EXHIBIT 10.9
EXECUTION COUNTERPART
EDC LOAN NO.: CHIL - 7078
IDB LOAN NO.: 1227/OC-CH
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COMMON AGREEMENT
dated as of
December 22, 1999
among
COMUNICACION Y TELEFONIA RURAL S.A.,
EXPORT DEVELOPMENT CORPORATION
and
INTER-AMERICAN DEVELOPMENT BANK
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience of reference only.
Page
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Section 1. Definitions and Accounting Matters.............................................................. 1
1.01 Certain Defined Terms......................................................................... 1
1.02 Principles of Construction.................................................................... 20
1.03 Accounting Terms and Determinations........................................................... 21
1.04 Conflicts..................................................................................... 21
Section 2. Senior Loan Agreements......................................................................... 21
2.01 Indebtedness Subject to this Agreement........................................................ 21
2.02 Senior Loans Pari Passu....................................................................... 21
2.03 Pro Rata Payment of Obligations............................................................... 21
2.04 Non-Pro Rata Prepayment....................................................................... 21
2.05 Optional Prepayments.......................................................................... 22
2.06 Mandatory Prepayments......................................................................... 23
2.07 Payments...................................................................................... 24
Section 3. Reserved....................................................................................... 24
Section 4. Accounts........................................................................................ 24
4.01 Creation of the Accounts and the Borrower Accounts............................................ 24
4.02 Limited Borrower Rights....................................................................... 25
4.03 Operating Account............................................................................. 25
4.04 EDC Accrual Account........................................................................... 27
4.05 IDB Accrual Account........................................................................... 27
4.06 Cash Sweep Account............................................................................ 28
4.07 Debt Service Reserve Account.................................................................. 28
4.08 Investment of Funds in Accounts............................................................... 29
4.09 Reports to the Senior Lenders................................................................. 29
4.10 Currency Conversion........................................................................... 29
4.11 Changes to Accounts........................................................................... 29
Section 5. Effectiveness vis-a-vis the Borrower........................................................... 30
Section 6. Conditions..................................................................................... 30
6.01 Initial Disbursement.......................................................................... 30
6.02 Initial and Subsequent Disbursements.......................................................... 33
Section 7. Representations and Warranties.................................................................. 35
7.01 Organization and Powers....................................................................... 35
7.02 Authorization; Enforceability................................................................. 35
7.03 Approvals..................................................................................... 35
7.04 No Breach..................................................................................... 35
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7.05 Financial Condition; No Material Adverse Change............................................... 36
7.06 Properties.................................................................................... 36
7.07 Litigation.................................................................................... 37
7.08 Compliance with Laws and Agreements........................................................... 37
7.09 Taxes ........................................................................................ 37
7.10 True and Complete Disclosure.................................................................. 37
7.11 Material Agreements and Liens................................................................. 38
7.12 Capitalization................................................................................ 38
7.13 Legal Form.................................................................................... 39
7.14 Ranking....................................................................................... 39
7.15 Security Interests............................................................................ 39
7.16 Commercial Activity; Absence of Immunity...................................................... 40
7.17 Insurance..................................................................................... 40
7.18 Business Purpose.............................................................................. 40
7.19 Environmental Matters......................................................................... 41
7.20 Qualification................................................................................. 41
7.21 Domicile...................................................................................... 42
7.22 Choice of Law................................................................................. 42
Section 8. Covenants of the Borrower...................................................................... 42
8.01 Financial Statements and Other Information.................................................... 42
8.02 Notices of Material Events.................................................................... 43
8.03 Existence, Compliance, Records, Inspection, Etc............................................... 44
8.04 Insurance..................................................................................... 45
8.05 Prohibition of Fundamental Changes............................................................ 47
8.06 Liens......................................................................................... 48
8.07 Indebtedness.................................................................................. 49
8.08 Investments................................................................................... 49
8.09 Restricted Payments........................................................................... 50
8.10 Certain Financial Covenants................................................................... 50
8.11 Subordinated Indebtedness..................................................................... 51
8.12 Lines of Business............................................................................. 51
8.13 Use of Proceeds............................................................................... 51
8.14 Subsidiaries.................................................................................. 52
8.15 Implementation of the Project................................................................. 52
8.16 Project Documents............................................................................. 52
8.17 Equity........................................................................................ 53
8.18 Environmental Matters......................................................................... 53
8.19 Transaction with Affiliates or Joint Ventures................................................. 54
8.20 Financial Completion.......................................................................... 54
8.21 Security...................................................................................... 55
Section 9. Events of Default............................................................................... 55
Section 10. Miscellaneous.................................................................................. 59
10.01 Notices...................................................................................... 59
10.02 Waiver....................................................................................... 60
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10.03 Amendments, Etc.............................................................................. 60
10.04 Expenses..................................................................................... 60
10.05 Successors and Assigns....................................................................... 61
10.06 Survival..................................................................................... 61
10.07 Counterparts................................................................................. 61
10.08 Governing Law; Jurisdiction; Service of Process; Etc......................................... 61
10.09 WAIVER OF JURY TRIAL......................................................................... 62
10.10 No Immunity.................................................................................. 62
10.11 Judgment Currency............................................................................ 63
10.12 Use of English Language...................................................................... 63
10.13 Severability................................................................................. 63
SCHEDULE I - Material Agreements and Liens
SCHEDULE II - Governmental Approvals
SCHEDULE III - IDB Member Countries
SCHEDULE IV - EBITDA
SCHEDULE V - Recurring Revenues
EXHIBIT A - Schedule of Insurance Requirements
EXHIBIT B - Form of Monthly Report
EXHIBIT C - Terms of Subordination
EXHIBIT D - Form of Independent Engineer Certificate
EXHIBIT E - Form of Process Agent Acceptance
EXHIBIT F - Form of Letter to the Borrower's Auditors
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COMMON AGREEMENT (this "Agreement") dated as of December 22,
1999, among: COMUNICACION Y TELEFONIA RURAL S.A., a sociedad anonima duly
organized and validly existing under the laws of Chile (the "Borrower"); EXPORT
DEVELOPMENT CORPORATION, a corporation established by an Act of the Parliament
of Canada ("EDC"); and INTER-AMERICAN DEVELOPMENT BANK, an international
organization established by the Articles of Agreement among its member countries
("IDB").
In order to finance the development and construction of the
Project (as defined below), the Borrower has requested that EDC and IDB
separately make loans to it in an aggregate principal amount not exceeding
$50,000,000. The execution of this Agreement, which provides for, among other
things, certain common conditions precedent, representations, warranties,
covenants and events of default applicable to the loan facilities to be provided
by both EDC and IDB, is a condition precedent to the obligation of EDC and IDB
to extend credit to the Borrower. EDC and IDB are prepared to make such loans
upon the terms and conditions hereof and upon the terms and conditions of the
Senior Loan Agreements (as defined below) to which each is a party, and,
accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Account Bank" means Banco Sud Americano, in its capacity as
Account Bank under the Project Account Agreement.
"Accounts" has the meaning assigned to such term in Section
4.01 (a).
"Adjusted DSCR" means, solely for the purposes of determining
Financial Completion, for any period, the quotient of (a) revenues less
Operating Costs, taxes, Capital Expenditures, and changes in working capital
during such period; divided by (b) the sum of interest, average principal
payments to be made over the repayment period of the Senior Loans, fees due
under Permitted Indebtedness (other than Subordinated Indebtedness) and any
financing costs due and payable, in each case, during such period.
"Affiliate" means, as to any Person, any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (b) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Agreed Financial Model" means the financial model dated
December 1999, in form and substance satisfactory to the Senior Lenders,
prepared and certified by the Borrower and SRT and designed to assess the
current and future revenues and expenditures of the Borrower.
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"Authorized Officer" means, with respect to any Person, the
Managing Director, the President, the Vice President, the Assistant Vice
President, the Treasurer, the Assistant Treasurer or equivalent officers of such
Person and. with respect to the Borrower, shall include any officer or
representative holding any of the foregoing positions (or their equivalent)
whose name appears on a certificate of incumbency delivered concurrently with
the execution of this Agreement or concurrently with the initial disbursement of
the IDB Loan pursuant to Section 2.02 of the IDB Loan Agreement, as such
certificate of incumbency may be amended from time to time to identify names of
individuals then holding such offices or the names of such representatives and
the capacity in which they are acting.
"Borrower Accounts" has the meaning assigned to such term in
Section 4.01(b).
"Borrower Material Adverse Effect" means the occurrence of any
event which could result in a material adverse effect on (a) the Project, (b)
the Property, business, operations, financial condition, liabilities or
capitalization of the Borrower, (c) the ability of the Borrower to perform its
obligations under any of the Transaction Documents to which it is a party, (d)
the validity or enforceability of any of the Transaction Documents, (e) the
rights and remedies of the Senior Lenders under any of the Transaction Documents
or (f) the timely payment of the principal of or interest on the Senior Loans or
other amounts payable in connection therewith.
"Business Day" means (a) with respect to a borrowing of, a
payment or prepayment of principal of or interest on, or an "Interest Period"
(as defined in each Senior Loan Agreement) for, any Senior Loan or a notice by
the Borrower with respect to any such borrowing, payment, prepayment or Interest
Period, a day which is both a New York Business Day and a London Business Day
and (b) with respect to any other reference to "Business Day", any day on which
commercial banks are not authorized or required to close in ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"Business Plan" means the Information for Proposed Debt
Holders dated November 1998 and reviewed by Deloitte & Touche, Chartered
Accountants.
"BVI Holdco" means CTR Holdings Limited, a limited liability
company duly organized and validly existing under the laws of the British Virgin
Islands.
"Canadian GAAP" means generally accepted accounting principles
in Canada, in effect from time to time.
"Capital Expenditures" means, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Borrower to acquire or
construct fixed assets, plant and equipment and related installation charges
(including renewals, improvements and replacements, but excluding repairs)
during such period computed in accordance with Canadian (GAAP).
"Capital Lease Obligations" means, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under Canadian GAAP, and, for purposes of this
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Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with Canadian GAAP.
"Cash Sweep Account" has the meaning assigned to such term in
Section 4.0 l(a)(iv).
"Central Bank of Chile" means Banco Central de Chile, a public
autonomous governmental entity of Chile.
"Chile" means the Republic of Chile.
"Chilean GAAP" means generally accepted accounting principles
in Chile, in effect from time to time.
"Chilean Holdco" means Servicios Rurales de Telecomunicaciones
S.A., a sociedad anonima duly organized and validly existing under the laws of
Chile.
"Chilean Holdco Pledge Agreements" means, collectively, (a)
that certain shareholders pledge agreement dated as of April 13, 1999, created
by BVI Holdco in favour of EDC, (b) that certain shareholders pledge agreement
dated as of April 13, 1999, created by SR (BV) Holdings in favour of EDC, and
(c) that certain shareholders pledge agreement, to be executed and delivered in
form and substance satisfactory to the Senior Lenders on or prior to the Closing
Date, created by BVI Holdco in favour of IDB, in each case, pledging the capital
stock of Chilean Holdco.
"Chilean Pesos" means the lawful money of Chile.
"Chilean Pledge Agreements" means the Shareholders Pledge
Agreements and the Chilean Holdco Pledge Agreements.
"Chilean Security Documents" means, collectively, the
Commercial Pledge to EDC on Concessions of Telecommunications. Commercial Pledge
to IDB on Concessions of Telecommunications, the Pledges Without Conveyance on
Chattel Property, the Chilean Pledge Agreements, the Conditional Assignments,
the Promise to Grant a Commercial Pledge on Concessions of Telecommunications,
the Promise to Grant a Pledge Without Conveyance on Chattel Property, the
Promise to Execute Conditional Assignment of Rights and the Project Account
Agreement.
"Closing Date" means the date upon which (a) each of the
conditions set forth in Section 6.01 are satisfied or waived and (b) the initial
disbursement of the IDB Loan is made pursuant to Section 2.02 of the IDB Loan
Agreement.
"Collateral" means, collectively, all of the rights, interests
and property intended to be pledged or assigned for the benefit of either Senior
Lender or both Senior Lenders, as the case may be by the Borrower or any other
Person, in any case pursuant to the Security Documents for the purpose of
securing the Obligations.
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"Collection Account Agreements" means, collectively, (a) that
certain account agreement to be executed and delivered in form and substance
satisfactory to the Senior Lenders on or prior to the Closing Date by the
Borrower and Banco BHIF and (b) that certain account agreement to be executed
and delivered in form and substance satisfactory to the Senior Lenders by the
Borrower and Banco del Estado, in each case, providing for the automatic
transfer of collected credit balance of any Collection Account to the Operating
Account and prohibiting the Borrower from making any other transfers from any
Collection Account.
"Collection Accounts" has the meaning assigned to such term in
Section 4.01(b)(ii) of this Agreement.
"Commercial Pledge to EDC on Concessions of
Telecommunications" means the pledge dated as of April 13, 1999 regulated by
articles 813 and following of the Commerce Code of Chile created by the Borrower
on certain concessions of telecommunications held by the Borrower granted in
favour of EDC.
"Commercial Pledge to IDB on Concessions of
Telecommunications" means the pledge, to be executed and delivered in form and
substance satisfactory to the Senior Lenders on or prior to the Closing Date,
regulated by articles 813 and following of the Commerce Code of Chile created by
the Borrower on certain concessions of telecommunications held by the Borrower
granted in favour of IDB.
"Commitment" means, collectively, the EDC Commitment and the
IDB Commitment.
"Completion of Network Construction" has the meaning assigned
to such term in Section 2.01 of the Performance Undertaking.
"Concessions" means each of the concessions, listed under the
heading "Concessions" on Schedule II hereto and any other concessions obtained
subsequent to the date hereof, for the operation of a public telephone network
in each of the nine primary zones involved in the Project.
"Conditional Assignments" means, collectively, the Telsur
Conditional Assignment, the ENTEL Conditional Assignment, the CTC Conditional
Assignment, the SRT Conditional Assignment and any other conditional assignment
(in form and content satisfactory to the Senior Lenders, acting reasonably) from
each Person (other than the Borrower) party to a Project Document.
"Contractor" means any Person who performs services, such as
construction, operation, or maintenance, related to the Project in the capacity
of an independent contractor of the Borrower (rather than in the capacity of an
employee).
"Covered Taxes" means all present and future income, stamp,
registration and other taxes and levies, imposts, deductions, charges,
compulsory loans and withholdings whatsoever, and all interest, penalties or
similar amounts with respect thereto, now or hereafter imposed, assessed, levied
or collected by any authority of or in any jurisdiction (including, without
limitation, Chile or any political subdivision or taxing authority thereof or
therein, or any
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federal or other association of or with which Chile may be a member or
associated) on or in respect of the Senior Loans, this Agreement, the Notes, the
other Financing Documents, the recording, registration, notarization or other
formalization of any thereof, the enforcement thereof or the introduction
thereof in any judicial proceedings, or on or in respect of any payments of
principal, interest, premium, charges, fees or other amounts made on, under or
in respect of any thereof.
"CTC" means Compania de Telecomunicaciones de Chile S.A., a
sociedad anonima duly organized and validly existing under the laws of Chile.
"CTC Conditional Assignment" means the Conditional Assignment,
to be executed and delivered in form and substance satisfactory to the Senior
Lenders on or prior to the Closing Date, among CTC, the Borrower and the Senior
Lenders.
"CTC Interconnection Agreement" means, collectively, (a) the
Interconnection Agreement for long distance telephone calls dated as of July 26,
1999 between CTC and the Borrower, and (b) the Service Agreement for long
distance telephone calls dated as of May 25, 1998 between CTC and the Borrower.
"Custodian" means Banco Sud Americano in its capacity as
Custodian under the Custodian Agreement.
"Custodian Agreements" means, collectively, the EDC Custodian
Agreement and the IDB Custodian Agreement.
"Date Certain" means December 31, 2000.
"Debt Service" means, for any period, the sum, for the
Borrower (determined in accordance with Canadian GAAP), of the following: (a)
all regularly scheduled payments of principal of Indebtedness (including,
without limitation, the principal component of any payments in respect of
Capital Lease Obligations) made during such period, plus (b) all payments in
respect of operating lease obligations made during such period plus (c) all
Interest Expense for such period plus (d) any fees incurred in connection with
Indebtedness.
"Debt Service Coverage Ratio" means, as at any date, the ratio
of (a) Free Cash Flow for the period of four consecutive fiscal quarters ending
on or most recently ended prior to such date to (b) Debt Service for such
period.
"Debt Service Reserve Account" has the meaning assigned to
such term in Section 4.0l(a)(iii).
"Debt Service Reserve Deficiency" means, on any date of
determination, the amount, if any. by which the collected credit balance of the
Debt Service Reserve Account is less than the Debt Service Reserve Requirement
for such date of determination.
"Debt Service Reserve Requirement" means, on any date of
determination, an amount equal to the sum of (a) the aggregate amount of
interest on the Senior Loans projected to accrue during the six-month period
following such date using the interest rates in effect with
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respect to such Senior Loans outstanding on such date of determination, plus (b)
the aggregate amount of principal of Senior Loans then scheduled to become due
on the next Principal Payment Date.
"Default" means an Event of Default or an event that with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
"Direct Agreement" means the Amended and Restated Direct
Agreement dated as of the date hereof among SRT, the Borrower and the Senior
Lenders.
"Dollars" and "$" each means the lawful money of the United
States of America.
"EBITDA" means, for any period, the sum, for the Borrower
(determined in accordance with Canadian GAAP), of the following: net income for
such period less extraordinary gains for such period, less SUBTEL subsidies
during such period, less foreign exchange gains during such period, plus foreign
exchange losses during such period, plus extraordinary losses for such period,
plus taxes paid and provisions for taxes made during such period, plus Interest
Expense for such period, plus depreciation and amortization.
"EDC" has the meaning assigned to such term in the Preamble to
this Agreement.
"EDC Accrual Account" has the meaning assigned to such term in
Section 4.0l(a)(i).
"EDC Commitment" has the meaning assigned to the term
"Commitment" in the EDC Loan Agreement.
"EDC Custodian Agreement" means the Custodian Agreement dated
as of April 13, 1999 among the Borrower, EDC and the Custodian.
"EDC Loan Agreement" means the Amended and Restated Loan
Agreement dated as of the date hereof between the Borrower and EDC.
"EDC Loans" means the loans made by EDC to the Borrower
pursuant to Section 2.01 of the EDC Loan Agreement.
"EDC Notes" means any promissory note delivered by the
Borrower to EDC in connection with the EDC Loan Agreement.
"EHSM Plan" means the Borrower's Environmental, Health and
Safety Management Plan ("Plan de Gestion Ambiental. Salud y Seguridad") by
Ambiental Consultores Limitada dated December 6, 1999. The EHSM Plan shall
include all the actions necessary to comply with all Environmental Requirements
and shall include, without limitation, the following: (a) a detailed description
of all necessary environmental and social mitigation measures and monitoring
programs, which are, at a minimum, those measures and monitoring programs
defined in any environmental impact assessment and related Governmental
Approvals; (b) an estimated cost, time schedule and assigned responsibility for
implementation for each mitigation measure and monitoring program; (c) a
description of the specific project supervision
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methods to be implemented to ensure that all measures and programs are
completely and properly implemented by all responsible parties; (d) a
description of the planned environmental, health and safety management system,
including description of personnel and their duties, training, and other related
plans and procedures (e.g., contingency plans, health and safety plans, etc.);
and (e) a description of ongoing public consultation and information disclosure
activities. The EHSM Plan shall address the construction and operational phases
of all relevant Project components.
"ENTEL" means Empresa Nacional de Telecomunicaciones S.A., a
sociedad anonima duly organized and validly existing under the laws of Chile.
"ENTEL Conditional Assignment" means the Conditional
Assignment of Rights (Entel Interconnection Agreement (Long Distance)), to be
executed and delivered in form and substance satisfactory to the Senior Lenders
on or prior to the Closing Date, among ENTEL, the Borrower and the Senior
Lenders.
"ENTEL Interconnection Agreement (Long Distance)" means,
collectively, (a) the Interconnection Agreement for long distance telephone
calls dated as of June 25, 1998 between ENTEL and the Borrower, and (b) the
Service Agreement for long distance telephone calls dated as of May 25, 1998
between ENTEL and the Borrower.
"Environmental and Social Compliance Report" shall include, at
a minimum, the following: (a) certification by an authorized representative of
compliance with all Environmental Requirements by the Project, the Borrower, and
any Contractor, and that the information presented in such report is correct and
accurate; (b) information concerning any and all non-compliance with any
Environmental Requirement which occurred during the reporting period, including
a brief description and justification and corrective measures taken; (c)
description of any and all relevant environmental or social issues/problems,
worker accidents, etc. and actions taken and measures implemented in order to
prevent the repetition of the same; (d) description of any and all environmental
or social risks or liabilities, either existing or foreseen; (e) description of
any and all environmental, social, or health and safety complaints, demands,
inquiries, third party communications, or Environmental Claims concerning the
Project, the Borrower, or any Contractor in relation to the Project; (f)
description of the status and results of all environmental, social, and health
and safety programs and summary of the previous time/reporting period
results/data from the environmental, social and health and safety monitoring
programs; (g) description of material Capital Expenditures, material increases
in operating expenses and other actions or activities planned to be performed
during the next report period to comply with Environmental Requirements and
Governmental Approvals and prevent Environmental Claims that are not already
included in the Environmental Reports, including any estimated costs that are
material, a schedule and a designation of responsibility for implementation of
such planned actions or activities: (h) description of ongoing public disclosure
and public consultation activities that were performed during the reporting
period; and (i) copies of any and all environmental, social or health and safety
documents or reports executed in order to satisfy Environmental Laws or material
correspondences with Governmental Bodies.
"Environmental Claim" means, with respect to any Person, any
administrative, regulatory or judicial notice, claim, action, suit, judgment,
demand or other communication
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(whether written or oral) by any other Person alleging or asserting such
Person's liability for investigatory costs, cleanup costs, governmental response
costs, damages to natural resources or other property of the claiming Person,
personal injuries, fines or penalties arising out of, based on or resulting from
(a) the presence, use or release into the environment of any Hazardous Material
at any location, whether or not owned by such Person; or (b) any fact,
circumstance, condition or occurrence forming the basis of any violation, or
alleged violation, of any Environmental Law including without limitation (i) any
and all claims by any Governmental Body for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (ii) any and all claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety to health, safety or the
environment.
"Environmental Laws" means any and all applicable Chilean
federal, provincial, municipal or local laws, rules, order, regulations,
statutes, ordinances, codes, decrees or requirements of any Chilean Governmental
Body, related to the environment, worker health and safety.
"Environmental Party" means the Borrower, and any Contractor
or any officer, director, employee or agent of either such party.
"Environmental Reports" means one or more reports prepared by
the Borrower (or a consulting firm on its behalf) related to environmental,
health or safety aspects of the Borrower's activities or assets or undertakings
to be executed by its Contractors for any applicable period including, without
limitation, the EHSM Plan, environmental impact assessments, environmental
management plans, safety management plans, emergency response or contingency
plans or similar studies.
"Environmental Requirements" means all environmental, social,
health and safety requirements, standards, protections, obligations and
performance required by (a) any Environmental Law, (b) any Governmental
Approval, (c) the IDB Environmental and Social Guidelines, (d) any Environmental
Reports, (e) any environmental, social, or health and safety representation and
warranty or affirmative covenant in this Agreement, and (f) any Fundamental
Principles and Rights at Work.
"Equity" means the sum, as at any date, for the Borrower
(determined in accordance with Canadian GAAP) of the following: (a) the amount
of cash equity invested in the Borrower, plus (b) the Subordinated Indebtedness
owing to SRT, plus (c) any in-kind investment, plus (d) any Indebtedness (other
than the Indebtedness created pursuant to this Agreement) of the Borrower
Guaranteed by SRT. plus (e) the Borrower's retained earnings less any retained
losses.
"Event of Default" has the meaning assigned to such term in
Section 9 to this Agreement.
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"Expansion Capital Expenditures" means those Capital
Expenditures required to expand the Project beyond the required specifications
for Completion of Network Construction pursuant to a plan in form and substance
satisfactory to the Senior Lenders.
"Financial Completion" has the meaning assigned to such term
in Section 8.20.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the Borrower.
"Financing Documents" means, collectively, this Agreement, the
Intercreditor Agreement, the IDB Notes, the IDB Loan Agreement, the EDC Notes,
the EDC Loan Agreement, the Custodian Agreements, the Project Account Agreement,
the Project Funds Agreement, the Transfer Restrictions Agreement, the
Performance Undertaking, the Direct Agreement, the Collection Account Agreements
and the Security Documents.
"First Pledge Without Conveyance on Chattel Property" means
the pledge dated as of April 13, 1999 regulated by Ley # 18, 112 of Chile on
chattel property owned by the Borrower created by the Borrower in favour of EDC.
"Free Cash Flow" means, for any period, the sum, for the
Borrower (determined in accordance with Canadian GAAP), of the following: (a)
EBITDA for such period less (b) Capital Expenditures (other than Expansion
Capital Expenditures) made during such period, less (c) taxes paid during such
period plus (d) decreases in non-cash working capital during such period less
increases in non-cash working capital during such period.
"Fundamental Principles and Rights at Work" include, without
limitation, (a) freedom of association and the effective recognition of the
right to collective bargaining; (b) prohibition of all forms of forced or
compulsory labor; (c) prohibition of child labor, including the prohibition of
children under 18 from working in hazardous conditions (which includes
construction activities) and young persons from working at night, and that young
persons under 18 be found fit to work via medical examinations; (d) elimination
of discrimination in respect of employment and occupation, where discrimination
is defined as any distinction, exclusion or preference based on race, color,
sex, religion, political opinion, national extraction, social origin, or any
other motive determined by any Governmental Body; (e) compliance with all
applicable labor laws, regulations, and standards; and (f) compliance with all
International Labor Organization conventions/treaties which have been accepted
by Chile.
"Governmental Approval" means any authorization, consent,
approval, license, ruling, permit, concession (including the Concessions),
certification, exemption, filing, variance, order, judgment, decree,
publication, notice to, declaration of or with or registration by or with (in
all cases other than with respect to the perfection of any security interest)
any Governmental Body.
"Governmental Body" means any national, state, county, city,
town, village, municipal or other local governmental department, commission,
board, bureau, agency, authority or instrumentality of Chile. Canada, or the
British Virgin Islands, or any political subdivision thereof, and any Person
(including, without limitation, the Central Bank of Chile) exercising
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executive, legislative, judicial, regulatory or administrative functions of or
pertaining to any of the foregoing entities, including, without limitation, all
commissions, boards, bureaus, arbitrators and arbitration panels, and any
authority or other Person controlled by any of the foregoing.
"Guarantee" means a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposits in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as verbs have
the correlative meanings.
"Hazardous Materials" means any hazardous or toxic substances,
materials or wastes defined, listed, classified or regulated as such in or under
any applicable Environmental Law, including, without limitation: (a) any
petroleum or petroleum products (including, without limitation, gasoline or
crude oil or any fraction thereof); (b) "radioactive materials;" (c) asbestos in
any form that is or could become friable; (d) urea formaldehyde foam insulation;
(e) fluids with polychlorinated biphenyl compounds; (f) lead-containing paint;
(g) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants" or "pollutants," or words of similar import,
under any applicable Environmental Law; and (h) any other chemical, material or
substance, exposure to or Release of which is prohibited, limited or regulated
by any Governmental Body.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"IDB" has the meaning assigned to such term in the Preamble of
this Agreement.
"IDB Accrual Account" has the meaning assigned to such term in
Section 4.0l(a)(ii).
"IDB Commitment" has the meaning assigned to the term
"Commitment" in the IDB Loan Agreement.
"IDB Custodian Agreement" means the Custodian Agreement, to be
executed and delivered in form and substance satisfactory to the Senior Lenders
on or prior to the Closing Date, among the Borrower. IDB and the Custodian.
"IDB Environmental and Social Guidelines" means the applicable
environmental and social IDB policies and guidelines, including, without
limitation, guidance on environmental impact assessments, resettlement policy
and disclosure of information policy.
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"IDB Loan" means the loan made by IDB to the Borrower pursuant
to Section 2.01 of the IDB Loan Agreement.
"IDB Loan Agreement" means the Loan Agreement dated as of the
date hereof between the Borrower and IDB.
"IDB Members" has the meaning assigned to such term in Section
8.13(b)(ii).
"IDB Notes" means any promissory note delivered by the
Borrower to IDB in connection with the IDB Loan Agreement.
"Indebtedness" means, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations or operating lease obligations of such Person; and (f)
Indebtedness of others Guaranteed by such Person.
"Independent Accountants" means Deloitte & Touche Sociedad de
Auditores y Consultores Limitada or other independent certified public
accountants of recognized national standing and acceptable to the Senior
Lenders.
"Independent Engineer" means Ingenieros y Economistas
Consultores Ltda. of Santiago, Chile or such other Person appointed by the
Senior Lenders from time to time with the consent of the Borrower, which consent
shall not be unreasonably withheld.
"Independent Insurance Advisor" means AON Risk Services, Inc.
or such other insurance consultant as the Senior Lenders may engage from time to
time.
"Initial Equity Investment" means SRT's equity investment in
the Borrower in an aggregate amount not less than $52,000,000. in the form of
any combination of the following: cash equity, Intercompany Loans, in-kind
investment.
"Intercompany Loans" means any loan made by SRT to the
Borrower, together with any intercompany receivables between the Borrower and
SRT relating to the Borrower's purchase of equipment or services for the
Project.
"Interconnection Agreements" means, collectively, (a) the
ENTEL Interconnection Agreement (Long Distance), (b) the Telsur Interconnection
Agreement, (c) the CTC Interconnection Agreement, and (d) any other
interconnection agreements entered into after
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the date hereof between the Borrower and any other telephone services operator
in Chile, in form and substance satisfactory to the Senior Lenders.
"Intercreditor Agreement" means the Intercreditor Agreement to
be executed and delivered in form and substance satisfactory to the Senior
Lenders on or prior to the Closing Date between EDC and IDB.
"Interest Expense" means, for any period, the sum, for the
Borrower (determined in accordance with Canadian GAAP), of the following: (a)
all interest in respect of Indebtedness (including, without limitation, the
interest component of any payments in respect of Capital Lease Obligations)
accrued or capitalized during such period (whether or not actually paid during
such period) plus (b) the net amount payable (or minus the net amount
receivable) under Hedging Agreements relating to interest during such period
(whether or not actually paid or received during such period).
"Interest Payment Date" means November 15th and May 15th of
each calendar year occurring during the term of this Agreement; or, if any such
date is not a Business Day, the succeeding Business Day.
"Investment" means, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, Joint Venture, partnership or other ownership
interests or other securities of any other Person or any agreement to make any
such acquisition (including, without limitation, any "short sale" or any sale of
any securities at a time when such securities are not owned by the Person
entering into such sale); (b) the making of any deposit with, or advance, loan
or other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person), but excluding
any such advance, loan or extension of credit having a term not exceeding 90
days arising in connection with the sale of inventory or supplies by such Person
in the ordinary course of business; (c) the entering into of any Guarantee of,
or other contingent obligations with respect to, Indebtedness or other liability
of any other Person and (without duplication) any amount committed to be
advanced, lent or extended to such Person; or (d) the entering into of any
Hedging Agreement.
"Joint Venture" means (a) the ownership of any capital stock
of any Person, other than by virtue of an ownership interest in a Subsidiary, or
(b) any other type of interest (whether ownership or otherwise) in any Person,
including without limitation, any partnership, joint venture, profit sharing or
royalty agreement or similar arrangement whereby income or profits are, or may
be, shared with any Person.
"Lien" means, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this Agreement and the other Financing Documents,
a Person shall be deemed to own subject to a Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.
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"London Business Day" means any day on which dealings on
Dollar deposits are conducted in the London interbank market.
"Long-Term Debt" means, as of any date of determination, the
aggregate of all those components of Indebtedness which fall due or whose final
payment is due more than one year after such date of determination.
"Maintenance Costs" means, for any period, expenditures made,
or projected to be made, by the Borrower to be paid or payable during such
period to maintain or replace existing fixed assets, plant and equipment in
accordance with Canadian GAAP, which expenditures are for the purpose of
maintenance, renewals, replacements and repairs of all or part of the Project in
a manner consistent with the Agreed Financial Model and are not for the purpose
of expanding or enhancing the capacity of the Project or the performance thereof
or otherwise for improvements or new operations.
"New York Business Day" means any date on which commercial
banks are not authorized or required to close in New York City.
"Network Assets" means all assets of the Borrower used in the
Borrower's business of providing telecommunications services.
"Notes" means collectively, the IDB Notes and the EDC Notes.
"Obligations" means all obligations of the Borrower now
existing or hereinafter arising, direct or indirect, absolute or contingent, due
or to become due, under the Financing Documents, including (without duplication)
(a) the principal and interest on the Senior Loans and all other obligations,
advances, debts and liabilities of the Borrower, including indemnities, fees and
interest incurred under, arising out of or in connection with the Senior Loans
or any other Financing Document; (b) any and all sums advanced by any Senior
Lender in order to preserve the security interests created pursuant to the
Security Documents; and (c) in the event of any proceeding for the collection or
enforcement of the Obligations, after an Event of Default shall have occurred
and be continuing and unwaived, the expense of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on any Collateral,
or of any exercise by any Senior Lender, of its rights under the Security
Documents, together with reasonable attorney's and experts' fees and expenses
and court costs.
"Operating Account" has the meaning assigned to such term in
Section 4.01(b)(i) of this Agreement.
"Operating Contracts" means, collectively, any agreements
relating to the operation of the Project entered into between the Borrower and
another Person.
"Operating Costs" means, for any period, the sum, computed
without duplication, of all costs and expenses paid by the Borrower during such
period (or in the case of any future period, projected by the Borrower to be
paid or payable during such period) in connection with the operation,
maintenance and administration of the Project, and including, without limiting
the generality of the foregoing, (a) costs of operating and administering the
Project and of maintaining it in good repair and operating condition (including,
without limitation, all
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Maintenance Costs and amounts due and payable under the Technical Services
Agreement that are permitted to be paid under this Agreement), (b) costs of
payroll, utilities, supplies and other services acquired in connection with the
operation and maintenance of the Project, (c) costs of insurance, (d) costs of
shipping and transporting, (e) costs and fees attendant to the obtaining and
maintaining in effect the Governmental Approvals relating to the Project and (f)
legal, accounting and other professional fees attendant to any of the foregoing;
provided that all of the foregoing costs and expenses shall be determined on a
cash basis and shall not include depreciation, amortization and other non-cash
items.
"Payment Dates" means, collectively, any Principal Payment
Dates or any Interest Payment Dates.
"Payroll Account" has the meaning assigned to such term in
Section 4.01(b)(iii).
"Performance Undertaking" means the Amended and Restated
Performance Undertaking dated as of the date hereof between SRT and the Senior
Lenders.
"Permitted Indebtedness" has the meaning assigned to such term
in Section 8.07.
"Permitted Investments" means, collectively:
(a) all financial instruments and investments that comply with
all of the following:
(i) fixed income; and
(ii) issued by: (A) the Central Bank of Chile, (B)
the Tesoreria General de la Republica, (C) Canada or the
United States or any agency thereof as a direct obligation, or
obligations guaranteed by Canada or the United States or any
agency thereof; or (D) financial institutions and companies
(other than SRT or any company affiliated, by way of
ownership, with SRT or the Borrower) having a rating, as
reported to the Superintendencia de Valores y Seguros, in the
two highest rating categories as existing at the time of the
Closing Date and from time to time or a rating equivalent
thereto; and
(b) any repurchase agreement in respect of any of the
instruments referred to in clause (a) of this definition; and
(c) time deposits in commercial banks acceptable to the Senior
Lenders and short-term marketable securities, acquired solely to give
temporary employment to the Borrower's idle resources;
provided, in each case, that such Permitted Investment matures within one year
from the date of acquisition thereof by the Borrower.
"Permitted Liens" has the meaning assigned to such term in
Section 8.06(a).
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"Person" means any individual, corporation, company, voluntary
association, partnership, limited liability company, joint venture, trust,
unincorporated organization or government (or any agency, instrumentality or
political subdivision thereof).
"Pledges Without Conveyance on Chattel Property" means,
collectively, the First Pledge Without Conveyance on Chattel Property, the
Second Pledge Without Conveyance on Chattel Property and the Senior Lenders'
Pledge Without Conveyance on Chattel Property.
"Principal Payment Date" means each May 15th and November 15th
of each calendar year, commencing on May 15, 2001 and continuing thereafter
until (a) with respect to the EDC Loans, the earlier of (i) November 15, 2007
and (ii) the date on which all Obligations owing to EDC have been paid in full
and (b) with respect to the IDB Loan the earlier of (i) November 15, 2008 and
(ii) the date on which all Obligations owing to IDB have been paid in full; or
if any such date is not a Business Day, the succeeding Business Day.
"Process Agent" has the meaning assigned to such term in
Section 10.08(c).
"Process Agent Acceptance" means a letter from the Process
Agent addressed to each Senior Lender substantially in the form of Exhibit E.
"Project" means the design, construction, installation and
operation of a rural telecommunications network in nine primary zones of Chile
as more specifically described in the Agreed Financial Model and Business Plan.
"Project Account Agreement" means the Project Account
Agreement, to be executed and delivered in form and substance satisfactory to
the Senior Lenders on or prior to the Closing Date, among the Borrower, the
Senior Lenders and the Account Bank, which regulates (a) the opening, operation
and maintenance of the Accounts and the use of the funds deposited therein; and
(b) certain aspects of the operation of the Borrower Accounts.
"Project Costs" means all costs and expenses (excluding
Expansion Capital Expenditures), incurred or anticipated to be incurred by the
Borrower to finance, develop, construct and complete the Project and achieve
Completion of Network Construction, including, without limitation, all costs and
expenses incurred in connection with the design, equipment procurement,
installation, construction and start-up of the Project in a manner consistent
with the Agreed Financial Model, the grant to the Borrower of all easements,
licenses and other real property rights and interests required for the Project.
Interest Expense during construction and other fees and costs (including in
connection with the Closing Date).
"Project Documents" means, collectively, the Concessions, the
Interconnection Agreements, the Tariff Agreements, the Technical Services
Agreement, the Operating Contracts, the Service Contracts, the Agreed Financial
Model, the Business Plan, the SUBTEL Letter, and every other contract or
agreement entered into by, or on behalf of the Borrower and any other Person in
effect on the date hereof or entered into after the date hereof relating to the
Project.
"Project Funds Agreement" means the Amended and Restated
Project Funds Agreement dated as of the date hereof among SRT. the Borrower and
the Senior Lenders.
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"Promise to Execute Conditional Assignment of Rights" means
the Borrower's agreement, to be executed and delivered in form and substance
satisfactory to the Senior Lenders on or prior to the Closing Date, to execute
conditional assignments of the Borrower's rights and obligations under any
relevant Project Document governed by the laws of Chile created by the Borrower
in favour of the Senior Lenders.
"Promise to Grant a Commercial Pledge on Concessions of
Telecommunications" means the Borrower's agreement, to be executed and delivered
in form and substance satisfactory to the Senior Lenders on or prior to the
Closing Date, to create a pledge regulated by articles 813 and following of the
Commerce Code of Chile on the concessions of telecommunications granted to the
Borrower after the date hereof, created by the Borrower in favour of the Senior
Lenders.
"Promise to Grant a Pledge Without Conveyance on Chattel
Property" means the Borrower's agreement, to be executed and delivered in form
and substance satisfactory to the Senior Lenders on or prior to the Closing
Date, to create a pledge regulated by Ley # 18, 112 of Chile on chattel property
to be owned by the Borrower after the date hereof, created by the Borrower in
favour of the Senior Lenders.
"Property" means any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Quarterly Dates" means the last day of March, June, September
and December in each year, the first of which shall be the first such day after
the date hereof.
"Receivables Turnover" means, as at any date, the ratio of (a)
Total Revenues plus applicable value added tax ("IVA") and long distance charges
(collected on behalf of the various long distance carriers) for the period of
four consecutive fiscal quarters ending on or most recently ended prior to such
date to (b) the quotient of the sum of the ending balance of accounts receivable
(as defined pursuant to Canadian GAAP) for each of the preceding four
consecutive fiscal quarters divided by four.
"Recurring Revenues" means the sum, converted from Chilean
Pesos to Dollars using the average of the closing rates of exchange, as quoted
by Bloomberg under the website found at the following internet address
"▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇.▇▇▇▇" or if such rate is not available from such
source, the rate notified to the Borrower by the Senior Lenders, on the last day
of the prior quarterly fiscal period and the last day of the current quarterly
fiscal period, (determined in accordance with Canadian GAAP) of the following:
(a) usage revenues for such period, plus (b) monthly subscription revenues for
such period.
"Release" means the release or disposal (accidental or
otherwise) of any Hazardous Material into or upon or under any land or water or
air, or otherwise into the environment, including, without limitation, by means
of burial, discharge, emission, injection, spillage, leakage, seepage, leaching,
dumping, pumping, pouring, escaping, emptying, placement and the like.
"Restricted Payment" means dividends (in cash, Property or
obligations) on, or other payments or distributions on account of. or the
setting apart of money for a sinking or other
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analogous fund for, or the purchase, redemption, retirement or other acquisition
of, any shares of any class of stock of the Borrower or of any warrants, options
or other rights to acquire the same (or to make any payments to any Person, such
as "phantom stock" payments, where the amount thereof is calculated with
reference to the fair market or equity value of the Borrower), but excluding
dividends payable solely in shares of common stock of the Borrower.
"Second Pledge Without Conveyance on Chattel Property" means
the pledge, to be executed and delivered in form and substance satisfactory to
the Senior Lenders on or prior to the Closing Date, regulated by Ley # 18, 112
of Chile on chattel property owned by the Borrower created by the Borrower in
favour of IDB.
"Security Documents" means, collectively, the SR (BV) Holdings
Pledge Agreement, each Chilean Security Document and all filings required by the
Security Documents to be filed in Chile, the British Virgin Islands or Canada
with respect to the security interests in Property created pursuant to the
Security Documents.
"Senior Lenders" means, collectively, EDC and IDB.
"Senior Lenders' Pledge Without Conveyance on Chattel
Property" means the pledge, to be executed and delivered in form and substance
satisfactory to the Senior Lenders on or prior to the Closing Date, regulated by
Ley # 18, 112 of Chile on chattel property owned by the Borrower created by the
Borrower in favour of IDB and EDC.
"Senior Loan Agreements" means, collectively, the EDC Loan
Agreement and the IDB Loan Agreement.
"Senior Loans" means, collectively, the IDB Loan and the EDC
Loans.
"Senior Notes" means, collectively, the EDC Notes and the IDB
Notes.
"Service Contracts" means, collectively, any agreement
providing for certain installation and maintenance services entered into between
the Borrower and any Person.
"Shareholders Pledge Agreements" means, collectively, (a) that
certain Pledge of Shares dated as of April 13, 1999, created by Chilean Holdco
in favour of EDC, (b) that certain Pledge of Shares dated as of April 13, 1999,
created by BVI Holdco in favour of EDC and (c) that certain Pledge of Shares, to
be executed and delivered in form and substance satisfactory to the Senior
Lenders on or prior to the Closing Date, created by Chilean Holdco in favour of
IDB, in each case, in the capital stock of the Borrower and regulated by
articles 813 and following of the Commerce Code of Chile.
"SR (BV) Holdings" means SR (BV) Holdings Limited, a limited
liability company duly organized and validly existing under the laws of the
British Virgin Islands.
"SR (BV) Holdings Pledge Agreement" means the share pledge
agreement, to be executed and delivered in form and substance satisfactory to
the Senior Lenders on or prior to the Closing Date, created by SR (BV) Holdings
in favour of the Senior Lenders in the capital stock of BVI Holdco.
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"SRT" means SR Telecom Inc., a corporation duly organized and
validly existing under the laws of Canada.
"SRT Conditional Assignment" means the Conditional Assignment
of Rights (Technical Services Agreement), to be executed and delivered in form
and substance satisfactory to the Senior Lenders on or prior to the Closing
Date, among SRT, the Borrower and the Senior Lenders.
"SRT Material Adverse Effect" means a material adverse effect
on (a) the Property, business, operations, financial condition, liabilities or
capitalization of SRT or (b) the ability of SRT to perform its obligations under
any of the Transaction Documents to which it is a party.
"Subordinated Indebtedness" means, collectively, all
Intercompany Loans (but in any event not including payments under the Technical
Services Agreement that are permitted under the Direct Agreement or the payment
of Project Costs owing to SRT which are permitted under Section 8.13(a)(ii)) and
any other Indebtedness (a) for which the Borrower is directly and primarily
liable and (b) that is unsecured and subordinated to the obligations of the
Borrower to pay principal of and interest on the Senior Loans and the Senior
Notes on terms and conditions substantially in the form of Exhibit C.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership or other entity of which at
least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
limited liability company, partnership or other entity (irrespective of whether
or not at the time securities or other ownership interests of any other class or
classes of such corporation, limited liability company, partnership or other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.
"SUBTEL" means Subsecretaria de Telecomunicaciones, an agency
of the Chilean government.
"SUBTEL Letter" means the letter dated as of March 23, 1999
from SUBTEL addressed to the Borrower and identified as ORD No. 32092.
"Surplus Cash" has the meaning assigned to such term in clause
"tenth" of Section 4.03(b).
"Tariff Agreements" means, collectively, any tariff agreements
entered into after the date hereof between the Borrower and any telephone
services operator in Chile, in form and substance satisfactory to the Senior
Lenders.
"Technical Services Agreement" means the Procurement of
Service Agreement dated as of March 31 1999 between SRT and the Borrower.
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"Telrad" means Telrad, Telecommunication and Electronic
Industries Ltd., a limited liability company duly organized and validly existing
under the laws of Israel.
"Telsur" means Compania Nacional de Telefonos, Telefonica del
Sur S.A., a sociedad anonima duly organized and validly existing under the laws
of Chile.
"Telsur Conditional Assignment" means the Conditional
Assignment of Rights (Telsur Interconnection Agreement), to be executed and
delivered in form and substance satisfactory to the Senior Lenders on or prior
to the Closing Date, among Telsur, the Borrower and the Senior Lenders.
"Telsur Interconnection Agreement" means the Interconnection
Agreement dated as of July 13, 1998 between Telsur and the Borrower.
"Total Debt" means, as at any date, the sum, for the Borrower
(determined in accordance with Canadian GAAP), of the following: (a) all
Indebtedness of the Borrower, less (b) any Indebtedness (other than Indebtedness
created pursuant to this Agreement) of the Borrower Guaranteed by SRT, less (c)
any Indebtedness of the Borrower owing to any shareholder of the Borrower.
"Total Revenues" means the sum, for any period, for the
Borrower (determined in accordance with Canadian GAAP) of the following: (a)
from usage revenues for such period, plus (b) carrier access revenues for such
period, plus (c) installation revenues for such period, plus (d) monthly
subscription revenues for such period.
"Transaction Documents" means, collectively, the Financing
Documents and the Project Documents.
"Transaction Parties" means, collectively, the Borrower, SRT,
SR (BV) Holdings, BVI Holdco and Chilean Holdco.
"Transfer Restrictions Agreement" means the Amended and
Restated Transfer Restrictions Agreement dated as of the date hereof among SRT,
SR (BV) Holdings, BVI Holdco, Chilean Holdco and the Senior Lenders.
"Trust Indenture" means the Trust Indenture dated as of April
22, 1998 between SRT and Montreal Trust Company, a trust company incorporated
under the laws of Canada pursuant to which a principal amount of Canadian
$75,000,000 of debentures were issued bearing interest at 8.15% with a due date
of April 22, 2005.
"Year 2000 Compliance" of an entity means that all computer
systems and programs (including but not limited to any technology reliant on an
embedded computer chip) of such entity material to such entity's business and
operations are (a) designed to be used prior to, during and after the calendar
year 2000 AD without error; (b) capable of operating without error relating to
the production of date data which represents or refers to different centuries or
more than one century; (c) designed so that all date data fields, date data
storage, date-related user interfaces, and other interfaces include an
unambiguous explicit or implicit (derived by algorithm
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or inferencing) indication of century; and (d) shall recognize that the calendar
year 2000 AD is a leap year, and "Year 2000 Compliant" shall have a
corresponding meaning.
1.02 Principles of Construction. In this Agreement and the
other Financing Documents and the appendices, exhibits and schedules hereto or
thereto:
(a) The meanings set forth for defined terms in Section 1.01
or in any Financing Document shall be equally applicable to both the
singular and plural forms of the terms defined and the masculine,
feminine or neutral gender shall include all genders.
(b) All references in any Financing Document to clauses,
sections, appendices, schedules and exhibits are to clauses, sections,
appendices, schedules and exhibits in or to such Financing Document
unless otherwise specified therein.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in a Financing Document shall refer to such
Financing Document as a whole and not to any particular provision of
such Financing Document.
(d) References in any Financing Document to any statute, law,
decree or regulation shall be construed as a reference to such statute,
law, decree or regulation as re-enacted, redesignated, amended or
extended from time to time, except as otherwise provided in such
Financing Document.
(e) References in any Financing Document to any Transaction
Document or any other document or agreement shall be deemed to include
references to such Transaction Document or such other document or
agreement as amended, varied, supplemented or replaced from time to
time in accordance with the terms of such Transaction Document,
document or agreement and this Agreement and to include any appendices,
schedules, exhibits, supplements, clarification letters, side letters
and disclosure letters executed in connection therewith.
(f) References to any Person or Persons shall be construed as
a reference to any successors or assigns of such Person or Persons to
the extent permitted under the Financing Documents and, in the case of
any Governmental Body, any Person succeeding to its functions and
capacities.
(g) The table of contents and the headings of the several
sections and subsections of this Agreement or any Financing Document
are intended for convenience only and shall not in any way affect the
meaning or construction of any provision therein.
(h) References to the words "include" or "including" shall be
deemed to be followed by "without limitation" or "but nut limited to",
whether or not they are followed by such phrases or words of similar
import.
(i) References to a number of days shall refer to calendar
days unless Business Days are otherwise specified.
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1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Senior Lenders hereunder shall be prepared, in
accordance with Canadian GAAP and Chilean GAAP, applied on a basis consistent
with that used in the Agreed Financial Model (in the case of Canadian GAAP) and
in the audited financial statements of the Borrower referred to in Section 7.05
(except for changes concurred with by the Borrower's independent public
accountants) and shall include certified data on appropriate Dollar exchange
rates applicable to the financial information provided. To enable the ready and
consistent determination of compliance with the covenants set forth in Section
8, the Borrower will not change the last day of its fiscal year from December
31, or the last days of the first three fiscal quarters in each of its fiscal
years from March 31, June 30 and September 30, respectively.
1.04 Conflicts. In the case of any conflict between the terms
of this Agreement and the terms of any Senior Loan Agreement, the terms of such
Senior Loan Agreement, as between the Company and the Senior Lender party
thereto, shall control. In the case of any conflict between the terms of the
Intercreditor Agreement and any other Financing Document, the terms of the
Intercreditor Agreement, as between the Senior Lenders, shall control. In the
case of any conflict between the terms of this Agreement and any other Financing
Document (other than the Intercreditor Agreement and the Senior Loan
Agreements), the terms of this Agreement shall control.
Section 2. Senior Loan Agreements.
2.01 Indebtedness Subject to this Agreement. All Senior Loans
shall be entitled to the benefits of and subject to the obligations set forth in
this Agreement and the security interests granted by or pursuant to the Security
Documents.
2.02 Senior Loans Pari Passu. All Senior Loans shall rank pari
passu without any preference among the Senior Loans or the Senior Loan
Agreements by reason of date of incurrence or otherwise.
2.03 Pro Rata Payment of Obligations. Each scheduled payment
in accordance with Section 2.07, in respect of the Obligations by the Borrower
to the Senior Lenders on a Payment Date, shall be on a pro rota payment basis in
accordance with the respective Obligations due to the Senior Lenders on such
Payment Date.
2.04 Non-Pro Rata Prepayment. The Borrower may prepay in whole
or in part the Obligations owed to one or more Senior Lenders without making a
pro rota payment to any other Senior Lender if:
(a) such prepayment is made to EDC. in an amount equal to the
aggregate outstanding amount of the EDC Loans in excess of $25,000,000
from the proceeds of the initial disbursement of the IDB Loan:
(b) such Senior Lender would be entitled to or has received
compensation from the Borrower pursuant to Section 5 of the EDC Loan
Agreement or pursuant to Section 5
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of the IDB Loan Agreement, as the case may be, for costs incurred by
such Senior Lender in connection with making or maintaining its Senior
Loans in excess of costs incurred generally by any other Senior Lender
in connection with the Senior Loans; or
(c) such prepayment is made to a Senior Lender because it has
become unlawful for such Senior Lender to honor its obligations to make
or maintain its Senior Loans under its Senior Loan Agreement.
2.05 Optional Prepayments.
(a) The Borrower shall have the right to prepay the Senior
Loans at any time or from time to time, provided that:
(i) the Borrower has obtained the specific prior approval of
the Central Bank of Chile with respect to such prepayment and with
respect to the fee referred to in clause (vi) of this Section 2.05(a);
(ii) the Borrower shall give each Senior Lender notice of each
such prepayment as provided in Section 4.04 of the IDB Loan Agreement
and in Section 4.04 of the EDC Loan Agreement (and, upon the date
specified in any such notice of prepayment, the amount to be prepaid
shall become due and payable thereunder);
(iii) Senior Loans may be prepaid only on an Interest Payment
Date occurring after the first Principal Payment Date;
(iv) one-half of the amount of the prepayment shall be made
available to each Senior Lender and, once paid to such Senior Lender,
shall be applied in accordance with Section 4.01(b) of the Senior Loan
Agreement to which such Senior Lender is a party;
(v) amounts prepaid under this Section 2.05 may not be
reborrowed;
(vi) in addition to any break-funding costs payable to either
or both of the Senior Lenders incurred in connection with such
prepayment, the Borrower shall pay to IDB a fee for any prepayment made
pursuant to this Section 2.05 prior to the eighth Principal Payment
Date in an amount equal to (A) 2.0% of the amount of the IDB Loan
prepaid during the period commencing on the first Principal Payment
Date to but excluding the fourth Principal Payment Date or (B) 1.0% of
the amount of the IDB Loan prepaid during the period commencing on the
fourth Principal Payment Date to but excluding the eighth Principal
Payment Date; and
(vii) each partial prepayment under this Section 2.05 shall be
in an amount equal to $2,000,000 and, if greater, in incremental
multiples of $1,000,000.
(b) Notwithstanding clauses (ii) and (iii) of Section 2.05(a),
in the event that the Borrower desires to prepay Senior Loans without providing
the notice required pursuant to Section 2.05(a)(ii) or on any day which is not
an Interest Payment Date occurring after the first Principal Date as required in
Section 2.05(a)(iii). then the Borrower's right to prepay any Senior Loans is
subject to (i) the payment by the Borrower to each Senior Lender of an
additional fee in
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an amount equal to the amount of interest which would have accrued on the amount
of principal to be so prepaid during the immediately succeeding 60 days, and
(ii) the Borrower's compliance with clauses (i), (iv), (v), (vi) and (vii) of
Section 2.05(a).
2.06 Mandatory Prepayments.
(a) Cash Sweep Account. On each Interest Payment Date
occurring after Financial Completion on which the collected credit balance of
the Cash Sweep Account is equal to or greater than $2,000,000, the Borrower
shall prepay (using the amounts in the Cash Sweep Account) the Senior Loans in
an aggregate amount equal to such collected credit balance.
(b) Prepayment of Other Indebtedness. On any date on which the
Borrower prepays any Long-Term Debt in an amount greater than $100,000, the
Borrower shall prepay the Senior Loans, in an aggregate amount equal to the
amount of Long-Term Debt so prepaid or in such other amount requested by the
Borrower and acceptable to the Senior Lenders.
(c) Termination Payment. Upon the Borrower's receipt of any
payment from SUBTEL or on SUBTEL's behalf relating to a termination of any
Concession, the Borrower shall prepay the aggregate outstanding amount of the
Obligations in an amount equal to the amount of such payment.
(d) Financial Completion. If the Borrower has failed to
demonstrate by January 31, 2003, that Financial Completion had occurred by
December 31, 2002 in accordance with Section 8.20, then on January 31, 2003, but
after taking the action described in Section 4.06(b)(ii), the Borrower shall
prepay the Senior Loans in an amount equal to the amount received by the
Borrower from SRT pursuant to Section 2.01(a)(v) of the Project Funds Agreement.
(e) Prepayment Fee. In addition to any break-funding costs
payable to either or both of the Senior Lenders incurred in connection with such
prepayment, the Borrower shall pay to IDB a fee for any prepayment made pursuant
to clause (b) of this Section 2.06 prior to the eighth Principal Payment Date in
an amount equal lo (i) 2.0% of the amount of the IDB Loan prepaid during the
period commencing on the first Principal Payment Date to but excluding the
fourth Principal Payment Date or (ii) 1.0% of the amount of the IDB Loan prepaid
during the period commencing on the fourth Principal Payment Date to but
excluding the eighth Principal Payment Date.
(f) Application. Prepayments described in (i) paragraphs (b)
and (d) of this Section 2.06 shall be made to each Senior Lender so that each
Senior Lender receives 50% of the amount prepaid and (ii) paragraphs (a) and (c)
shall be made to each Senior Lender pro rata to the aggregate outstanding
Obligations then owing to each Senior Lender and, in each case, once paid to
each Senior Lender, applied in accordance with Section 4.01(b) of each Senior
Loan Agreement: provided, however, that any amount prepaid pursuant to Section
2.06(d) shall be applied pro rata to the remaining principal installments to be
paid in accordance with Section 3.01 of each Senior Loan Agreement. Amounts
prepaid under this Section 2.06 may not be reborrowed. Prepayment is permitted
only upon payment of all accrued interest and other amounts then payable.
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2.07 Payments.
(a) On each Principal Payment Date, the Borrower shall make
the scheduled principal payments of Senior Loans, if any, due on such Principal
Payment Date except to the extent that such payments have been prepaid.
Principal of the Senior Loans shall be payable in accordance with the terms and
conditions set forth in the applicable Senior Loan Agreement.
(b) On each Interest Payment Date, the Borrower shall pay
accrued and unpaid interest on the unpaid principal amount of the Senior Loans
outstanding under each Senior Loan Agreement, and any commitment fees under each
Senior Loan Agreement, in each case in accordance with the terms of the
applicable Senior Loan Agreement.
Section 3. Reserved.
Section 4. Accounts.
4.01 Creation of the Accounts and the Borrower Accounts.
(a) Pursuant to, and in accordance with, the Project Account
Agreement, concurrently with or prior to the Closing Date, the Senior Lenders
and the Borrower will cause to be established and maintained with the Account
Bank the following segregated, Dollar denominated accounts at the office of the
Account Bank located in Santiago, Chile (collectively, the "Accounts"):
(i) an account into which an amount equal to 1/6 of the amount
of Debt Service owing to EDC on the next Payment Date is deposited by
the Borrower on a monthly basis (the "EDC Accrual Account");
(ii) an account into which an amount equal to 1/6 of the
amount of Debt Service owing to IDB on the next Payment Date is
deposited by the Borrower on a monthly basis (the "IDB Accrual
Account");
(iii) an account, the aggregate outstanding balance of which,
will at all times subsequent to Financial Completion be equal to the
Debt Service Reserve Requirement (the "Debt Service Reserve Account");
and
(iv) an account into which, inter alia, Surplus Cash is to be
deposited (the "Cash Sweep Account").
(b) Prior to the date hereof, the Borrower has established in
its name and will maintain the following Chilean Peso denominated accounts
(collectively, the "Borrower Accounts"):
(i) an operating account established at the office of Banco
Sud Americano, a banking institution located in ▇▇▇▇▇▇▇▇. Chile (the
"Operating Account");
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(ii) the collection accounts (the "Collection Accounts")
opened and maintained with (A) Banco BHIF, a banking institution with
branches throughout Chile and (B) Banco del Estado, a banking
institution located in Temuco, Chile; and
(iii) the payroll account opened and maintained with Banco
Santiago, a banking institution located in ▇▇▇▇▇▇▇▇, Chile (the
"Payroll Account").
4.02 Limited Borrower Rights. The Borrower irrevocably agrees
to deposit into and remit funds from the Accounts in accordance with this
Agreement, the Project Account Agreement and the other Financing Documents.
With respect to the Payroll Account and Collection Accounts, the Borrower
agrees to deposit and remit funds to and from these Borrower Accounts in
accordance with its current practice.
4.03 Operating Account.
(a) Deposits into Operating Account. The Borrower agrees and
confirms that it has irrevocably instructed:
(i) each party to a Project Document in effect as of the date
hereof (and shall instruct each party to a Project Document entered
into after the date hereof) to direct any payments, including without
limitation, the payment of any liquidated damages, owing to the
Borrower under any Project Document to the Operating Account;
(ii) Banco BHIF and Banco del Estado (in their capacities as
account banks for the Collection Accounts) to transfer, on each
Business Day, to the Operating Account the collected credit balances of
the Collection Accounts in accordance with the Collection Account
Agreements; and
(iii) each other Person from whom the Borrower is entitled to
receive payments of any kind not otherwise referred in the preceding
clauses (i) and (ii), to direct any such payments to the Operating
Account.
If, notwithstanding such instructions, the Borrower should receive any such
payment, the Borrower shall promptly deposit such payment into the Operating
Account in the exact form received with any necessary endorsement.
(b) Transfers from Operating Account Prior to an Event of
Default. Unless an Event of Default shall have occurred and be continuing or
would result therefrom, the Borrower shall transfer (or cause to be
transferred), from the collected credit balance of the Operating Account, the
following amounts, subject in some cases to Section 4.10, in the following order
of priority (and no transfer at any such priority level shall be made on any day
if any transfer remains to be made on such day at any higher priority level):
first, on any Business Day, to any Person to whom taxes or
Operating Costs are then due and payable, an amount equal to such taxes
or Operating Costs;
second, intentionally omitted;
Common Agreement
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third, on the first Business Day of each calendar month, pro
rata, (i) to the EDC Accrual Account, an amount equal to 1/6 of the
Debt Service owing to EDC on the next Payment Date, and (ii) to the IDB
Accrual Account, an amount equal to 1/6 of the Debt Service owing to
IDB on the next Payment Date;
fourth, on each Payment Date, to each Senior Lender, an amount
equal to the sum of (i) the of principal and interest then due and
payable to such Senior Lender less (ii) the amounts transferred to such
Senior Lender on such Payment Date from the aggregate cash balance of
either (A) the EDC Accrual Account pursuant to Section 4.04(b) or (B)
the IDB Accrual Account pursuant to Section 4.05(b), as the case may
be.
fifth, on any Business Day, to each Senior Lender, an amount
equal to the Obligations not included under clause "fourth" above which
are then due and payable to such Senior Lender;
sixth, on any Business Day, to the lenders of any Permitted
Indebtedness (other than Subordinated Indebtedness), the amount of
principal, interest, scheduled fees and commissions then due and
payable in connection with such Permitted Indebtedness;
seventh, on any Business Day, to any Person to whom Project
Costs are then due and payable, an amount equal to the aggregate
Project Costs then due and payable; provided that the Borrower's
ability to make any payment of Project Costs to SRT in respect of
Intercompany Loans is subject to (i) the provisions of the Project
Funds Agreement, (ii) the requirement that the terms of such
Intercompany Loan are in compliance with Section 8.19 and (iii) the
requirement that the Project Costs incurred by such date do not exceed
the sum of $ 113,000,000;
eighth, prior to any transfer from the Operating Account
pursuant to clauses "ninth" through "eleventh" of this Section 4.03(b),
to the Debt Service Reserve Account, an amount equal to the lesser of
(A) the aggregate outstanding balance of the Operating Account and (B)
the Debt Service Reserve Deficiency;
ninth, on any Business Day from and after Completion of
Network Construction, to Persons to whom Expansion Capital Expenditures
are then due and payable, the aggregate amount of such Expansion
Capital Expenditures then due and payable;
tenth, (i) within five days of each Quarterly Date occurring
during the period commencing immediately after Completion of Network
Construction and ending on Financial Completion, to the Cash Sweep
Account, an amount equal to 100% of the collected credit balance of the
Operating Account existing on such Quarterly Date after the application
of the immediately preceding clauses "first" through "ninth" (such
amount being "Surplus Cash"); and (ii) within five days of each
Quarterly Date occurring after Financial Completion, to the Cash Sweep
Account, an amount equal to (A) 50% of the Surplus Cash, so long as no
Default or Event of Default is existing on such date or (B) 100% of the
Surplus Cash in the event that a Default or Event of Default is
existing on such date; and
eleventh, on any date on which (i) a transfer from the
Operating Account is made pursuant to subclause (ii)(A) of clause
"tenth" above and (ii) the Borrower would be permitted to make a
Restricted Payment pursuant to Section 8.09, to the Person to whom
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such Restricted Payment is intended to be made, in an amount equal to 50% of
Surplus Cash referred to in subclause (ii)(A) of clause "tenth" above.
(c) Transfers from Operating Account When an Event of Default
Is Continuing. At any time that an Event of Default shall have occurred and be
continuing, upon its receipt of notice thereof, the Borrower shall transfer (or
caused to be transferred) from the collected credit balance of the Operating
Account the following amounts in the following order of priority (and no
transfer at any such priority level shall be made on any day if any transfer
remains to be made on such day at any higher priority level): the amounts and
destinations set forth in clauses "first", "third", "fourth", "fifth", "sixth",
"seventh", "eighth" and "tenth" of Section 4.03(b) hereof and, with the consent
of the Senior Lenders, the amount set forth in clause "ninth" of Section 4.03
(b) hereof.
4.04 EDC Accrual Account.
(a) Deposits into the EDC Accrual Account. In addition to the
deposits described in Section 4.08, the Borrower will make deposits into the EDC
Accrual Account in accordance with clause "third" of Section 4.03(b).
(b) Transfers from EDC Accrual Account Prior to an Event of
Default. Unless an Event of Default shall have occurred and be continuing, on
each Payment Date, the Borrower will transfer (or will cause to be transferred)
to EDC from the collected credit balance of the EDC Accrual Account an amount
equal to the lesser of (i) the Debt Service then due and payable to EDC pursuant
to Sections 3.01 and 3.02 of the EDC Loan Agreement and (ii) the aggregate
outstanding balance of the EDC Accrual Account.
(c) Transfers When an Event of Default is Continuing. At any
time that an Event of Default shall have occurred and be continuing, the Senior
Lenders may notify the Account Bank of the existence of such Event of Default
and, upon receipt of such notification by the Senior Lenders, the Account Bank
shall make (or cause to be made) transfers from the EDC Accrual Account as
directed by EDC, pursuant to the Project Account Agreement.
4.05 IDB Accrual Account.
(a) Deposits into the IDB Accrual Account. In addition to the
deposits described in Section 4.08, the Borrower will make deposits into the IDB
Accrual Account in accordance with clause "third" of Section 4.03(b).
(b) Transfers from IDB Accrual Account Prior to an Event of
Default. Unless an Event of Default shall have occurred and be continuing, on
each Payment Date, the Borrower will transfer (or will cause to be transferred)
to IDB from the collected credit balance of the IDB Accrual Account an amount
equal to the lesser of (i) the Debt Service then due and payable to IDB pursuant
to Sections 3.01 and 3.02 of the IDB Loan Agreement and (ii) the aggregate
outstanding balance of the IDB Accrual Account.
(c) Transfers When an Event of Default is Continuing. At any
time that an Event of Default shall have occurred and be continuing, the Senior
Lenders may notify the Account Bank of the existence of such Event of Default
and, upon receipt of such notification by the
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Senior Lenders, the Account Bank shall make (or cause to be made) transfers from
the IDB Accrual Account as directed to IDB, pursuant to the Project Account
Agreement.
4.06 Cash Sweep Account.
(a) Deposits into the Cash Sweep Account. In addition to the
deposits described in Section 4.08, the Borrower shall make (or cause to be
made) the following deposits into the Cash Sweep Account:
(i) the deposit to be made pursuant to clause "tenth" of
Section 4.03(b); and
(ii) all Proceeds from any conveyance, sale, lease, transfer
or disposition of any business or Property of the Borrower, in
accordance with Section 8.05(d).
(b) Transfers from Cash Sweep Account Prior to an Event of
Default. Unless an Event of Default shall have occurred and be continuing:
(i) on each Interest Payment Date on which the conditions
described in Section 2.06(a) have occurred, the Borrower will transfer
(or will cause to be transferred) to the Senior Lenders from the
collected credit balance of the Cash Sweep Account the amount required
by Section 2.06(a); and
(ii) on December 31, 2002, in the event that a Debt Service
Reserve Deficiency exists on such day, the Borrower shall transfer to
the Debt Service Reserve Account, an amount equal to the lesser of (A)
the Debt Service Reserve Deficiency and (B) the collected credit
balance of the Cash Sweep Account.
(c) Transfers When an Event of Default is Continuing. At any
time that an Event of Default shall have occurred and be continuing, upon
notification by the Senior Lenders to the Account Bank of the existence of such
Event of Default, the Account Bank shall make (or cause to be made) such
transfers from the Cash Sweep Account pursuant to the Project Account Agreement
as are required by the Senior Lenders.
4.07 Debt Service Reserve Account.
(a) Deposits into Debt Service Reserve Account. In addition to
the deposits described in Section 4.08, deposits into the Debt Service Reserve
Account shall be made as provided in clause "eighth" of Section 4.03(b) or, at
the option of SRT, through equity investments or Subordinated Indebtedness or,
at the option of the Borrower, as provided in Section 4.06(b)(ii).
(b) Transfers from Debt Service Reserve Account Prior to an
Event of Default. Unless an Event of Default shall have occurred and be
continuing, the Borrower shall not transfer (or cause to be transferred) any
amount from the collected credit balance of the Debt Service Reserve Account
unless (i) such transfer shall constitute all or a portion of a payment by the
Borrower to the Senior Lenders which payment pays or prepays the Obligations in
full or (ii) the collected credit balance of the Debt Service Reserve Account is
greater than the Debt
Common Agreement
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Service Reserve Requirement, in which case the amount in excess of the Debt
Service Reserve Requirement shall be transferred to the Operating Account.
(c) Transfers from Debt Service Reserve Account When an Event
of Default is Continuing. At any time that an Event of Default shall have
occurred and be continuing, upon notification by the Senior Lenders to the
Account Bank of the existence of such Event of Default, the Account Bank shall
make (or cause to be made) transfers from the collected credit balance of the
Debt Service Reserve Account pursuant to the Project Account Agreement as are
required by the Senior Lenders.
4.08 Investment of Funds in Accounts. The aggregate cash
balance of the Accounts shall be invested in accordance with Sections 5 and 6 of
the Project Account Agreement. Interest and other amounts accruing in respect of
Permitted Investments and all proceeds resulting from the collection, sale,
transfer or disposal of Permitted Investments made with respect to funds on
deposit in any Account, shall be deposited into such Account and remain in such
Account until transferred pursuant to the provisions of this Section 4.
4.09 Reports to the Senior Lenders. The Borrower shall deliver
to each Senior Lender within 15 Business Days after the end of each calendar
month occurring during the term of this Agreement, (a) the bank statements
relating to the Accounts and the Borrower Accounts and (b) a report with respect
to the Accounts and the Operating Account, setting forth in reasonable detail
all deposits to and transfers from such Accounts and the Operating Account
during such month, including the date on which made, and the balances of and any
investments in such Accounts and the Operating Account at the end of such month;
provided, however, that (i) the Borrower shall not be required to provide such
report in connection with transfers pursuant to clause "first" of Section
4.03(b) but only total amounts transferred therefrom. The Borrower shall provide
any additional information or reports relating to the Accounts and the Borrower
Accounts and the transactions therein reasonably requested from time to time by
the Senior Lenders and (ii) the Borrower shall demonstrate to the satisfaction
of the Senior Lenders, by the fifth Business Day of each calendar month, that
the Borrower has made the deposits into the EDC Accrual Account and the IDB
Accrual Account pursuant to Section 4.03(b) third.
4.10 Currency Conversion. On any Business Day on which an
amount is transferred from a Borrower Account to an Account, to the Senior
Lenders, or otherwise in order to satisfy an obligation of the Borrower
denominated in Dollars, the Borrower shall (i) determine the best available rate
of exchange for converting Chilean Pesos to Dollars (whether from a Chilean
banking institution or the free foreign exchange market) in accordance with the
applicable Chilean laws and regulations regarding foreign exchange transactions,
(ii) calculate the amount of Chilean Pesos to be transferred using the rate of
exchange quoted by the entity as provided for in clause (i) of this Section 4.10
and (iii) purchase Dollars based on such calculation in clause (ii) of this
Section 4.10 not later than 12:30 p.m. in Santiago, Chile, on the applicable
date of determination (or, if no such quotation shall be available on such date,
on the date closest to such date of determination).
4.11 Changes to Accounts. The Borrower agrees not to move any
existing bank account, open any new bank account, or alter the flow of cash from
sub accounts to the main
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account from that in effect on the date hereof, in each case without the prior
written consent of the Senior Lenders.
Sections 5. Effectiveness vis-a-vis the Borrower. The
effectiveness of this Agreement vis-a-vis the Borrower is subject to the
satisfaction of Section 6.0l(g).
Section 6. Conditions.
6.01 Initial Disbursement. The effectiveness of the EDC Loan
Agreement, the effectiveness of this Agreement vis-a-vis EDC and the obligations
of IDB to make the initial disbursement under the IDB Loan Agreement are subject
to the conditions precedent that the Senior Lenders shall have received the
following documents or other evidence, each of which shall be satisfactory to
the Senior Lenders in form and substance:
(a) Opinions of Counsel.
(i) An opinion, dated the Closing Date, of Cruzat,
Ortuzar and Mackenna, Chilean counsel to the Transaction
Parties, in form and substance satisfactory to the Senior
Lenders (and the Borrower hereby instructs such counsel to
deliver such opinion to the Senior Lenders);
(ii) An opinion, dated the Closing Date, of Winthrop,
Stimson, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, special New York counsel to the
Transaction Parties, in form and substance satisfactory to the
Senior Lenders (and the Borrower hereby instructs such counsel
to deliver such opinion to the Senior Lenders);
(iii) An opinion, dated the Closing Date, of ▇▇▇▇▇▇,
Westwood & Riegels, British Virgin Islands counsel to BVI
Holdco and SR (BV) Holdings, in form and substance
satisfactory to the Senior Lenders (and the Borrower hereby
instructs such counsel to deliver such opinion to the Senior
Lenders);
(iv) An opinion, dated the Closing Date, of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Canadian counsel to SRT, in form and substance
satisfactory to the Senior Lenders (and the Borrower hereby
instructs such counsel to deliver such opinion to the Senior
Lenders);
(v) An opinion, dated the Closing Date, of ▇▇▇▇▇ y
Cia Ltda., Chilean counsel to the Senior Lenders, in form and
substance satisfactory to the Senior Lenders;
(vi) An opinion, dated the Closing Date, of Milbank,
Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special New York counsel to the
Senior Lenders, in form and substance satisfactory to the
Senior Lenders; and
(vii) An opinion, dated the Closing Date, of O'▇▇▇▇
▇▇▇▇▇▇▇ ▇'▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special British Virgin
Islands counsel to the Senior Lenders, in form and substance
satisfactory to the Senior Lenders.
Common Agreement
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(b) Organizational Documents. Certified copies of the charter,
by-laws and good standing certificates (or, in each case, equivalent
documents) of the Transactions Parties and of all corporate authority
for each Transaction Party (including, without limitation, board of
director resolutions and evidence of the incumbency, including specimen
signatures, of officers) with respect to the execution, delivery and
performance of such of the Transaction Documents to which such
Transaction Party is intended to be a party and each other document to
be delivered by such Transaction Party from time to time in connection
with the Transaction Documents and the Senior Loans (and each Senior
Lender may conclusively rely on such certificates until it receives
notice in writing from such Transaction Party to the contrary).
(c) Officer's Certificate. A certificate of the President, a
Vice President or a Financial Officer of each Transaction Party, dated
the Closing Date that:
(i) the representations and warranties made by such
Transaction Party in each Transaction Document to which it is
a party shall be true and complete on and as of the Closing
Date with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as
of such specific date); and
(ii) no Default shall have occurred and be
continuing.
(d) Financing Documents. Each Financing Document (other than
the Security Documents referred to in clause (f) below and the IDB
Notes referred to in Section 6.02(b)) duly executed and delivered by
each of the parties named as a proposed signatory thereto and in full
force and effect in accordance with its terms.
(e) Project Documents. An original or certified copy of each
Project Document, duly executed and delivered by the parties thereto
and in full force and effect in accordance with its terms and certified
by the Borrower as to completeness and authenticity.
(f) Security Documents. Each Security Document shall be (i)
duly executed by the party required thereby to execute or grant the
same and in full force and effect in accordance with its terms, and
(ii) recorded and filed in all jurisdictions wherein such recording and
filing are necessary or advisable to create and perfect the interests
of the Senior Lenders in, to and under the collateral referred to
therein, together with notarized (where required) originals thereof and
evidence of such filing and that all recording and stamp taxes have
been paid in full, and all other instruments to be recorded or filed or
delivered in connection with the Security Documents and all stock
certificates of the Borrower and each other Transaction Party whose
shares are collateral under a Security Document. The Borrower shall
deliver to the Senior Lenders a certified copy of the entry in its
shares record book evidencing the recordation of and the pledge on such
shares in favour of the Senior Lenders.
(g) Governmental Approvals. Originals (or copies certified by
the Borrower to be true, complete and authentic copies) of all
Governmental Approvals (including,
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without limitation, the Concessions) referred to as having been
obtained in Section 7.03 hereof and such other Governmental Approvals,
including all necessary foreign exchange approvals from the Central
Bank of Chile to enable the Borrower to make payments under the Senior
Loan Agreements, as are then necessary (in the determination of any
Senior Lender) under applicable laws and regulations in connection with
the transactions contemplated by the Transaction Documents, in each
case in full force and effect, and, if reasonably requested by any
Senior Lender, copies of all applications made for such Governmental
Approvals and all material correspondence received or sent in respect
of such Governmental Approvals or such applications therefor.
(h) Models, Budget, etc. The Agreed Financial Model and the
Business Plan for the Project accepted in all respects by the Senior
Lenders, examined and confirmed by Deloitte & Touche, Chartered
Accountants (or other independent public accountants acceptable to the
Senior Lenders) with only such qualifications and limitations as are
acceptable to the Senior Lenders in their reasonable discretion. The
formulas contained in the Agreed Financial Model shall be examined by
Deloitte & Touche, Chartered Accountants and such accounting firm
shall certify that the calculations are correct and take into account
the current applicable tax and accounting rules.
(i) Insurance. True and complete copies of binders for the
insurance policies required pursuant to Section 8.04 hereof together
with (i) a letter from the Borrower's insurance broker of recent date
prior to the Closing Date, stating with respect to each insurance
policy required to be in effect on the Closing Date pursuant to said
Section 8.04, that (A) such insurance is in full force and effect and
(B) all premiums theretofore due and payable thereon have been paid and
(ii) a report from the Independent Insurance Advisor on the adequacy
and completeness of such insurance coverage.
(j) Initial Equity Investment. The Borrower's Financial
Officer shall deliver a certificate, dated the Closing Date, (i)
attaching in form and substance satisfactory to the Senior Lenders,
copies of the Borrower's audited financial statements and balance
sheets as at December 31, 1998 demonstrating that SRT has made the
Initial Equity Investment in the Borrower, and (ii) certifying that
each of the financial statements delivered pursuant to clause (i) above
are true and complete copies and that the Initial Equity Investment
remains in the Borrower.
(k) Accounts. Notice from the Account Bank to the Senior
Lenders of the establishment of the Accounts.
(l) Process Agent Acceptance. A Process Agent Acceptance, duly
executed and delivered by the Process Agent to each Senior Lender. Each
Senior Lender shall also have received a letter from SRT, in which SRT
agrees to act as the agent for service of process for the Transaction
Parties for any action in Canada as contemplated in Section 4.05(b) of
the Transfer Restrictions Agreement.
(m) Tariff Decree. An original or certified copy of the decree
issued by Chile in favour of the Borrower regarding maximum access
tariffs permitted to be charged by the Borrower.
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(n) Environmental Matters. The Borrower shall have submitted,
in form and substance acceptable to the Senior Lenders, the final EHSM
Plan and a complete summary of the status of the EHSM Plan's
implementation as of a date not earlier than one-month prior to the
initial disbursement. The Borrower shall have submitted to the Senior
Lenders a copy of the environmental, health and safety annexes to any
construction contract to which the Borrower is a party for the
installation of towers, electric cables, posts and fences.
(o) Borrower's Independent Accountants. The Borrower shall
have executed and delivered the letter of authorization to the
Independent Accountants, in substantially the form of Exhibit F, and
the Borrower shall have delivered a copy of such letter to the Senior
Lenders.
(p) Other Documents. Such other documents as the Senior
Lenders may reasonably request.
6.02 Initial and Subsequent Disbursements. The obligation of
IDB to make any disbursement of the IDB Loan to the Borrower upon the occasion
of each disbursement under the IDB Loan Agreement (including the initial
disbursement under the IDB Loan Agreement) is subject to the further conditions
precedent that:
(a) IDB shall have received a duly executed Disbursement
Request (as defined in the IDB Loan Agreement), in connection with the
disbursement of such IDB Loan stating, inter alia, that:
(i) Representations and Warranties. Both immediately
prior to such disbursement of the IDB Loan and also after
giving effect thereto and to the intended use thereof, the
representations and warranties made by the Borrower in Section
7 hereof, and by each Transaction Party in any other
Transaction Document to which such Person is a party, shall be
true and correct on and as of the date of the disbursement of
the IDB Loan with the same force and effect as if made on and
as of such date (or it made solely as of an earlier date,
were true and correct as of such date);
(ii) No Default. Both immediately prior to such
disbursement of the IDB Loan and also after giving effect
thereto and to the intended use thereof, no Default or Event
of Default shall have occurred and be continuing under this
Agreement, and no similar event or events shall have occurred
and be continuing under any of the other Transaction
Documents, on the date of such disbursement of the IDB Loan;
(iii) Material Adverse Effect. Both immediately prior
to such disbursement of the IDB Loan and also after giving
effect thereto and to the intended use thereof, no event or
circumstance shall have occurred which has resulted in nor
would reasonably he expected to result in a Borrower Material
Adverse Effect or an SRT Material Adverse Effect;
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(iv) Use of Proceeds. The proceeds of such
disbursement of the IDB Loan are required to pay or repay
amounts then due and owing in connection with the uses of
proceeds permitted by Section 8.13 hereof; and
(v) Environmental Matters. The Borrower shall certify
(A) compliance with all Environmental Requirements by the
Project, the Borrower, and any Contractor in relation to the
Project, (B) that in relation to the Project there are no
adverse environmental, health, safety or social hazards or
impacts that have not been adequately mitigated or
compensated, (C) there are no Environmental Claims and no
material complaints associated with the Project or
Environmental Party, and (D) as necessary, a description of
any additional or new environmental or social liabilities,
including without limitation Environmental Claims, or material
complaints, or unforeseen environmental, health or safety
impacts or risks.
(b) IDB (or, if such IDB Note is to be deposited with the
Custodian, the Custodian) shall have received for the benefit of IDB:
(i) an IDB Note in the amount of such disbursement in accordance with
Section 2.06 of the IDB Loan Agreement, substantially in the form of
Exhibit A thereto, duly executed by an authorized representative of the
Borrower and each other signatory thereto and duly notarized before a
Chilean Notary Public, payable on demand, to the order of IDB in a face
amount equal to the disbursed amount and on which stamp tax has been
paid and such Notary Public shall have certified such payment; and (ii)
if such IDB Note is to be deposited with the Custodian, evidence of the
deposit of such IDB Note, duly executed and notarized as above
mentioned, with the Custodian and payment of all stamp tax imposed by
any relevant Governmental Body in connection with such execution and
notarization.
(c) IDB shall have received such evidence, in form and
substance satisfactory to IDB, that SRT is in compliance with SRT's
obligations under the Project Funds Agreement.
(d) for all disbursements other than the initial disbursement,
IDB shall have received a certificate, substantially in the form of
Exhibit D hereto, from the Independent Engineer confirming that the
proceeds of such disbursement of the IDB Loan are required to pay or
repay amounts then due and owing, or due and owing within six months of
the intended disbursement date, in connection with the uses of proceeds
permitted by Section 8.13 hereof.
(e) The Borrower shall have paid in full all outstanding and
invoiced fees and expenses of the Senior Lenders (including, without
limitation, fees and expenses which have been invoiced and are then
owed to consultants and attorneys retained to assist the Senior Lenders
in connection with the transactions contemplated hereby), if any, in
each case to the extent such fees and expenses are required to be paid
pursuant to this Agreement or the other Transaction Documents.
Each Disbursement Request by the Borrower under the IDB Loan Agreement shall
constitute a certification by the Borrower to the effect set forth in this
Section 6.02 (both as of the date of
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such notice and, unless the Borrower otherwise notifies IDB prior to the date of
such borrowing, as of the date of such borrowing).
Section 7. Representations and Warranties. The Borrower
represents and warrants to the Senior Lenders that:
7.01 Organization and Powers. The Borrower: (a) is a sociedad
anonima duly organized, validly existing and in good standing under the laws of
Chile; (b) has all requisite corporate or other power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could (either
individually or in the aggregate) have a Borrower Material Adverse Effect.
7.02 Authorization, Enforceability. The Borrower has all
necessary corporate power, authority and legal right to execute, deliver and
perform its Obligations under each of the Transaction Documents to which it is a
party; the execution, delivery and performance by the Borrower of each of the
Transaction Documents to which it is a party have been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required shareholder approvals); and this Agreement has been duly and validly
executed and delivered by the Borrower and constitutes, and the Notes and the
other Transaction Documents to which it is a party when executed and delivered
(in the case of the Notes, for value) will constitute, its legal, valid and
binding obligations, enforceable against the Borrower in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
7.03 Approvals. No Governmental Approvals (including any
exchange control approval), are necessary for the execution, delivery or
performance by the Borrower of this Agreement or any of the other Transaction
Documents to which it is a party or for the legality, validity or enforceability
hereof or thereof, except for (i) filings and recordings in respect of the Liens
created pursuant to the Security Documents and (ii) those Governmental Approvals
listed in Schedule II hereof. The Borrower knows of no condition, event or
circumstance that currently, or with the passage of time, could materially
interfere with its ability to perform its obligations under the Concessions or
its ability to collect revenues from its operations pursuant to the Concessions
and from its other assets. The Concessions have been duly executed and delivered
by SUBTEL and constitute the legal, valid and binding obligation of SUBTEL,
enforceable against SUBTEL in accordance with its terms. All Governmental
Approvals and other consents or approvals required in connection with the
granting, execution and delivery of the Concessions by SUBTEL have been duly
obtained or made, are in full force and effect and are not subject to appeal or
judicial, governmental or other review.
7.04 No Breach. None of the execution and delivery of this
Agreement, the Notes and the other Transaction Documents, the consummation of
the transactions herein and therein contemplated or compliance with the terms
and provisions hereof and thereof will
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conflict with or result in a breach of, or require any consent under, the
organizational documents of the Borrower, or any applicable law or regulation
(including, without limitation, regulations of the Central Bank of Chile), or
any order, writ, injunction or decree of any court or Governmental Body, or any
agreement or instrument to which the Borrower is a party or by which it or any
of its Property is bound or to which it is subject, or constitute a default
under any such agreement or instrument, or (except for the Liens created
pursuant to the Security Documents) result in the creation or imposition of any
Lien upon any Property of the Borrower pursuant to the terms of any such
agreement or instrument.
7.05 Financial Condition; No Material Adverse Change.
(a) Financial Condition. The Borrower has heretofore furnished
to the Senior Lenders the audited balance sheet of the Borrower as at December
31, 1998 and the related audited statements of income, retained earnings and
cash flows of the Borrower for the fiscal year ended on such date, with the
opinion thereon of Deloitte & Touche Sociedad de Auditores y Consultores
Limitada. All such financial statements are complete and correct and fairly
present the financial condition of the Borrower, as at such date and the results
of its operations for the fiscal year ended on such date, all in accordance with
generally accepted accounting principles and practices applied on a consistent
basis. The Borrower has on the date hereof no material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in such balance sheets as at such dates.
(b) No Material Adverse Change. Since December 31, 1998, there
has been no material adverse change in the financial condition, operations,
business or prospects taken as a whole of the Borrower from that set forth in
the financial statements as at such date referred to in paragraph (a) of this
Section 7.05.
(c) Year 2000 Issues. The Borrower has undertaken a review and
assessment of all areas within its business and operations that could be
adversely affected by its failure to be Year 2000 Compliant on a timely basis
and has developed and implemented a comprehensive, detailed program to become
Year 2000 Compliant and is presently Year 2000 Compliant and, on the basis of
inquiries made, reasonably believes that each supplier and vendor of the
Borrower that is of material importance to the financial well-being of the
Borrower has achieved Year 2000 Compliance, and will remain Year 2000 Compliant.
(d) Management Information System. The Borrower has installed
a management information system (i) satisfactory to enable the Borrower to
conduct the business of the Project as contemplated by the Agreed Financial
Model and (ii) similar in nature to the management information systems
customarily used by similar businesses.
7.06 Properties.
(a) Property Generally. The Borrower owns and has on the date
hereof good and marketable title (subject only to Liens permitted by Section
8.06) to the Properties shown to be owned in the most recent financial
statements referred to in Section 7.05 (other than Properties disposed of in the
ordinary course of business or otherwise permitted to be disposed of pursuant
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to Section 8.05). The Borrower owns and has on the date hereof good and
marketable title to, and enjoys on the date hereof peaceful and undisturbed
possession of, all Properties (subject only to Liens permitted by Section 8.06)
that are necessary for the operation and conduct of its businesses.
(b) Intellectual Property. The Borrower owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Borrower Material Adverse Effect.
7.07 Litigation. There are no legal or arbitral proceedings,
or any proceedings by or before any governmental or regulatory authority or
agency, now pending or (to the knowledge of the Borrower) threatened against the
Borrower that, if adversely determined, could (either individually or in the
aggregate) have a Borrower Material Adverse Effect.
7.08 Compliance with Laws and Agreements. The Borrower is in
compliance with all laws, regulations and orders of any Governmental Body
(including, without limitation, the Central Bank of Chile) applicable to it or
its Property, all Governmental Approvals, the Concessions and all indentures,
agreements and other instruments (including, without limitation, the agreements
referred to in Section 7.11 (a)) binding upon it or its Property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Borrower Material Adverse Effect.
7.09 Taxes. The Borrower has filed all material tax returns
that are required to be filed by it and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Borrower. The charges,
accruals and reserves on the books of the Borrower in respect of taxes and other
governmental charges are, in the opinion of the Borrower, adequate. The Borrower
has not given or been requested to give a waiver of the statute of limitations
relating to the payment of any or other impositions. All material taxes required
to be withheld by the Borrower have been timely and duly withheld and properly
paid to the appropriate Governmental Body.
7.10 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules, including, without limitation, the
Agreed Financial Model and the Business Plan, furnished in writing by or on
behalf of the Borrower to the Senior Lenders in connection with the negotiation,
preparation or delivery of this Agreement and the other Transaction Documents or
included herein or therein or delivered pursuant hereto or thereto, (a) have
been prepared in good faith, based upon assumptions believed by the Borrower to
be reasonable at the time they were made and (b) when taken as a whole do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by the Borrower to the Senior
Lenders in connection with this Agreement and the other Transaction Documents
and the transactions contemplated hereby and thereby will be true, complete and
accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or
certified. There is no fact known to the Borrower that could have a
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Borrower Material Adverse Effect that has not been disclosed herein, in the
other Transaction Documents or in a report, financial statement, exhibit,
schedule, disclosure letter or other writing furnished to the Senior Lenders for
use in connection with the transactions contemplated hereby or thereby.
7.11 Material Agreements and Liens.
(a) Material Agreements. Part A of Schedule I is a complete
and correct list of each credit agreement, loan agreement, indenture, purchase
agreement, guarantee, letter of credit or other arrangement providing for or
otherwise relating to any Indebtedness (other than the Indebtedness under the
Senior Loan Agreements) or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, the Borrower outstanding on the date
hereof the aggregate principal or face amount of which equals or exceeds (or may
equal or exceed) $ 100,000, and the aggregate principal or face amount
outstanding or that may become outstanding under each such arrangement is
correctly described in Part A of Schedule I. Schedule I correctly describes all
secured and unsecured Indebtedness of the Borrower outstanding, or for which the
Borrower has commitments, on the date of this Agreement, and identifies the
collateral securing any secured Indebtedness. No event has occurred and no
condition exists with respect to any Indebtedness of the Borrower or any
instrument or agreement relating thereto that, with the giving of notice, the
passing of time, or both, could reasonably be expected to permit one or more
Persons to cause such Indebtedness to become due before its stated maturity or
before its regularly scheduled dates of payment and, except as set forth on
Schedule I, no instrument or agreement applicable to or binding on the Borrower
or any Affiliate contains any restrictions on the incurrence by any such Person
of additional Indebtedness hereunder except for the Trust Indenture and the
commitment letters for the banking arrangements with Royal Bank of Canada and
Canadian Imperial Bank of Commerce.
(b) Liens. Part B of Schedule I is a complete and correct list
of each Lien securing Indebtedness of any Person outstanding on the date hereof
the aggregate principal or face amount of which equals or exceeds (or may equal
or exceed) $50,000 and covering any Property of the Borrower (other than the
Liens securing the Senior Loans), and the aggregate Indebtedness secured (or
that may be secured) by each such Lien and the Property covered by each such
Lien is correctly described in Part B of Schedule I.
7.12 Capitalization. The authorized capital stock of the
Borrower consists, on the date hereof, of an aggregate of 121,074 shares of
common stock with no par value, duly and validly issued and outstanding, each of
which shares is fully paid by the holder thereof and nonassessable. As of the
date hereof 99.8416% of such issued and outstanding shares of common
stock are owned beneficially and of record by Chilean Holdco and 0.1584% of such
issued and outstanding shares of preferred stock are owned beneficially and of
record by BVI Holdco. As of the date hereof, there are no outstanding equity
rights with respect to the Borrower and there are no outstanding obligations of
the Borrower to repurchase, redeem, or otherwise acquire any shares of capital
stock of the Borrower nor are there any outstanding obligations of the Borrower
to make payments to any Person, such as "phantom stock" payments, where the
amount thereof is calculated with reference to the fair market value or equity
value of the Borrower.
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7.13 Legal Form. Each of the Financing Documents is in proper
legal form under the law of Chile for the enforcement thereof against the
Borrower under such law, and if each of the Financing Documents were stated to
be governed by such law, they would constitute legal, valid and binding
obligations of the Borrower under such law, enforceable in accordance with their
respective terms. All formalities required in Chile for the validity and
enforceability of each of the Financing Documents (including, without
limitation, any necessary registration, recording or filing with any court or
other authority in Chile) have been accomplished, and no Covered Taxes are
required to be paid to Chile, or any political subdivision thereof or therein,
and no notarization is required, for the validity and enforceability thereof.
7.14 Ranking. This Agreement and the other Financing Documents
and the obligations evidenced hereby and thereby are and will at all times be
direct and unconditional general obligations of the Borrower, and rank and will
at all times rank in right of payment at least pari passu with all other
Indebtedness of the Borrower, whether now existing or hereafter outstanding.
There exists no Lien (including any Lien arising out of any attachment, judgment
or execution), nor any segregation or other preferential arrangement of any
kind, on, in or with respect to any of the Property or revenues of the Borrower,
except as expressly permitted by Section 8.06.
7.15 Security Interests. At all times from and after the
Closing Date and subject to any qualifications expressed in the legal opinion
delivered pursuant to Section 6.01(a)(i), the provisions of the Security
Documents are effective to create, in favour of the Senior Lenders party
thereto, a legal, valid and enforceable Lien on and security interest in all the
Collateral purported to be covered thereby. The following actions will be taken
on or before the Closing Date:
(a) with respect to the Collateral secured by (i) all of the
Chilean Security Documents, each such document shall be executed in the
form of a public deed; (ii) the Chilean Pledge Agreements, each such
agreement shall be registered in the applicable shareholder's registry;
and (iii) the Pledges Without Conveyance on Chattel Property shall be
appropriately published in accordance with the requirements of Chilean
law;
(b) with respect to:
(i) the Collateral secured by the SR (BV) Holdings
Pledge Agreement:
(A) the said agreement shall be executed by
all parties thereto;
(B) particulars of the said agreement shall
be entered in a Register of Mortgages and Charges for
SR (BV) Holdings as a first charge after the existing
charges on the charged asset have been noted as
having been discharged;
(C) the Share Register for BVI Holdco shall
be endorsed with particulars of the said agreement;
(D) the Register of Mortgages and Charges
for SR (BV) Holdings shall be lodged for registration
with the BVI Companies' Registry;
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(E) the Share Register for BVI Holdco shall
be lodged for registration with the BVI Companies
registry; and
(F) appropriate resolutions relating to the
above have been passed by SR (BV) Holdings and BVI
Holdco; and
(ii) such of the Chilean Security Documents as are to
be executed by SR (BV) Holdings or BVI Holdco:
(A) the particulars of any Chilean Security
Document shall be entered in the Register of
Mortgages and Charges of SR (BV) Holdings or BVI
Holdco, as the case may be, after the existing
charges on the relevant charged asset have been noted
as having been discharged;
(B) the said Register of Mortgages and
Charges shall be lodged for registration with the BVI
Companies Registry; and
(C) appropriate resolutions relating to the
above have been passed by SR (BV) Holdings and BVI
Holdco; and
(c) all other necessary and appropriate action will have been
taken, so that each such Security Document will create a perfected Lien
on and security interest in all such Collateral, prior and superior to
all other Liens and Permitted Liens.
7.16 Commercial Activity; Absence of Immunity. The Borrower is
subject to civil and commercial law with respect to its obligations under this
Agreement and each of the other Financing Documents to which it is a party. The
execution, delivery and performance by the Borrower of this Agreement and each
of the other Financing Documents to which it is a party constitute private and
commercial acts rather than public or governmental acts. Neither the Borrower,
nor any of its Properties or revenues, is entitled to any right of immunity in
any jurisdiction from suit, court jurisdiction, judgment, attachment (whether
before or after judgment), set-off or execution of a judgment or from any other
legal process or remedy relating to the obligations of the Borrower under this
Agreement or any of the other Financing Documents to which it is a party.
7.17 Insurance. The Borrower maintains (a) the insurance
coverage in compliance with Section 8.04 and Exhibit A and (b) such other
insurance policies, with insurers that the Borrower reasonably believes are
financially sound and reputable, insurance with respect to its business and
properties to the extent that property of similar characteristics to that of the
Borrower is usually so insured (whether within or outside Chile) in accordance
with good business practice.
7.18 Business Purpose. The Borrower has not engaged in any
business other than the development, construction, completion, ownership and
operation of the Project pursuant to the Project Documents.
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7.19 Environmental Matters.
(a) There are no facts, circumstances, conditions or
occurrences regarding the Project that could reasonably be expected (i) to form
the basis of an Environmental Claim arising with respect to the development,
construction, ownership or operation of the Project against the Project or any
Environmental Party, that individually or in the aggregate could result in a
Borrower Material Adverse Effect, (ii) to cause the Project to be subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law, (iii) to require the filing or recording of any notice,
registration, permit or disclosure documents under any Environmental Law or (iv)
to have a material negative impact on the environment.
(b) There are no past, pending or, to the best knowledge of
the Borrower after due inquiry, threatened Environmental Claims or material
complaints arising with respect to the development, construction, ownership or
operation of the Project against the Project or any Environmental Party.
(c) Hazardous Materials have not at any time been generated,
used, treated, recycled, stored on or transported to or from or Released at, on,
under or from the Project other than in compliance at all times with all
applicable Environmental Laws.
(d) There are not now and, to the best knowledge of the
Borrower after due inquiry, never have been any underground storage tanks
located on any Property of the Borrower, there is no asbestos contained in,
forming part of, or contaminating any part of the Project, and no
polychlorinated biphenyls ("PCBs") are used, stored, located at or contaminate
any part of the Project.
(e) There have been no environmental, social, or health and
safety investigations, studies, audits, reviews or other analyses conducted by
or on behalf of or which are in the possession of the Borrower or SRT in
relation to the Project which have not been delivered to the Senior Lenders. The
Borrower is not aware of any fact or circumstance that would contravene or
conflict with in any material fashion any conclusion, finding or assumption
contained in the Environmental Reports.
(f) The Borrower is not aware of any evidence of soil or
groundwater contamination at the Project sites.
(g) There are no past or existing non-compliances with the
Environmental Requirements related to the Project, Borrower, Properties or
Contractors.
7.20 Qualification. It is not necessary under the applicable
law of Chile (a) in order to enable the Senior Lenders to enforce their rights
hereunder and under the other Financing Documents or (b) solely by reason of the
execution, delivery and performance of this Agreement and the other Financing
Documents (and the consummation of the transactions contemplated hereby and
thereby), that any Senior Lender or any Participant (as defined in the IDB Loan
Agreement) should be licensed, qualified or otherwise authorized to carry on
business in Chile.
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7.21 Domicile. Under the applicable law of Chile, no Senior
Lender nor any Participant (as defined in the IDB Loan Agreement) is or will be
deemed to be resident, domiciled or carrying on business in Chile solely by
reason only of the execution, delivery, performance and/or enforcement of this
Agreement and the other Financing Documents.
7.22 Choice of Law. Under the laws of Chile, the choice of New
York law to govern this Agreement and the other Financing Documents containing a
provision stating that New York governs such document is valid and binding.
Under the procedural law applicable to procedures adhered to by Chilean courts,
the consent to the jurisdiction of courts of the State of New York or of the
Province of Ontario, Canada, or of the courts of the United States of America
for the Southern District of New York, by the Borrower in Section 10.08 is valid
and binding and not subject to revocation, and service of process effected in
the manner set forth in Section 10.08 will be effective to confer personal
jurisdiction over the Borrower in such courts.
Section 8. Covenants of the Borrower. The Borrower covenants
and agrees with the Senior Lenders that, so long as any Commitment (as defined
in either Senior Loan Agreement) or any Senior Loan is outstanding and until
payment in full of all amounts payable by the Borrower hereunder or under any
Financing Document:
8.01 Financial Statements and Other Information. The Borrower
shall deliver to the Senior Lenders:
(a) as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower, statements of
income, retained earnings and cash flows of the Borrower for such
fiscal year and the related balance sheet of the Borrower as at the end
of such fiscal year, and accompanied by an opinion thereon of the
Independent Accountants, which opinion shall state that such financial
statements fairly present the financial condition and results of
operations of the Borrower as at the end of, and for, such fiscal year
in accordance with both Chilean GAAP and Canadian GAAP, and a statement
of such accountants to the effect that, in making the examination
necessary for their opinion, nothing came to their attention that
caused them to believe that the Borrower was not in compliance with
Sections 8.03(e), 8.07, 8.09 and 8.10, insofar as such Sections relate
to accounting matters:
(b) as soon as available and in any event within 45 days after
the end of each quarterly fiscal period of each fiscal year of the
Borrower, unaudited interim statements of income, retained earnings and
cash flows of the Borrower for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and
the related balance sheet of the Borrower as at the end of such period,
accompanied by a certificate of a Financial Officer of the Borrower,
which certificate shall (i) state that such financial statements fairly
present the financial condition and results of operations of the
Borrower in accordance with Canadian GAAP, consistently applied, as at
the end of, and for, such period (subject to normal year-end audit
adjustments), (ii) state that no Default has occurred and is continuing
(or if any Default has occurred and is continuing, describing the same
in reasonable detail and describing the action that the Borrower has
taken or proposes to take with respect thereto) and (iii) set forth in
reasonable detail the computations necessary to determine whether the
Borrower is in compliance with
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Sections 8.07, 8.09, 8.10, as of the end of the respective quarterly
fiscal period or fiscal year;
(c) as soon as available and in any event (i) within 30 days
after the end of each calendar month (or, if the end of such calendar
month is a Quarterly Date, within 45 days after such Quarterly Date)
unaudited interim statements of income, retained earnings and cash
flows of the Borrower for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and
the related balance sheet of the Borrower as at the end of such period,
and (ii) within 30 days after the end of each calendar month a progress
report detailing, inter alia, subscriber numbers by line type, minutes
of use by line type, revenues by source, and Capital Expenditures
substantially in the form of Exhibit B hereto and explaining any
variances to the Agreed Financial Model;
(d) as soon as available and in any event within 30 days after
the end of each calendar year, compliance reports certifying compliance
with its environmental, regulatory and other legal compliance of all
applicable statutes;
(e) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, that the
Borrower shall have filed with the Securities and Exchange Commission
(or any governmental agency substituted therefor) or any national
securities exchange;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, or to holders of Subordinated Indebtedness
generally, copies of all financial statements, reports and proxy
statements so mailed and, prior to any meeting of the shareholders of
the Borrower, a copy of the agenda for such meeting; and
(g) from time to time such other information regarding the
financial condition, operations, business or prospects of the Borrower,
or compliance with the terms of this Agreement and the other Financing
Documents, as the Senior Lenders may reasonably request.
8.02 Notices of Material Events. The Borrower will furnish the
following to the Senior Lenders in writing:
(a) immediately after the Borrower knows or has reason to
believe that any Default or Event of Default has occurred, notice of
such Default or Event of Default;
(b) immediate notice of all legal or arbitral proceedings, and
of all proceedings by or before any governmental or regulatory
authority or agency, and of any material development in respect of such
legal or other proceedings, affecting the Borrower;
(c) prompt notice of changes to the Project (including,
without limitation, any notice required pursuant to Section 8.04(e)(i):
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(d) within five days of the earlier of (i) Borrower's receipt
thereof and (ii) SUBTEL's sending thereof, notice and copies of any
material communication with SUBTEL concerning the Concessions;
(e) promptly following receipt thereof by the Borrower, any
management letter or other communication sent by the Independent
Accountants in relation to the Borrower's financial, accounting and
other systems, management or accounts; and
(f) prompt notice of any other development that results in, or
could reasonably be expected to result in, a Borrower Material Adverse
Effect or an SRT Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
8.03 Existence, Compliance, Records, Inspection, Etc. The
Borrower will:
(a) preserve and maintain its legal existence and all of its
Governmental Approvals, material rights, privileges, licenses and
franchises, including, without limitation, its rights under the
Concessions (provided that nothing in this Section 8.03 shall prohibit
any transaction expressly permitted under Section 8.05);
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of any Governmental Body if failure to
comply with such requirements could (either individually or in the
aggregate) have a Borrower Material Adverse Effect;
(c) pay and discharge all obligations, taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such obligations, tax, assessment,
charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained;
(d) maintain all of its Properties used or useful in its
business in good working order and condition, ordinary wear and tear
excepted;
(e) maintain a satisfactory management information system and
keep adequate records and books of account, in which complete entries
will be made in accordance with generally accepted accounting
principles consistently applied, and maintain the Independent
Accountants;
(f) permit representatives of the Senior Lenders, during
normal business hours, to examine, copy and make extracts from its
books and records, to inspect any of its Properties, and to discuss its
business and affairs with its officers and the Independent Accountants,
all to the extent reasonably requested by the Senior Lenders; and
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(g) maintain its office located at the address set forth in
Section 10.01 (a) as its registered domicile and principal place of
business until 60 days after written notice to the Senior Lenders of
any change of such address.
8.04 Insurance.
(a) Insurance by the Borrower. The Borrower shall procure at
its own expense and maintain in full force and effect at all times on and after
the Closing Date, and continuing throughout the term of this Agreement insurance
policies with responsible insurance companies authorized to do business in Chile
with (i) a Best Insurance Reports rating of "A-" or better and an financial size
category of "IX" or higher, (ii) or if not rated by Best a Standard & Poor's
financial strength rating of "BBB" or higher, (iii) or other companies
acceptable to the Senior Lenders. Insurance policies shall be maintained with
limits and coverage provisions customary for companies of the size and
conducting business similar to that of the Borrower, but in no event less than
the limits and coverage provisions set forth in Exhibit A to this Agreement, the
terms of such Exhibit A shall be those agreed by the Borrower and Senior Lenders
from time to time.
(b) Endorsements. All policies of insurance to be maintained
by the Borrower shall provide for waivers of subrogation in favour of the Senior
Lenders. All policies of liability insurance required to be maintained by the
Borrower under Exhibit A, other than employer's liability, shall be endorsed as
follows:
(i) To provide a severability of interest or cross liability
clause;
(ii) To name the Senior Lenders as additional insureds; and
(iii) That the insurance shall be primary and not excess to or
contributing with any insurance or self-insurance maintained by the
additional insureds.
(c) Waiver of Subrogation. The Borrower hereby waives any and
every claim for recovery from the Senior Lenders for any and all loss or damage
covered by any of the insurance policies to be maintained under this Agreement
to the extent that such loss or damage is recovered under any such policy.
Inasmuch as the foregoing waiver will preclude the assignment of any such claim
to the extent of such recovery, by subrogation (or otherwise), to an insurance
company (or other Person), the Borrower shall give written notice of the terms
of such waiver to each insurance company which has issued, or which may issue in
the future, any such policy of insurance (if such notice is required by the
insurance policy) and shall cause each such insurance policy to be properly
endorsed by the issuer thereof to, or to otherwise contain one or more
provisions that, prevent the invalidation of the insurance coverage provided
thereby by reason of such waiver.
(d) Amendment of Requirements. The Senior Lenders may at any
time amend the requirements and approved insurance companies of this Section
8.04 due to (i) new information not known by the Senior Lenders on the Closing
Date or (ii) changed circumstances after the Closing Date which in the
reasonable judgment of the Senior Lenders either renders such coverage
materially inadequate or materially reduces the financial ability of the
approved insurance companies to pay claims.
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(e) Conditions.
(i) The Borrower shall promptly notify the Senior Lenders of
any loss in excess of $500,000.
(ii) All policies of property, business interruption,
installation and transportation insurance shall provide that the
proceeds of such policies shall be payable solely to the Senior Lenders
pursuant to a standard first mortgage endorsement substantially
equivalent to the Lenders Loss Payable Endorsement 438BFU or ISO
endorsement CP12181091, without contribution; provided that if the
proceeds thereof are less than $500,000, such proceeds shall be paid to
the Borrower. The Senior Lenders shall have the right to join the
Borrower in adjusting any loss in excess of $500,000. All policies
(other than in respect to liability or workers compensation insurance)
shall insure the interests of the Senior Lenders regardless of any
foreclosure relating to the Project.
(iii) A loss under any property, business interruption,
installation or transportation insurance shall be adjusted with the
insurance companies, including the 'filing in a timely manner of
appropriate proceedings, by the Borrower, subject to the approval of
the Senior Lenders if such loss is in excess of $500,000. In addition,
the Borrower may in its reasonable judgment consent to the settlement
of any loss, provided that in the event that the amount of the loss
exceeds $500,000 the terms of such settlement is concurred with by the
Senior Lenders.
(iv) All policies of insurance required to be maintained by
the Borrower shall be endorsed so that if at any time should they be
assigned, canceled, modified or coverage be reduced which affects the
interests of the Senior Lenders, such cancellation or reduction shall
not be effective as to the Senior Lenders for 60 days, except for
nonpayment of premium which shall be for 10 days, after receipt by the
Senior Lenders of written notice from such insurer of such cancellation
or reduction.
(v) All policies of property insurance required to be
maintained by the Borrower shall (A) not include any annual or term
aggregate limits of liability or clause requiring the payment of
additional premium to reinstate the limits after loss except as regards
the insurance applicable to the perils of flood, earth movement,
sabotage and terrorism, (B) shall include the Senior Lenders as
additional insured as its interest may appear and (C) include a clause
requiring the insurer to make final payment on any claim within 45 days
after the submission of proof of loss and its acceptance by the
insurer.
(f) Evidence of Insurance. On or prior to the Closing Date,
and on an annual basis prior to each policy anniversary, the Borrower shall
furnish the Senior Lenders with (i) approved certification of all required
insurance and (ii) a schedule of the insurance policies held by or for the
benefit of the Borrower and required to be in force by the provisions of this
Section 8.04. Such certification shall be executed by each insurer or by an
authorized representative of each insurer where it is not practical for such
insurer to execute the certificate itself. Such certification shall identify
underwriters, the type of insurance, the insurance limits and the policy term
and shall specifically list the special provisions enumerated for such insurance
required by this Section 8.04. Upon request, the Borrower will promptly furnish
the
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Senior Lenders with copies of all insurance policies, binders and cover notes or
other evidence of such insurance relating to the insurance required to be
maintained by the Borrower. The schedule of insurance shall include the name of
the insurance company, policy number, type of insurance, major limits of
liability and expiration date of the insurance policies.
(g) Reports. Concurrently with the furnishing of the
certification referred to in Section (f), the Borrower shall furnish the Senior
Lenders with a report of an independent broker, signed by an officer of the
broker, stating that in the opinion of such broker, the insurance then carried
or to be renewed is in accordance with the terms of Exhibit A hereto and
attaching an updated copy of the schedule of insurance required by Section (f)
above. In addition the Borrower will advise the Senior Lenders in writing
promptly of any default in the payment of any premium and of any other act or
omission on the part of the Borrower which may invalidate or render
unenforceable, in whole or in part, any insurance being maintained by the
Borrower pursuant to this Section 8.04.
(h) Failure to Maintain Insurance. In the event the Borrower
fails to take out or maintain the full insurance coverage required by this
Section 8.04, the Senior Lenders, upon 30 days' prior notice (unless the
aforementioned insurance would lapse within such period, in which event notice
should be given as soon as reasonably possible) to the Borrower of any such
failure, may (but shall not be obligated to) take out the required policies of
insurance and pay the premiums on the same. All amounts so advanced thereof by
the Senior Lenders shall become an additional Obligation of the Borrower to the
Senior Lenders, and the Borrower shall forthwith pay such amounts to the Senior
Lenders, together with interest thereon at the applicable Post Default Rate (as
defined in the Senior Loan Agreement applicable to the relevant Senior Lender)
from the date so advanced.
(i) No Duty of Lender to Verify or Review. No provision of
this Section 8.04 or any provision of the Senior Loan Agreements or any other
Transaction Document shall impose on the Senior Lenders any duty or obligation
to verify the existence or adequacy of the insurance coverage maintained by the
Borrower, nor shall the Senior Lenders be responsible for any representations or
warranties made by or on behalf of the Borrower to any insurance company or
underwriter. Any failure on the part of any Senior Lender to pursue or obtain
the evidence of insurance required by this Agreement from the Borrower and/or
failure of any Senior Lender to point out any non-compliance of such evidence of
insurance shall not constitute a waiver of any of the insurance requirements in
this Agreement.
8.05 Prohibition of Fundamental Changes. The Borrower will
not:
(a) enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution);
(b) amend or otherwise modify any provision of any of its
charter, by-laws or equivalent documents in any manner which would be
likely to result in a Borrower Material Adverse Effect, without the
prior written consent of the Senior Lenders;
(c) acquire any business or Property from, or capital stock
of, or be a party to any acquisition of, any Person except for
purchases of inventory and other Property to be sold
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or used in the ordinary course of business and Investments permitted
under Section 8.08(c); and
(d) without the prior written consent of the Senior Lenders,
convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or a substantial part of
its business or Property, whether now owned or hereafter acquired
(including, without limitation, receivables and leasehold interests,
but excluding (i) obsolete or worn-out Property, tools or equipment no
longer used or useful in its business so long as the amount thereof
sold in any single fiscal year by the Borrower shall not have a fair
market value in excess of $500,000 and (ii) any inventory or other
Property sold or disposed of in the ordinary course of business and on
ordinary business terms). The Borrower shall deposit into the Cash
Sweep Account all proceeds from any such conveyance, sale, lease,
transfer or disposition.
8.06 Liens.
(a) The Borrower will not create, incur, assume or suffer to
exist any Lien upon any of its Property, whether now owned or hereafter
acquired, except (collectively, "Permitted Liens"):
(i) Liens created pursuant to the Security Documents;
(ii) Liens in existence on the date hereof and listed in Part
B of Schedule I (or, to the extent not meeting the minimum thresholds
for required listing on Schedule I pursuant to Section 8.07, in an
aggregate amount not exceeding $250,000);
(iii) Liens imposed by any Governmental Body for taxes,
assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if, adequate reserves with respect
thereto are maintained on the books of the Borrower in accordance with
Canadian GAAP and Chilean GAAP;
(iv) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business that are not overdue for a period of more than 30 days or that
are being contested in good faith and by appropriate proceedings and
Liens securing judgments but only to the extent for an amount and for a
period not resulting in an Event of Default under clause (k) of Section
9;
(v) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(vi) cash deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business;
(vii) easements, rights-of-way. restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Property or minor imperfections in title
thereto that, in the aggregate, are not material in amount, and that do
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not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business
of the Borrower; and
(viii) Liens upon real and/or tangible personal Property
acquired after the date hereof (by purchase, construction or
otherwise) by the Borrower, each of which Liens either (A) existed on
such Property before the time of its acquisition and was not created
in anticipation thereof or (B) was created solely for the purpose of
securing Indebtedness representing, or incurred to finance, refinance
or refund, the cost (including the cost of construction) of such
Property; provided that (i) no such Lien shall extend to or cover any
Property of the Borrower other than the Property so acquired and
improvements thereon and (ii) the principal amount of Indebtedness
secured by any such Lien shall at no time exceed 80% of the fair
market value (as determined in good faith by a Financial Officer of
the Borrower) of such Property at the time it was acquired (by
purchase, construction or otherwise).
(b) The Borrower will not create, incur or suffer to exist any
mandate on any VAT refund owed to the Borrower.
8.07 Indebtedness. The Borrower will not create, incur or
suffer to exist any Indebtedness other than the following Indebtedness
(collectively, "PERMITTED INDEBTEDNESS"):
(a) Indebtedness to the Senior Lenders under the Senior Loan
Agreements;
(b) Indebtedness outstanding on the date hereof and listed in
Part A of Schedule I (or, to the extent not meeting the minimum
thresholds for required listing on such Schedule I pursuant to Section
7.11, in an aggregate amount not exceeding $100,000);
(c) Subordinated Indebtedness: and
(d) additional Indebtedness of the Borrower (including,
without limitation, Capital Lease Obligations and other Indebtedness
secured by Liens permitted under Section 8.06(viii)) up to but not
exceeding $500,000 at any one time outstanding; provided that at no
time during the term of the Senior Loan Agreements may the Borrower
Guarantee obligations of other Persons unless (i) issued in the
ordinary course of business and (ii) in an aggregate amount not
exceeding $100,000.
8.08 Investments. The Borrower will not make or permit to
remain outstanding any Investments except:
(a) investments outstanding on the date hereof;
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Hedging Agreements entered into in the ordinary course of
the Borrower's financial planning and not for speculative purposes; and
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(e) investments consisting of security deposits with
utilities and other like Persons made in the ordinary course of
business.
8.09 Restricted Payments. The Borrower will not declare or
make any Restricted Payment prior to the occurrence of Financial Completion.
The Borrower may declare and make Restricted Payments within five days of each
Quarterly Date after the occurrence of Financial Completion, in cash, subject
to the satisfaction of each of the following conditions on the date of such
Restricted Payment and after giving effect thereto:
(a) no Default (including, without limitation, any Default in
connection with Section 8.10) shall have occurred and be continuing;
(b) such Restricted Payments are made from Surplus Cash not
required to be deposited in the Cash Sweep Account in accordance with
clause "tenth" of Section 4.03(b) hereof;
(c) the Debt Service Coverage Ratio for the preceding four
quarterly periods, must be at least (i) 1.4, for any such Restricted
Payment made during the period from Financial Completion to (but
excluding) the fourth Principal Payment Date and (ii) 1.5, for any such
Restricted Payment made during the period commencing on the fourth
Principal Payment date to the date on which the Obligations are paid in
full; and
(d) the Borrower shall have delivered to the Senior Lenders,
at least five Business Days prior to the date of the proposed
Restricted Payment, a certificate of a Financial Officer of the
Borrower setting forth computations in reasonable detail demonstrating
satisfaction of the foregoing conditions as at the date of such
certificate.
8.10 Certain Financial Covenants.
(a) Current Ratio. The Borrower will not permit the ratio of
its current assets (excluding prepaid expenses) to its current liabilities
(including current maturities of Long-Term Debt) to be less than 1 to 1 when
calculated on March 31, 2001 and each Quarterly Date thereafter. For purposes
hereof, the terms "current assets" and "current liabilities" shall have the
respective meanings assigned to them by Canadian GAAP.
(b) Debt Service Coverage Ratio. The Borrower will not permit
the Debt Service Coverage Ratio to be less than (i) 1.15 to 1 when calculated on
June 30, 2001 and each following Quarterly Date to and including December 31,
2002 and (ii) 1.20 to 1 when calculated on March 31, 2003 and each Quarterly
Date thereafter.
(c) EBITDA. Commencing on the date hereof and calculated on
each Quarterly Date thereafter, the Borrower will not permit its EBITDA for the
period of two consecutive fiscal quarters ending on the date indicated under the
"Quarter Ending" column of Schedule IV to fall below the amount indicated in the
"Covenant" column corresponding to such date in Schedule IV.
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(d) Receivables Turnover. Commencing on the date hereof and
calculated on each Quarterly Date thereafter and for the immediately preceding
12 months, the Borrower will not permit its Receivables Turnover to be less than
4 to 1.
(e) Total Debt to Equity. Commencing on the date hereof and
calculated on each Quarterly Date thereafter, the Borrower shall not permit the
ratio of Total Debt to Equity to be more than 1 to 1.
(f) Recurring Revenues. Commencing on the date hereof, the
Borrower will maintain at least the respective Recurring Revenues on each of the
respective Quarterly Dates set out in Schedule V.
(g) Maintenance Costs. The Borrower shall not incur
Maintenance Costs in excess of $144,000 in any calendar year less the amount of
insurance proceeds received with respect to any corresponding damage and applied
to repair or replace all or part of the Project.
8.11 Subordinated Indebtedness. Other than as provided in
Section 8.13 or unless made from the proceeds of a Restricted Payment pursuant
to Section 8.09, the Borrower will not purchase, redeem, retire or otherwise
acquire for value, or set apart any money for a sinking, defeasance or other
analogous fund for the purchase, redemption, retirement or other acquisition of,
or make any voluntary payment or prepayment of the principal of or interest on,
or any other amount owing in respect of, any Subordinated Indebtedness, until
all of the Borrower's Obligations have been paid in full. The Borrower will not
consent to any modification, supplement or waiver of any of the provisions of
any agreement, instrument or other document evidencing or relating to
Subordinated Indebtedness without the prior consent of the Senior Lenders.
8.12 Lines of Business. The Borrower will not engage, or incur
expenditures for fixed and other non-current assets, in any line or lines of
business activity other than the business of the Project.
8.13 Use of Proceeds.
(a) The Borrower will use the proceeds of the Senior Loans,
within 180 days after the disbursement thereof, solely to:
(i) finance Project Costs incurred since November 23, 1998;
(ii) repay and/or repurchase, as the case may be, the Initial
Equity Investment made by SRT to the Borrower in an amount equal to (A)
the aggregate amount (in Dollars) of SRT's equity investment in the
Borrower as of such repayment date less (B) $52,000,000; provided that
the aggregate amount paid to SRT pursuant to this clause (a)(ii) shall
at no time while any Senior Loan remains outstanding exceed
$20,000,000;
(iii) pay the fees and expenses incurred by or on behalf of
the Borrower in connection with the development of the Project and the
consummation of the transactions
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contemplated by the Transaction Documents, including financial,
accounting, legal, surveying and consulting fees;
(iv) pay taxes of the Borrower incurred in connection with the
Project prior to the Commitment Termination Date (as defined in the IDB
Loan Agreement);
(v) fund the Debt Service Reserve Account;
(vi) pay insurance premiums with respect to the insurance and
reinsurance required pursuant to Section 8.04; and
(vii) pay any interest to the Senior Lenders pursuant to the
Senior Loan Agreements accruing prior to the earlier of the Completion
of Network Construction and the Commitment Termination Date (as defined
in the IDB Loan Agreement).
(b) In addition to the permitted uses of proceeds described in
the preceding clause (a), the Borrower will use the proceeds of the IDB Loan
solely to:
(i) prepay from the initial disbursement thereof, the EDC
Loans in an amount equal to the aggregate outstanding principal amount
of the EDC Loans in excess of $25,000,000; and
(ii) pay or reimburse only those expenditures originating in
the territories of IDB member countries (as listed in Schedule III,
such member countries of IDB, collectively, the "IDB Members") or for
goods produced in or services supplied from such territories.
(c) Without limiting or otherwise affecting the obligations of
the Borrower hereunder or under the other Transaction Documents, the Senior
Lenders shall not be bound to monitor or verify the application or utilization
of any part of the proceeds of the Senior Loans.
8.14 Subsidiaries. The Borrower will not have any
Subsidiaries, nor enter into any Joint Venture, at any time during the term of
this Agreement.
8.15 Implementation of the Project. The Borrower shall design,
construct, install, operate and monitor the Project pursuant to and materially
in accordance with prudent industry standards and practices and in accordance
with the Agreed Financial Model, the Business Plan, the Concessions and the
terms of this Agreement. The Borrower shall not, without the prior written
consent of the Senior Lenders, amend or modify the Agreed Financial Model, the
Business Plan or the Concessions.
8.16 Project Documents.
(a) The Borrower shall: (i) perform and observe its covenants
and obligations contained in each of the Project Documents to which it is a
party, (ii) enforce against the other party to each Project Document each
covenant or obligation of such Project Document in accordance with its terms and
(iii) notify the Senior Lenders of any proposed amendment, termination,
modification or waiver of any Project Document.
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(b) The Borrower shall not, without the prior written consent
of the Senior Lenders: (i) cancel or terminate any Project Document to which it
is a party or consent to or accept any cancellation or termination thereof if
the consent of the Borrower is required for such cancellation or termination
(other than expiration in accordance with its terms), (ii) amend any material
provision of, waive any default under, or breach of, any Project Document or
waive, fail to enforce, forgive, compromise, settle, adjust or release any
right, interest or entitlement, howsoever arising, under, or in respect of, any
Project Document or in any way vary, or agree to the variation of, any provision
of such Project Document or of the performance of any covenant or obligation by
any other Person under any Project Document, (iii) petition, request or take any
other legal or administrative action that seeks, or may reasonably be expected,
to materially impair any Project Document, or (iv) consent or accept the
transfer or assignment of any of the Borrower's rights or obligations under any
Project Document.
(c) Promptly after the execution and delivery thereof, the
Borrower shall furnish the Senior Lenders with certified copies of (i) all
amendments, supplements or modifications of any Project Document and (ii) all
Project Documents entered into after the date hereof.
(d) Without the prior consent of the Senior Lenders, the
Borrower shall not: (i) enter into any contract or agreement which could be
characterized as a lease in the capacity as a lessee thereunder, unless such
contract or agreement is a Capital Lease Obligation or an operating lease (A)
undertaken in the ordinary course of business of a telephone service operator,
(B) not relating to any Network Assets, and (C) when taken together with all
such contracts and agreements, is in compliance with Section 8.07(e), or (ii)
enter into any contract or agreement pursuant to which a material portion of the
Borrower's operations are managed by any third party, other than as contemplated
by the Operating Contracts or pursuant to the Technical Services Agreement.
8.17 Equity. The Borrower shall not take any actions which
would have the effect of reducing its Equity from that existing as of the date
hereof, except as contemplated herein and in the Project Funds Agreement.
8.18 Environmental Matters.
(a) The Borrower, the Project, the Properties, and any
Contractor (in connection with such Contractor's performance relating to the
Project) shall comply with all Environmental Requirements.
(b) The Borrower shall consult and obtain the approval of the
Senior Lenders in connection with any changes in the EHSM Plan.
(c) The Borrower shall deliver to the Senior Lenders (i)
promptly upon obtaining knowledge of (A) any fact, circumstance, condition or
occurrence that could form the basis of an Environmental Claim or non-compliance
with any Environmental Requirement arising with respect to the development,
construction, ownership and operation of the Project against the Project or any
Environmental Party or (B) any pending or threatened Environmental Claim or
Environmental Requirements non-compliance arising with respect to the
development, construction, ownership and operation of the Project against the
Project or any Environmental
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Party, a notice thereof describing the same in reasonable detail and, together
with such notice or as soon thereafter as possible, a description of the action
that the Borrower has taken or proposes to take with respect thereto and,
thereafter, from time to time such detailed reports with respect thereto as the
Senior Lenders may reasonably request and (ii) promptly upon their becoming
available, copies of all written communications with any Government Authority
relating to any Environmental Law or Environmental Claim arising out of the
development, construction, ownership and operation of the Project.
(d) The Borrower shall implement ongoing, public disclosure
and consultation activities to ensure that the local public is aware of Project
related environmental, social, health and safety issues.
(e) The Borrower must prepare and submit an Environmental and
Social Compliance Report, in form and content acceptable to IDB, which must be
received by IDB within 60 calendar days after the close of each calendar year.
(f) At any time, upon request from any Senior Lenders, permit
such Senior Lender or an independent consultant engaged by any Senior Lender, at
the expense of the Borrower, to perform an independent environmental, health and
safety audit of the Project and associated operations to confirm such compliance
with the Environmental Requirements. The audit shall result in the preparation
of a written report in form and substance satisfactory to the Senior Lenders and
including a plan to correct any identified non-compliances. The Borrower shall
be obligated to ensure that all identified deficiencies that constitute material
non-compliance with any Environmental Requirements shall be corrected within a
time schedule acceptable to the Senior Lenders.
8.19 Transaction with Affiliates or Joint Ventures. Enter into
any transaction, including without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate or
Joint Venture or any direct or indirect shareholder unless such transaction is
(a) in the ordinary course of business and (b) and upon terms no less favorable
to the Borrower than it would obtain in a comparable arm's-length transaction
with a Person which is not an Affiliate, Joint Venture or any direct or indirect
shareholder.
8.20 Financial Completion. On or prior to January 31, 2003,
the Borrower shall have demonstrated that Financial Completion occurred no later
than December 31, 2002. "Financial Completion" shall be deemed to have occurred
on the first date when each of the following statements shall be true, in each
case, to the satisfaction of the Senior Lenders:
(a) no Default shall have occurred and be continuing
(including, without limitation, any Default in connection with Section
8.10 or in connection with Section 9(d) for failure to take any actions
required pursuant to the Security Documents to perfect the security
interests intended to be granted to the Senior Lenders in connection
with any property or assets of the Borrower acquired after the Closing
Date);
(b) the Borrower shall have paid all Project Costs;
(c) the Completion of Network Construction shall have
occurred;
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(d) the Debt Service Reserve Requirement shall have been
deposited into the Debt Service Reserve Account;
(e) all equity contributions shall have been made to complete
the Agreed Financial Plan and the required debt/equity ratio is at the
stated level;
(f) the Adjusted DSCR for two consecutive semi-annual periods
occurring after the Completion of Network Construction is greater than
1.4; and
(g) the Borrower shall have delivered to the Senior Lenders,
at least five Business Days prior to the proposed date of Financial
Completion, a certificate of a Financial Officer of the Borrower
setting forth computations or other evidence in reasonable detail
demonstrating satisfaction of the foregoing conditions as at the date
of such certificate.
8.21 Security. From time to time, execute, acknowledge and
deliver or cause to be executed, acknowledged or delivered such further
instruments as may reasonably be requested by the Senior Lenders for perfecting,
or maintaining in full force and effect the perfection of, the security
interests created by the Security Documents or for re-registering the Security
Documents or otherwise to comply with the Borrower's obligations under the
Security Documents.
Section 9. Events of Default. If one or more of the following
events (herein called "Events of Default") shall occur and be continuing:
(a) the Borrower shall default in the payment of any principal
of any Senior Loans when due (whether at stated maturity or at
mandatory or optional prepayment) and such default shall have continued
unremedied for three or more days;
(b) the Borrower shall default in the payment of any interest
on any Senior Loans, any fee or any other amount (other than an amount
referred to in clause (a) of this Section 9) payable by it hereunder or
under any other Financing Document when due and such default shall have
continued unremedied for three or more days;
(c) any representation, warranty or certification made or
deemed made herein or in any other Transaction Document (or in any
modification or supplement hereto or thereto) by any Transaction Party
or any certificate furnished to the Senior Lenders pursuant to the
provisions hereof or thereof, shall prove to have been false or
misleading as of the time made or furnished in any material respect;
(d) the Borrower shall default in the performance of any of
its obligations under any of Sections 8.02, 8.03(a), 8.05, 8.06, 8.07,
8.08, 8.09, 8.10, 8.11, 8.14, 8.15 or 8.17 the Borrower shall default
in the performance of any of its obligations under any Security
Document to which it is a party; or SRT shall default in the
performance of any of its obligations under the Project Funds Agreement
or the Direct Agreement; or any Transaction Party (other than the
Borrower) shall default in the performance of its obligations under any
Security Document to which it is a party or under the Transfer
Restrictions Agreement;
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(e) any Transaction Party shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other
than those specified in clause (a), (b) or (d) of this Section 9) or
any other Transaction Document and such failure shall continue
unremedied for a period of 30 or more days;
(f) any Transaction Party (other than SRT) shall default in
the payment when due of any principal of or interest on any of its
other Indebtedness in an aggregate amount equal to or greater than
$500,000; or any Transaction Party shall default in the payment when
due of any amount under any Hedging Agreement;
(g) any event specified in any note, agreement, indenture or
other document evidencing or relating to any other Indebtedness
aggregating $500,000 or more of any Transaction Party (other than SRT)
shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder
or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause, such Indebtedness to become due, or
to be prepaid in full (whether by redemption, purchase, offer to
purchase or otherwise), prior to its stated maturity or to have the
interest rate thereon reset to a level so that securities evidencing
such Indebtedness trade at a level specified in relation to the par
value thereof; or any event specified in any Hedging Agreement to which
any Transaction Party (other than SRT) is a party shall occur if the
effect of such event is to cause, or (with the giving of any notice or
the lapse of time or both) to permit, termination or liquidation
payment or payments to become due or at any time prior to the
termination of the Project Funds Agreement and the Performance
Undertaking, the holder or holders of any Indebtedness aggregating
$500,000 or more of SRT (or a trustee or agent on behalf of such holder
or holders) shall have declared such Indebtedness to become due or to
be prepaid in full (whether by redemption, purchase, offer to purchase
or otherwise), prior to its stated maturity or to have the interest
rate thereon reset to a level so that securities evidencing such
Indebtedness trade at a level specified in relation to the par value
thereof; or, at any time prior to the termination of the Project Funds
Agreement and the Performance Undertaking, any event specified in any
Hedging Agreement to which SRT is a party shall occur if the effect of
such event is to cause termination or liquidation payment or payments
to become due;
(h) a proceeding or case shall be commenced, without the
application or consent of any Transaction Party, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of any Transaction
Party or of all or any substantial part of its Property, (iii) similar
relief in respect of any Transaction Party under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of 60 or more days, or (iv) the equivalent of any of the
foregoing under the laws of Chile. Canada or the British Virgin
Islands;
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(i) any Transaction Party shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its Property, (ii) make a general assignment for
the benefit of its creditors, (iii) file a petition seeking to take
advantage of any law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (iv) take any corporate action
for the purpose of effecting any of the foregoing or (v) do the
equivalent of any of the foregoing under the laws of Chile, Canada or
the British Virgin Islands;
(j) any Transaction Party shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts
become due;
(k) a final judgment or judgments for the payment of money
shall be rendered by one or more courts, administrative tribunals or
other bodies having jurisdiction against any Transaction Party other
than SRT in an aggregate amount in excess of $500,000 or against SRT in
an aggregate amount in excess of $1,000,000 and the same shall not be
discharged (or provision shall not be made for such discharge), or a
stay of execution thereof shall not be procured, within 30 days from
the date of entry thereof and such Transaction Party shall not, within
such period of 30 days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal, or any action shall
be legally taken by a judgment creditor to attach or levy upon any
assets of such Transaction Party to enforce any such judgment;
(l) any license, consent, authorization, registration or
approval at any time necessary to enable any Transaction Party to
comply with any of its obligations under this Agreement or any other
Transaction Document shall be revoked, withdrawn or withheld or shall
be modified or amended in a manner prejudicial, in the opinion of any
Senior Lender, to the interests of such Senior Lender hereunder; or the
governments of Chile, Canada or the British Virgin Islands, or any
agency or political subdivision thereof, shall promulgate or declare
effective any law, rule or regulation that, in the opinion of any
Senior Lender, could have a Borrower Material Adverse Effect or an SRT
Material Adverse Effect;
(m) any Governmental Body shall take any action to condemn,
nationalize or appropriate any substantial portion of the Property of
any Transaction Party (either with or without payment of compensation)
or shall take any action that, in the opinion of any Senior Lender,
adversely affects the ability of any Transaction Party to perform its
obligations under this Agreement or any other Transaction Document; or
any Transaction Party shall be prevented from exercising normal control
over all or a substantial part of its Property (and the same shall
continue for 15 or more days);
(n) Chile or any competent authority thereof shall declare a
moratorium on the payment of indebtedness by Chile or any governmental
agency or authority thereof or corporations therein, or Chile shall
cease to be a member in good standing of the International Monetary
Fund or shall cease to be eligible to utilize the resources of the
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International Monetary Fund under the Articles of Agreement thereof, or
the international monetary reserves of Chile shall become subject to
any Lien;
(o) the Liens created by the Security Documents shall at any
time not constitute a valid and perfected Lien on the collateral
intended to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required herein or therein)
in favour of either Senior Lender or both Senior Lenders, as the case
may be, free and clear of all other Liens (other than Liens permitted
under Section 8.06 or under the respective Security Documents), or,
except for expiration in accordance with its terms, any of the Security
Documents shall for whatever reason be terminated or cease to be in
full force and effect except by any actions of the Senior Lenders, or
the enforceability thereof shall be contested by any Transaction Party
thereto;
(p) the decision of the Borrower's board of directors or
shareholders (at a shareholders meeting) to (i) cease operation of the
Project for any period of time, or (ii) suspend the construction of the
Project for a period of 15 days or more;
(q) SUBTEL terminates, suspends, expropriates or amends one or
more of the Concessions in a manner that, in the opinion of the Senior
Lenders, could have a Borrower Material Adverse Effect; or SUBTEL gives
notice of its intention to terminate one or more of the Concessions
which in the opinion of the Senior Lenders, could have a Borrower
Material Adverse Effect;
(r) one or more of the Interconnection Agreements terminates
or expires without renewal and are not renewed or, prior to termination
or expiry have not been replaced by one or more new agreements in form
and substance substantially similar to, and providing for comparable
scope and quality of service as, such terminated or expired
Interconnection Agreement(s); or one or more Interconnection Agreements
are terminated, amended or renewed in a manner that, in the opinion of
any Senior Lender, could have a Borrower Material Adverse Effect;
(s) either (i) this Agreement or any Transaction Document not
otherwise referred to in clauses (q) or (r) above, except as
contemplated thereby, shall cease to be in full force and effect or
(ii) any Transaction Party shall deny any further liability or
obligations under this Agreement or any other Transaction Document to
which it is a party; or
(t) SRT at any time ceases to own, directly or indirectly, at
least 80% of the voting capital stock of, or other ownership interests
in, the Borrower;
(u) Completion of Network Construction shall not have occurred
by the Date Certain;
(v) the Borrower shall have ceased all or substantially all
construction activities of the Project without interruption for 90 days
and shall have declared its intention that such activities not be
resumed either by (i) the Borrower's failure to deliver within 30 days
of notice from any Senior Lender a certificate to the effect that the
Borrower intends to cause all or substantially all such construction or
production activities to resume as
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soon as is commercially practicable or (ii) the Borrower's failure to
resume activities within 90 days following delivery of such
certificate;
(w) the total loss, destruction or condemnation of the
Project; or
(x) any Transaction Party or Contractor (in connection with
such Contractor's performance relating to the Project) shall fail to
comply in any material respect with any Environmental Requirement and
such failure shall continue unremedied for a period of 30 or more days;
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (h) or (i) of this Section 9 with respect to the Borrower, the Senior
Lenders may, by notice to the Borrower, terminate the Commitment (as defined in
each Senior Loan Agreement) and they may thereupon terminate, and/or declare the
principal amount then outstanding of, and the accrued interest on, the Senior
Loans and all other amounts payable by the Borrower under the Senior Loan
Agreements and under the Notes (including, without limitation, any amounts
payable under Section 5.04 of each Senior Loan Agreement) to be forthwith due
and payable, whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower; and (2) in the case of the occurrence
of an Event of Default referred to in clause (h) or (i) of this Section 9 with
respect to the Borrower, the Commitments (as defined in each Senior Loan
Agreement) shall automatically be terminated and the principal amount then
outstanding of, and the accrued interest on, the Senior Loans and all other
amounts payable by the Borrower under the Senior Loan Agreements and under the
Notes (including, without limitation, any amounts payable under Section 5.04 of
each Senior Loan Agreement) shall automatically become immediately due and
payable without presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
Section 10. Miscellaneous.
10.01 Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, any notice, claim,
request, demand, consent designation, direction, instruction, certificate,
report or other communication to be given hereunder shall be given in writing in
the English language (or accompanied by an accurate English language translation
upon which the recipient shall have the right to rely for all purposes) and will
be deemed duly given when (i) personally delivered, (ii) sent by facsimile
transmission (but only if, immediately after the transmission, the sender's
facsimile machine records in writing the correct answer back) or (iii) ten days
have elapsed after mailing by certified or registered mail, postage prepaid, in
each case addressed to a party at its address or facsimile transmission number
as set forth below or to another address or facsimile number of which that party
has given notice in accordance herewith. Notice of address or facsimile number
change shall be effective only upon receipt:
(a) if to the Borrower, to it at Av. Vicacura 2771, Oficina
▇▇▇-▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇
(Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇, Telephone No. ▇▇▇-▇▇▇-▇▇▇▇: and
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(b) if to the Senior Lenders, (i) to Export Development
Corporation, at ▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇,
Attention of the Loans Operations Team (Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇,
Telephone No. ▇▇▇-▇▇▇-▇▇▇▇) and (ii) to Inter-American Development
Bank, Private Sector Department, at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇, Attention Loan Administration Unit, (Telecopy
No. 202-623-3639).
10.02 Waiver. No failure on the part of the Senior Lenders to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or the Financing Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement or the Financing Documents
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
The Borrower irrevocably waives, to the fullest extent
permitted by applicable law, any claim that any action or proceeding commenced
by the Senior Lenders relating in any way to this Agreement should be dismissed
or stayed by reason, or pending the resolution, of any action or proceeding
commenced by the Borrower relating in any way to this Agreement whether or not
commenced earlier. To the fullest extent permitted by applicable law, the
Borrower shall take all measures necessary for any such action or proceeding
commenced by the Senior Lenders to proceed to judgment prior to the entry of
judgment in any such action or proceeding commenced by the Borrower.
10.3 Amendments, Etc. No provision of this Agreement or of the
Senior Loan Agreements may be modified or supplemented except by an instrument
in writing signed by the Borrower and the Senior Lenders.
10.4 Expenses. The Borrower agrees to pay or reimburse the
Senior Lenders for: (a) all reasonable out-of-pocket costs and expenses of the
Senior Lenders (including, without limitation, the reasonable fees and expenses
of legal counsels and consultants to the Senior Lenders) in connection with (i)
the negotiation, preparation, registration, execution and delivery of this
Agreement and the other Financing Documents and the making of the Senior Loans
under the Senior Loan Agreements and the syndication on monitoring thereof and
(ii) the negotiation or preparation of any modification, supplement or waiver of
any of the terms of this Agreement or any of the other Financing Documents
(whether or not consummated); (b) all reasonable out-of-pocket costs and
expenses of the Senior Lenders (including, without limitation, the reasonable
fees and expenses of legal counsel) in connection with (i) any Default and any
enforcement or collection proceedings resulting therefrom, including, without
limitation, all manner of participation in or other involvement with (x)
bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceedings, (y) judicial or regulatory proceedings and (z) workout,
restructuring or other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 10.04; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any of the other Financing
Documents or any other document referred to herein or therein and all costs,
expenses, taxes, assessments and other charges incurred in connection with any
filing,
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registration, recording or perfection of any security interest contemplated by
any Security Document or any other document referred to therein.
The Borrower hereby agrees to indemnify the Senior Lenders and
their directors, officers, employees, attorneys and agents from, and hold each
of them harmless against, any and all losses, liabilities, claims, damages or
expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to the Senior Loans
or any actual or proposed use by the Borrower of the proceeds of any of the
Senior Loans, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified).
10.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The Borrower may not assign any of its rights
or obligations hereunder or under the other Transaction Documents without the
prior consent of the Senior Lenders and any such assignment in contravention of
the terms hereof shall be null and void. Any Senior Lender may transfer, assign
or grant its rights hereunder in connection with an assignment or transfer of
all or any part of its interest in its Senior Loans in accordance with the
Senior Loan Agreement to which it is a party; provided that any such assignee
has agreed to be bound by the terms of this Agreement, such Senior Loan
Agreement and the Intercreditor Agreement.
10.06 Survival. The obligations of the Borrower under Sections
5.01, 5.04 and 5.05 of each Senior Loan Agreement and Section 10.04 hereof shall
survive the repayment of the Senior Loans and the termination of the
Commitments. In addition, each representation and warranty made, or deemed to be
made by a notice of any Senior Loan, herein or pursuant hereto shall survive the
making of such representation and warranty, and the Senior Lenders shall not be
deemed to have waived, by reason of making any Senior Loan hereunder, any
Default that may arise by reason of such representation or warranty proving to
have been false or misleading, notwithstanding that the Senior Lenders may have
had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Senior Loan was made.
10.07 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement; provided that original signature pages
of each party hereto are delivered to each other party hereto within five
Business Days.
10.08 Governing Law; Jurisdiction; Service of Process; Etc.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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(b) Submission to Jurisdiction. The Borrower hereby agrees
that any suit, action or proceeding with respect to this Agreement, the other
Transaction Documents or any judgment entered by any court in respect thereof
may be brought by any Senior Lender in the courts of the Province of Ontario,
Canada and in the United States District Court for the Southern District of New
York, in the Supreme Court of the State of New York sitting in New York County
(including its Appellate Division), or in any other appellate court in the State
of New York, as the party commencing such suit, action or proceeding may elect
in its sole discretion; and the Borrower hereby irrevocably submits to the
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment. Each party hereto further submits, for the purpose of any such
suit, action, proceeding or judgment brought or rendered against it, to the
appropriate courts of the jurisdiction of its domicile.
(c) Process Agent. The Borrower hereby agrees that service of
all writs, process and summonses in any such suit, action or proceeding brought
in the Province of Ontario or the State of New York may be made upon CT
Corporation, presently located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇.▇.▇. (the "Process Agent"), and the Borrower hereby confirms and agrees that
the Process Agent has been duly and irrevocably appointed as its agent and true
and lawful attorney-in-fact in its name, place and stead to accept such service
of any and all such writs, process and summonses, and agrees that the failure of
the Process Agent to give any notice of any such service of process to the
Borrower shall not impair or affect the validity of such service or of any
judgment based thereon. The Borrower hereby further irrevocably consents to the
service of process in any suit, action or proceeding in such courts by the
mailing thereof by the Senior Lender by registered or certified mail, postage
prepaid, at its address set forth beneath its signature hereto.
(d) Other Service. Nothing herein shall in any way be deemed
to limit the ability of any Senior Lender to serve any such writs, process or
summonses in any other manner permitted by applicable law or to obtain
jurisdiction over the Borrower in such other jurisdictions, and in such manner,
as may be permitted by applicable law.
(e) Waiver of Venue. The Borrower hereby irrevocably waives
any objection that it may now or hereafter have to the laying of the venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Transaction Document brought by any Senior Lender in the courts of the
Province of Ontario, Canada and in the Supreme Court of the State of New York,
County of New York or in the United States District Court for the Southern
District of New York, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
10.9 WAIVER OF JURY TRIAL. THE BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.
10.10 No Immunity. To the extent that the Borrower may be or
become entitled, in any jurisdiction in which judicial proceedings may at any
time be commenced with respect to
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this Agreement, the Notes or any other Financing Document, to claim for itself
or its Properties or revenues any immunity from suit, court jurisdiction,
attachment prior to judgment, attachment in aid of execution of a judgment,
execution of a judgment or from any other legal process or remedy relating to
its obligations under this Agreement, the Notes or any other Financing Document,
and to the extent that in any such jurisdiction there may be attributed such an
immunity (whether or not claimed), the Borrower hereby irrevocably agrees not to
claim and hereby irrevocably waives such immunity to the fullest extent
permitted by the laws of such jurisdiction. The Borrower agrees that the waiver
set forth above shall have the fullest extent permitted under the Foreign
Sovereign Immunities Act of 1976 of the United States of America and be intended
to be irrevocable and not subject to withdrawal for purposes of such Act.
10.11 Judgment Currency. This Agreement and the Senior Loan
Agreements represent an international loan transaction in which the
specification of Dollars and payment in New York City is of the essence, and the
obligations of the Borrower under the Financing Documents to make payment to (or
for account of) the Senior Lenders in Dollars shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any other currency or in another place except to the extent that
such tender or recovery results in the effective receipt by the Senior Lenders
in New York City of the full amount of Dollars payable to the Senior Lenders
under this Agreement and the Senior Loan Agreements. If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder
in Dollars into another currency (in this Section 10.11 called the "judgment
currency"), the rate of exchange that shall be applied shall be that at which in
accordance with normal banking procedures the Senior Lenders could purchase such
Dollars with the judgment currency on the Business Day next preceding the day on
which such judgment is rendered. The obligations of the Borrower in respect of
any such sum due from it to the Senior Lenders hereunder or under any other
Financing Document shall, notwithstanding the rate of exchange actually applied
in rendering such judgment, be discharged only to the extent that on the
Business Day following receipt by the Senior Lenders of any sum adjudged to be
due hereunder in the judgment currency the Senior Lenders may in accordance with
normal banking procedures purchase and transfer Dollars to New York City with
the amount of the judgment currency so adjudged to be due; and the Borrower
hereby, as a separate obligation and notwithstanding any such judgment, agrees
to indemnify the Senior Lenders against, and to pay the Senior Lenders on
demand, in Dollars, the amount (if any) by which the sum originally due to the
Senior Lenders in Dollars hereunder exceeds the amount of the Dollars so
purchased and transferred.
10.12 Use of English Language. This Agreement has been
negotiated and executed in the English language. All certificates, reports,
notices and other documents and communications given or delivered pursuant to
this Agreement (including, without limitation, any modifications or supplements
hereto) shall be in the English language, or accompanied by a certified English
translation thereof. Except in the case of laws or official communications of
Chile, in the case of any document originally issued in a language other than
English, the English language version of any such document shall for purposes of
this Agreement, and absent manifest error, control the meaning of the matters
set forth therein.
10.13 Severability. If any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby. If any provisions of this Agreement shall be invalid,
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illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of such provision shall not in any way be affected or impaired in
any other jurisdiction thereby.
Common Agreement
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
COMUNICACION Y TELEFONIA RURAL S.A.
By: /s/ D'Arcy ▇. ▇▇▇▇▇
---------------------------------
Name: D'Arcy ▇. ▇▇▇▇▇
Title: Director
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EXPORT DEVELOPMENT CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Financial Services Manager
EXPORT DEVELOPMENT CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Financial Services Manager
Common Agreement
INTER-AMERICAN DEVELOPMENT BANK
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Deputy Manager, Private
Sector Department
Common Agreement