DRAFT 8/19/99
CONVERTIBLE NOTE AGREEMENT
Dated August [23], 1999 among SIEMENS AKTIENGESELLSCHAFT, as Initial Lender, THE OTHER LENDERS PARTY HERETO, COMPANIA DEL SUR SOCIEDAD ANONIMA, as Borrower, [DISTACOM] and [COMMUNICATION VENTURE PARTNERS]
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TABLE OF CONTENTS Section ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1. Defined Terms ........................................................................................................ 1 SECTION 1.2. Computation of Time Periods. ............................................................................... 8 SECTION 1.3. Accounting Terms. ................................................................................................. 8 SECTION 1.4. Certain Terms. ........................................................................................................ 8 SECTION 1.5. Gender. ................................................................................................................... 8 ARTICLE II AMOUNT AND TERMS OF THE LOAN Page
SECTION 2.1. The Loan. ............................................................................................................... 8 SECTION 2.2. Initial Loan Amount; Minimum Amount of Each Borrowing; Maximum Number of Borrowings. ......................................................................................... 9 SECTION 2.3. Funding the Loans. ................................................................................................. Error! Bookma SECTION 2.4. The Closings. .......................................................................................................... 13 ARTICLE III THE NOTE
SECTION 3.1. The Note. ................................................................................................................ Error! Bookma SECTION 3.2. Mandatory Repayments. ......................................................................................... Error! Bookma SECTION 3.3. Prepayments. .......................................................................................................... 9 SECTION 3.4. Interest. ................................................................................................................... 9 SECTION 3.5. Increased Costs. ...................................................................................................... 9 SECTION 3.6. Payments and Computations. ................................................................................. 10 SECTION 3.7. Taxes. ..................................................................................................................... 11 SECTION 3.8. Funding Costs. ........................................................................................................ 11 ARTICLE IV CONVERSION; OPTION TO PURCHASE COMMON STOCK
SECTION 4.1. Conversion. ............................................................................................................ 12 SECTION 4.2. Option to Purchase Additional Shares of Common Stock. .................................... Error! Bookma SECTION 4.3. Exercise of Conversion Right; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends .............................................................. 12 SECTION 4.4. Exercise of Purchase Option. ................................................................................. Error! Bookma SECTION 4.5. Reservation of Common Stock. ............................................................................. 13 SECTION 4.6. Taxes on Shares Issued. ......................................................................................... 13
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Section ARTICLE V CONDITIONS OF LENDING
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SECTION 5.1. Conditions Precedent to the Loan. ......................................................................... 13 SECTION 5.2. Additional Conditions Precedent to the Loans. ...................................................... 15 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWER AND THE SHAREHOLDERS
SECTION 6.1. Corporate Existence; Compliance with Law. ......................................................... 16 SECTION 6.2. Corporate Power; Authorization; Enforceable Obligations. .................................. 16 SECTION 6.3. Ownership of Capital Stock of Borrower. .............................................................. 16 SECTION 6.4. Full Disclosure. ...................................................................................................... 17 SECTION 6.5. Financial Matters. ................................................................................................... 17 SECTION 6.6. Undisclosed Liabilities. .......................................................................................... Error! Bookma SECTION 6.7. Litigation. ............................................................................................................... 18 SECTION 6.8. Margin Regulations. ............................................................................................... Error! Bookma SECTION 6.9. No Default. ............................................................................................................. 19 SECTION 6.10. Investment Company Act. .................................................................................... Error! Bookma SECTION 6.11. Use of Proceeds. ................................................................................................... 19 SECTION 6.12. Title to Assets. ...................................................................................................... 19 SECTION 6.13. Customers and Suppliers. ..................................................................................... Error! Bookma SECTION 6.14. Intellectual Property. ............................................................................................ Error! Bookma SECTION 6.15. Contracts. ............................................................................................................. 19 SECTION 6.16. Compliance with Law. ......................................................................................... 20 SECTION 6.17. Government Approvals; Required Consents. ....................................................... 20 SECTION 6.18. Environmental Matters. ........................................................................................ 21 SECTION 6.19. Employment and Labor Matters. .......................................................................... Error! Bookma SECTION 6.20. Employee Benefit Plans. ...................................................................................... Error! Bookma SECTION 6.21. FCC Authorizations. ............................................................................................ Error! Bookma SECTION 6.22. Insurance Policies. ................................................................................................ 21 SECTION 6.23. Tax Matters. ......................................................................................................... 22 SECTION 6.24. Pari Passu Obligations. ......................................................................................... 22 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE LENDER
SECTION 7.1. Corporate Existence; Compliance with Law. ......................................................... Error! Bookma SECTION 7.2. Corporate Power; Authorization; Enforceable Obligations. .................................. Error! Bookma ARTICLE VIII AFFIRMATIVE COVENANTS SECTION 8.1. Compliance with Laws, Etc. .................................................................................. 23 SECTION 8.2. Conduct of Business. .............................................................................................. 23
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Section
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SECTION 8.3. Preservation of Corporate Existence, Etc. .............................................................. 24 SECTION 8.4. Access. ................................................................................................................... 24 SECTION 8.5. Keeping of Books. .................................................................................................. 24 SECTION 8.6. Application of Proceeds. ........................................................................................ 24 SECTION 8.7. Financial Statements. ............................................................................................. 24 SECTION 8.8. Reporting Requirements. ........................................................................................ 25 SECTION 8.9. Insurance. ............................................................................................................... 25 SECTION 8.10. Payment of Taxes and Claims. ............................................................................. 25 SECTION 8.11. Further Documents. .............................................................................................. 25 ARTICLE IX NEGATIVE COVENANTS
SECTION 9.1. Liens, Etc................................................................................................................. 26 SECTION 9.2. Mergers, Sale of Assets, Etc. .................................................................................. 26 SECTION 9.3. Change in Nature of Business. ............................................................................... 27 SECTION 9.4. Accounting Changes. ............................................................................................. 27 SECTION 9.5. Compliance with ERISA. ....................................................................................... Error! Bookma SECTION 9.6. Indebtedness. .......................................................................................................... 27 ARTICLE X EVENTS OF DEFAULT SECTION 10.1. Events of Default. ................................................................................................. 27 SECTION 10.2. Remedies. ............................................................................................................. 29 SECTION 10.3. Other Remedies. ................................................................................................... 30 ARTICLE XI MISCELLANEOUS
SECTION 11.1. Amendments, Etc. ................................................................................................ 30 SECTION 11.2. Notices, Etc. ......................................................................................................... 30 SECTION 11.3. No Waiver; Remedies. ......................................................................................... 30 SECTION 11.4. Costs; Expenses. ................................................................................................... 31 SECTION 11.5. Indemnification. ................................................................................................... 31 SECTION 11.6. Right of Set-off. ................................................................................................... Error! Bookma SECTION 11.7. Binding Effect. ..................................................................................................... 32 SECTION 11.8. Governing Law. .................................................................................................... 32 SECTION 11.9. Severability. .......................................................................................................... 32 SECTION 11.10. Submission to Jurisdiction; Service of Process. ................................................. 32 SECTION 11.11. Section Titles. ..................................................................................................... 33 SECTION 11.12. Execution in Counterparts. ................................................................................. 33 SECTION 11.13. Survival. ............................................................................................................. 33 SECTION 11.14. Entire Agreement. .............................................................................................. 33 SECTION 11.15. Waiver of Jury Trial. .......................................................................................... 33
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Section EXHIBITS Exhibit A-1 Exhibit A-2 Exhibit A-3 Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G Form of Tranche A Convertible Promissory Note Form of Tranche B Convertible Promissory Note Form of Tranche C Convertible Promissory Note Form of Opinion of Counsel for the Borrower and the Investors Form of Pledge Agreement Form of Securityholders’ Agreement Form of Assignment Agreement Form of Amendment to Estatutos Names and Addresses of the Lenders and the Investors SCHEDULES Schedule 5.3 Schedule 5.12 Ownership of Capital Stock of Borrower Contracts
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THIS CONVERTIBLE NOTE AGREEMENT, dated August [23], 1999 (the “Effective Date”), is made and entered into by and among COMPANIA DEL SUR SOCIEDAD ANONIMA, a corporation organized under the laws of Argentina (the “Borrower”), SIEMENS AKTIENGESELLSCHAFT, a corporation organized under the laws of Germany (the “Initial Lender”), [COMMUNICATION VENTURE PARTNERS [ ], a corporation organized under the laws of [ ]] (“CVP”), and [DISTACOM [ ], a corporation organized under the laws of [ ]] (“Distacom” and, together with CVP, the “Investors”). W I T N E S S E T H: WHEREAS, the Borrower has been awarded a telephony license and the related frequency of 10 MHz within the GSM frequency range of 890 to 910 MHz for uplink pursuant to Resolution No. 16.200/99 promulgated by the Ministry of Telecommunications of the Republic of Argentina (the “Ministry”) and a radio license and the related frequency of 10 MHz within the frequency range of 935 to 960 MHz for downlink pursuant to Resolution No. [ ] promulgated by the Ministry (collectively, the “Licenses”); WHEREAS, the Borrower has requested that the Initial Lender make loans to the Borrower in the aggregate principal amount of $13,000,000 for the purpose of acquiring the Licenses; WHEREAS, the Initial Lender is willing to make funds available for such purpose upon the terms and subject to the conditions set forth herein; and WHEREAS, the Investors, upon the terms and subject to the conditions set forth herein, desire to purchase from the Initial Lender on August 31, 1999, an aggregate of $7,000,000 of the outstanding principal amount of the Loans made by the Initial Lender on the Closing Date; NOW, THEREFORE, in consideration of the premises and the representations, warranties and covenants and mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1. Defined Terms As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): “Adverse Consequences” has the meaning specified in Section 10.6(a). “Affiliate” means, as to any Person, any Subsidiary of such Person and any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person and includes each officer or director or general partner of such Person, and each Person
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who is the beneficial owner of 5% or more of any class of voting Stock of such Person. For the purposes of this definition, “control” means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. “Agreement” means this Convertible Note Agreement, together with all Exhibits and Schedules hereto, as the same may be amended, supplemented or otherwise modified from time to time. “Argentina” means the Republic of Argentina. “Assignment Agreement” means those certain assignment agreements entered into by the Initial Lender and each of CVP and Distacom, substantially in the form of Exhibit E hereto, as the same may be amended, supplemented or otherwise modified from time to time. “Audited Financial Statements” has the meaning specified in Section 5.5. “Borrower Adverse Consequences” has the meaning specified in Section 10.5(b). “Borrower Indemnified Party” has the meaning specified in Section 10.5(b). “Business Day” means a day of the year on which banks are not required or authorized to close in New York City or Buenos Aires, Argentina. “Closing Date” means August [23], 1999. “Common Stock” means the common stock, par value [ ], of the Borrower.
“Conversion Date” has the meaning specified in Section 3.1. “Conversion Notice” has the meaning specified in Section 3.2. “Convertible Promissory Note” means a Tranche A Convertible Promissory Note, a Tranche B Convertible Promissory or a Tranche C Convertible Promissory Note, as the case may be. “Default” means any event which with the passing of time or the giving of notice or both would become an Event of Default. “Dollars” and the sign “$” each mean the lawful money of the United States of America. “Effective Date” has the meaning specified in the preamble . “Environmental Laws” means all laws, statutes, ordinances and regulations, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any judicial or administrative interpretation thereof, including, without limitation, any judicial or administrative order, consent decree or judgment relating to the regulation and protection of human health, safety, the environment or natural resources (including, without limitation,
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ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). “Event of Default” has the meaning specified in Section 9.1. “GAAP” means generally accepted accounting principles in Argentina as in effect from time to time. “Governmental Authority” means the government of any nation or political subdivision thereof, whether provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity (including any federal or other association of or with which any such nation may be a member or associated) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. “Guaranteed Indebtedness” means, as to any Person, the obligation of such Person guaranteeing any Indebtedness, lease, dividend, or other obligation (“primary obligations”) of any other Person (the “primary obligor”) in any manner, including, without limitation, any obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to supply or advance funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or Solvency or any balance sheet condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against a loss in respect thereof. “Hazardous Materials” means any hazardous substance, hazardous waste, pesticides, petroleum, crude oil or any fraction thereof, radioactive material, and any pollutant, oil, contaminant, hazardous, extremely hazardous, dangerous or toxic chemical, material, waste or any other substance within the meaning of any Environmental Law or which could pose a hazard to the environment or the health and safety of any person. “Indebtedness” means, as to any Person, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including, without limitation, reimbursement and all other obligations with respect to surety or appeal bonds, letters of credit and bankers’ acceptances, whether or not matured, but not including obligations to trade creditors incurred in the ordinary course of business), (b) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property, but not including obligations to trade creditors incurred in the ordinary course of business), (d) all obligations of such Person arising under a capital lease, (e) all Guaranteed Indebtedness of such Person, (f) all Indebtedness referred to in clause (a), (b), (c), (d) or (e) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even
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though such Person has not assumed or become liable for the payment of such Indebtedness and (g) in the case of the Borrower, the Obligations. “Initial Lender” has the meaning specified in the preamble. “Interest Period” means (a) initially, the period commencing on the Closing Date and ending six months thereafter, and (b) thereafter, a period commencing on the last day of the immediately preceding Interest Period and ending six months thereafter; provided, however, that the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless the result of such extension would be to extend such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and (iii) any Interest Period that would otherwise extend beyond the Maturity Date shall end on the Maturity Date. “Lender Indemnified Party” has the meaning specified in Section 10.6(a). “LIBOR Rate” means, for any applicable Interest Period, a simple per annum interest rate (rounded upward, if necessary, to the nearest 1/100th of one percent) equal to (a) (i) the rate per annum that appears on page 3750 of the Dow Jones & Company Telerate screen or any successor page as the composite offered rate for London interbank deposits, in an amount approximately equal to the outstanding principal amount of the Loan for the requested Interest Period, as shown under the heading “USD” as of 11:00 a.m. (London time), two Business Days before the first day of such Interest Period, or (ii) if the rate specified in clause (i) cannot be determined, the rate per annum equal to the arithmetic mean of the rates shown on the LIBO page of Reuters Money Service at approximately 11:00 a.m. (London time), two Business Days before the first day of such Interest Period in an amount approximately equal to the amount of the requested Loan, divided by (b) one, minus the Reserve Rate, stated as a decimal.
“Licenses” has the meaning specified in the recitals hereto.
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“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness or other obligation, including, without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, and the filing, under the [__________] or comparable law of any jurisdiction, of any financing statement (or its equivalent) naming the owner of the asset to which such Lien relates as debtor. “Loan(s)” means the Tranche A Loan, the Tranche B Loan or the Tranche C Loan, as the case may be. “Loan Documents” means, collectively, this Agreement, the Convertible Promissory Notes, the Pledge Agreement, each Assignment Agreement, the Securityholders’ Agreement and each certificate, agreement or document executed by the Borrower or the Investors, as the case may be, and delivered to the Initial Lender in connection with or pursuant to any of the foregoing. “Material Adverse Change” means a material adverse change in any of (a) the condition (financial or otherwise), business, performance, prospects, operations or properties of the Borrower, (b) the legality, validity or enforceability of any Loan Document, (c) the ability of the Borrower to repay the Obligations or of the Borrower or either Investor to perform its obligations under any Loan Document, or (e) the rights and remedies of the Lenders under any of the Loan Documents. “Material Adverse Effect” means an effect that results in or causes, or has a reasonable likelihood of resulting in or causing, a Material Adverse Change. “Maturity Date” means February [23], 2000. “Ministry” has the meaning specified in the recitals. “Obligations” means the Loans and all other advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to the Lenders, or any Lender Indemnified Party or Borrower Indemnified Party, of every type and description, present or future, whether or not evidenced by any note, guaranty or other instrument, arising under this Agreement or under any other Loan Document, whether or not for the payment of money, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including, without limitation, those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. The term “Obligations” includes, without limitation, all interest, charges, expenses, fees, attorneys’ fees and disbursements and any other sum chargeable to the Borrower under this Agreement or any other Loan Document. “Other Taxes” has the meaning specified in Section 2.6(b). “Permit” means any permit, approval, authorization, license, variance or permission required from a Governmental Authority under an applicable Requirement of Law.
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“Person” means an individual, partnership, corporation (including, without limitation, a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a Governmental Authority. “Pledge Agreement” means that certain pledge agreement substantially in the form of Exhibit C hereto, as the same may be amended, supplemented or otherwise modified from time to time. “Requirement of Law” means, as to any Person, the certificate of incorporation and bylaws or other organizational or governing documents of such Person, and all Argentine laws, rules and regulations, including, without limitation, securities, antitrust and licensing laws, all health and safety laws, including, without limitation, Environmental Laws, and all orders, judgments, decrees or other determinations of any Governmental Authority or arbitrator, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. “Reserve Rate” means, for any Interest Period, the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including eurocurrency liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on the Loan is determined) having a term equal to such Interest Period. “Responsible Officer” means, with respect to any Person, any of the principal executive officers of such Person. “Securityholders’ Agreement” means that certain securityholders’ agreement substantially in the form of Exhibit D hereto, as the same may be amended, supplemented or otherwise modified from time to time. “Solvent” means, with respect to any Person, that the value of the assets of such Person (both at fair value and present fair saleable value) is, on the date of determination, greater than the total amount of liabilities (including, without limitation, contingent and unliquidated liabilities) of such Person as of such date and that, as of such date, such Person is able to pay all liabilities of such Person as such liabilities mature and does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. “Stock” means shares of capital stock, beneficial or partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or non-voting, and includes, without limitation, common stock and preferred stock.
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“Subsidiary” means any corporation, partnership or other business entity of which an aggregate of 50% or more of the outstanding Stock having ordinary voting power to elect a majority of the board of directors, managers, trustees or other controlling persons, is, at the time, directly or indirectly, owned or controlled by the Borrower (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the happening of any contingency). “Supply Agreement” means an agreement pursuant to which, among other things, the Borrower shall purchase certain equipment from the Initial Lender. “Taxes” mean any tax (including any income tax, franchise tax, capital gains tax, estimated tax, gross receipts tax, value added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll tax), levy, assessment, tariff, impost, imposition, toll, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), that is, has been or in the future may be (a) imposed, assessed or collected by or under the authority of any Governmental Entity, or (b) payable pursuant to any tax sharing agreement or similar contract. “Tax Return” shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information that is, has been or in the future may be filed with or submitted to, or required to be filed with or submitted to, any Governmental Entity in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any legal requirement relating to any Tax. “Tranche A Convertible Promissory Note” means a convertible promissory note substantially in the form of Exhibit A-1, as the same may be amended, supplemented or otherwise modified from time to time. “Tranche A Lender” means a Lender to whom the Tranche A Loan is owed. “Tranche A Loan” means a loan made to the Borrower pursuant to Section 2.1(a). “Tranche B Convertible Promissory Note” means a convertible promissory note substantially in the form of Exhibit A-2, as the same may be amended, supplemented or otherwise modified from time to time. “Tranche B Lender” means a Lender to whom the Tranche B Loan is owed. “Tranche B Loan” means a loan made to the Borrower pursuant to Section 2.1(b). “Tranche C Convertible Promissory Note” means a convertible promissory note substantially in the form of Exhibit A-3, as the same may be amended, supplemented or otherwise modified from time to time. “Tranche C Lender” means a Lender to whom the Tranche C Loan is owed.
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“Tranche C Loan” means a loan made to the Borrower pursuant to Section 2.1(c). “Unaudited Financial Statements” has the meaning specified in Section 5.5(a). SECTION 1.2. Computation of Time Periods. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including”. SECTION 1.3. Accounting Terms. All accounting terms not specifically defined herein shall be construed in conformity with GAAP and all accounting determinations required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in conformity with GAAP. SECTION 1.4. Certain Terms. (a) The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole, and not to any particular Article, Section, subsection or clause in this Agreement. References herein to an Exhibit, Schedule, Article, Section, subsection or clause refer to the appropriate Exhibit or Schedule to, or Article, Section, subsection or clause in this Agreement. (b) The term “Lender” includes its successors and assigns.
SECTION 1.5. Gender. Words used herein, regardless of the gender used, shall be deemed and construed to include any other gender, masculine, feminine or neuter, as the context requires. ARTICLE II AMOUNT AND TERMS OF THE LOANS SECTION 2.1. The Loans. (a) On the terms and subject to the conditions contained in this Agreement, the Initial Lender agrees on the Closing Date to make a loan (the “Tranche A Loan”) to the Borrower in an aggregate principal amount equal to $6,000,000.00. The Tranche A Loan shall be evidenced by the Tranche A Convertible Promissory Note. (b) On the terms and subject to the conditions contained in this Agreement, the Initial Lender agrees on the Closing Date to make a loan (the “Tranche B Loan”) to the Borrower in an aggregate principal amount equal to $5,000,000.00. The Tranche B Loan shall be evidenced by the Tranche B Convertible Promissory Note.
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(c) On the terms and subject to the conditions contained in this Agreement, the Initial Lender agrees on the Closing Date to make a loan (the “Tranche C Loan”) to the Borrower in an aggregate principal amount equal to $2,000,000.00. The Tranche C Loan shall be evidenced by the Tranche C Convertible Promissory Note. SECTION 2.2. Assignment of the Tranche B Loan and Tranche C Loan. (a) On August 31, 1999, the Initial Lender shall sell and assign to CVP, without recourse, and CVP shall purchase and assume from the Initial Lender, the Tranche B Loan pursuant to the Assignment Agreement between the Initial Lender and CVP executed and delivered on the Closing Date. (b) On August 31, 1999, the Initial Lender shall sell and assign to Distacom, without recourse, and Distacom shall purchase and assume from the Initial Lender, the Tranche C Loan pursuant to the Assignment Agreement between the Initial Lender and Distacom executed and delivered on the Closing Date. SECTION 2.3. Prepayments. The Borrower may, upon sixty days’ prior irrevocable written notice to the Lenders stating the proposed date, prepay the entire outstanding principal amount of the Loans without premium or penalty, together with accrued interest to the date of such prepayment, on the principal amount of the Loans and any amounts owing under Section 2.5. SECTION 2.4. Interest. The Borrower shall pay interest on the unpaid principal amount outstanding of each Loan until the principal amount thereof shall be paid in full, at a rate equal at all times during the applicable Interest Period to the LIBOR Rate in effect for such Interest Period plus 1.50% per annum, payable in cash on the last day of such Interest Period; provided, however, that during the continuance of a Default or an Event of Default, each Loan shall bear interest, payable on demand, at a rate per annum equal at all times to the LIBOR Rate then in effect plus 4.50% per annum. SECTION 2.5. Increased Costs. If, due to either (a) the introduction of or any change in or in the interpretation of any law or regulation, or (b) compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan bearing interest based upon the LIBOR Rate, then the Borrower shall, at its option either (i) prepay such Loans in full, together with all accrued interest thereon, or (ii) from time to time, upon demand by such Lender, pay to such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, containing sufficient detail to allow the Borrower to ascertain the basis and calculation of the cost
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increase, submitted to the Borrower by such Lender, shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.6. Illegality. Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to make or to continue to fund or maintain any Loan bearing interest based upon the LIBOR Rate, then, on notice thereof and demand therefor by such Lender to the Borrower (a) the obligation of such Lender to make or to continue any Loan based upon the LIBOR Rate shall terminate, and (b) the Borrower shall prepay such Loans in full, together with all accrued interest thereon. SECTION 2.7. Capital Adequacy. If (a) the introduction of or any change in or in the interpretation of any law or regulation of the United States of America or any political subdivision thereof, (b) compliance with any law or regulation of the United States of America or any political subdivision thereof, or (c) compliance with any guideline or request from any central bank or other Governmental Authority of the United States of America or any political subdivision thereof (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by any Lender or any corporation controlling any Lender and such Lender reasonably determines that such amount is based upon the existence of such Lender’s Loan and its other loans of this type, then, upon demand by such Lender, the Borrower shall pay to such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender’s Loans. A certificate as to such amounts submitted to the Borrower by such Lender, containing sufficient detail to allow the Borrower to ascertain the basis and calculation of the increase, shall be conclusive and binding for all purposes absent manifest error. SECTION 2.8. Payments and Computations. (a) Subject to Section 3.1 hereof, the Borrower shall repay the Loans not later than 11:00 A.M. (New York City time) on the Maturity Date, in Dollars, to the Lenders at their respective addresses referred to in Section 10.2 in immediately available funds without set-off or counterclaim. Payment received by the Lenders after 11:00 A.M. (New York City time) shall be deemed to be received on the next Business Day. (b) All computations of interest hereunder shall be made by the Lenders on the basis of a year of 360 days, for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.
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(c) Whenever any payment hereunder or repayment of any Convertible Promissory Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest; provided, however, that if such extension would cause payment of interest on a Loan to be made in the next calendar month, such payment shall be made on the next preceding Business Day. SECTION 2.9. Taxes. (a) Any and all payments by the Borrower under each Loan Document shall be made free and clear of and without deduction for any and all present or future Taxes and all liabilities with respect thereto, excluding, in the case of any Lender taxes measured by its net income, and franchise taxes imposed on it, by the jurisdiction of any Lender’s applicable lending office or any political subdivision thereof. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including, without limitation, deductions applicable to additional sums payable under this Section 2.9) such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law, and (iv) the Borrower shall deliver to such Lender evidence of such payment to the relevant taxation or other authority. (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of any applicable jurisdiction which arise from any payment made under any Loan Document or from the execution, delivery or registration of, or otherwise with respect to, any Loan Document (collectively, “Other Taxes”). (c) The Borrower will indemnify each Lender for the full amount of Taxes or Other Taxes paid in connection herewith (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.9) paid by such Lender and any liability (including, without limitation, for penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date a Lender makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes or Other Taxes, the Borrower will furnish to each Lender, at its address referred to in Section 10.2, the original or a certified copy of a receipt evidencing payment thereof. (e) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.9 shall survive the payment in full of the other Obligations. SECTION 2.10. Funding Costs.
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If any Lender receives any payment of principal of its respective Loan other than on the last day of an Interest Period, as a result of prepayment made in accordance with Section 2.3 hereof or acceleration of the maturity of any Convertible Promissory Note pursuant to Section 9.1 or for any other reason, the Borrower shall, upon demand by the Lender, pay to the Lender all amounts required to compensate the Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment, including, without limitation, any loss (including, without limitation, loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such Loan. ARTICLE III CONVERSION SECTION 3.1. Conversion. (a) The Tranche A Lender shall have the right (but not the obligation) at any time and from time to time to convert all or any portion of the Tranche A Loan into that number of shares of Common Stock of the Borrower at a rate that would convert the aggregate principal amount of the Tranche A Loan into Common Stock of the Borrower representing 30.0% of the issued and outstanding shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock on the date the conversion right is exercised (the “Conversion Date”) on a fully diluted basis. (b) The Tranche B Lender shall have the right (but not the obligation) at any time and from time to time to convert all or any portion of the Tranche B Loan into that number of shares of Common Stock of the Borrower at a rate that would convert the aggregate principal amount of the Tranche B Loan into Common Stock of the Borrower representing 25.0% of the issued and outstanding shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock on the date the conversion right is exercised on a fully diluted basis. (c) The Tranche C Lender shall have the right (but not the obligation) at any time and from time to time to convert all or any portion of the Tranche C Loan into that number of shares of Common Stock of the Borrower at a rate that would convert the aggregate principal amount of the Tranche C Loan into Common Stock of the Borrower representing 10.0% of the issued and outstanding shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock on the date the conversion right is exercised on a fully diluted basis. SECTION 3.2. Exercise of Conversion Right; Issuance of Common Stock on Conversion. (a) In order to exercise the conversion rights set forth in Section 3.1, a Lender shall give written notice to the Borrower (the “Conversion Notice”) that is reasonably acceptable to the Borrower setting forth the amount of the Loan that the Lender desires to convert. The Conversion Notice shall set forth the name and address of the Person in whose name the
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certificate or certificates for shares of Common Stock issuable upon the exercise of the conversion right shall be issued. (b) Promptly following delivery of the Conversion Notice, and in any event within five Business Days thereof, the Borrower at its sole expense shall issue and deliver to the converting Lender a stock certificate or certificates representing the number of fully-paid and nonassessable shares of the Common Stock to which such Lender is entitled pursuant to the exercise of the conversion right. (c) The exercise of a conversion right shall be deemed to have been effected on the Conversion Date, and the Person in whose name any certificate or certificates for shares of Common Stock shall be issuable upon exercise of the conversion right shall be deemed to have become on the Conversion Date the holder of record of the shares of Common Stock represented thereby. SECTION 3.3. Reservation of Common Stock. The Borrower shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion as provided herein, the full number of shares of Common Stock then deliverable upon exercise of the conversion right; provided, that nothing contained herein shall be construed to preclude the Borrower from satisfying its obligations in respect of the conversion and delivery of purchased shares of Common Stock by utilizing shares which are held in the treasury of the Borrower. The Borrower covenants that all shares of Common Stock which are delivered to a Lender upon exercise of the Conversion Right will upon delivery be duly and validly issued and fully paid and nonassessable, free of all Liens and not subject to any preemptive rights. SECTION 3.4. Taxes on Shares Issued. The issuance of stock certificates upon exercise of the conversion right shall be made without charge to a Lender for any transfer or similar tax in respect of the issue thereof. ARTICLE IV CLOSING; CONDITIONS OF CLOSING SECTION 4.1. The Closing. The making of the Loans and the delivery of the Convertible Promissory Notes shall take place at the offices of Morrison & Foerster LLP, Florida 375 5C, 1005 Capital, Buenos Aires, Argentina, or at such other place as the parties hereto agree, at a closing (the “Closing”) on the Closing Date. SECTION 4.2. Conditions Precedent to the Loans. The obligation of the Initial Lender to make the Loans is subject to satisfaction of the conditions precedent that
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(a) the Initial Lender shall have received, on the Closing Date, the following documents, each dated the Closing Date unless otherwise indicated, in form and substance satisfactory to the Lender: (i) The Convertible Promissory Notes evidencing the Loans, duly executed by the Borrower. (ii) thereto. (iii) (iv) The Securityholders’ Agreement, duly executed by each of the parties The Pledge Agreement, duly executed by each of the parties thereto. An Assignment Agreement, duly executed by each of CVP and Distacom.
(v) Certified copies of all approvals, qualifications, authorizations, licenses and Permits of any Governmental Authority or any third party (including the Licenses) that are necessary or prudent for the conduct of the operations of the Borrower, and to the extent such approvals, qualifications, authorizations, licenses and permits are required to be in place prior to the Closing Date, the same shall have been duly obtained, be in full force and effect, not subject to appeal, free from conditions or requirements the compliance with which could be reasonably be expected to have a Material Adverse Effect and held in the name of the Borrower. (vi) [ The Audited Financial Statements prepared and certified by ], and the Unaudited Financial Statements all in conformity with GAAP.
(vii) Certified copies of (i) the resolutions of the Board of Directors of the Borrower and each Investor approving each Loan Document to which it is a party and (ii) all documents evidencing other necessary corporate action and required governmental and third party approvals, licenses and consents with respect to each Loan Document and the transactions contemplated thereby. (viii) Such documents and certificates as the Initial Lender or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, all in form and substance satisfactory to the Initial Lender and its counsel. (ix) A certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of each officer of the Borrower who has been authorized to execute and deliver any Loan Document or other document required hereunder to be executed and delivered by or on behalf of the Borrower. (x) A opinion of [ ], counsel to the Borrower, in substantially the form of Exhibit B, and as to such other matters as the Lender may reasonably request. (xi) A certificate, signed by a Responsible Officer of the Borrower, stating that each of the conditions specified in Sections 5.2 (a), (b), (c) and (d) has been satisfied.
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(xii) An amendment to the Borrower’s estatutos, substantially in the form of Exhibit F, which amendment shall be in full force and effect. (xiii) Such additional documents, information and materials as the Lender may reasonably request. SECTION 4.3. Additional Conditions Precedent to the Loans. The obligation of the Initial Lender to make the Loans hereunder is subject to the further conditions precedent that: (a) The following statements shall be true on the Closing Date before and after giving effect to the making of the Loans and to the application of the proceeds therefrom (and the acceptance by the Borrower of the proceeds of the Loans shall constitute a representation and warranty by the Borrower that on the Closing Date such statements are true): (i) The representations and warranties of the Borrower and the Investors contained in Articles V and VI, and in each of the other Loan Documents are correct on and as of the Closing Date as though made on and as of the Closing Date; (ii) No Default or Event of Default is continuing or will result from the Loans being made on the Closing Date; and (iii) All necessary governmental and third party approvals required to be obtained by the Borrower in connection with the transactions contemplated hereby and by each of the other Loan Documents have been obtained and remain in full force and effect. (b) [All costs and accrued and unpaid fees and expenses (including, without limitation, legal fees and expenses) required to be paid by the Borrower on or before the Closing Date, to the extent then due and payable, shall have been paid.] (c) The making of the Loans on the Closing Date does not violate any Requirement of Law and is not enjoined, temporarily, preliminarily or permanently. (d) The Borrower and each Investor is in compliance with each Requirement of Law to which the Borrower or such Investor is subject. (e) No facts or circumstances giving rise to a Material Adverse Effect have occurred or exist. No material adverse change has occurred in the economy of Argentina or in the general conditions of the international or local markets, and no change in applicable law has occurred that could reasonably be expected to have a Material Adverse Effect. (f) Mr. Newbery shall have made a cash capital contribution to the Borrower in an amount not less than $2,000,000, on terms satisfactory to the Initial Lender.
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BORROWER To induce the Lenders to enter into this Agreement, the Borrower represents and warrants to the Lenders that: SECTION 5.1. Corporate Existence; Compliance with Law. The Borrower: (a) is a “sociedad anonima” with a legal capital that complies with Argentine law, is validly existing and in good standing under the laws of Argentina; (b) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where such qualification is necessary; (c) has all requisite corporate power and authority and the legal right to own, pledge, mortgage and operate its properties, to lease the property it operates under lease and to conduct its business as now or currently proposed to be conducted; (d) is in compliance with its estatutos; (e) is in compliance with all other applicable Requirements of Law; and (f) has all necessary licenses, Permits, consents or approvals from or by, has made all necessary filings with, and has given all necessary notices to, each Governmental Authority having jurisdiction, to the extent required for such ownership, operation and conduct. SECTION 5.2. Corporate Power; Authorization; Enforceable Obligations. (a) The execution, delivery and performance by the Borrower of the Loan Documents to and the consummation of the transactions contemplated thereby: (i) (ii) are within the Borrower’s corporate powers; have been duly authorized by all necessary corporate action; and
(iii) do not and will not (A) contravene the Borrower’s estatutos, (B) violate any other applicable Requirement of Law, or any order or decree of any Governmental Authority or arbitrator, (C) conflict with or result in the breach of, or constitute a default under, or result in or permit the termination or acceleration of, any contractual obligation of the Borrower, or (D) result in the creation or imposition of any Lien upon any of the property of the Borrower. (b) This Agreement has been, and each of the other Loan Documents will have been upon delivery thereof, duly executed and delivered by the Borrower. This Agreement is, and the other Loan Documents will be, when delivered hereunder, the legal, valid and binding obligation of the Borrower enforceable against it in accordance with its terms. SECTION 5.3. Ownership of Capital Stock of Borrower. The authorized capital stock of the Borrower consists of [____] shares of Common Stock, of which [____] shares are issued and outstanding. All of the shares of Common Stock of the Borrower outstanding as of the date of this Agreement are owned of record by the shareholders as set forth on Schedule 5.3 hereto. All of such shares are duly authorized, validly issued, fully
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paid and non-assessable, have not been issued in violation of any preemptive or similar rights, are owned beneficially and of record by such shareholders free and clear of all Liens, options, proxies, voting trusts, voting agreements, judgments, escrows, rights of first refusal or first offer, transfer restrictions and equities and represent all of the issued and outstanding shares of capital Stock of the Borrower. There are no agreements, contracts, warrants, options, calls, conversion or other rights to purchase or acquire any shares of the capital Stock of or other equity interest in the Borrower. SECTION 5.4. Full Disclosure. No written statement prepared or furnished by or on behalf of the Borrower or any of its Affiliates in connection with any of the Loan Documents or the consummation of the transactions contemplated thereby, and no financial statement delivered pursuant thereto contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading. SECTION 5.5. Financial Matters. (a) Copies of the audited balance sheet of the Borrower at December 31, 1998, and the related audited statements of income, stockholders’ equity and cash flows of the Borrower for the fiscal year then ended (collectively, the “Audited Financial Statements”), certified by [ ], and the unaudited balance sheet at June 30, 1999 and the related unaudited statements of income, stockholders’ equity and cash flows for the three months ended June 30, 1999 (the “Unaudited Financial Statements”) have been furnished to the Initial Lender. The Audited Financial Statements and the Unaudited Financial Statements have been prepared from and in accordance with the books and records of the Borrower in accordance with GAAP, consistently applied and maintained throughout the periods indicated, except for (i) normal recurring year-end adjustments which are not material individually and in the aggregate and (ii) the omission of footnote disclosures required by GAAP. The Audited Financial Statements and the Unaudited Financial Statements fairly present the assets, liabilities and financial condition of the Borrower as of the date thereof and its results of operations. (b) Since December 31, 1998, The Borrower has operated its businesses only in the ordinary course of business and consistent with past practices, and there has not occurred a Material Adverse Change, nor has there been any condition, event, circumstance, change or effect that has had or would reasonably be expected to have a Material Adverse Effect. The Borrower has not: (i) sold or transferred any portion of its assets or property, except in the usual and ordinary course of business; (ii) incurred any damage, destruction, loss or interruption of use which materially affects its business or assets (whether or not covered by insurance); (iii) incurred any liabilities, except (A) liabilities incurred in the ordinary course of business and (B) liabilities incurred in connection with or as a result of this
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Agreement and the other Loan Documents and the transactions contemplated hereby and thereby; (iv) waived any right other than in the ordinary course of business;
(v) set aside, paid or declared any dividends or other distributions on securities of any class or purchased, redeemed, retired or otherwise acquired any of its securities of any class; (vi) made any change in its accounting methods or practices, or made any change in depreciation or amortization policies or rates adopted by it, except as required by law or GAAP; (vii) increased the compensation of any of its officers or directors, changed, altered or entered into any employment, severance, retention or similar agreement with any salaried employee of the Borrower, in each case other than in the ordinary course of business; (viii) suffered any change that has had a Material Adverse Effect on the Borrower’s income, business, properties, assets, liabilities, prospects or condition (financial or otherwise); or (ix) entered into any contract or other agreement to do any of the foregoing; or without limitation by the enumeration of any of the foregoing, entered into any transaction with a consideration in excess of $[____] other than in the usual and ordinary course of business and except as contemplated in this Agreement. (c) The Borrower is Solvent.
SECTION 5.6. Undisclosed Liabilities Except for liabilities or obligations which are accrued or reserved against in the Audited Financial Statements or the Unaudited Financial Statements, since January 1, 1999, the Borrower has not incurred any liabilities or obligations (including, without limitation, Tax liabilities) (whether absolute, accrued, contingent or otherwise) other than those incurred since the date of the Audited Financial Statements or the Unaudited Financial Statements in the ordinary course of business. SECTION 5.7. Litigation. (a) The performance of any action by the Borrower required or contemplated by any of the Loan Documents is not restrained or enjoined (either temporarily, preliminarily or permanently), and no material adverse condition has been imposed by any Governmental Authority or arbitrator upon any of such transactions.
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(b) There are no pending or, to the knowledge of the Borrower, threatened actions, investigations or proceedings affecting the Borrower before any court, arbitrator or other Governmental Authority. SECTION 5.8. No Default. No Default or Event of Default has occurred and is continuing. SECTION 5.9. Investment Company Act. The Borrower is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. The making of the Loans by the Initial Lender, the application of the proceeds and repayment thereof by the Borrower and the consummation of the transactions contemplated by the Loan Documents will not violate any provision of such Act or any rule, regulation or order issued by the Securities and Exchange Commission thereunder. SECTION 5.10. Use of Proceeds. The proceeds of the Loans shall be used by the Borrower solely to pay for the Licenses. SECTION 5.11. Properties. (a) The Borrower has good title to, or valid leasehold interests in, all its real and personal property material to its business, subject only to Liens permitted by Section 8.1 and except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) The Borrower owns, or is licensed or otherwise permitted by contractual arrangement to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its current business, and the use thereof by the Borrower does not infringe upon the rights of any other Person. SECTION 5.12. Contracts. Schedule 5.12 sets forth an accurate and complete list of each contract or agreement (including any and all amendments thereto) to which the Borrower is a party or by which the Borrower is bound which (i) relates to the borrowing of money, the guaranty of or pledge of its credit, any obligation to borrow money or make loans or advances; (ii) involves revenues or expenditures in excess of $[ ]; (iii) obligates the Borrower not to compete with any business or which otherwise restrains or prevents the Borrower from carrying on any lawful business; (iv) relates to employment, compensation, severance, consulting or indemnification between the Borrower and any of the Borrower’s respective officers, directors, employees or consultants who are entitled to compensation thereunder in excess of $[50,000] per annum; or (v) is material to the assets, business, operations or financial condition of the Borrower (collectively, the “Contracts”). The Borrower previously has furnished or made available to the Initial Lender true and correct copies of all written Contracts and written descriptions of all oral Contracts. All
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of the Contracts are enforceable by the Borrower in accordance with their terms except to the extent that such enforceability (A) may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights generally, and (B) is subject to general principles of equity and public policy. The Borrower is not in breach or default under (and no event has occurred which with notice or the passage of time or both would constitute a breach or default under) any of the agreements listed or required to be listed on Schedule 5.12 nor is any other party to any of the agreements listed or required to be listed on Schedule 5.12 in default thereunder (and no event has occurred which with notice or the passage of time or both would constitute a breach or default thereunder). SECTION 5.13. Compliance with Law. The Borrower is not in violation of and is in compliance with all Requirements of Law, contractual obligations, commitments, instruments, licenses, permits and franchises, including, without limitation, the Licenses and all Permits. SECTION 5.14. Government Approvals; Required Consents. No filing or registration with, notice to, or authorization, consent or approval of, any Governmental Authority is required in connection with the execution and delivery of this Agreement or the other Loan Documents by the Borrower or is necessary for the consummation by the Borrower of the transactions contemplated hereby and thereby. SECTION 5.15. All Approvals in Place. All approvals, qualifications, authorizations, licenses and permits of any Governmental Authority or any other third party that are necessary or prudent for the conduct of the operations of the Borrower have been duly obtained, are in full force and effect, are not subject to appeal, are free from conditions or requirements the compliance with which could have a Material Adverse Effect and are held in the name of the Borrower; except those approvals, qualifications, authorizations, licenses and permits that are not capable of being obtained at the present time or that are not capable as a matter of applicable law or prevailing practice of the relevant Governmental Authority or third party of being obtained at the present time (but as to which, in any case the Borrower knows of no reason the same will not be obtained in due course). SECTION 5.16. Security Interests. The Pledge Agreement provides the Lenders with an effective, valid, legally binding and enforceable perfected first priority Lien on all collateral described in the Pledge Agreement; and the security interests created by the Pledge Agreement will be, as of the Closing Date, superior and prior to the rights of all third Persons now existing or hereafter arising, whether by way of Lien or otherwise . SECTION 5.17. Legal Form. Each of the Loan Documents is in proper legal form under the laws of Argentina for the enforcement thereof against the Borrower under such laws, and if each of the Loan Documents
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were stated to be governed by such laws, they would constitute legal, valid and binding obligations of the Borrower under such laws, enforceable in accordance with their respective terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). All formalities required in Argentina for the validity and enforceability of each of the Loan Documents executed and delivered at the date of this representation (including any necessary registration, recording or filing with any public registry, court or other authority in Argentina) will have been accomplished prior to the Closing Date, and no Taxes or Other Taxes are required to be paid to Argentina, or any political subdivision thereof or therein, and no notarization is required, in each case for the validity and enforceability thereof. SECTION 5.18. Environmental Matters. (a) The Borrower is in compliance with all Environmental Laws;
(b) The Borrower has not received any communication (written or oral) that alleges that it is not in compliance with the Environmental Laws, and there are no past, present or future actions, activities, circumstances, conditions, events or incidents that may prevent or interfere with compliance of such laws in the future; (c) Neither the Borrower nor any other Person has placed, stored, deposited, discharged, buried, dumped or disposed of Hazardous Materials or any other waste on any property currently or formerly owned, operated, or leased by the Borrower; (d) The Borrower has delivered or otherwise made available for inspection to the Lender true, correct and complete copies of any reports, studies, analyses, tests or monitoring possessed or initiated by the Borrower pertaining to Hazardous Materials in, on, beneath or adjacent to any property currently or formerly owned, operated or leased by the Borrower regarding the Borrower’s compliance with applicable Environmental Laws; (e) Without in any way limiting the generality of the foregoing, any properties currently owned, operated or leased by the Borrower do not contain any: underground storage tanks; asbestos; polychlorinated biphenyls (PCBs); underground injection wells; radioactive materials; or septic tanks or waste disposal pits in which processed wastewater or any Hazardous Materials have been discharged or disposed; and (f) No environmental Lien has attached to any property that is currently owned or operated by the Borrower. SECTION 5.19. Insurance Policies. All policies of insurance of any kind or nature owned by or issued to the Borrower or any of its Subsidiaries, including, without limitation, policies of life, fire, theft, product liability, public liability, property damage, other casualty, employee fidelity, workers’ compensation and employee health and welfare insurance, are in full force and effect and are of a nature and
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provide such coverage as is sufficient and as is customarily carried by companies of the size and character of the Borrower. The Borrower has never been refused insurance for which it applied or had any policy or insurance terminated (other than at its request). SECTION 5.20. Tax Matters. (a) Each Tax required to have been paid, or claimed by any Governmental Authority to be payable, by the Borrower (whether pursuant to any Tax Return or otherwise) has been duly paid in full on a timely basis. Any Tax required to have been withheld or collected by the Borrower has been duly withheld and collected, and (to the extent required) each such Tax has been paid to the appropriate Governmental Authority; (b) All Tax Returns (i) have been, or will be, filed when due, and (ii) have been, or will be when filed, accurately and completely prepared in full compliance with all applicable legal requirements. All amounts shown on the Tax Returns to be due on or before the Closing Date, and all amounts otherwise payable in connection with the Tax Returns on or before the Closing Date, have been paid on or before the Closing Date. The Borrower has delivered to the Initial Lender copies of all Tax Returns already filed; (c) The Borrower’s liability for unpaid Taxes for all periods ending on or before the date of the Audited Financial Statements, including any liability for Taxes assumed under contract, does not, in the aggregate, exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred taxes) reported in the Audited Financial Statements. The Borrower has established, in the ordinary course of business, reserves adequate for the payment of all Taxes for the period from December 31, 1998 through the Closing Date, and the Borrower has disclosed the dollar amount of such reserves to the Initial Lender on or prior to the Closing Date; (d) There has been no examination or audit of any Tax Return conducted by any Governmental Authority. The Borrower has delivered to the Lender copies of all audit reports and similar documents relating to the Tax Returns. No extension or waiver of the limitation period applicable to any Tax Returns has been granted (by the Borrower or any other Person), and no such extension or waiver has been requested from the Borrower; (e) There are no Liens for Taxes upon the assets of the Borrower (other than Liens for Taxes not yet due and owing); (f) No claim or other proceeding is pending or has been threatened against or with respect to the Borrower in respect of any Tax. SECTION 5.21. Pari Passu Obligations. The Obligations constitute the direct, unconditional and general obligations of the Borrower, and rank at least pari passu with all other Indebtedness and other obligations of the Borrower. SECTION 5.22. No Subsidiaries; No Partnership Obligations.
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The Borrower has no Subsidiaries. The Borrower is not the general partner (or otherwise liable for the Obligations of) any partnership. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE INVESTORS To induce the Initial Lender to enter into this Agreement, each Investor represents and warrants to the Initial Lender that: SECTION 6.1. Corporate Existence; Corporate Power; Authorization; Enforceable Obligations. Such Investor is duly authorized to execute and deliver the Loan Documents to which it is a party and consummate the transactions contemplated thereby and has duly taken all requisite corporate action in connection therewith; (b) the person signing this Agreement on behalf of such Investor has been duly authorized by the entity to do so; (c) such Investor is validly existing and in good standing under the laws of the state of its organization; (d) the execution, delivery and performance of the Loan Documents to which such Investor is a party do not and will not conflict with, violate or constitute a default under any applicable law or regulation, its Certificate of Incorporation or By-laws (or the equivalents thereof), or any agreement or arrangement to which such entity is a party or may be bound; and (e) each of the Loan Documents to which such Investor is a party is a valid and binding legal obligation of the Investor, enforceable against it in accordance with its terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought in equity or at law). ARTICLE VII AFFIRMATIVE COVENANTS As long as any of the Obligations or the Convertible Promissory Notes remain outstanding, the Borrower agrees with the Lenders that: SECTION 7.1. Compliance with Laws, Etc. The Borrower shall comply in all material respects, with all Requirements of Law, contractual obligations, commitments, instruments, licenses, permits and franchises, including, without limitation, the Licenses and all Permits. SECTION 7.2. Conduct of Business. The Borrower shall (a) conduct its business in the ordinary course and consistent with past practice, and (b) perform and observe, in all material respects all the terms, covenants and conditions required to be performed and observed by it under its contractual obligations, and do
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all things necessary to preserve and to keep unimpaired its rights under such contractual obligations. SECTION 7.3. Preservation of Corporate Existence, Etc. The Borrower shall preserve and maintain its corporate existence, rights (charter and statutory) and franchises. SECTION 7.4. Access. The Borrower shall, at any reasonable time and from time to time, permit the Lenders or representatives thereof, to (a) examine and make copies of and abstracts from the records and books of account of the Borrower, (b) visit the properties of the Borrower, (c) discuss the affairs, finances and accounts of the Borrower with any of its officers or directors, and (d) communicate directly with the Borrower’s independent certified public accountants. The Borrower shall authorize its independent certified public accountants to disclose to the Lenders any and all financial statements and other information of any kind, including, without limitation, copies of any management letter, or the substance of any oral information that such accountants may have with respect to the business, financial condition, results of operations or other affairs of the Borrower. SECTION 7.5. Keeping of Books. The Borrower shall keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower. SECTION 7.6. Application of Proceeds. The Borrower shall use the entire amount of the proceeds of the Loan as provided in Section 5.10 hereof. SECTION 7.7. Financial Statements. (a) The Borrower shall furnish to the Lenders as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, an audited balance sheet of the Borrower as of the end of such year and audited statements of income, stockholders’ equity and cash flows of the Borrower for such fiscal year, all prepared in conformity with GAAP and certified, without qualification as to the scope of the audit or as to the Borrower being a going concern, by [ ] or other independent public accountants of recognized national standing, together with a certificate of such accounting firm stating that in the course of the regular audit of the business of the Borrower, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default or Event of Default has occurred and is continuing, or, if in the opinion of such accounting firm, a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof.
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(b) The Borrower shall furnish to the Lender as soon as available and in any event within 45 days after the end of each fiscal quarter, an unaudited balance sheet of the Borrower as of the end of such quarter and unaudited statements of income, stockholders’ equity and cash flows of the Borrower for such quarter, all prepared in conformity with GAAP. SECTION 7.8. Reporting Requirements. The Borrower shall furnish to the Lender: (a) promptly after the commencement thereof, notice of all actions, suits and proceedings before any Governmental Authority or arbitrator, affecting the Borrower, except those which in the aggregate, if adversely determined, would have no Material Adverse Effect; (b) promptly and in any event within two Business Days after the Borrower becomes aware of the existence of (i) any Default or Event of Default, (ii) any breach or non-performance of, or any default under, any contractual obligation which is material to the business, prospects, operations or condition (financial or otherwise) of the Borrower, or (iii) any Material Adverse Change or any event, development or other circumstance which has any reasonable likelihood of causing or resulting in a Material Adverse Change, telephonic notice in reasonable detail specifying the nature of the Default, Event of Default, breach, non-performance, default, event, development or circumstance, including, without limitation, the anticipated effect thereof, which notice shall be promptly confirmed in writing within five days; and (c) to time. promptly such other information as any Lender may reasonably request from time
SECTION 7.9. Insurance. The Borrower shall maintain or cause to be maintained with financially sound and reputable insurers, insurance with respect to its properties and business, against loss or damage of the kinds customarily insured against by reputable companies in the same or similar businesses, such insurance to be of such types and in such amounts (with such deductible amounts) as is customary for such companies under similar circumstances, and furnish the Lenders on request full information as to all such insurance. SECTION 7.10. Payment of Taxes and Claims. The Borrower shall pay (a) all Taxes, assessments and governmental charges imposed upon it or upon its property, and (b) all genuine claims (including claims for labor, materials, supplies or services) that might, if unpaid, become a Lien upon its property or assets, unless, in each case, the validity or amount thereof is being contested in good faith by appropriate proceedings and the Borrower has maintained adequate reserves in accordance with GAAP with respect thereto or has posted a bond in respect thereof satisfactory to the Lenders. SECTION 7.11. Further Documents.
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The Borrower shall execute and deliver or to cause to be executed and delivered to the Lenders from time to time such confirmatory or supplementary security agreements, financing statements, reaffirmations and consents and such other documents, instruments or agreements as each such Lender may reasonably request, that are, in such Lender’s reasonable judgment, necessary or desirable to obtain for such Lender the benefit of the Loan Documents. ARTICLE VIII NEGATIVE COVENANTS As long as any of the Obligations or the Convertible Promissory Notes remain outstanding, the Borrower agrees with the Lender that: SECTION 8.1. Liens, Etc. The Borrower shall not create or suffer to exist any Lien upon or with respect to any property or assets of the Borrower, whether now owned or hereinafter acquired, except: (a) Liens for Taxes not yet due or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (b) other Liens incidental to the conduct of the Borrower’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit, and which do not secure any appeal bond or judgment, and which do not in the aggregate materially detract from the value of the Borrower’s property or assets taken as a whole or materially impair the use of such property or assets in the operation of the Borrower’s business taken as a whole; (c) Liens created pursuant to a Loan Document;;
(d) statutory Liens of and other Liens imposed by law and created or otherwise occurring in the ordinary course of the Borrower’s business, but only to the extent that the amounts secured by such Liens either (i) are not yet past due, (ii) do not exceed an aggregate amount equal to $[25,000], or (iii) are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; and (e) Liens incurred or deposits made in the ordinary course of the Borrower’s business (including, without limitation, surety bonds) or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of borrowed money or other Indebtedness), statutory obligations and other similar obligations. SECTION 8.2. Mergers, Sale of Assets, Etc. The Borrower shall not (a) merge with any Person, (b) consolidate with any Person, (c) sell, lease, transfer or otherwise dispose of, whether in one transaction or in a series of
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transactions all or substantially all of its assets, (d) effect any share exchange pursuant to which all of the outstanding shares of Common Stock are converted into other securities or property or (e) issue any other securities except for the shares of Common Stock issuable upon the conversion of the Convertible Promissory Notes in accordance with Article IV hereof. SECTION 8.3. Change in Nature of Business. The Borrower shall not make any material change in the nature or conduct of its business as carried on at the date hereof. SECTION 8.4. Accounting Changes. The Borrower shall not make any change in accounting treatment and reporting practices or tax reporting treatment, except as required by GAAP or law and disclosed to the Lender. SECTION 8.5. Indebtedness. The Borrower will not create, incur, assume or suffer to exist any Indebtedness, except: (a) (b) Indebtedness of the Borrower represented by the Convertible Promissory Notes; Indebtedness of the Borrower outstanding on the date of this Agreement; and
(c) Indebtedness of the Borrower with respect to letters of credit obtained in the ordinary course of business in connection with the maintenance of insurance by the Borrower or international commercial transactions of the Borrower. SECTION 8.6. No Subsidiaries. The Borrower shall not create any Subsidiaries or own or acquire any Stock of any Person. ARTICLE IX EVENTS OF DEFAULT SECTION 9.1. Events of Default. Each of the following events shall be an “Event of Default”: (a) The Borrower shall fail to pay any principal of, or interest on, any Convertible Promissory Note, any other amount due hereunder or under the other Loan Documents or any other Obligation when the same becomes due and payable; or (b) Any representation or warranty made or deemed made by the Borrower in any Loan Document or by the Borrower (or any of its officers) in connection with any Loan Document shall prove to have been incorrect when made or deemed made; or
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(c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Article VII or VIII or, (ii) the Borrower or either Investor shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or in any other Loan Document if such failure under this clause (ii) shall remain unremedied for five days after the earlier of the date on which (A) a Responsible Officer of the Borrower or such Investor, as the case may be, becomes aware of such failure or (B) written notice thereof shall have been given to the Borrower or such Investor, as the case may be, by the Lenders; or (d) The Borrower shall fail to pay any principal of or premium or interest on any Indebtedness of the Borrower having a principal amount of $[____] or more (excluding indebtedness evidenced by the Convertible Promissory Notes), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall become or be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), or the Borrower shall be required to repurchase or offer to repurchase such Indebtedness, prior to the stated maturity thereof; or (e) The Borrower shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against the Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a custodian, receiver, trustee or other similar official for it or for any substantial part of its property and, in the case of any such proceedings instituted against the Borrower (but not instituted by it), either such proceedings shall remain undismissed or unstayed for a period of 30 days or any of the actions sought in such proceedings shall occur; or the Borrower shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or (f) One or more judgments or order for the payment of money in excess of $[____] in the aggregate to the extent not fully covered by insurance shall be rendered against the Borrower and either (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment or order, or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of any such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (g) There shall occur a Material Adverse Change or an event which would have a Material Adverse Effect; or (h) Any license (including, without limitation, the Licenses), consent, authorization, registration or approval at any time necessary to enable the Borrower to comply with any of its obligations under this Agreement or any other Loan Document shall be revoked, withdrawn or withheld or shall be modified or amended in a manner prejudicial, in the opinion of the Lenders,
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to the interests of the Lenders hereunder; or any Argentine Governmental Authority shall promulgate or declare effective any law, rule or regulation that, in the opinion of the Lenders, could have a Material Adverse Effect; or (i) any Argentine Governmental Authority shall take any action to condemn, seize, nationalize, expropriate or appropriate the Borrower or any substantial portion of the property of the Borrower (either with or without payment of compensation) or shall take any action that, in the opinion of the Lenders, could be expected to have a Material Adverse Effect; or the Borrower shall be prevented from exercising normal control over all or a substantial part of its property; or (j) Argentina or any competent authority thereof shall (i) declare a moratorium on the payment of indebtedness (other than that denominated in pesos) of Argentina or any Governmental Authority thereof or corporations therein or (ii) impose foreign exchange control regulations and such imposition could, in the opinion of the Lender, be expected to have a Material Adverse Effect; or Argentina 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 International Monetary Fund under the Articles of Agreement thereof; or the international monetary reserves of Argentina shall become subject to any Lien; or (k) The government of Argentina or any other Governmental Authority shall (i) revoke, terminate, statutorily appropriate, suspend, materially and adversely modify, withdraw or fail to renew the Licenses or any other material approval related to the operation of the Borrower’s business, or (ii) issue any order, rule or decree (whether or not appealable) relating to the revocation, termination, statutory appropriation, suspension or material and adverse modification or withdrawal of the same, or (iii) commence or threaten any proceeding for the revocation, termination, statutory appropriation, suspension or material and adverse modification or withdrawal of the same. SECTION 9.2. Remedies. If there shall occur and be continuing any Event of Default, each Lender may by notice to the Borrower, declare the Loans owed to such Lender, all interest thereon and all other amounts and Obligations payable under this Agreement to be forthwith due and payable, whereupon the Loans owed to such Lender, the Convertible Promissory Notes held by such Lender, all such interest and all such amounts and Obligations shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of the Event of Default specified in subparagraph (e) above, (ii) if prior to the Closing Date, the Commitment shall automatically be canceled and the obligation of the Lender to make the Loan shall automatically be terminated and (ii) if on or after the Closing Date, the Loan, all such interest and all such amounts and Obligations shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.
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SECTION 9.3. Other Remedies. If any Event of Default shall occur and be continuing, each of the Lenders may proceed to protect and enforce its respective rights under this Agreement and any Convertible Promissory Note by exercising such remedies as are available to such Lender in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement. No remedy conferred in this Agreement upon the Lenders is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise. ARTICLE X MISCELLANEOUS SECTION 10.1. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be in writing and signed by the Lenders and the Borrower, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 10.2. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including, without limitation, telegraphic, telex, telecopy or cable communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered by hand, if to the Borrower, at its address at [ ] (telecopy number: [ ] (telephone number: [________]), Attention: [ ]; if to any of the Lenders or the Investors, to the address set forth on Exhibit G or as to any party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed, telegraphed, telexed, telecopied, cabled or delivered, be effective when deposited in the mails, delivered to the telegraph company, confirmed by telex answerback, telecopied with confirmation of receipt, delivered to the cable company or delivered by hand to the addressee, respectively. SECTION 10.3. Further Assurances. (a) Each of the parties agrees that it will execute and deliver to each other party any and all other agreements, documents and instruments and take such other actions, in addition to those expressly required by this Agreement, that may be reasonably necessary or appropriate to carry out the purposes of this Agreement whether before, at or after the Closing. (b) Each of the Borrower and the Initial Lender agrees to use commercially reasonable efforts to enter into the Supply Agreement as promptly as practicable. SECTION 10.4. No Waiver; Remedies.
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No failure on the part of any of the Lenders to exercise, and no delay in exercising, and no course of dealing with respect to, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law or in equity. SECTION 10.5. Costs; Expenses. (a) The Borrower agrees to pay on demand (i) all reasonable costs and expenses of each Lender in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, each of the other Loan Documents and each of the other documents to be delivered hereunder and thereunder, including, without limitation, the fees and expenses of all attorneys, accountants, appraisers, consultants or industry experts retained by the Agent or any of the Lenders with respect thereto, and (ii) all costs and expenses of each Lender (including, without limitation, the fees and out-of-pocket expenses of counsel, accountants, appraisers, consultants or industry experts retained by any Lender) in connection with a restructuring requested by the Borrower or the enforcement after Event of Default (whether through negotiation, legal proceedings or otherwise) of this Agreement and the other Loan Documents. SECTION 10.6. Indemnification. (a) In the event that the Borrower or any of the Investors (i) breaches any of its representations, warranties or covenants contained in this Agreement or any of the other Loan Documents or (ii) has made any misstatement or omission of a material fact relating to the Borrower or such Investor, as the case may be, (each an “Indemnifying Party”) in any of the Loan Documents and a Lender Indemnified Party (as hereinafter defined) makes a written claim for indemnification against the Borrower or any such Investor, as the case may be, then, the applicable Indemnifying Party agrees to indemnify the Lender, its Affiliates and agents and their respective officers, directors and employees (collectively, the “Lender Indemnified Parties,” each a “Lender Indemnified Party”) from and against the entirety of, without duplication, the aggregate of all expenses, losses, costs, deficiencies, liabilities and damages (including, without limitation, reasonable related counsel and paralegal fees and expenses of investigation) incurred or suffered by any Lender Indemnified Party (“Adverse Consequences”) through and after the date of the claim for indemnification, resulting from, arising out of, relating to, in the nature of, or caused by any such breach. (b) Any indemnification or other protection provided to any Lender Indemnified Party pursuant to this Agreement (including, without limitation, pursuant to this Section 10.6) or any other Loan Document shall (i) survive payment of the Obligations and (ii) inure to the benefit of any Person who was at any time a Lender Indemnified Party under this Agreement or any other Loan Document.
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SECTION 10.7. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders and the Investors, and their respective successors and assigns, except that none of the Borrower, the Investors nor shall have the right to assign its rights or delegate its obligations hereunder or any interest herein without the prior written consent of the Lenders. SECTION 10.8. Governing Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 10.9. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. SECTION 10.10. Submission to Jurisdiction; Service of Process. (a) Any legal action or proceeding with respect to this Agreement, any of the other Loan Documents or any document related thereto may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Agreement, each of the Investors and the Borrower hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens, which any of them may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. (b) Each of the Investors and the Borrower irrevocably consents to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at its address provided herein. (c) Nothing contained in this Section 11.11 shall affect the right of the Lenders to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Borrower, either Investor in any other jurisdiction.
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SECTION 10.11. Section Titles. The Section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. SECTION 10.12. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 10.13. Survival. The representations and warranties of Borrower and the Investors contained in each of the Loan Documents shall survive the execution and delivery of the Loan Documents and the Convertible Promissory Notes and the making of the Loans. SECTION 10.14. Entire Agreement. This Agreement, together with all of the other Loan Documents and all certificates and documents delivered hereunder or thereunder, embody the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements and understandings, either oral or written, relating thereto. SECTION 10.15. Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. COMPANIA DEL SUR, SOCIEDAD ANONIMA, as Borrower By: Name: Title: By: Name: Title: SIEMENS AKTIENGESELLSCHAFT, as Initial Lender By: Name: Title: By: Name: Title: DISTACOM By: Name: Title: COMMUNICATION VENTURE PARTNERS By: Name: Title:
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