior Secured Indebtedness, in order to
accelerate payment of the Indebtedness due to the same party
from Net Servicos or from a Restricted Subsidiary, or (iii)
any judicial action proposed by any creditor of the Senior
Secured Indebtedness, with a view to executing or enforcing
the same Indebtedness due from Net Servicos or from a
Restricted Subsidiary;
a.4) immediately (but in any case, no later than 10 (ten)
business days calculated from the dispatch of notification
mentioned in subitem (a.3) above), a report elaborated by a
legal representative of Net Servicos, describing in detail,
the event mentioned in subitem (a.3) above, as well as the
measures that Net Servicos or any Restricted Subsidiary have
implemented or shall implement with regard to the same event;
a.5) immediately, a notification that an Early Maturity Event
established in this Agreement has been remedied, together with
a certificate from a Director of Net Servicos, describing the
steps taken to remedy the same event;
(b) not to carry out operations outside its business purpose, in
observance of the terms of its By-Laws, as well as the provisions of its
By-Laws, legislation and regulations in force;
(c) to maintain the respective accounting standards and dissemination
practices for information, unless an alteration is required in order to comply
with Brazilian GAAP;
(d) to provide all and any information that may reasonably be requested
of it by the Creditor Institutions within at most 10 (ten) business days,
calculated from the respective request date, and in particular, the information
required to verify the compliance by Net Servicos of the obligations arising
from this Agreement, it being hereby agreed that any information that is not in
the public domain and is not obligatory by law shall not be provided to
Competitors of Net Servicos and its Restricted Subsidiaries;
- 17 -
(e) to maintain its registration as a public listed company with the CVM
updated at all times.
CLAUSE 3 DECLARATIONS AND GUARANTEES OF NET GROUP COMPANIES
The Net Group Companies hereby provide the declarations and guarantees below, in
favor of the Creditor Institutions, with the same declarations and guarantees
provided being faithful and correct on the present date and on the date on which
the Preceding Conditions are met and this Agreement becomes effective. Any
references to the Net Group Companies shall be understood as applying to each of
them on an individual basis.
(a) Constitution and Existence. The Net Group Companies are Persons duly
constituted and in existence in accordance with the laws of their country of
constitution, with the corporate power and authority to own, lease and exploit
their assets as well as to manage their business activities in their current
manner;
(b) Corporate Powers and Authorizations. All corporate acts required to
authorize the execution and formalization of this Agreement have been duly
established and obtained by the Net Group Companies. The same Net Group
Companies possess the powers required to carry out the acts specified herein,
and the individuals representing the Net Group Companies and signing this
Agreement duly authorized to do the same;
(c) Validity. The Net Group Companies are authorized, in accordance with
the terms of their respective agreements or By-Laws and applicable legislation
to comply with the obligations contained in this Agreement, in the Intercreditor
Agreement, in the Pledge Agreements, in the Instruments of Debt Confession and
the other Documents of the Operation (as defined in the Intercreditor
Agreement), with these constituting valid and binding obligations on the
Subsidiaries, which are liable and enforceable in accordance with their terms,
and limited only by bankruptcy, insolvency, composition with creditors
(concordata) or other similar types of applicable law that restrict the
receivables of creditors in general;
(d) Absence of Default or Non-Compliance with Laws. The terms of this
Agreement are not at variance with any agreement or document to which the Net
Group Companies are parties or to which any of their goods and properties are
linked, with the exception of the debts forming the object of the Restructuring
Plan, including the debentures of the second and third public issues by Net
Servicos; (b) any law, decree, regulation to which the persons forming part of
the Net Group (and/or their Affiliates) or any of their goods and properties are
subject; or (c) any order, decision or administrative or judicial sentence
affecting member persons of the Net Group or any of their goods and properties,
excluding the proceedings mentioned in "Annex 5" to this Agreement;
(e) Authorization and Approval. The execution, formalization and
execution of this Agreement, the Intercreditor Agreement, the Pledge Agreements,
the Instruments of
- 18 -
Debt Confession and the other Operation Documents (as defined in the
Intercreditor Agreement), as well as the realization of the operations
considered herein and in the Operation Documents (as well as the observance of
the terms established in the same documents) shall not constitute a violation,
conflict or infraction or default relative to (i) the By-Laws, as applicable of
Net Group Companies, (ii) the indentures, mortgage deeds, debt obligations,
licenses, leasing agreements, licenses, loan agreements, other debt titles or
other agreements to which the Net Group Companies are a party or to which the
respective goods may be bound, except by the documents mentioned in the Third
Paragraph of Clause 5 of this Agreement; or (iii) existing and applicable laws,
rules, regulations, rulings, orders or decrees, issued by any government or the
decision of any court, whether within Brazil and outside it, with jurisdiction
over the relevant Net Group Company or over any of its respective goods or
relevant assets;
(f) Veracity of Declarations. This Agreement does not contain false or
incorrect declarations or the omission of material facts;
(g) Subsidiaries. The Restricted Subsidiaries, TV e Comunicacoes de
Jundiai S.A. and Televisao a Cabo Criciuma Ltda. are the only persons in which
Net Servicos, whether directly or indirectly, (i) holds or is committed to
holding a capital investment or similar stake, and (ii) has a controlling Equity
Interest;
(h) CDI Rate. The Net Group Companies have chosen, in agreement with the
Creditor Institutions, the CDI as the interest rate to be applied to the
Instruments of Debt Confession, hereby declaring that (i) this rate is subject
to variation, (ii) its form of calculation is understood and accepted by the
parties, (iii) it is a publicly known rate, disseminated to the market and
easily accessible to the Parties.
CLAUSE 4(A) DECLARATIONS AND GUARANTEES OF CREDITOR INSTITUTIONS
Each of the Creditor Institutions herein provides the following declarations and
guarantees with regard to itself and on behalf of the other Creditor
Institutions, certifying that the same declarations and guarantees are faithful
and correct on the present date and shall continue to be so during the term of
this Agreement:
(a) Constitution and Existence. The Creditor Institution has been duly
constituted and is validly in existence in accordance with Brazilian law, except
in the case of those institutions that are branches of foreign institutions that
were constituted in accordance with the laws of the country of their respective
parent, having the corporate powers and authority (or similar) to own, lease and
exploit their assets as well as to administer their business in their current
manner;
(b) Corporate Powers and Authorizations. All the corporate acts required
to authorize the execution and formalization of this Agreement by the Creditor
Institution
- 19 -
have been duly undertaken and obtained, with the Creditor
Institution possessing the powers necessary to realize the acts specified herein
and the individuals representing it in the signing of this Agreement duly
authorized to carry out the same;
(c) Authorizations and Validity. The Creditor Institution is authorized,
in the terms of its By-Laws and applicable legislation, to comply with the
obligations contained herein that constitute valid and binding obligations on
the Creditor Institution and that are liable and enforceable in accordance with
their terms.
CLAUSE 5 DEFAULT EVENTS
The parties expressly agree that the Confessed Debt shall be subject to early
maturity with regard to all Net Group Companies, in the event of occurrence of
any of the following hypotheses ("Early Maturity Events"):
(a) independently of any notice or notification, at any time, any Net
Group files for composition with creditors (concordata) or self-declared
bankruptcy or judicial or extrajudicial recovery;
(b) any bankruptcy, intervention, insolvency or other similar process
brought against Net Servicos or any one of its Restricted Subsidiaries, if not
fully secured by bankruptcy provisions, as per the case;
(c) independently of any notice or notification, any Net Group Company
defaults on any obligation regarding the payment (i) of the Principal Value of
any one of the Instruments of Debt Confession, on the maturity date, or (ii)
Interest on any one of the Instruments of Debt Confession, that is not remedied
within a period of 5 (five) days of the relevant maturity date;
(d) default by Net Group Companies, on any obligation under the terms
and on the date established in this Agreement, that is not remedied within 15
(fifteen) business days, reckoned from the receipt, by Net Servicos, of
notification by the respective holder of the credit arising from the Instruments
of Debt Confession, requiring the discharging of the relevant obligation in
default;
(e) declaration of early maturity, after the expiry of the respective
grace periods of any Indebtedness of Net Group Companies, including Indebtedness
relating to Debt Instruments or of any Restricted Subsidiary, whose aggregate
principal amount is equal to or greater than R$ 30,000,000.00 (thirty million
Brazilian reais) (or the equivalent amount in another currency or currencies),
corrected by the IGP-M Adjustment since January 1, 2004;
(f) one or more judicial decision or protest of a xxxx (unless the
protest is in error or bad faith, as validly proven by Net Servicos) against Net
Servicos or its Restricted Subsidiaries, for which the individual or aggregate
value of the fine is greater than R$
- 20 -
30,000,000.00 (thirty million Brazilian reais) (or the equivalent amount in
another currency or currencies), corrected by the IGP-M Adjustment since January
1, 2004, with regard to which, there is no measure in force preventing the
execution of the same or for which the deadline for taking the same measure has
expired;
(g) demonstration of the false, incorrect or misleading nature of any
relevant aspect of the declarations appearing in Clause 3 above or Clause 6.1 of
the Intercreditor Agreement;
(h) the confiscation, expropriation or other measures of a similar
character, applicable to all of or a substantial part of the assets of Net
Servicos or of its Restricted Subsidiaries, where the same event is not remedied
within 60 (sixty) days calculated from its occurrence
(i) default, by Net Servicos or its Restricted Subsidiaries, on any
obligation established in the Pledge Agreements and the Intercreditor Agreement,
that is not remedied by the deadlines specified in the agreements in question,
or in the absence of the same, within 10 (ten) business days, calculated from
the receipt by Net Servicos, of notification by the respective holder of the
credit arising from the Instruments of Debt Confession of the requirement to
comply with the relevant obligation in default;
(j) ineffectiveness or unenforceability, in any event, of the guarantees
granted to the holders of the debts arising from the Instruments of Debt
Confession, under the terms of this Agreement and the Pledge Agreements;
(k) a substantial alteration in the business purpose of Net Servicos;
(l) default on any obligation appearing in Clause 2.16 by Net Servicos
and/or its Restricted Subsidiaries;
(m) where any Operation Document becomes null or ineffective, whether in
full or in part, or the compliance with the obligations assumed by Net Servicos
or by its Restricted Subsidiaries in the same Documents becomes illegal, or (ii)
Net Servicos, or any one of its Restricted Subsidiaries contest the
enforceability of any Operation Document to which it is a party/they are
parties.
FIRST PARAGRAPH The events to which items (b), (e), (f), (g), (j), (k) and
(l) of this Clause 5 refer shall only be considered as Early Maturity Events if
they are not remedied within 5 (five) days of the date of receipt by Net
Servicos, of notification of occurrence of the default in question.
SECOND PARAGRAPH The occurrence of any Early Maturity Event shall
automatically cause the early maturity of the Confessed Debt, Interest, overdue
interest and penalties for late payment, which shall automatically and
immediately fall due, regardless of any request, protest, notice, communication
or notification, whether judicial or
- 21 -
extrajudicial or any other notification of any nature.
THIRD PARAGRAPH Default by Net Group Companies on their obligations
arising from the original loans listed in Annex 9 to the Intercreditor Agreement
that have not been converted into Senior Secured Indebtedness, as well as the
declaration of early maturity of the same debt, shall not constitute an Early
Maturity Event under the terms of this Agreement.
CLAUSE 6 TRANSFER
Any assignments or transfers to third parties, whether in full or in part, of
the receivables represented by the Confessed Debt and/or the other rights and
obligations arising from the respective Instruments of Debt Confession, under
the terms and conditions of the respective Instruments of Debt Confession, shall
imply the automatic adhesion of the same third party to this Agreement, without
the need for any additional formality or provision.
CLAUSE 7 EFFECT
Subject to the terms of Article 1 above, this Agreement shall be executed
irrevocably and irreversibly and shall take effect on the date of its signing,
and shall be binding on the Parties, their successors and assignees in any
capacity, remaining valid while the Instruments of Debt Confession remain in
force.
CLAUSE 8 ALTERATIONS, AMENDMENTS, WAIVER OR TOLERANCE
Unless otherwise determined in the Intercreditor Agreement, any alteration,
amendment, waiver or tolerance with regard to this Agreement and the Instruments
of Debt Confession shall only be considered valid and having effect if in
writing and signed by all the Parties.
FIRST PARAGRAPH The Parties recognize that, unless expressly established
in this Agreement: (a) the failure to exercise, the granting of extensions,
tolerance or delay in exercising any right guaranteed to them by virtue of this
Instrument and/or the law, shall not constitute a novation or waiver of these
rights, nor shall it affect their eventual exercise; (b) the single or partial
exercise of these rights shall not prevent the subsequent exercise of the
remainder of theses rights or the exercise of any other right; (c) the waiver of
any of these rights shall not be valid unless granted in writing; (d) the waiver
of one right shall be interpreted restrictively, and shall not be considered as
the waiver of any other right granted through this Instrument.
CLAUSE 9 NOTIFICATIONS
Notices, communications and/or notifications required and/or
permitted by this Agreement shall be carried out in the manner determined in
each Instrument of Debt
- 22 -
Confession.
CLAUSE 10 APPLICABLE LAW
This Instrument shall be governed by the laws of the Federal Republic of Brazil.
CLAUSE 11 CHOICE OF JURISDICTION
The parties hereby choose the jurisdiction of the City of Sao Paulo, State of
Sao Paulo, to resolve any doubts or disputes that may arise from this
Instrument, expressly renouncing any other, regardless of its merits.
The Parties, being in full agreement, have signed [ ] ([ ]) copies of this
instrument of equal content and form, in the presence of the witnesses indicated
below.
Sao Paulo, [ ], 200[ ]
[SIGNATURE LIST OF CREDITOR INSTITUTIONS]
INSTRUMENT OF DEBT CONFESSION DATED [ ]
NET GROUP COMPANIES
NET SERVICOS DE NET FRANCA LTDA.
COMUNICACAO S.A.: NET GOIANIA LTDA.
ALNOR ALUMINIO DO NORTE LTDA. NET INDAIATUBA LTDA.
ANTENAS COMUNITARIAS NET JOINVILLE LTDA.
BRASILEIRAS LTDA. NET LONDRINA LTDA.
CABODINAMICA TV CABO NET MARINGA LTDA.
SAO PAULO S.A. NET PARANA COMUNICACOES LTDA.
CMA PARTICIPACOES S.A. NET PIRACICABA LTDA.
DABNY, L.L.C. NET RECIFE LTDA.
DR EMPRESA DE DISTRIBUICAO NET RIBEIRAO PRETO S.A.
E RECEPCAO DE TV LTDA. NET RIO S.A.
HORIZONTE SUL NET SAO XXXXXX S.A.
COMUNICACOES LTDA. NET SAO XXXX DO RIO PRETO LTDA.
JONQUIL VENTURE LIMITED NET SAO PAULO LTDA.
MULTICANAL NET SOROCABA LTDA.
TELECOMUNICACOES S.A. NET SUL COMUNICACOES LTDA.
NET ANAPOLIS LTDA. REYC COMERCIO
NET ARAPONGAS LTDA. E PARTICIPACOES LTDA.
NET BAURU LTDA. TV CABO DE CHAPECO LTDA.
NET BELO HORIZONTE LTDA. TELEVISAO A CABO
NET BRASILIA LTDA. VINDIMA LTDA.
NET CAMPINAS LTDA. TV VIDEO CABO
NET CAMPO GRANDE LTDA. DE BELO HORIZONTE S.A.
NET CURITIBA LTDA.
NET FLORIANOPOLIS LTDA.
P. ________________________________________
Name:
Position:
P. ________________________________________
Name:
Position:
Witnessed by:
1. - ____________________________
Name: [ ]
ID Number (RG): [ ]
2. - ____________________________
Name: [ ]
ID Number (RG): [ ]
ANNEX 1
TO THE COMMON
TERMS AGREEMENT
LIST OF CREDITOR INSTITUTIONS
1) Planner Corretora de Valores S.A., a joint-stock company with its
headquarters in the City of Sao Paulo, State of Sao Paulo, at Avenida Paulista,
2.439, 11th floor, enrolled in the National Register of Legal Entities
(C.N.P.J.) under No. 00.806.535/0001-54, herein represented according to its
Bylaws, representing, as fiduciary agent and proxy, the holders of debentures of
the fourth issuance of debentures.
2) The Bank of New York, a financial institution with its headquarters in the
City of New York, at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX, 00000, as the trustee
("Trustee") of the holders of the Net Sul Notes (according to the definition of
the Intercreditor Agreement), herein represented according to its Bylaws.
3) Banco do Brasil S.A., a financial institution duly organized and existent in
compliance with the Brazilian law, with it headquarters in [ ], herein
represented according to its Bylaws.
4) Banco Itau BBA S.A., a financial institution duly organized and existent in
compliance with the Brazilian law, with it headquarters in the City of Sao
Paulo, State of Sao Paulo, at Praca Xxxxxxx Xxxxxx xx Xxxxx Aranha, 100, Xxxxx
Xxxxxxxxx, 9th floor, enrolled in the National Register of Legal Entities
(C.N.P.J.) under No. 17.298.092/0001-30, herein represented according to its
Bylaws.
5) BankBoston Banco Multiplo S.A., a financial institution duly organized and
existent in compliance with the Brazilian law, with it headquarters in [ ],
herein represented according to its Bylaws.
6) Banco Brascan S.A., a financial institution duly organized and existent in
compliance with the Brazilian law, with it headquarters in the City of Rio de
Janeiro, State of Rio de Janeiro, at Avenida Almirante Xxxxxxx, 52, 30th floor,
enrolled in the National Register of Legal Entities (C.N.P.J.) under No.
33.923.111/0001-29, herein represented according to its Bylaws.
7) Unibanco - Uniao de Bancos Brasileiros S.A., a financial institution duly
organized and existent in compliance with the Brazilian law, with it
headquarters in the City of Sao Paulo, State of Sao Paulo, at Avenida Xxxxxxx
Xxxxxx, 891, enrolled in the National Register of Legal Entities (C.N.P.J.)
under No. 33.700.394/0001-40, herein represented according to its Bylaws.
8) Banco do Estado do Rio Grande do Sul S.A., a financial institution duly
organized and existent in compliance with the Brazilian law, with it
headquarters in [ ], herein represented according to its Bylaws.
9) Marathon Fund, L.P., a financial institution duly organized and existent in
compliance with the [ ] law, with it headquarters in [ ], herein represented
according to its Bylaws.
10)_Banco Unico S.A., the new denomination for Banco BNL do Brasil S.A., a
financial institution duly organized and existent in compliance with the
Brazilian law, with it headquarters in the City of Sao Paulo, State of Sao
Paulo, at Xxxxxxx Xxxxxxxx, 0000, enrolled in the National Register of Legal
Entities (C.N.P.J.) under No. 00.086.413/0001-30, herein represented according
to its Bylaws.
11) Banco do Estado do Rio Grande do Sul S.A., a financial institution duly
organized and existent in compliance with the Brazilian law, with it
headquarters in [ ], herein represented according to its Bylaws.
ANNEX 2
TO THE COMMON
TERMS AGREEMENT
NET GROUP COMPANIES
NET SERVICOS DE COMUNICACAO S.A., a joint stock company headquartered in the
city and state of Sao Paulo, at Rua Verbo Divino, N. 1,356, registered
in the National Register of Corporate Entities (CNPJ/MF) under N(degrees).
00.108.786/0001-65, hereafter referred to simply as "Net Servicos" and duly
represented in the form of its By-Laws;
ALNOR ALUMINIO DO NORTE LTDA., a Brazilian limited liability company with
principal office in the city of Manaus, state of Amazonas, at Xxx Xxxxxx Xxxxxxx
X. 0,000, Xxxxx, Xxxxx 00 de Janeiro, registered in the National Register of
Corporate Entities (CNPJ) under N. 34.534.750/0001-65, herein represented in
accordance with its Articles of Association;
ANTENAS COMUNITARIAS BRASILEIRAS LTDA., a Brazilian limited liability company
with principal office in the city of Blumenau, state of Santa Catarina, at
Xxxxxxx Xxxxxx X. 00, Xxxxx Xxxxx, registered in the National Register of
Corporate Entities (CNPJ) under N. 79.375.606/0001-61, herein represented in
accordance with its Articles of Association;
CABODINAMICA TV CABO SAO PAULO S.A., a Brazilian joint stock company with
principal office in the city of Sao Paulo, state of Sao Paulo, at Rua Verbo
Divino, N. 1,356, Chacara Xxxxx Xxxxxxx, registered in the National Register of
Corporate Entities (CNPJ) under N. 65.516.254/0001-02, herein represented in
accordance with its By-Laws;
CMA PARTICIPACOES S.A., a Brazilian joint stock company with principal office in
the city of Sao Paulo, state of Sao Paulo, at Rua Verbo Divino, N. 1.356,
Chacara Xxxxx Xxxxxxx, registered in the National Register of Corporate Entities
(CNPJ) under N. 31.959.356/0001-80, herein represented in accordance with its
By-Laws;
DABNY, L.L.C., a company constituted and operating in accordance with the laws
of Delaware, headquartered c/o of The Prentice Hall Corporation System, Inc. 00
Xxxxxxxxxx Xxxxxx, Xxxxx X-000, Xxxxx, Xxxx Xxxxxx 00000, herein represented in
accordance with its Articles of Association dated as of January 13, 1995 and
its amendments;
JONQUIL VENTURE LIMITED, a company constituted and operating in accordance with
the laws of the British Virgin Islands, headquartered at Xxxxxxxxx Xxxxxxxx,
X.X. Xxx 00, Xxxx Xxxx, Xxxxxxx, herein represented in accordance with its
Memorandum and articles of incorporation;
MULTICANAL TELECOMUNICACOES S.A., a Brazilian joint stock company, headquartered
in the city and state of Sao Paulo, at Rua Verbo Divino N(degrees). 1,356 - 1st
floor - part, CEP 04719-002, Chacara Xxxxx Xxxxxxx, registered in the National
Register of Corporate Entities (CNPJ) under N(degrees). 31.963.481/0001-64,
herein represented in accordance with its By-Laws;
NET BELO HORIZONTE LTDA., a Brazilian limited company, with principal office in
the city of Belo Horizonte, state of Minas Gerais, at Xxxxxxx Xxxxxxxxxx
X(xxxxxxx). 000, Xxxxxxxxxx, XXX 00000-000, registered in the National Register
of Corporate Entities (CNPJ) under N(degrees). 38.738.308/0001-01, herein
represented in accordance with its Articles of Association;
NET BRASILIA LTDA., a Brazilian limited company, headquartered in the city of
Xxxxxxxx, Xxxxxxx Xxxxxxxx, XXX/Xxx, Xxxxxx 00, N(degrees). 725, CEP 70000-000,
registered in the National Register of Corporate Entities (CNPJ) under
N(degrees). 26.499.392/0001-79, herein represented in accordance with its
Articles of Association;
NET LONDRINA LTDA., a Brazilian limited liability company with principal office
in the city of Londrina, state of Parana, at Xxx Xxxxxx, X(xxxxxxx). 000,
Xxxxxx, registered in the National Register of Corporate Entities (CNPJ) under
N(degrees). 80.924.459/0001-10, herein represented in accordance with its
Articles of Association;
NET RIO S.A a Brazilian joint stock company with principal office in the city of
Rio de Janeiro, state of Rio de Janeiro, at Rua Vilhena de Moraes, N(degrees).
000, Xxxxx 00, Xxxxx 000, 0xx Xxxxx, Xxxxx xx Xxxxxx, registered in the National
Register of Corporate Entities (CNPJ) under N(degrees). 28.029.775/0001-09,
herein represented in accordance with its By-Laws;
TV CABO DE CHAPECO LTDA., a Brazilian limited liability company with principal
office in the city of Chapeco, state of Santa Catarina, at Avenida Xxxxx Xxxxx,
N(degrees). 247/01, registered in the National Register of Corporate Entities
(CNPJ) under N(degrees). 00.847.530/0001-26, herein represented in accordance
with its Articles of Association;
TELEVISAO A CABO VINDIMA LTDA., a Brazilian limited liability company with
principal office in the city of Caxias do Sul, state of Rio Grande do Sul, at
Xxx Xx Xxxxxxx xx Xxxxx, 0.000, Xxxx 02, part, registered in the National
Register of Corporate Entities (CNPJ) under N(degrees). 94.853.801/0001-43
herein represented by in accordance with its Articles of Association;
TV VIDEO CABO DE BELO HORIZONTE S.A., a Brazilian joint stock company with
principal office in the city of Belo Horizonte, state of Minas Gerais, at
Avenida
Renascenca, N(degrees). 505, registered in the National Register of Corporate
Entities (CNPJ) under N(degrees). 64.195.522/0001-79, herein represented in
accordance with its By-Laws;
NET RECIFE LTDA., a Brazilian limited liability company with principal office in
the city of Recife, state of Pernambuco, at Rua Xxxxxxxxx Xxxxx N(degrees). 100,
CEP 50070-490, Bairro da Ilha do Xxxxx, registered in the National Register of
Corporate Entities (CNPJ) under N(degrees). 08.828.469/0001-25, herein
represented in accordance with its Articles of Association;
NET SAO PAULO LTDA., a Brazilian limited liability company with principal office
in the city and state of Sao Paulo, at Rua Verbo Divino N(degrees). 1,356,
ground floor, blocks 1 and 2, CEP 04719-002, Chacara Xxxxx Xxxxxxx, Sao Paulo -
SP, registered in the National Register of Corporate Entities (CNPJ) under
N(degrees). 65.697.161/0001-21, herein represented in accordance with its
Articles of Association;
NET CAMPINAS LTDA., a Brazilian limited liability company with principal office
in the city of Campinas, state of Sao Paulo, at Rua Jasmim N(degrees). 610, CEP
13.807-520, Chacara Primavera, registered in the National Register of Corporate
Entities (CNPJ) under N(degrees). 61.698.510/0001-79, herein represented in
accordance with its Articles of Association;
NET INDAIATUBA LTDA., a Brazilian limited liability company with principal
office in the city of Indaiatuba, state of Sao Paulo, at Xxx 00 xx Xxxxx,
X(xxxxxxx). 0,000/0,000, Xxxx Xxxxxxxx, CEP 13.330-050, registered in the
National Register of Corporate Entities (CNPJ) under N(degrees).
58.393.695/0001-07, herein represented in accordance with its Articles of
Association;
NET FRANCA LTDA., a Brazilian limited liability company with principal office in
the city of Franca, state of Sao Paulo, at Xxx Xxxxxx Xxxxx Xxxxxxx N(degrees).
2,837, Jardim Samello, CEP 14405-135, registered in the National Register of
Corporate Entities (CNPJ) under N(degrees). 60.348.414/0001-38, herein
represented in accordance with its Articles of Association;
NET SUL COMUNICACOES LTDA., a Brazilian limited liability company with principal
office in the city of Porto Alegre, state of Rio Grande do Sul, at Xxx Xxxxxxxx
X(xxxxxxx). 0000, Xxxxx Santa Xxxxxx, CEP 90850-000, registered in the National
Register of Corporate Entities (CNPJ) under N(degrees). 73.676.512/0001-46,
herein represented in accordance with its Articles of Association;
DR- EMPRESA DE DISTRIBUICAO E RECEPCAO DE TV LTDA., a Brazilian limited
liability company with principal office in the city of Porto Alegre, state of
Rio Grande do Sul, at Xxx Xxxxxxxx X(xxxxxxx). 0000, Xxxxx Santa Xxxxxx, CEP
90850-000, registered in the National Register of Corporate Entities (CNPJ)
under N(degrees). 93.088.342/0001-96, herein represented in accordance with its
Articles of Association;
NET JOINVILLE LTDA., a Brazilian limited liability company with principal office
in the city of Joinville, state of Santa Catarina, at Avenida Xxxxxxxx Xxxxx
N(degrees). 419, Bucaren, CEP 89202-300, registered in the National Register of
Corporate Entities (CNPJ) under N(degrees). 85.271.898/0001-95, herein
represented in accordance with its Articles of Association;
NET FLORIANOPOLIS LTDA., a Brazilian limited liability company with principal
office in the city of Florianopolis, state of Santa Catarina, at Xxxxxxx Xxx
Xxxxxx X(xxxxxxx). 000, Xxxxxx, XXX 00000-000 registered in the National
Register of Corporate Entities (CNPJ) under N(degrees). 72.461.072/0001-47,
herein represented in accordance with its Articles of Association;
NET MARINGA LTDA., a Brazilian limited liability company with principal office
in the city of Maringa, state of Parana, at Xxxxxxx Xxxxxxx X(xxxxxxx). 000,
Xxxx 00, XXX 87013-330, registered in the National Register of Corporate
Entities (CNPJ) under N(degrees). 81.712.416/0001-34, herein represented in
accordance with its Articles of Association;
NET SAO XXXX DO RIO PRETO LTDA., a Brazilian limited liability company with
principal office in the city of Sao Xxxx do Rio Preto, state of Sao Paulo, at
Rua Lafaiete Xxxxxxx xx Xxxxxx N(degrees). 1,922, Boa Vista, CEP 15025-510,
registered in the National Register of Corporate Entities (CNPJ) under
N(degrees). 69.082.832/0001-09, herein represented in accordance with its
Articles of Association;
NET PIRACICABA LTDA., a Brazilian limited liability company with principal
office in the city of Piracicaba, state of Sao Paulo, at Avenida Independencia
N(degrees). 3,552, Alemaes, CEP 13416-230, registered in the National Register
of Corporate Entities (CNPJ) under N(degrees). 64.592.116/0001-40, herein
represented in accordance with its Articles of Association;
NET GOIANIA LTDA., a Brazilian limited liability company with principal office
in the city of Goiania, state of Goias, at Xxx 00, Xxxxxx x-00, Xxxx 00,
X(xxxxxxx). 970, Setor Marista, CEP 74000-000 registered in the National
Register of Corporate Entities (CNPJ) under N(degrees). 33.659.475/0001-43,
herein represented in accordance with its Articles of Association;
NET CAMPO GRANDE LTDA., a Brazilian limited liability company with principal
office in the city of Campo Grande, state of Mato Xxxxxx do Sul, at Avenida
Xxxxxx Xxxx N(degrees). 3,004, CEP 79002-075, Centro, registered in the National
Register of Corporate Entities (CNPJ) under N(degrees). 24.615.965/0001-57,
herein represented in accordance with its Articles of Association;
NET SOROCABA LTDA., a Brazilian limited liability company with principal office
in the city of Sorocaba, State of Sao Paulo, at Avenida Xxxxxxx Xxxxxx Xxxxxxx
N(degrees). 1,074 and Xxx Xxxxx Xxxxxx X(xxxxxxx). 00, Xxxxxx Xxxxxxxx, CEP
18047-000, registered in the National Register of Corporate Entities (CNPJ)
under N(degrees). 64.637.903/0001-60, herein represented in accordance with its
Articles of Association;
NET SAO XXXXXX S.A., a Brazilian joint stock company with principal office in
the city of Sao Xxxxxx, state of Sao Paulo, at Avenida Xx. Xxxxxx Xxxxxxx,
N(degrees). 1,986, registered in the National Register of Corporate Entities
(CNPJ) under N(degrees). 57.724.759/0001-34, herein represented in accordance
with its Articles of Association;
HORIZONTE SUL COMUNICACOES LTDA., a Brazilian limited liability company with
principal office in the city of Porto Alegre, state of Rio Grande do Sul, at Rua
Silveiro, N(degrees). 1,111, part, registered in the National Register of
Corporate Entities (CNPJ) under N(degrees). 94.319.209/0001-66, herein
represented in accordance with its Articles of Association;
NET PARANA COMUNICACOES LTDA., a Brazilian limited liability company with
principal office in the city of Curitiba, state of Parana, at Rua Xxxxx Xxxxxxx
Sobrinho, N(degrees). 557, Merces, registered in the National Register of
Corporate Entities (CNPJ) under N(degrees). 84.922.681/0001-35, herein
represented in accordance with its Articles of Association;
NET CURITIBA LTDA., a Brazilian limited liability company with principal office
in the city of Curitiba, state of Parana, at Rua Mamore N(degrees). 340,
registered in the National Register of Corporate Entities (CNPJ) under
N(degrees). 82.342.833/0001-03, herein represented in accordance with its
Articles of Association;
NET ARAPONGAS LTDA., a Brazilian limited liability company with principal office
in the city of Arapongas, state of Parana, at Xxx Xxxxxx, X(xxxxxxx). 000,
registered in the National Register of Corporate Entities (CNPJ) under
N(degrees). 81.897.118/0001-66, herein represented in accordance with its
Articles of Association;
NET RIBEIRAO PRETO S.A., a Brazilian limited liability company with principal
office in the city of Ribeirao Preto, state of Sao Paulo, at Avenida Nove de
Julho,
N(degrees). 1,266, registered in the National Register of Corporate Entities
(CNPJ) under N(degrees). 64.807.456/0001-40, herein represented in accordance
with its By-Laws;
NET BAURU LTDA., a Brazilian limited liability company with principal office in
the city of Bauru, state of Sao Paulo, at Avenida Xxxxx de Caxias, N(degrees).
466, registered in the National Register of Corporate Entities (CNPJ) under
N(degrees). 64.083.561/0001-84, herein represented in accordance with its
Articles of Association;
NET ANAPOLIS LTDA., a Brazilian limited liability company with principal office
in the city of Anapolis, state of Goias, at Xxx Xxxxx, Xx. 000, registered in
the National Register of Corporate Entities (CNPJ) under N(degrees).
33.584.277/0001-68, herein represented in accordance with its Articles of
Association;
REYC COMERCIO E PARTICIPACOES LTDA., a Brazilian limited liability company with
principal office in the city of Sao Xxxx, state of Santa Catarina, at Xxx
Xxxxxxxxx Xxxx Xxxxxxxx, X(xxxxxxx). 000, registered in the National Register of
Corporate Entities (CNPJ) under N(degrees). 95.853.263/0001-50, herein
represented in accordance with its Articles of Association.
ANNEX 3
TO THE COMMON
TERMS AGREEMENT
LIST OF DEBT INSTRUMENTS
(1) Indenture for the Fourth Public Issue of Debentures Not Convertible Into
Shares with Collateral Guarantee and Suretyship, by Net Servicos de
Comunicacao S.A. dated as of [..../..../....] with Planner Corretora de
Valores S.A. (Trustee), in the amount of [.....];.
(2) Security Indenture for Net Sul Comunicacoes Ltda., dated as of
[..../..../....] and entered by The Bank of New York (Trustee), relative
to US$[ ] 7.0% Senior Secured Notes due 2009 and the U.S.$[ ] Senior
Secured Floating Rate Notes due 2009 dated as of [..../..../....] and
connected instruments, as such: Private Instrument of Debt Confession,
dated as of [..../..../....] with [Marathon Fund, L.P.] in the amount of
[....], Private Instrument of Debt Confession, dated as of
[..../..../....] with [UBS], in the amount of [....], Private Instrument
of Debt Confession, dated as of [..../..../....] with [XX Xxxxxx] in the
amount of [....] and Private Instrument of Debt Confession, dated as of
[..../..../....] with [Banco do Espirito Santo - BES] in the amount of
[....], Private Instrument of Debt Confession, dated as of
[..../..../....] with [Cargill] in the amount of [....], Private
Instrument of Debt Confession, dated as of [..../..../....] with [Banco do
Brasil] in the amount of [....], Private Instrument of Debt Confession,
dated as of [..../..../....] with [Moneda] in the amount of [....];
(3) Security Indenture for Net Servicos de Comunicacao S.A., dated as of
[..../..../....] and entered by The Bank of New York (Trustee), relative
to US$76,593,068 7.0% Senior Secured Notes due 2009;
(4) Private Instrument of Debt Confession, dated as of [..../..../....] with
Banco do Brasil S.A. in the amount of [....] and corresponding to the
Common Terms Agreement;
(5) Private Instrument of Debt Confession, dated as of [..../..../....] with
Banco do Brasil S.A. in the amount of [....] and corresponding to the
Common Terms Agreement;
(6) Private Instrument of Debt Confession, dated as of 30/12/2004 with Banco
do Itau BBA S.A. in the amount of R$ 61,144,097.23 and corresponding to
the Common Terms Agreement;
(7) Private Instrument of Debt Confession, dated as of 30/12/2004 with Banco
Itau BBA S.A. in the amount of R$ 4,509,403.14 and corresponding to the
Common Terms Agreement;
(8) Private Instrument of Debt Confession, dated as of 30/12/2004 with Banco
Itau BBA S.A. in the amount of R$ 4,039,613.40 and corresponding to the
Common Terms Agreement;
(9) Private Instrument of Debt Confession, dated as of [..../..../....] with
BankBoston Banco Multiplo S.A. in the amount of [....] and corresponding
to the Common Terms Agreement;
(10) Private Instrument of Debt Confession, dated as of [..../..../....] with
BankBoston Banco Multiplo S.A. in the amount of [....] and corresponding
to the Common Terms Agreement;
(11) Private Instrument of Debt Confession, dated as of [..../..../....] with
BankBoston Banco Multiplo S.A. in the amount of [....] and corresponding
to the Common Terms Agreement;
(12) Private Instrument of Debt Confession, dated as of 27/12/2004 with Banco
Brascan S.A. in the amount of R$ 19,270,986.76 and corresponding to the
Common Terms Agreement;
(13) Private Instrument of Debt Confession, dated as of 28/12/2004 with
Unibanco - Uniao de Bancos Brasileiros in the amount of R$ 103,988,711.06
and corresponding to the Common Terms Agreement;
(14) Private Instrument of Debt Confession, dated as of 28/12/2004 with
Unibanco - Uniao de Bancos Brasileiros in the amount of R$ 368,951.88 and
corresponding to the Common Terms Agreement;
(15) Private Instrument of Debt Confession, dated as of 28/12/2004 with Banco
Unico S.A. in the amount of R$ 20,541,104.80 and corresponding to the
Common Terms Agreement;
(16) Private Instrument of Debt Confession, dated as of [..../..../....] with
Marathon Fund, L.P. in the amount of R$ [..........] and corresponding to
the Common Terms Agreement;
(17) Private Instrument of Debt Confession, dated as of [..../..../....] with
Banco de Credito Nacional S.A. in the amount of R$ [..........] and
corresponding to the Common Terms Agreement.
ANNEX 4
TO THE COMMON
TERMS AGREEMENT
GLOSSARY
For the purposes of this Common Terms Agreement, the terms indicated below shall
have the meaning attributed to them unless otherwise indicated in the Common
Terms Agreement or Instruments of Debt Confession.
"MANAGEMENT INVESTORS" shall mean any officer, director, employee or other
member of the management of Net Servicos or any of its Subsidiaries, as well as
family members, relatives or attorneys-in-fact of any of the above Persons, or
also any of their heirs, executors, successors and legal representatives who, on
any date, have the right to acquire, directly or indirectly, Representative
Portion of the Capital Stock in Net Servicos.
"AFFILIATES" shall mean any Person that, directly or indirectly, controls or is
controlled by or is under the direct or indirect common control of the Person in
question.
"COLLATERAL AGENT" shall mean Banco Itau S.A. or its replacement, nominated in
accordance with the terms of the Intercreditor Agreement
"CASH EQUIVALENTS" shall mean: (i) any evidence of Indebtedness with a maturity
equal to or less than 365 (three hundred and sixty five), issued or guaranteed
by the Federal Government of Brazil or the Federal Government of the United
States, or by any agency or autonomous government entity of the same countries,
provided that the same Indebtedness is unconditionally guaranteed by the Federal
Government of Brazil or by the Federal Government of the United States, as per
the case; (ii) deposits, certificates of deposit or acceptances with a maturity
equal to or less than 365 (three hundred and sixty five) days, issued by a
member institution of the U.S. Federal Reserve System ("FED") whose combined
capital and surplus and undivided profits, or any similar capital concept, is
not less than US$50,000,000, or its equivalent in another currency or
currencies, at the time of deposit; (iii) commercial paper with a maturity equal
to or less than 365 (three hundred and sixty five) days, issued by a corporation
(other than an Affiliate of Net Servicos) that is incorporated or organized
under Brazilian law or the laws of any state of the United States, which is
rated at least "A-1" by Standard & Poor's Ratings Services ("Standard & Poor's")
or "P-I" by Xxxxx'x Investor Services Inc. ("Moody's") or any Brazilian
affiliate of the same rating agencies; (iv) investments in any Person with a
maturity equal to or less than 365 (three hundred and sixty five), that are
fully and unconditionally guaranteed by a member bank or institution of the U.S.
Federal Reserve System meeting the requirements of clause (ii) of this
definition; (v) repurchase agreements and reverse repurchase agreements for
securities issued or unconditionally guaranteed by the Federal Government of
Brazil or the Federal Government of the United States, or issued by any agency
or autonomous government entity of the governments of Brazil or the United
States, provided that these are unconditionally guaranteed by the relevant
government, in each case maturing within 1 (one) year or less of the date of
acquisition; (vi) (vi.a) securities issued or fully and unconditionally
guaranteed by the Federal Government of the United States, or issued by any
agency or autonomous body of the government of the same country, provided that
these are fully and unconditionally guaranteed by the relevant government,
(vi.b) securities issued or guaranteed by the government of the same country, or
issued by any agency or autonomous body of the government of any other country,
provided that these are fully and unconditionally guaranteed by the relevant
government and have an investment rating of at least "BBB-" if rated by Standard
& Poor's or "Baa3" if rated by Moody's, and (vi.c) direct obligations of the
National Treasury of Brazil or of the Central Bank of Brazil that are recorded
in the accounts of the relevant holder as short-term investments; (vii) quotas
of fixed-income mutual funds managed by a financial institution, forming part of
a business group whose bank with a commercial loan and/or investment portfolio
has an investment rating of at least "BBB-", if rated by Standard & Poor's or
"Baa3", if rated by Moody's provided that (a) the same funds are widely held and
the Issuer and its Restricted Subsidiaries do not hold an Investment in excess
of 30% (thirty per cent) of the aggregate Investment in the same funds, or (b)
the same fund may only invest in Cash Equivalents; (viii) fixed or floating rate
certificates of deposit issued by any bank organized under the laws of Brazil
that (a) maintains minimum adjusted shareholders' funds of US$100,000,000 (one
hundred million U.S. dollars), or its equivalent amount in another currency or
currencies; (b) maintains an investment rating with respect to its certificates
of deposit, of at least "BBB-", if rated by Standard & Poor's or "Baa3", if
rated by Moody's or any Brazilian affiliate of the same rating agencies, or (c)
is a branch or subsidiary of a non-Brazilian bank that maintains an investment
rating with respect to its short-term obligations, of at least "BBB-", if rated
by Standard & Poor's or "Baa3", if rated by Moody's.
"Bridge Loan" means the indebtedness incurred by the Issuer pursuant to the
Contrato de Emprestimo, dated February [ ], 2005, between the Issuer and
Banco Itau BBA S.A.
"Competitor" shall mean any Person (or Affiliate of any Person) that operates
within Brazil in one or more business areas in which Net or any of its
Subsidiaries (including, but not limited to the provision of telecommunications
services, access to the Internet, cable service, satellite transmission or
television (including, but not limited to pay-per-view services)); with the
proviso, however, that any commercial bank, financial company or other financial
institution or fund (or any Affiliate of these) that holds investments in, but
does not control a Competitor, shall not be considered to be a Competitor for
the purposes of this definition.
"BOARD OF DIRECTORS" shall mean the board of directors of the Company or any
other entity of the Company which has been granted by the board of directors the
power to act on its behalf.
"INDEPENDENT FINANCIAL ADVISOR" shall mean a Brazilian or United States
investment or commercial bank or independent auditing firm of high reputation
that (a) does not hold, and whose directors and executive officers and
Affiliates, if any, do not hold an investment in Net Servicos or in any of its
Affiliates and (b) which, in the judgment of the Board of Directors of Net
Servicos, is independent of Net Servicos and its Affiliates and is qualified to
perform the task for which it may be retained.
CONTRACT" or "INCUR" shall mean to issue, assume, contract or otherwise become
liable for a Debt, albeit with the provision that any Indebtedness or
Representative Portion of Capital Stock existing at the time when the same
Person becomes a subsidiary (whether through merger, consolidation, acquisition
or otherwise) shall be considered to be Incurred by the same party at the time
it becomes a Subsidiary.
"CURRENCY AGREEMENT" shall mean, with regard to any Person, any foreign exchange
derivative agreement, including but not limited to currency agreements, currency
swap agreements or other similar agreements or instruments, to which the Person
in question is party or a beneficiary.
"INTEREST RATE AGREEMENT" shall mean, with respect to any Person, any interest
rate derivative agreement, including but not limited to contracts that aim to
protect against movements in interest rates, options on interest rates, interest
rate swaps, caps and collars on interest rates, interest rate futures contracts
or any other similar instrument, to which the Person in question is party or a
beneficiary.
"MATERIAL AGREEMENT" shall mean any agreement that provides for the payment or
receipt, in any year, by Net Servicos or any one of its Restricted Subsidiaries
of more than R$10,000,000 (corrected by the IGP-M Adjustment on January 1 of
each fiscal year subsequent to the date of its execution) or the equivalent
amount in another currency or currencies, or that is otherwise material to the
business or operations of Net Servicos or of its Restricted Subsidiaries,
considered as a whole.
"UNRESTRICTED SUBSIDIARIES" shall mean (a) TV Cabo and Comunicacoes de Jundiai
S.A., (b) Televisao A Cabo Criciuma Ltda., and (c) any other Subsidiary of Net
Servicos that is designated by the Board of Directors as an Unrestricted
Subsidiary, in accordance with the terms of Clause 2.15 of the Agreement.
"RESTRICTED SUBSIDIARIES" shall mean any subsidiaries of Net Servicos that are
not Unrestricted Subsidiaries.
"CONTROL" shall mean the power to generate the business of a Person, whether
directly or indirectly, whether through ownership of voting shares, by
contractually guaranteed rights or otherwise. The terms "Subsidiary" and
"Controlling Shareholder" shall have corresponding meanings, being certain that
for the purpose of Clause 2.3.1 of this Agreement; it shall not be considered a
Change of Control Event the transfer of Control to: (i) Globo Comunicacoes e
Participacoes S.A. or its Affiliates; or (ii) Telefonos de Mexico S.A. or its
Affiliates.
"BOARD RESOLUTION" shall mean a resolution arising from a meeting of the Board
of Directors of Net Servicos that is duly confirmed in the Minutes of the
meeting of the Board of Directors at which the same resolution is adopted, with
the same minutes duly signed by the board of the same meeting, transcribed in
the company ledgers of Net Servicos and registered, where appropriate, at the
Board of Trade of the State of Sao Paulo. A copy of the minutes in question
shall be delivered to each Creditor Institution.
"CONSOLIDATED NET FINANCING COSTS" shall mean, for any period, the amount equal
to (i) financial expenses of Net Servicos and its Restricted Subsidiaries for
the same period on a consolidated basis in accordance with Brazilian GAAP minus
(ii) the financial income of Net Servicos and its Restricted Subsidiaries for
the same period, considered on a consolidated basis in accordance with Brazilian
GAAP.
"CONSOLIDATED NET INTEREST EXPENSE" shall mean, with respect to any period, the
sum, without duplication, of (a) the interest expense of Net Servicos and its
Restricted
Subsidiaries, accrued and paid or payable in cash for the same period, as
determined on a consolidated basis in accordance with Brazilian GAAP, and in any
event, including, but not limited to (i) any amortization of debt discount,
excluding any amortization of debt discount with regard to the Senior Secured
Indebtedness, (ii) the net cost, paid in cash, arising from any Currency
Agreement or Hedging Obligation, including any amortization of discounts, (iii)
the interest portion of any deferred payment obligation, (iv) all commissions,
discounts and other fees and charges owed with regard to letters of credit,
bills of exchange, promissory notes and bankers' acceptances and (b) the
interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be accrued by or liable to the same Person during the same period,
minus (c) interest income of Net Servicos and its Restricted Subsidiaries,
accrued and received or receivable in cash during the same period, considered on
a consolidated basis in accordance with Brazilian GAAP.
"SENIOR SECURED INDEBTEDNESS" shall mean this Agreement and respective
Instruments of Debt Confession, the Fourth Issue of Debentures and the Notes of
the Company, as defined in the Intercreditor Agreement ("Notes"), as well as the
notes issued in the context of the exchange offer for the Floating Rate Notes
issued by Net Sul Comunicacoes S.A. for an amount of US$ 80,000,000.00 and
maturing in 2005 ("Net Sul Notes") and their respective Debt Instruments, the
Loan Agreement arising from the Real Conversion Option set forth in the Exchange
Agreement (it being understood that the Bridge Loan does not constitute Senior
Secured Indebtedness).
"EBITDA" shall mean, for any period, the Consolidated Net Income for the same
period, adjusted to exclude, without duplication, the following income or
expenses to the extent that the same items are included in the calculation of
Consolidated Net Income: (i) Consolidated Net Financial Expenses, (ii) total
expenses relating to income tax and social contribution on net income, or other
forms of taxation that may be created, (iii) depreciation, amortization,
including but not limited to the amortization of goodwill and intangibles, and
other charges or losses without effect on the cash position of Net Servicos,
that require a provision for future payments; (iv) any net income of any Person
that is not a Restricted Subsidiary; excepting the limitations contained in
clause (v) below, the equity interest of Net Servicos in the net income of the
same Person for the same period shall be included in the same Consolidated Net
Income up to the aggregate amount of cash effectively distributed by the Person
in question during the same period to Net Servicos or to a Restricted Subsidiary
as a dividend or other payment of the same nature (subject, in the case of
dividends or other distribution to a Restricted Subsidiary, to the limitations
contained in clause (v) below); (v) any gain or loss arising from the disposal
of any other form of transfer of any asset of Net Servicos or of its Restricted
Subsidiaries, considered in consolidated form, that is not disposed of or
transferred in any other way in the normal course of business; (vi) any
extraordinary gain or loss; (vii) the cumulative effect of a change in
accounting principles; (viii) any nonrecurring expenses relating to the
Restructuring or to any acquisition by Net Servicos or any Restricted Subsidiary
after the full payment date, including but not limited to, any charge and/or
expense incurred through bonuses paid to the management of Net Servicos on
account of the Restructuring; (ix) any non-cash compensation charge arising from
any grant of stock, stock options or other similar bonuses.
"REFINANCING INDEBTEDNESS" shall mean Indebtedness that is incurred by Net
Servicos to reimburse, refinance, replace, renew, repay or extend (including
that relating to any defeasance or discharge mechanism) any Indebtedness
existing on the Date of Effectiveness or incurred as a result of the terms of
this Agreement (including, to the extent permitted in this Agreement, the
Indebtedness of Net Servicos that refinances the Indebtedness of any Restricted
Subsidiary, as well as the Indebtedness of any Restricted Subsidiary that
refinances the Indebtedness of another Restricted Subsidiary) including the
Indebtedness that finances Refinancing Indebtedness, provided that:
(i) the Refinancing Indebtedness matures after the Indebtedness to be
refinanced;
(ii) at the time of contracting such Refinancing Indebtedness, it has a weighted
average maturity that is equal to or greater than the weighted average maturity
of the Indebtedness to be refinanced;
(iii) such Refinancing Indebtedness is incurred in a total principal amount, or
if issued at a discount to face value, at a total issue price that is equal to
or less than the sum of (a) the aggregate principal amount, or if issued at a
discount to face value, the aggregate accreted value outstanding of the
Indebtedness to be refinanced, plus (b) fees, placement discounts, premiums and
other costs and expenses incurred in conjunction with the same Refinancing
Indebtedness; and
(iv) Refinancing Indebtedness shall not include (a) Indebtedness of Restricted
Subsidiaries that are not guarantors of the refinancing of the Indebtedness of
Net Servicos or (b) the Indebtedness of Net Servicos or of a Restricted
Subsidiary that refinances the Indebtedness of an Unrestricted Subsidiary.
"CONSOLIDATED TOTAL INDEBTEDNESS" shall mean the total aggregate principal
amount of Indebtedness of Net Servicos and its Restricted Subsidiaries on any
date, determined in consolidated form in accordance with Brazilian GAAP.
"INDEBTEDNESS" shall mean, with respect to any Person, without duplication:
(i) any liability, contingent or otherwise, of the same Person (a) relating to
money borrowed by the Person in question, that may or may not be guaranteed in
full or in part by the assets of the same, whether as a cash advance, xxxx,
overdraft or loan agreement; (b) evidenced by a debenture or similar instrument
or by letters of credit, including Purchase Obligations, or any book-entry
security, or (c) unless otherwise determined in this Glossary, instruments
signed with such Persons for the purpose of hedging against movements in
exchange and interest rates (the value of any such obligation shall be equal at
any time to the value of the hedge that would be paid or received by the same
Person upon its termination);
(ii) any third-party liability similar to those described in subclause (i)
above, which is guaranteed by the Person or for which the same Person is legally
liable;
(iii) any obligation secured by a Lien on the property or assets of the Person,
regardless
of whether the guaranteed obligations have been directly assumed by the Person
or for which the same party comes to be legally liable;
(iv) the maximum repurchase or redemption price of any share or quota
representing the capital stock, equity interests, partner's rights,
participation certificates or any other securities that confer a share of the
net income and that carry a repurchase/redemption obligation, or that are
convertible into Indebtedness (except where this is at the option of Net
Servicos) of the same Person, that is not held by Net Servicos or by one of its
Restricted Subsidiaries;
(v) for the exclusive purpose of calculating Consolidated Total Indebtedness in
accordance with Clause 2.10 of the Agreement, Indebtedness shall mean (a) debt
securities that are overdue by 60 (sixty) days or more and that are not being
contested in good faith by the same Person, (b) all Capitalized Lease
Obligations to which the same Person is a party and (c) deferred obligations
relating to the purchase price for the assets of the same Person, provided that
the same deferred purchase price is due after 120 (one hundred and twenty) days
reckoned from the date of delivery of the asset in question.
For the purposes of Clauses 2.10 and 5.1 of the Agreement, in determining the
principal amount of any Indebtedness that may be Incurred by Net Servicos or by
any one of its Restricted Subsidiaries or that is outstanding on any date, (x)
shall be considered on the date of determination as the principal amount of the
Indebtedness to be paid in the event of declaration of early maturity of the
respective Indebtedness, if this value is less than the amount of the principal
indebtedness effectively due with regard to the same indebtedness, and (y) the
amount of any such Indebtedness shall be reduced by the amount of any net gain
related to any Currency Agreement linked to the same Indebtedness.
"EXCESS CASH FLOW" shall mean, for any fiscal year, the sum of (i) (a) the cash
and Cash Equivalents of Net Servicos and its Restricted Subsidiaries, taking as
a basis the last day of the same fiscal year minus (b) the Starting Cash Balance
of Net Servicos minus (ii) the Net Cash Proceeds arising from the issuance of
any Equity Interests by Net Servicos during the same fiscal year minus (iii) the
Net Cash Proceeds of Net Servicos obtained through the incurring of any
Indebtedness by Net Servicos or by any one of its Restricted Subsidiaries during
the same fiscal year minus (iv) the Net Cash Proceeds obtained by Net Servicos
by virtue of any Asset Sale during the same fiscal year plus (v) the amount of
any Investment by Net Servicos or any of its Restricted Subsidiaries in any
Person that, as a result of the same Investment, becomes a Restricted
Subsidiary, as well as any amount paid by Net Servicos or any of its Restricted
Subsidiaries to acquire any person or any business or any group of assets
constituting an operating unit of a business (any one of these operations
constituting a "Purchase"), plus (vi) the amount of any prepayments of principal
in respect of Senior Secured Indebtedness during the same fiscal year plus (vii)
the amount of any cash dividend or other cash payment in favor of Net Servicos
arising from its Equity Interests, with the proviso that:
(a) if Net Servicos or any Restricted Subsidiary has, within the same fiscal
year, made any Asset Sale of any person, business or any group of assets
constituting an operating unit of a business (any one of these operations
constituting a "Sale"), the Starting Cash Balance for the same fiscal year
shall, for the purpose of measuring Excess Cash Flow relating to the same fiscal
year, be reduced by an amount equal to the amount of cash or Cash Equivalents
transferred in connection with the same Sale; and
(b) if Net Servicos or any Restricted Subsidiary has, within the same fiscal
year, made any Purchase, the Starting Cash Balance for the same fiscal year
shall, for the purpose of measuring Excess Cash Flow relating to the same fiscal
year, be increased by an amount equal to the amount of cash or Cash Equivalents
acquired as a result of the same Purchase.
"FORECLOSURE OF THE COLLATERAL GUARANTEE" shall mean any action or proceeding
against any Company of Net Group adopted by the Collateral Agent on behalf of
the Creditors in accordance with the terms and conditions of the Intercreditors
Agreement aiming to assure any Creditors' under the Pledge Agreements to
foreclose on the assets object of the Pledge Agreements, including, but not
limited to, propose any lawsuit before any court or arbitration court or against
any administrative court or any governmental entity.
"REPRESENTATIVE PORTION OF CAPITAL STOCK" shall mean any representative portion
of the capital stock of any Person that grants a right to participate in the
proceeds of such Person.
"GUARANTEE" shall mean any guarantee that may be granted in accordance with the
terms of the Agreement , the Instruments of Debt Confession and Pledge
Agreements.
"PERMITTED LIENS" shall mean:
(i) the Liens in existence on the date of signing of this Agreement;
(ii) any Lien on any property acquired, constructed or improved by Net Servicos
or any of its Restricted Subsidiaries after the date of signing of this
Agreement, which has been created, incurred or assumed at the same time as or
within 90 (ninety) days of the relevant acquisition, in order to guarantee the
payment of any portion of the price of acquisition, construction or rebuilding,
including readjustments, interests and financial charges incurred during the
construction, as well as eventual increases in costs. In the event that the same
property has been built or rebuilt, the period of 90 (ninety) days mentioned
above shall be reckoned starting from the end of the relevant building or
rebuilding or from the start of the commercial use of the property in question,
whichever occurs last:
(iii) any Lien that secures all Senior Secured Indebtedness in same proportion
and on an equivalent basis;
(iv) any Guarantee granted in accordance with the Pledge Agreements and the
Intercreditor Agreements;
(v) any Lien on any asset or good acquired by Net Servicos that was already in
existence at the time of acquisition of the same asset, and that in no way
arises from the acquisition of the same, unless the same Lien was created to
secure or provide for payment of part or all of the purchase price;
(vi) any Lien on any asset acquired from a Person that is merged with or
incorporated by Net Servicos or by any one of its Restricted Subsidiaries, or
any Liens already in existence on any asset of a Person at the time that it
becomes a subsidiary of Net Servicos and that does not result in any way from
the operation in question, unless the same Lien was created to secure or provide
for the payment of part or all of the
operation;
(vii) any Lien which exclusively guarantees the Indebtedness between (a) Net
Servicos and any one of its Restricted Subsidiaries or (b) the Restricted
Subsidiaries and Net Servicos or between Restricted Subsidiaries;
(viii) any extension, renewal or replacement (or successive extensions, renewals
or replacements), in whole or in part, of any Lien referred to in the preceding
clauses (i) through (vii) inclusive, with the proviso that the principal amount
of Indebtedness to be secured may not exceed the amount of principal guaranteed
immediately prior to the extension, renewal or replacement , and that the
extension, renewal or replacement in question shall be limited to the whole or
part of the property, including the improvements carried out, to which the Lien
to be extended, renewed or replaced shall apply;
(ix) any Lien related to disputes regarding the payment of outstanding taxes
which are being contested diligently and in good faith, in accordance with
appropriate actions or proceedings, provided that provisions for the contested
amounts are made in the accounting ledgers of Net Servicos and/or its Restricted
Subsidiaries;
(x) Liens (including Liens associated with the granting of any surety letter)
that are not Guarantees arising from Judicial or Administrative actions against
Net Servicos, for which Net Servicos has diligently and in good faith presented
a defense or appeal, as per the case, and the decision , sentence or judgment
has not yet been judged, or if the period within which such defense, appeal or
proceedings may be initiated has not yet expired, with the purpose of
guaranteeing the right of defense or recourse in such judicial or administrative
actions and that effectively prevent the foreclosure of the same Lien;
(xi) Liens created by legal imposition and arising from the normal course of
business;
(xii) Easements, rights-of-way, restrictions and other similar encumbrances
incurred in the normal course of business;
(xiii) Liens incurred in the normal course of business in connection with
workers' compensation claims, unemployment insurance and social security
benefits, as well as Liens granted to ensure the performance of bids, tenders,
leases and other agreements signed in the ordinary course of business, surety
letters, performance bonds and other obligations of a similar nature incurred in
the normal course of business, as well as Liens constituted due to legal
imposition;
(xiv) Liens relating to maintenance services, the provision of programming
services, rental of real estate and any other similar liens arising in the
ordinary course of business relating to obligations that have not been overdue
for more than 60 (sixty) days, or that are guaranteed or that are being
contested diligently and in good faith, in accordance with suitable actions and
procedures, that effectively prevent the foreclosure of the same Lien;
(xv) pledges, deposits and other Liens that guarantee the performance of
proposals, bids, operations and other agreements (other than for borrowed
money), incurred in the ordinary course of business;
(xvi) Leases, subleases, licenses or sublicenses to third parties;
(xvii) Liens securing obligations arising from Currency Agreements and Interest
Rate Agreements incurred in accordance with Clause 2.10 of the Agreement,
provided that the lesser of (a) the Fair Market Value and (b) the book value of
the Liens securing obligations arising from Currency Agreements and/or Interest
Rate Agreements, at no time exceeds R$50,000,000 (fifty million Brazilian
reais), with this amount corrected by the IGP-M Adjustment on January 1 of each
fiscal year after June 30, 2004;
(xviii) Any easement or immaterial imperfection of title on real estate in which
Net Servicos or any Restricted Subsidiary has an interest, provided that such
easement or imperfection shall not render such title unusable for purposes of
the business of Net Servicos or the Restricted Subsidiary in question;
(xix) Liens arising from capital leasing operations and Indebtedness associated
with Purchase Obligations, provided that these are in accordance with Clause
2.10.3 of the Agreement and that such guarantees shall be restricted to the
properties or assets underlying such capital leasing operations;
(xx) any Lien over the proceeds of the Issuance of Restructuring Shares, any
account into which such proceeds are deposited and/or any agreement relating
thereto, in each case securing the Bridge Loan.
"LIENS" shall mean any real encumbrance, mortgage, charge, pledge, usufruct,
lien, right of preference or priority, assignment for security, claim of rights
or other guarantee or right of any kind on any property or assets of any kind.
Notwithstanding the previous definition, a property shall be considered to be
subject to a Lien when the acquisition or maintenance of the same property by a
Person shall be restricted by any contingent sale and purchase contract,
financial lease or other similar instrument that restricts rights of ownership,
as well as its use or enjoyment, whether fully or in part.
"HEDGING OBLIGATIONS" shall mean the obligations of a Person relating to
Interest Rate or Currency Agreements
"CONSOLIDATED LEVERAGE RATIO", shall mean the ratio, on any date, of (i) Total
Consolidated Indebtedness, as determined on the same date, to (ii) EBITDA for
the period of the most recent four consecutive fiscal quarters for which
consolidated financial statements of Net Servicos are available, with the
proviso that:
(ii.a) if, since the beginning of the same period, Net Servicos or any
Restricted Subsidiary has made any Asset Sale of any person, business or any
group of assets constituting an operating unit of a business (each of these
operations constituting a "Sale"), the EBITDA for the same period shall be
reduced by an amount equivalent to the EBITDA (if positive) directly
attributable to the assets forming the object of the Asset Sale in question for
the period under consideration, or increased by an amount equal to EBITDA (if
this is negative) directly attributable to the assets forming the
object of the same Asset Sale during the period under consideration;
(ii.b) if Net Servicos or any Restricted Subsidiary has made an Investment (by
incorporation, merger or otherwise) in any Person that thereby becomes a
Restricted Subsidiary, or through the acquisition of any person, business or
group of assets constituting an operational business unit, including any
Investment or acquisition of assets within the context of a transaction that
makes it necessary to carry out the calculation to which this item refers (each
one of these operations constituting an "Acquisition"), the EBITDA for the same
period shall be calculated on a pro forma basis (including the incurring of any
Debt), as if the same Investment or acquisition had occurred on the first day of
the relevant period; and
(ii.c) if any Person which, during the period in question, came to be considered
as a Restricted Subsidiary, merged with or was incorporated by Net Servicos or
any Restricted Subsidiary and that carried out any Sale or Acquisition which, if
the same operation had been carried out by Net Servicos or a Restricted
Subsidiary, would have given rise to an accounting adjustment in accordance with
the terms of subclauses (ii.a) and (ii.b) above, the EBITDA for the same period
shall be calculated on a pro forma basis, as if the Sale or Acquisition in
question had occurred on the first day of the same period.
For purposes of this definition, whenever it is necessary to make a pro forma
calculation for an Asset Sale, Investment, acquisition of assets or any
transaction made in accordance with Clause 2.16 of the Agreement, or of the
amount of revenues or capital gains arising from the operations in question, the
applicable pro forma calculations shall be carried out in the determined manner
and in good faith by a director of Net Servicos on the basis of reasonable
assumptions.
""CONSOLIDATED INTEREST EXPENSE RATIO" shall mean the ratio between: (i) EBITDA
for the period consisting of the four most recent consecutive fiscal quarters
ending prior to the date of determination for which the consolidated financial
statements of Net Servicos are available, minus the total Capital Expenditure
for the same period, and (ii) the Net Consolidated Interest Expense for the same
four fiscal quarters, determined, in each case, for each fiscal quarter (or
portion thereof) of the four fiscal quarters ending prior to the date of signing
of this Agreement, calculated on a pro forma basis to simulate the Restructuring
as if it had occurred at the beginning of the same four-quarter period, with the
proviso that:
(a.1) if Net Servicos or any Restricted Subsidiary (i) has incurred any
Indebtedness since the beginning of the same period that has not been paid in
full by the date of determination or has incurred any Indebtedness since the
start of the same period, and on the date of determination of the Consolidated
Interest Expense Ratio, the same has not been paid in full, or if the
transaction giving rise to the need to calculate the Consolidated Interest
Expense Ratio is an Incurrence of Debt, then the EBITDA and Consolidated
Interest Expense for the same period shall be calculated after calculating the
same Indebtedness on a pro forma basis, as if the same Indebtedness had been
incurred on the first day of the same period (albeit for this calculation, the
amount of Indebtedness arising from any revolving credit facility outstanding on
the date of the same calculation shall be computed based on (x) the average
daily balance of the same Indebtedness during the same four fiscal quarters or
during any shorter period for which the same facility was outstanding or (y) the
average daily balance of the same Indebtedness during the period from the date
of creation of the same facility until the date of the same calculation, in the
event that the same facility was created after the end of the same four fiscal
quarters), or (ii) has, during the period for the same calculation, repaid,
repurchased, redeemed or otherwise discharged any Indebtedness (each the same
operation constituting a "Discharge"), with the same Indebtedness no longer
outstanding on the date of the calculation, or if the transaction giving rise to
the need to calculate the Consolidated Interest Expense Ratio involves a
discharge of Indebtedness (provided that the Indebtedness does not relate to any
revolving credit facility that remains to be permanently repaid), the EBITDA and
Consolidated Interest Expense for the same period shall be calculated after
calculating the Discharge of the same Indebtedness on a pro forma basis, as if
the same discharge had occurred on the first day of the same period of
calculation;
(a.2) if Net Servicos or any Restricted Subsidiary has, during the calculation
period, made any Asset Sale of any person, business or any group of assets
constituting an operating unit of a business (any the same transaction
constituting a "Sale"), the EBITDA for the same period shall be calculated (x)
by subtracting an amount equal to the EBITDA (if positive) directly attributable
to the assets that are the subject of the same Asset Sale for the same period or
increased by an amount equal to the EBITDA (if positive) directly attributable
to the same assets forming the object of the Asset Sale carried out during the
same period, or (y) by adding an amount equal to the EBITDA (if negative)
directly attributable to the same assets forming the object of the Asset Sale
carried out during the same period. To the degree that Net Servicos or any
Restricted Subsidiary is no longer responsible for the same Indebtedness after
the same Asset Sale, the Net Consolidated Interest Expense for the same period
shall be reduced by an amount equivalent to the Net Consolidated Interest
Expense of Net Servicos or any Restricted Subsidiary that has been repaid,
repurchased, defeased or otherwise discharged as a result of the same Asset Sale
during the period in question (and if significant Representative Portion of
Capital Stock of any Restricted Subsidiary has been disposed of, this amount
shall be the Net Consolidated Interest Expense for the same period attributable
to the Indebtedness of the same Restricted Subsidiary);
(a.3) if during the same calculation period, Net Servicos or any Restricted
Subsidiary (whether by incorporation, merger or otherwise) has made an
Investment in any Person, as a result of which the latter Person becomes a
Restricted Subsidiary, or otherwise acquires any person, business or group of
assets constituting an operating unit of a business, including any the same
Investment or acquisition of assets that gives rise to an obligation to
calculate the Consolidated Interest Expense Ratio in accordance with the
definition herein (any one of these transactions constituting an "Acquisition"),
the EBITDA and Consolidated Net Interest Expense for the same period shall be
calculated
after calculating the value of the same Investment or Acquisition on a pro forma
basis (including the incurring of any Indebtedness), as if the same Investment
or acquisition had occurred on the first day of the period in question;
(a.4) if any Person that comes to be considered as a Restricted Subsidiary
during the period in question or that merged with Net Servicos or with any
Restricted Subsidiary or was incorporated by the same companies, has carried out
any Sale or Purchase that requires an accounting adjustment in accordance with
subitems (a.1), (a.2) or (a.3) above, the EBITDA and Consolidated Interest
Expense for the period in question shall be calculated after calculating the
effect of the same operation on a pro forma basis, as if it had occurred on the
first day of the same period; and
(a.5) if any Person that comes to be considered as a Restricted Subsidiary
during the period in question or that merged with Net Servicos or with any
Restricted Subsidiary or was incorporated by the same companies, and in any
case, by means of a Purchase, has discharged any Indebtedness or carried out any
Sale or Purchase which, if effected by Net Servicos or by a Restricted
Subsidiary during the period in question, would have required an accounting
adjustment in accordance with subitems (a.1), (a.2), (a.3) or (a.4) above, the
EBITDA and the Net Consolidated Interest Expense for the period in question
shall be calculated after calculating the effect of the Sale, Purchase or
Discharge in question on a pro forma basis, as if the same operation had
occurred on the first day of the relevant period.
For the purposes of this definition, whenever it is necessary to calculate on a
pro forma basis the effect of a Asset Sale, Investment or acquisition of assets
or any transaction governed by the provisions of Clause 2.16 of the Agreement,
the EBITDA for the operations in question and the Net Consolidated Interest
Expense associated with any Indebtedness incurred, repaid, repurchased, defeased
or otherwise discharged as a result of the operations in question, the
associated pro forma calculations shall be carried out by a Director of Net
Servicos, based on reasonable assumptions, in the manner determined in this
Agreement and in good faith. If any Indebtedness bears a floating rate of
interest and is being calculated on a pro forma basis, the interest expense on
the same Indebtedness shall be calculated as the average rate in effect during
the same period (taking into account any Interest Rate Agreement that applies to
the same Indebtedness and that remains in force for an additional period of 12
months reckoned from the relevant calculation date). For the pro forma
calculation of any Indebtedness arising in conjunction with a revolving credit
facility, the interest expense on the same Indebtedness shall be calculated on
the basis of the average daily balance of this Indebtedness during the period in
question.
"DEBT INSTRUMENTS" shall mean this Agreement and the respective
Instruments of Debt Confession, the Fourth Issue Debentures, the Notes of the
Company, as defined in the Intercreditor Agreements ("Notes"), and the notes
issued in the context of the exchange offer for the Floating Rate Notes issued
by Net Sul for an amount of US$ 80,000,000.00 maturing in 2005 ("Net Sul
Notes"), as well as any eventual Senior Secured Indebtedness that may be
contracted by Net Servicos and the Restricted Subsidiaries.
"PERMITTED INVESTMENT" shall mean an investment carried out by Net Servicos or
by any Restricted Subsidiary:
(i) in a Restricted Subsidiary, in Net Servicos or in a Person which, as a
result of the effecting of the same Investment, comes to be considered as a
Restricted Subsidiary;
(ii) in another Person if, as a result of the same Investment, the same Person
merges with Net Servicos or with any Restricted Subsidiary, or is incorporated
by the same;
(iii) Cash Equivalents;
(iv) receivables of Net Servicos or of any Restricted Subsidiary that are
created or acquired by Net Servicos or by any Restricted Subsidiary in the
regular course of business, in accordance with normal market practices;
(v) securities or other Investments received as consideration for disposals of
property or assets, including Asset Sales made in accordance with the terms of
Clause 2.1.1 (IV) of this Agreement, that have been negotiated in accordance
with normal market practices;
(vi) securities or other Investments received as payment for credits due to Net
Servicos or to any Restricted Subsidiary in the ordinary course of business, or
as a result of the execution or foreclosure of any Lien, or in compliance with
any judicial order, including such orders relating to bankruptcy, composition
with creditors (concordata) or any similar procedure;
(vii) Investments in existence or validly agreed in writing on the date of
signing of this Agreement;
(viii) deposits constituted in favor of third parties in the normal course of
business with respect to leases or the provision of any public service, in
accordance with the definition of Permitted Liens or as agreed under the terms
of Clause 2.9 of the Agreement;
(ix) prepaid expenses, including trade credits, arising during the normal course
of business;
(x) promissory notes issued by Management Investors, acquired as full payment
for shares issued by Net Servicos, whose aggregate principal amount at no time
exceeds R$10,000,000 (ten million Brazilian reais), corrected by the IGP-M
Adjustment on January 1 of each fiscal year following the Date of Effectiveness;
(xi) other Investments that do not exceed, in aggregate, the following amounts
(in each case corrected by the IGP-M Adjustment on January 1 of each fiscal year
following the Date of Effectiveness;
(a) R$ 10,000,000 (ten million Brazilian reais), during the fiscal years ending
December 31, 2005 and December 31, 2006;
(b) R$ 20,000,000 (twenty million Brazilian reais), during the fiscal year
ending
December 31, 2007; and
(c) R$ 35,000,000 (thirty five million Brazilian reais), during the fiscal year
ending December 31, 2008 and during each subsequent fiscal year.
"INVESTMENT" shall mean, with regard to any Person, any (i) advance, loan
agreement, receivable or extension of credit (including but not limited to those
arising from guarantees); (ii) full payment of capital with credits, goods or
rights; or (iii) the acquisition of shares, quotas, notes or other debt
securities, or any other negotiable securities issued by any Person.
Notwithstanding the above terms, the issue by Net Servicos of shares or quotas
representing the capital stock, equity interests, partners' rights,
participation certificates or any other securities that confer a right to a
share in the results of Net Servicos (except where these carry a redemption or
repurchase obligation) for exchange for shares or quotas representing the
capital stock, equity interests, partners' rights, participation certificates or
any other securities that confer a right to a share in the results of another
Person or for exchange for assets or any Representative Portion of Capital Stock
of another Person shall not be considered to be an Investment by Net Servicos in
the same Person.
"CAPITAL EXPENDITURES" shall mean, with regard to any Person, the sum (without
duplication) of all the investments that have been made, at any time, whether
directly or indirectly, by the Person in question or by any one of its
subsidiaries, in equipment, fixed assets, chattels or improvements, as well as
the respective replacements or substitutions that, in accordance with Brazilian
GAAP, are or should be recorded in the accounts as fixed assets.
"CONSOLIDATED NET INCOME" shall mean, for any period, the net income (loss) of
Net Servicos and its Subsidiaries, determined on a consolidated basis, in
accordance with Brazilian GAAP.
"PRE-RESTRUCTURING DEBT" shall mean the sum of R$ 606,781,497.00 with the amount
in Brazilian reais equivalent to US$ 248,777,479.00, converted into Brazilian
reais on the basis of the Exchange Rate for the Date of Effectiveness.
"PERMITTED BUSINESS" shall mean (i) the distribution of signals for pay TV,
radio, internet or the provision of other telecommunications services within
Brazil and (ii) any business activity related to item (i) above, carried out by
Net Servicos or any Restricted Subsidiary on the Date of Effectiveness, as well
as the acquisition, interest in or exploitation of any license relating to the
business activities described in item (i), the development or acquisition of
programming or distribution rights in accordance with item (i) of this
definition and any other business involving voice, data or video transmission
and telecommunications services;
"PURCHASE OBLIGATIONS" shall mean any Indebtedness Incurred to finance or
refinance the deferred payment for the acquisition of any property or assets
used in the normal course of business of Net Servicos and its subsidiaries,
provided that this Indebtedness is incurred within 6 (six) months of the
acquisition of such property or assets.
"APPLICABLE PERCENTAGE" shall mean (i) with respect to the fiscal years ending
on or prior to December 31, 2007, 70%; (ii) with respect to the fiscal year
ending December 31, 2008, 75%; (iii) with respect to the fiscal year ending
December 31, 2009, 80%; and (iv) with respect to the fiscal years ending on or
after December 31, 2010, 85%.
"EQUITY INTERESTS" shall mean Representative Portion of Capital Stock, warrants,
options or other rights to subscribe to Representative Portion of Capital Stock,
albeit while excluding any debt security convertible into Representative Portion
of Capital Stock.
"VOLUNTARY PREPAYMENT PERCENTAGE" shall mean, with regard to any voluntary
prepayment of Senior Secured Indebtedness, a fraction, represented in percentage
form, the numerator of which is the principal amount of the same Senior Secured
Indebtedness to be prepaid and the denominator is the total principal value of
the obligations relating to the same Senior Secured Indebtedness immediately
prior to the prepayment in question.
"PREPAYMENT PERCENTAGE" shall mean, for any date of determination, a fraction,
represented in percentage form, the numerator of which is the Principal Amount
due on the date of determination, and the denominator is the total principal
amount of the Senior Secured Indebtedness outstanding on the same date.
"EXCESS CASH FLOW PREPAYMENT AMOUNTS" shall mean, with respect to any fiscal
year, the lesser of (i) the Excess Cash Flow of Net Servicos for the relevant
fiscal year multiplied by the Applicable Percentage for the same fiscal year and
(ii) the difference between (a) the cash and Cash Equivalents of Net Servicos
and its Restricted Subsidiaries on December 31 of the same fiscal year less (b)
the Minimum Cash Balance for the same fiscal year.
"EXCESS SHARE ISSUANCE PROCEEDS FROM THE RESTRUCTURING" shall mean the Net Cash
Proceeds of Net Servicos obtained through the issuance of shares by the same Net
Servicos within the context of the Restructuring Plan minus (i) an amount
equivalent to 40% (forty per cent) of the amount of Pre-Restructuring
Indebtedness minus (ii) the value equivalent to 40% (forty per cent) of interest
payments in cash by Net Servicos to Creditors holding its debt securities in
connection with the Restructuring Plan minus (iii) the value equivalent to 20%
(twenty per cent) multiplied by (a) the total number of shares issued by Net
Servicos in the context of the Restructuring Plan at a price per share exceeding
R$ 0.35 (thirty five centavos) multiplied by (b) the difference between the
average issue price per share of the same shares and R$ 0.35 (thirty five
centavos).
"EXCESS PROCEEDS" shall mean any net cash proceeds arising from a Asset Sale
that are not applied or invested in accordance with Clause 3.12.1. (IV).
"NET CASH PROCEEDS" shall mean, with respect to any Asset Sale, or the Incurring
or issuance of any Indebtedness or the sale or issuance of any shares or quotas
representing the capital stock, equity interests, partner's rights,
participation certificates or any other securities that confer the right to
participate in the results (including, but not limited to any capital
contribution) of any Person, the total aggregate amount of cash, Cash
Equivalents or securities acquired as a result of a Asset Sale and converted
into cash within 30 (thirty) days of the date of the same acquisition, that are
received periodically (whether in lieu of initial remuneration, payment or
deferred remuneration) for or in the name of the Person in question and in
connection with the above operations, after deducting (without duplication) (a)
reasonable and customary brokerage commissions, underwriting fees and discounts,
remuneration fees, and other similar fees and commissions; (b) the total amount
of taxes paid or payable in connection with or as a result of the same
transaction; and (c) with respect to any Asset Sale, (x) all payments arising
from any Indebtedness that are secured on any assets forming the object of the
Asset Sale in question, in accordance with the terms of any Lien upon such
assets, or that must, in accordance with its terms, or in order to obtain the
necessary consent for the same Asset Sale, or by virtue of the applicable law,
be repaid from the proceeds from the Asset Sale in question and (y) all
distributions and other payments due to minority interest holders in
subsidiaries or joint ventures as a result of the same Asset Sale, or to any
other Person (other than the Net Servicos or a Restricted Subsidiary) that holds
rights to the assets disposed of in the Asset Sale in question.
"RESTRUCTURING" shall mean the exchange of the existing Indebtedness of Net
Servicos and some of its Restricted Subsidiaries (including, without limitation,
the U.S. 12 5/8% Senior Guaranteed Notes maturing in 2004, the Net Sul floating
rate notes, due 2005, the existing working capital and bank loan facilities and
the convertible and non-convertible debentures denominated in Brazilian reais)
for Senior Secured Indebtedness and payment in cash.
"INITIAL CASH BALANCE" shall mean the cash and Cash Equivalents of Net Servicos
and its Restricted Subsidiaries, considering as a basis, the last day of the
immediately preceding fiscal year.
"MINIMUM CASH BALANCE" shall mean R$ 120,000,000 (one hundred and twenty million
Brazilian reais) (i) corrected on January 1 of each year by the IGP-M
Adjustment, or any index that may replace it by the reference date, and (ii)
adjusted in accordance with any expense still outstanding that has been
contracted by the end of the immediately preceding fiscal year.
"PERSON" shall mean any individual, corporation, company, limited company,
voluntary association, joint venture, trust, autonomous government entity,
non-corporate organization or government (or any agency, sector or political
subdivision of the same) or any other entity of any nature.
"FAIR MARKET VALUE" shall mean, with respect to any asset or property, the price
at which the same asset could be negotiated in a transaction under normal market
conditions for cash payment, between a seller and buyer that are both free from
any pressure or compulsion to complete the transaction. Unless otherwise
expressly specified in this Agreement, the Fair Market Value shall be determined
in good faith by the Board of Directors of Net Servicos, and must be approved by
a Resolution of the Board of Directors; albeit, in the event of any transaction
or series of related transactions which, during any period of 12 (twelve)
consecutive months that involves an aggregate consideration equal or greater
than R$ 75,000,000 (seventy five million Brazilian reais) (with this amount
increased by the IGP-M Adjustment on January 1 of each fiscal year following the
date of signing of the Agreement), or the equivalent amount in another currency,
the Fair Market Value shall also be determined by an Independent Financial
Consultant.
"IGP-M ADJUSTMENT" shall mean, on any date of determination, a fraction, the
numerator of which is the General Price Index-Market (IGP-M) as calculated and
published by the Xxxxxxx Xxxxxx Foundation - FGV ("IGP-M") on the same date and
the denominator of which is the IGP-M index for January 1, 2004.
"ASSET SALE" shall mean any direct or indirect sale, leasing, conveyance,
transfer or other disposal of Representative Portion of Capital Stock of a
Restricted Subsidiary (other than shares held by members of the Board of
Directors, or by legal imposition), property or other assets, including any
licenses for the provision of cable television services or other related
activities carried out by Net Servicos or by any Restricted Subsidiary, (each
activity constituting a "Disposal" for the purposes of this definition) by Net
Servicos or any of its Restricted Subsidiaries (including any disposal by means
of a merger, consolidation or similar operation). Notwithstanding the preceding
provisions, the following operations shall not be considered as Asset Sales:
(i) a disposal by Net Servicos to a Restricted Subsidiary or by a Restricted
Subsidiary to Net Servicos or to another Restricted Subsidiary;
(ii) any disposal arising in the normal course of business, including any
disposal of (ii.a) inventory, (ii.b) obsolete assets or (ii.c) surplus assets,
or any disposal of Cash Equivalents, or any non-exclusive licensing of
intellectual property rights;
(iii) transactions over any 12 (twelve) month period involving assets whose Fair
Market Value is less than R$ 3,000,000 (three million Brazilian reais), the
amount of which shall be corrected by the IGP-M Adjustment on January 1 of each
fiscal year, from January 1, 2004 onwards;
(iv) any swap of operating assets by Net Servicos or any of its Restricted
Subsidiaries for operating assets of equal or greater Fair Market Value;
(v) the sale, without recourse, under normal market conditions, of receivables
or of securities representing receivables, arising in the normal course of
business and existing at the time of the same sale, or conversion or swap, in
the normal course of business, of the same receivables for securities
representing receivables that are characterized as a "Permitted Investment";
(vi) a Restricted Payment that is permitted under the terms of Clause 2.11 of
the Agreement; or
(vii) any disposal of assets permitted under the terms of Clause 2.16 of the
Agreement.
ANNEX 5
TO THE COMMON
TERMS AGREEMENT
LIST OF ACTIONS, PROCEDURES, LIENS, ENCUMBRANCES AND RESTRICTIONS
I. JUDICIAL PROCEEDINGS
PLAINTIFF IN
ENFORCEMENT ACTION SUBJECT
OPERATOR NO. MATTER OBSERVATIONS
-------- --- ------ ------------
NET SAO PAULO FEDERAL GOVERNMENT Tax
1999.61.82.053713-2
6th Lower Court of
Federal Tax
Enforcements
NET SAO PAULO MUNICIPALITY Tax Attachment of
705.673-7/97-8 certain assets
1st Lower Court of that make up the
Municipal Tax network.
Enforcements - SP
FEDERAL GOVERNMENT Tax
NET SAO PAULO 2004.61.04.008510-2
(XXXXXX XXXXXX) 0xx Xxxxx Xxxxxxx
Xxxxx in Xxxxxx
NET SAO XXXX STATE OF SAO PAULO Tax Cable network
RIO PRETO 20.497/01 attachment.
Ancillary Service
of the SJRPRETO
Internal Revenue
NET SERVICOS FEDERAL GOVERNMENT Tax
2004.61.82.037766-7
5th Lower Court of
Federal Tax
Enforcements - SP
NET SERVICOS FEDERAL GOVERNMENT Tax
2004.61.82.051947-4
5th Lower Court of
Tax Enforcements
- SP
NET SERVICOS UNIBANCO Loan
000.02.222752-0, Agreement
16th Lower Civil
Court of the
Central Courts -
SP
NET RIO STATE OF RIO DE Tax
JANEIRO
2001/100-004.229-8
MOTION TO STAY
EXECUTION NO.
2004.001.044.800-3
11th Rio de
Janeiro Internal
Revenue Service.
NET RIO STATE OF RIO DE Tax Attachment of 5%
JANEIRO of Net Xxxx'x
2001/100-004.230-4 monthly
11th Rio de revenues.
Janeiro Internal
Revenue Service.
NET RIO STATE OF RIO DE Tax
JANEIRO Attachment
2001/100-004.231-6 of Net Rio's
11th Rio de revenues.
Janeiro Internal
Revenue Service.
NET RIO STATE OF RIO DE Tax
JANEIRO
2003/100.000.355-8
11th Rio de
Janeiro Internal
Revenue Service.
II. ADMINISTRATIVE PROCEEDINGS:
TAX AUTHORITY SUBJECT
OPERATOR PROCEEDING NO. MATTER OBSERVATIONS
-------- -------------- ------ ------------
NET SAO PAULO Federal Revenue Tax
Office
AI 52385
NET SAO PAULO Federal Revenue Tax
Office
AI 00503
NET SAO PAULO Federal Revenue Tax
Office
AI 1998.00902-7
NET SAO PAULO 08.1.81912-35
Federal Revenue TAX
Office
Cabodinamica Federal Revenue Tax
Office
08.109000/03695/03
CABODINAMICA Federal Revenue Tax
Office
08.109000/03695/03
NET RIO Rio de Janeiro Tax
Internal Revenue
Service
E-04/603.358/94
AI n. 791.691
NET RIO Rio de Janeiro
Internal Revenue TAX
Service
E-04/146.770/97
AI 01.041552-9
NET RIO Rio de Janeiro
Internal Revenue TAX
Service.
AI 01.049922-6
E-04.177.374/98
NET RIO Rio de Janeiro Tax
Internal Revenue
Service
AI 01.053492-3
E-04.147.573/97
Tax
NET RIO RIO DE JANEIRO
INTERNAL REVENUE
SERVICE.
E - 04/085.241/2002
Infraction Notice
No. 03.007333-2
NET RIO Federal Revenue Tax
Office
15374.001438/99-84
NET RIO Federal Revenue Tax
Office
04203/02-A
NET RIO Federal Revenue Tax
Office
04203/02-B
NET RIO Federal Revenue Tax
Office
04203/02-C
MULTICANAL Federal Revenue Tax
Office
AI n.
15374.004005/2001-20
DR (Porto Federal Revenue Tax
Alegre) Office
11080.013354/
2002-68
DR (Porto Federal Revenue Tax
Alegre) Office
11080-013.353/2002-13
NET SUL Municipality of Tax
Porto Alegre
0085/98
NET BELO Federal Revenue Tax
HORIZONTE Office
0610100/01055/03
III. AGREEMENTS:
ENCUMBERED TYPE OF CONTRACT BENEFITING FROM
OPERATOR PROPERTIES LIEN THE LIEN
-------- ---------- ---- --------
NET CAMPINAS 3,073 Feet of Conditional Financing Agreement with
RG/ Coaxial Sale Transfer of Loan in
MT cables, Foreign Currency - BONY
year of signed with UNIBANCO -
manufacture Xxxxx xx Xxxxxx
0000, Xxxxxxxxxxx S/A., filed
Manufacturer with the 1st Registry of
CommScope, Deeds and Documents of
Inc. Xxxxxxxx - XX, xxxxxxxxx
Xx. 000000, value: US$
364,116.59
NET Attenuators, Conditional Financing Agreement with
CAMPINAS Equalizers, Sale Transfer of Loan in
Amplifiers Foreign Currency - BONY
and Carcass signed with UNIBANCO -
for Uniao de Bancos
Amplifiers, Brasileiros S/A., filed
year of with the 1st Registry of
manufacture Deeds and Documents of
1998, Campinas - SP, microfilm
Manufacturer: No. 283302, value: US$
Scientific 635,800.07
Atlanta, Inc.
NET Attenuators, Conditional Financing Agreement with
CAMPINAS Equalizers, Sale Transfer of Loan in
Amplifiers Foreign Currency - BONY
and Carcass signed with UNIBANCO -
for Uniao de Bancos
Amplifiers, Brasileiros S/A., filed
year of with the 1st Registry of
manufacture Deeds and Documents of
1998, Campinas - SP, microfilm
Manufacturer: No. 283303, value: US$
Scientific 342,868.14
Atlanta, Inc.
IV. Nonparticipating Debt, as defined in the Intercreditor Agreement:
ANNEX 6
TO THE COMMON
TERMS AGREEMENT
LIST OF RESTRICTED SUBSIDIARIES TO BE LIQUIDATED, DISSOLVED OR SPLIT.
--------------------------------------------------------------------------------
Alnor Aluminio do Norte Ltda.
--------------------------------------------------------------------------------
Antenas Comunitarias Brasileiras Ltda.
--------------------------------------------------------------------------------
Cabodinamica TV Cabo Sao Paulo S.A.
--------------------------------------------------------------------------------
CMA Participacoes S.A.
--------------------------------------------------------------------------------
Dabny, L.L.C.
--------------------------------------------------------------------------------
Jonquil Venture Limited
--------------------------------------------------------------------------------
Multicanal Telecomunicacoes S.A.
--------------------------------------------------------------------------------
Net Belo Horizonte Ltda.
--------------------------------------------------------------------------------
Net Brasilia Ltda.
--------------------------------------------------------------------------------
Net Londrina Ltda.
--------------------------------------------------------------------------------
Net Rio S.A.
--------------------------------------------------------------------------------
TV Cabo de Chapeco Ltda.
--------------------------------------------------------------------------------
TV Video Cabo de Belo Horizonte S.A.
--------------------------------------------------------------------------------
Net Recife Ltda.
--------------------------------------------------------------------------------
Net Sao Paulo Ltda.
--------------------------------------------------------------------------------
Net Campinas Ltda.
--------------------------------------------------------------------------------
Net Indaiatuba Ltda.
--------------------------------------------------------------------------------
Net Franca Ltda.
--------------------------------------------------------------------------------
Net Sul Comunicacoes Ltda.
--------------------------------------------------------------------------------
DR- Empresa de Distribuicao e Recepcao de TV Ltda.
--------------------------------------------------------------------------------
Net Joinville Ltda.
--------------------------------------------------------------------------------
Net Florianopolis Ltda.
--------------------------------------------------------------------------------
Net Maringa Ltda.
--------------------------------------------------------------------------------
Net Sao Xxxx do Rio Preto Ltda.
--------------------------------------------------------------------------------
Net Piracicaba Ltda.
--------------------------------------------------------------------------------
Net Goiania Ltda.
--------------------------------------------------------------------------------
Net Campo Grande Ltda.
--------------------------------------------------------------------------------
Net Sorocaba Ltda.
--------------------------------------------------------------------------------
Net Sao Xxxxxx S.A.
--------------------------------------------------------------------------------
Horizonte Sul Comunicacoes Ltda.
--------------------------------------------------------------------------------
Net Parana Comunicacoes Ltda.
--------------------------------------------------------------------------------
Net Curitiba Ltda.
--------------------------------------------------------------------------------
Net Arapongas Ltda.
--------------------------------------------------------------------------------
Net Ribeirao Preto S.A.
--------------------------------------------------------------------------------
Net Bauru Ltda.
--------------------------------------------------------------------------------
Net Anapolis Ltda.
--------------------------------------------------------------------------------
Reyc Comercio e Participacoes Ltda.
--------------------------------------------------------------------------------
